Opinion of the European Economic and Social Committee on ‘Funding the European Pillar of Social Rights’

(own-initiative opinion)

(2018/C 262/01)

Rapporteur:

Anne DEMELENNE

Plenary Assembly decision	15.2.2018
Legal basis	Rule 29(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Economic and Monetary Union and Economic and Social Cohesion
Adopted in section	26.3.2018
Adopted at plenary	19.4.2018
Plenary session No	534
Outcome of vote (for/against/abstentions)	155/3/4

1.   Conclusions and recommendations

1.1.

The principles of the European Pillar of Social Rights (the ‘Social Pillar’) and the need for its implementation, along with the implementation of the 2030 Agenda for Sustainable Development, should constitute one of the guiding lines in the negotiations on the next EU multi-annual financial framework post-2020.

1.2.

Making a reality of the Social Pillar will require improvements in Member States. The Social Scoreboard, produced alongside the Pillar, points to shortfalls and substantial divergences across the EU. Overcoming these shortfalls will require commitment from all levels, including Member States, social partners and civil society actors. It will also require a robust budgetary base, investment and current spending. Consideration needs to be given to how this will be financed.

1.3.

Spending needs are particularly large in lower-income countries and in countries that suffered income declines in recent years. All face some degree of constraint from EU rules on budgets and debt levels. Scope for more spending can be created within Member States and with the help of various EU-level programmes.

1.4.

Private sector investment can make a contribution in some areas — such as expanding digital access — when appropriate regulatory conditions are created. Private sector investment will however not be enough and cannot ensure against exclusion of the socially weakest, seen as an important issue within the Social Pillar. More public investment within Member States can be facilitated by reference to a Golden Rule for public investment with a social objective, which would allow more flexibility in budget rules (1) with a view to achieving the aims of the European Pillar of Social Rights.

1.5.

More public investment can also be supported by the use of existing EU instruments, especially the European Structural and Investment Funds (ESIF), which can be more clearly focused towards objectives highlighted within the Social Pillar. Public investment can also be supported by the European Investment Bank, helped by the European Fund for Strategic Investments (EFSI), which has enabled it to maintain its level of credits over recent years. This support should explicitly include objectives linked to the Social Pillar, as is consistent with its mandate.

1.6.

Appropriate taxation policies, including effective fight against tax fraud, tax avoidance and aggressive tax planning, should allow Member States and the EU to raise additional means to contribute to the financing of the Social Pillar. Ensuring efficient use of additional funding requires the implementation of the action programmes and roadmaps on the implementation of the Social Pillar as an integral part of the European Semester and in particular in the development of National Reform Programmes and Convergence Programmes. In this regard, the EU should also explore new avenues for means to increase its own resources.

1.7.

The implementation of the Social Pillar requires the active ownership, responsibility and participation of relevant stakeholders at all the different levels: the European institutions, the Member States and regional and local authorities, as well as the social partners and other civil society stakeholders.

2.   Background

2.1.

The European Pillar of Social Rights, proclaimed and signed by the EU Council, the European Parliament and the European Commission on 17 November 2017, is intended as a step towards reinforcing social rights and delivering a positive impact on people's lives in the short and medium term. Delivering on the Social Pillar is a shared commitment and responsibility of the EU, the Member States and the social partners.

2.2.

It reflects a stated recognition from leaders of 27 Member States of the need to address economic and social insecurity as a matter of priority (2). Reasons for the urgency of the Social Pillar include the poor economic and social performance in many countries since 2008; new opportunities and new challenges arising from globalisation, climate change, large-scale migration, digitalisation and ageing populations; increased diversity in economic and social levels within the EU in the wake of the financial and economic crisis; and political developments in many countries that imply a threat to future European unity and cohesion. Raising the EU to a ‘social triple-A rating’ was presented as ‘just as important as an economic and financial triple-A rating’ by the European Commission president-elect to the European Parliament in October 2014 (3). Achieving such an aim evidently requires an acceptance of responsibility at all levels within the EU. Fulfilling such an aim could be expected to improve cohesion, political and social stability and economic performance, without forgetting the importance of automatic stabilisers in the event of economic shocks.

2.3.

As recognised by the EESC (4), the Social Pillar is a political declaration of intent as there is still no clear roadmap for its implementation. In this regard, the Pillar remains incomplete and the recognition of new rights and obligations is lacking. In the context of a strong economy and fair taxation, adequate financial resources have to be made available at Member State level with the support of the European Union. It will be a crucial aspect for the implementation of the Social Pillar.

2.4.

The European Commission is to present its proposals for the next multi-annual financial framework (MFF) in May 2018. It is essential that the Social Pillar, as well as the UN Sustainable Development Goals, serve as one of the guiding lines for the European institutions and the Member States in the preparation of the next long-term EU budget to apply from 2020.

2.5.

Proper implementation of the Social Pillar will depend on appropriate policy reforms within Member States, for example, to create appropriate mechanisms for quality job creation, for enhancing skills and for ensuring efficient use of public resources. The EESC, in accordance with its previous opinions, advocates structural reforms geared towards social and economic development: more and better jobs, sustainable growth, administrative and institutional quality, and environmental sustainability (5). Such reforms should be country-specific, consistent with National Reform Programmes (NRPs) to improve well-being and backed by democratic support, not a one-size-fits-all approach for all Member States (6).

2.6.

Proper implementation of the Social Pillar will also require a strengthening of the financial resources available (7). Currently, EU expenditure on social matters represents only on average 0,3 % of total public social expenditure in the EU, with the great bulk provided from Member States' budgets (8). The departure of the United Kingdom from the EU will have major consequences for the EU budget. The EESC stresses that sufficient resources must be made available for the implementation of social policies. It supports the European Parliament's demand that the current 1 % ceiling for the EU's expenditure should be increased to 1,3 % of GNI (9) and believes that an increase in the EU's own resources, for example by an increase in VAT, would be particular unfair in a social context. The EESC also stresses the need to target more resources towards supporting cohesion policy, support for working people and citizens in general. Particular attention will be devoted to the acquisition of skills by workers as a source of economic strengthening. At the same time, the EESC agrees that increased funding should not be limited only to security, defence and external border control. The European Social Fund is an important driver for more convergence and the EESC reiterates its demand that it should not be reduced if the future challenges are to be met in view of the next EU multi-annual financial framework (10).

2.7.

The Social Scoreboard that accompanies the European Commission's presentation of the Social Pillar (11) is intended as a tool for monitoring progress towards the target of a fairer Europe with a stronger social dimension. It has been criticised for the choice of some indicators, for time periods used for comparison and in some cases for the accompanying interpretations (12). The EESC has previously called for it to be improved (13).

2.8.

In some cases clearly inappropriate indicators have been used. This applies for the case of progress in reducing the gaps in pay and employment between men and women. Both have suffered from declining working hours, but it is larger for men than women, so that a smaller gap (the indicator used in the Scoreboard) does not reflect clear improvement. Moreover, time periods for assessing progress vary, sometimes showing only one year and sometimes a longer period, going back to before the crisis that broke out in 2008. The longer time scale is more appropriate for indicating what the longer term trends are. Indicators also need to be interpreted flexibly and adapted over time, making use of evolving expertise and data from sources such as Eurofound. Revision and updating of indicators should be the result of an open discussion, involving the social partners and other civil society stakeholders.

2.9.

Despite reservations, the scoreboard gives an indication of the scale of the task ahead if the stated objectives are to be achieved. It shows inadequacies within all Member States and substantial divergences of levels among Member States which can lead to increasing social inequalities. An acceptable level of incomes, living standards, social security, welfare provision, educational attainment and digital access is clearly not achieved across all Member States.

2.10.

Figures on levels of employment and unemployment demonstrate the extent of divergences. The employment rate in Greece was 56 % while it reached 81 % in Sweden. The unemployment rate in Greece was 23 % against 4 % in Germany, the lowest level in the EU. These figures from the scoreboard suggest wide divergences in social conditions across the EU with much higher levels of unused potential in some countries than others.

2.11.

Many other indicators point in the same direction. Thus, for example, the proportion of early leavers from education reaches 20 % of the 18-24 population in Spain, but less than 3 % in Croatia. This latter is also a deceptive figure on the general position of young people: the youth unemployment rate indictor shows Croatia to be one of the worst in the EU. The proportion of the population at risk of poverty reaches 40 % in Bulgaria against an EU average of 23 %.

2.12.

The NEET (14) rate (percentage of 15-24 year olds not in employment, education or training) varies from 20 % in Italy to under 5 % in the Netherlands. Activation support (including training, employment incentives and similar measures) is taken by 54 % of those who want to work in Denmark but less than 3 % of those who want to work in Bulgaria.

2.13.

The proportion of children aged 0-3 in full-time child care ranges from 1,1 % in Slovakia to over 77 % in Denmark. Unmet health needs, usually because of financial constraints, are reported by over 12 % in Estonia and Greece but are minimal in Austria.

2.14.

Over the EU as a whole, 44 % lack adequate digital skills, ranging from 74 % in Bulgaria to 14 % in Luxembourg.

2.15.

Making the Social Pillar a reality would therefore improve social and labour market conditions for many citizens and would thus also enhance the EU's economic potential. It implies upward convergence for the countries that are currently lagging behind. Some indicators show improvements over very recent years but not all and, even there, large gaps remain.

2.16.

Making the Social Pillar a reality will be an enormous challenge, requiring commitment from Member States supported by the European Union. It will also require full involvement of social partners and encouraging and promoting their joint actions, specifically the conclusion and improved coverage of collective agreements, particularly in the area of employment security, the quality of work, wage conditions and health and safety at work. Civil society organisations, with their experience and knowledge of problems, can also make a crucial contribution. There can also be an important contribution from private business through public-private partnerships, investment in the development of skills and qualifications within enterprises.

3.   Policy areas

3.1.

Steps to further implementation can include new legislative and non-legislative measures, including ensuring that policies already decided actually are implemented within Member States, the use of the European semester and the Country Specific Recommendations issued within that process (15). Involvement of social partners at all levels is essential for successful implementation of these initiatives.

3.2.

Country Specific Recommendations in 2015 and/or in 2016 covered areas referred to in the Social Pillar notably in relation to pensions, public services, social care, healthcare, childcare, housing, enhancement of skills, active labour market policies and education.

3.3.

However, for such recommendations to have meaning, they must be based on an assumption that the necessary funding will be available. The EU can play a positive role here through its various programmes and by flexibility in rules on state budgets and state debt levels.

3.4.

The issues of investment and finance arise in various ways across all the areas covered by the Social Pillar. The Social Scoreboard also helps to demonstrate the need for investment in specific areas across all, and especially lower-income, Member States. Financing the Social Pillar therefore links in with issues of macroeconomic policy, with economic governance policies oriented towards social convergence and not social divergence, with discussions on the management of the Eurozone and with policies to promote investment, including social investment.

3.5.

EESC has already argued for the many positive effects of well planned, effective and efficient future-oriented social investment which, as accepted in the European Commission's Social Investment Package, should be viewed not as a cost but as an investment in Europe's growth and employment potential. The EESC has regretted that more has not been done to effectively implement these objectives. Social investment offers economic and social returns over time, in terms of increased employment or labour incomes, improved health, reduced unemployment, better education, less poverty and social exclusion, etc. It also improves individuals' prosperity and well-being, while boosting the economy by ensuring a more skilled workforce, higher productivity and employment. Such investment, especially when enhancing sustainable growth, would also contribute to strengthening people's skills and qualifications, improve their opportunities in society and the labour market, as well as stimulating the economy, helping the EU to emerge from the crisis stronger. Moreover, it would ensure more efficient and effective public spending, leading to savings in public budgets in the medium to long-term (16) finances. The EESC has also highlighted the long-term cost of failing to act and invest in the social sphere. The EESC has in this respect also stressed the importance of investment in robust social security systems given also that they act as an automatic stabiliser (17).

3.6.

Themes listed in the Social Pillar that cannot be addressed without more investment or current spending include: the right to quality and inclusive education, training and lifelong learning; support for job search; improving gender equality and reducing the gender pay gap; prevention of in-work poverty; access to care services; affordable early childhood education; adequate social protection; adequate unemployment benefits; pensions ensuring an adequate income; dignity in old age; affordable preventive and curative healthcare of good quality; affordable long-term care services of good quality; social housing or housing assistance of good quality; and access to water, sanitation, energy, transport, financial services and digital communications.

3.7.

The main EU funds for economic and social growth are the European Structural and Investment Funds (ESIF), the Youth Employment Initiative (YEI), competitiveness programmes and the European Fund for Strategic Investments (EFSI). Investment can also come from Member States' own budgets and from private sources.

3.8.

The European Structural and Investment Funds are the most substantial source with complex processes for overseeing and assessing investment identified in a previous EESC opinion as a means to achieve more investment in the real economy. They have led to increased public-sector investment in lower-income countries, but have not been sufficient to compensate for falling investment from other sources or to ensure rapid convergence in economic and social levels. It is important to ensure that these funds are strengthened and increased in order to support efforts to implement the Social Pillar. The EESC reiterates its support for a review of regulations governing ESIFs and for improved evaluation of the effectiveness and efficiency of their contribution (18).

3.9.

It is possible to ensure that investment is targeted in line with the aims of the Social Pillar, both in terms of the activities undertaken and in terms of conditions to ensure fair employment practices and support for otherwise excluded groups.

3.10.

The EFSI provides a guarantee to the European Investment Bank enabling the latter to maintain levels of credit which would otherwise have faced reduction. It, like EIB projects in general, can support projects consistent with the Social Pillar. In some cases it does (supporting some social entrepreneurship and some health and social care). The bias has been towards more typical commercial projects, such that social benefits are a by-product rather than an objective.

3.11.

The EESC has called for reinforcement of the social dimension of EFSI deployment such as in education, training and vocational training for skills and lifelong learning, developing the creative and cultural industries, innovation in healthcare and medicine, and social services, social housing and childcare, tourism and environmental protection infrastructure. The Investment Plan for Europe should clearly support the COP21 commitments (19).

3.12.

There is also little emphasis on assessing and overseeing projects on employment conditions, inclusion of disadvantaged groups and investment in the physical infrastructure for social services.

3.13.

There was an initial commitment to avoid any geographical considerations in the allocation of the EFSI resources and a number of lower-income countries are receiving very little, despite demonstrably high levels of need. Appropriate changes to the rules can ensure that priority is given to the less developed countries in the second phase of action.

3.14.

Financing implementation of the Social Pillar will also depend heavily on resources available at the Member State level. It will require funding from state budgets for investment and also for running costs of activities over future years. This can be constrained by EU budget and debt rules (20). As already stressed repeatedly by the EESC (21), consideration should be given to ways of enhancing the flexibility allowable within these by means, for example, by means of a ‘Golden Rule’ which would allow public investment with a social objective in order to achieve the aims of the Social Pillar notably by: increasing income levels, stronger social cohesion and preventing the exclusion of otherwise disadvantaged groups who cannot otherwise play a full part in society, while generating sustainable economic growth.

3.15.

Business and corporate responsibility is also key in financing social goals. Private investment alone will not address the Social Pillar objectives, but there should be scope for private investment additionally to public responsibility to contribute in many of the areas concerned (including, for example employment, improving digitalisation skills and social care) especially with appropriate regulatory frameworks and some financial support from public sources, such as the European Structural and Investment Funds and/or the EIB.

3.16.

The need for financial resources to implement the Social Pillar should be recognised and planned for. Appropriate institutional frameworks already exist. Terms of reference for the European Structural and Investment Funds (ESIFs) and the EFSI should be clarified to make explicit reference to the Social Pillar and costs associated with furthering its aims should be allowed for in the EU budget and in the Member States' budgets.

3.17.

Finally, in the context of the fight against tax fraud, against tax havens and aggressive tax planning, and for the reduction of unfair tax competition between Member States (22), measures relating to fair taxation undertaken by the European Commission (regarding multinationals and individuals) should be strengthened (23), as well as measures to combat misappropriation and fraud concerning EU-budget resources. In relation to the search for new sources of tax revenue to finance the Social Pillar, fully respecting the principle of subsidiarity, it would be appropriate to promote kinds of taxation that take into account the contributive capacities of each, while respecting the incentives for sustainable economic growth.

3.18.

As regards the financing of the EU budget, the EESC agrees with the analysis in the report on Future financing of the EU by the High Level Group on Own Resources, that calls for an EU budget which consists predominantly of autonomous, transparent and fair own resources (24). Furthermore, the EESC takes the view that an increased budget should be achieved.

---

(1)  Lessons learned for avoiding the severity of austerity policies in the EU, pt. 1.6, not yet published; Euro area economic policy 2018, points 1.8 and 3.6, not yet published; OJ C 327, 12.11.2013, p. 11; Annual Growth Survey 2018, pt. 1.4, not yet published; OJ C 226, 16.7.2014, p. 21.

(2)  European Pillar of Social Rights, booklet, p. 6, (ISBN 978-92-79-74092-3).

(3)  http://europa.eu/rapid/press-release_SPEECH-14-1525_en.htm

(4)  OJ C 81, 2.3.2018, p. 145.

(5)  For example, improving the business environment, the financing of companies and R&D expenditure; increasing the productivity of companies, sectors and economies; promoting the creation of good quality jobs with higher wages, and the simultaneous reduction of temporary and unstable jobs with low wages; strengthening collective bargaining, and the autonomy of the social partners in it, and social dialogue at local, regional, national and European levels; reforming public administrations to make them more effective for economic and social development, and more transparent for the public; promoting the quality of education and training systems for workers to bring about equal opportunities and results for all social groups.

(6)  Support to structural reforms in the Member States, point 3.9, not yet published.

(7)  OJ C 81, 2.3.2018, p. 145.

(8)  Reflection Paper on the Social Dimension of Europe, p 24

(9)  European Parliament's resolution of 14 March 2018 on the next MFF: Preparing the Parliament’s position on the MFF post-2020 — (2017/2052(INI)), co-rapporteurs: Jan Olbrycht, Isabelle Thomas, point 14.

(10)  OJ C 81, 2.3.2018, p. 145; OJ C 81, 2.3.2018, p. 131.

(11)  https://composite-indicators.jrc.ec.europa.eu/social-scoreboard/#

(12)  Galgoczi, B. et al, ‘The Social Scoreboard Revisited’, ETUI, 2017.

(13)  OJ C 81, 2.3.2018, p. 145.

(14)  ‘Not in education, employment or training’.

(15)  OJ C 81, 2.3.2018, p. 145.

(16)  OJ C 125, 21.4.2017, p. 10.

(17)  OJ C 226, 16.7.2014, p. 21.

(18)  OJ C 303, 19.8.2016, p. 94.

(19)  OJ C 75, 10.3.2017, p. 57.

(20)  OJ C 177, 18.5.2016, p. 35.

(21)  Lessons learned for avoiding the severity of austerity policies in the EU, point 1.6, not yet published; Euro area economic policy 2018, points 1.8 and 3.6, not yet published; OJ C 327, 12.11.2013, p. 11; Annual Growth Survey 2018, point 1.4, not yet published; OJ C 226, 16.7.2014, p. 21.

(22)  OJ C 81, 2.3.2018, p. 131.

(23)  Annual Growth Survey 2018, pt. 3.3.4, not yet published.

(24)  OJ C 81, 2.3.2018, p. 131.

Opinion of the European Economic and Social Committee on ‘The LeaderSHIP 2020 strategy as a vision for the maritime technology industry: towards an innovative, sustainable and competitive maritime industry in 2020’

(own-initiative opinion)

(2018/C 262/02)

Rapporteur:	Marian KRZAKLEWSKI
Co-rapporteur:	Patrizio PESCI

Plenary Assembly decision	1.6.2017
Legal basis	Rule 29(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Consultative Commission on Industrial Change (CCMI)
Adopted by CCMI	4.4.2018
Adopted at plenary	19.4.2018
Plenary session No	534
Outcome of vote (for/against/abstentions)	197/1/2

1.   Conclusions and recommendations

1.1.

The EESC recommends that all Commission services step up their efforts to assume responsibility for the completion of the LeaderSHIP 2020 strategy (LS 2020) and for the preparation and implementation of the next strategy for the sector (LeaderSHIP 2030), in cooperation with stakeholders.

1.2.

As it was adopted in 2013, the conclusions and recommendations of LeaderSHIP 2020 have been determined by the consequences of the economic crisis of 2008. However, many changes have taken place in recent years, with serious challenges and new opportunities emerging for the maritime industries in Europe. The EESC therefore calls on the Commission to provide stronger support for the maritime industries in coping with its challenges and opportunities.

1.3.

With the publication of the LS 2020 strategy, the Commission and stakeholders agreed on 19 recommendations, aimed at putting the strategy into practice. At the hearing, stakeholders from the sector completed a survey evaluating the extent to which these recommendations had been implemented. The survey's findings are discussed in section 3.

1.3.1.

The EESC notes that, four years after the strategy was published, progress towards implementing all recommendations has been uneven — the average implementation rate is only 25 %. Recommendations relating to the RDI pillar have been implemented relatively well. Rather less successful, but still effective, has been the implementation of recommendations under the ‘employment and skills’ pillar, with the exception of informal learning. This is followed by the roll-out of measures on ‘improving market access and fair competition’. Progress on such measures is rated at only 20 %. The pillar with the weakest level of implementation (an average of 15 %) is ‘access to finance’, with the exception of measures to promote EIB financing. The EESC calls on the Commission and stakeholders to step up the strategy's roll-out and to carry over key, outstanding recommendations to the sector's new strategy (LeaderSHIP 2030) which has been proposed by stakeholders.

1.4.

The hearing highlighted that the European maritime technology (MT) sector is a key strategic sector for Europe, and that it is in relatively good shape, despite the many difficulties the sector had been confronted with, especially after the economic crisis. In contrast, Asian shipyards are suffering a lot, inter alia as a result of vigorous state aid policies. However, due to their current problems, Asian competitors, and particularly China, will increase pressure on Europe. The EESC recommends that the European Commission adopt a framework that would enable a genuine global level playing field for the European MT sector.

1.5.

The Chinese government and banks will provide all financial support to their state-owned companies in order to implement the recently announced strategy to take over Europe's position as a leader in building high end ships, such as cruise ships, and high tech maritime equipment. Against this backdrop, the EESC recommends that the European Commission adopt a strong industrial and manufacturing policy, based on reciprocity, enabling the European maritime technology industry to survive competition.

1.6.

The maritime industries are currently challenged by regulatory and societal pressures. On the regulatory side, this sector is pressured to improve its environmental, safety and security performance. On the societal side, digitalisation, automation, cybersecurity or the Internet of Things are potentially disruptive technologies which may fundamentally change the future of the maritime sector. At the same time, these challenges create interesting opportunities for the European MT sector. The EESC therefore recommends that the European Commission stimulate investments of the European MT sector in RDI — for instance through a PPP — to cope with the sector's needs. RDI is key for the European MT sector to stay ahead of global competitors.

1.7.

The European MT sector has an increasing interest in exploiting the economic potential of seas and oceans in a sustainable manner. Offshore wind, ocean energies or aquaculture are only few examples. To fully exploit this potential and to open up new opportunities (e.g. energy storage at sea), the EESC recommends that the European Commission support the European maritime technology sector with a Blue PPP.

1.8.

Contrary to Asian competitors, access to finance is a significant problem for European shipyards and European maritime equipment manufacturers. Existing European financial tools are either insufficiently known or not fit for use in such a capital-intensive sector at all. The EESC therefore calls on the European Commission to launch a dedicated financial instrument that would enhance investment in a capital risk intensive sector, such as the European MT industry.

1.9.

The EESC believes that the navy sub-sector has a very important role to play in maintaining the ‘critical mass’ of the entire European shipbuilding sector and is, additionally, a driving force behind research and innovation in the MT sector and beyond. The EESC therefore calls on the Commission to ensure that the maritime defence industry forms one of the pillars of the follow-up to the LeaderSHIP strategy.

1.10.

To remain competitive and innovative, the European MT sector needs to implement new technologies and to have the rightly skilled and trained workforce. The EESC advises the Commission to provide strong support to the social partners from the shipbuilding sector to continue with their work at the European Skills Council for the Maritime Technology Sector. The EESC brings to the attention of the EC the need to promote industry-led initiatives and expertise to solve the skills mismatches in the sector.

1.11.

The EESC has taken note of the findings of the report on New trends in the shipbuilding and marine supply industries (1) and calls upon the European Commission to cooperate with SEA Europe and IndustriALL and other stakeholders to implement the recommendations made in this report.

2.   Background to the opinion

Current status of the European maritime technology industry

2.1.

The European maritime technology industry covers all businesses involved in the design, construction, maintenance and repair of vessels and other maritime structures, including the entire supply chain of systems, equipment and services, supported by research and educational institutions. European firms are innovation leaders and produce around half of the world's marine equipment each year.

2.2.

European shipyards are successful in the building, repairing, maintenance and conversion of very complex and technologically advanced civil and naval ship types, such as cruise ships, ferries, offshore vessels and installations, frigates, submarines, etc. They also produce and deliver technologies associated with the development of ‘blue growth’ (offshore energies, aquaculture, seabed mining, etc.). They create an annual turnover of approximately EUR 31 billion, directly employing over 200 000 people, and there are currently around 300 shipyards in Europe (2).

2.3.

Producers and suppliers of marine equipment from the EU are global market leaders. They comprise around 22 000 large, small and medium-sized companies which deliver various materials, systems, technologies and equipment or provide engineering and consultancy services. They generate an annual turnover of approximately EUR 60 billion, and they directly employ over 350 000 people. Their share of the global market is about 50 %.

2.4.

The European maritime technology sector invests 9 % of its profits from sales in research, development and innovation — the highest rate of investment in RDI to be found in Europe.

2.5.

The global shipbuilding industry is facing one of its most serious crises in years with 2016 being the worst year so far but worse is expected to come in the coming two to three years. Reduced demand for goods transport in Asia caused order books to shrink dramatically. Europe is unique in that it has been able to keep orders growing since 2012, without financial support or subsidies. At the same time, European maritime equipment manufacturers are facing the negative consequences of the dramatic shrinkage of Asian order books.

2.6.

In 2016, European shipyards' new orders were worth more than the units already delivered. European contracts for new vessels were worth USD 14,7 billion, representing 55 % of the value of new orders across the globe.

2.7.

The competitiveness of East Asian countries is largely based on national protectionist policies, including subsidies, other financial support, local content requirements, etc. Moreover, contrary to Europe, these countries consistently order their new buildings at their own shipyards. In contrast, European shipowners have shifted their orders for the building of cargo vessels as well as offshore support vessels from Europe to shipyards in Asia. Hence, the European order book has changed over the last decade, towards the building of sophisticated vessel types with higher added value. Interestingly, this evolution took place at a time that the European shipping industry itself benefited from financial or fiscal support schemes.

Context of the LeaderSHIP 2020 strategy

2.8.

The LeaderSHIP 2020 strategy (3) has its origins in the LeaderSHIP 2015 initiative, launched in 2003 with the aim of ensuring a coordinated response to the challenges faced by the European shipbuilding industry. The main emphasis was on knowledge-based activities and the need for a better return on investment in shipyards in terms of research, development and innovation.

2.9.

In 2008, the European shipbuilding sector was hit by the global economic crisis. The crisis is still having an effect on the sector to this day. A strong response was therefore needed, in the form of the new LeaderSHIP 2020 strategy (LS 2020).

2.10.

The 2013 document detailing the LS 2020 strategy was developed by a broad group of stakeholders headed by industry representatives, the European Commission, Parliament and the social partners (SEA Europe and IndustriALL).

2.11.

The strategy pinpoints the attributes of this industry: innovative, ‘green’, specialised in high-tech markets, energy efficient, and capable of expanding into new markets.

2.12.

The report presenting the LS 2020 strategy identifies the following four pillars: — Employment and skills — Improving market access and fair market conditions — Access to finance — Research, development and innovation (RDI).

3.   Evaluation of progress towards implementing the LS 2020 strategy recommendations

3.1.

The assessment of the extent to which the LS 2020 strategy's recommendations have been implemented was carried out on the basis of a survey completed by participants at a public hearing. The findings of the survey are set out below.

3.2.

There has been moderate progress on measures under the ‘employment and skills’ pillar of LS 2020. The recommendations implemented most effectively were ‘to create a MT sector sub-group within the ESCO system’ and ‘to promote the TM sector’, with a score of 30 %. Plans for a study on informal learning were viewed as poor, with a score of 0. The remaining recommendations in this group received a score of 15-20 %.

3.3.

Implementation of recommendations under the second pillar, on ‘improving market access and fair competition’, was viewed as rather limited. Three measures are underway: the OECD Working Party on Shipbuilding; closer cooperation between industry and the EC on issues relating to the protection of intellectual property and compliance with IMO regulations; and making use of various trade policy instruments and supporting efforts to conclude free trade agreements. Around 20 % of these measures are considered to have been implemented. The implementation of the other measures in this group is negligible.

3.4.

As regards the pillar on access to finance, stakeholders noted progress on one point only: ‘explore and promote EIB financing opportunities and possibilities for broadening the lending it provides’, which got a score of 20-30 %. Implementation of the recommendation to ‘examine the possibility of a “blue PPP”’ is rated at 15 % and the recommendation on the evaluation of ‘opportunities for long-term financing by the Commission’ has hardly been put into practice at all (5 %).

3.5.

The recommendations on RDI provide grounds for mild optimism. Three of the recommendations are halfway — or even more than halfway — to being fully implemented. The assessment of this group of recommendations is as follows: — examine the feasibility of PPP projects in the field of RDI for the maritime technology sector — 50 %, — the Commission's incorporation of provisions covering RDI into EU regulations in view of the expiry of the Framework on State Aid to Shipbuilding — 60 %, — examine the possibility of allocating structural funds to diversify the MT sector, especially in the context of regional strategies for smart specialisation — 45 %, — development by the MT industry of a comprehensive PPP at EU level to focus maritime research on, among other things, zero-emissions and energy-efficient ships — 30 %.

4.   General and specific comments on the implementation of the priorities of the LeaderSHIP 2020 strategy

Employment and skills

4.1.

There is a strong need to rectify skills shortages, to upskill workers and to provide relevant training and retraining with the aim of maintaining a critical mass of expertise and know-how in the European MT industry. Thus, it is important to support and continue the work initiated by the social partners with the Skills Council project (4). Moreover, it is essential that the social partners are involved and consulted by the European institutions in the policy making process and about any EU initiative affecting the sector and that the professional organisations representing employers and employees continue to be involved in dialogue, including in the context of the social dialogue.

4.2.

Workers must have appropriate training to be able to cope with the challenges of Industry 4.0 and future technological change (e.g. digitalisation). Future workers in the maritime technology industry will need to have skills enabling them to handle the opportunities and challenges of the blue economy.

4.3.

Efforts to improve the attractiveness of the sector need to be stepped up. Various career paths for workers in this sector need to be identified and brought together, and the mobility of students (i.e. Erasmus for the maritime technology sector) needs to be increased. The European Commission should continue to fully support the activities of SEA Europe and IndustriALL at European level within the framework of the social dialogue committee.

Improving market access and fair competition conditions

4.4.

European industry is still confronted by unfair competition from third countries, both in the shipbuilding industry and — increasingly — in the marine equipment sector. The crisis in Asia, caused by production overcapacity, mainly as a result of massive state subsidies, means that the public authorities of these countries wish to support local shipyards as well as local marine equipment manufacturers, which means increasing exports and thus additional competitive pressure on European shipyards and marine equipment manufacturers.

4.5.

Asian shipyards are now focusing their attention on the successful European markets for more advanced types of vessel, such as cruise ships and passenger ships. Furthermore, in its recent ‘Made in China 2025’ and ‘China Manufacturing 2025’ official documents, China announced that it is aiming to become the world's leading producer of high end ships, including cruise ships, and high tech marine equipment, meaning that it will be directly competing with successful European markets. This policy receives full governmental support through state aid. It also poses a threat to the European maritime technology industry.

4.6.

The US market remains closed due to the Jones Act. If this law were to be loosened and the US market opened up, the European shipbuilding industry would gain some interesting opportunities. The EU should push for this, despite the fact that the current political climate in the United States is more inclined towards protectionism.

4.7.

Like China, the United States, Japan and South Korea, European and Member States’ decision-makers should realise that the European shipbuilding industry and marine equipment manufacturing are strategic sectors of the European economy that call for special attention and a dedicated approach, for both commercial and naval purposes.

4.8.

The European Commission should endeavour to conclude a comprehensive OECD agreement (including China) setting out rules on subsidies and — potentially — pricing discipline, and should support efforts in this direction.

4.9.

Reciprocity between Europe and third countries is essential and should therefore be a guiding principle in both bilateral and multilateral trade negotiations, and issues linked to market access. It is the cornerstone to making the European industry, including the MT sector, more competitive towards its global competitors. Hence if European businesses encounter protectionist measures in a third country, the EU should take the same steps with companies from those countries wishing to trade with Europe. Only in this way would there be fairer competition for European shipyards and the European maritime equipment industry.

Access to finance

4.10.

The Commission frequently presents the EFSI — a financial tool in the Juncker plan — as a (financial) instrument for industry, but its scope and benefits are not fully known (it is mainly oriented towards SMEs). This tool, and its benefits for the maritime technology industry, should be better explained and disseminated.

4.11.

The shipbuilding industry requires large amounts of capital, but European shipyards have recently been finding it harder to access financing. Meanwhile, foreign shipyards benefit from significant financial incentives, including state aid. The Commission should therefore consider creating a specific system to make it easier for the capital-intensive European shipbuilding industry to access financing.

4.12.

Use should be made of financial incentives (e.g. through European financing programmes, like the Connecting Europe Facility, incentives for shipowners to invest in environmentally friendly vessels, equipment or technology), with a return on investment in Europe.

4.13.

The adoption of a dedicated sector-specific regime, which would provide for incentives that would enhance the global competitiveness of the European MT sector, whilst avoiding situations generating tension amongst EU Member States, should be explored. In this respect, best practice examples from other sectors, in particular from the shipping sector, can to some extent serve as a source of inspiration.

4.14.

The EU, together with Norway, should consider establishing a specific programme to stimulate environmentally friendly and energy efficient short sea shipping by means of the European shipbuilding industry and marine equipment sector. The EESC calls for use to be made of the Committee's exploratory opinion, drawn up for the Maltese Presidency, on ‘Nautical and maritime tourism diversification strategies’ (5).

4.15.

Consideration should also be given to setting up a financing programme to enable European recycling facilities to scrap larger ship types.

4.16.

For the high-tech TM sector in the EU, financial instruments supporting public procurement for the navy are a powerful driver and provide a key contribution to retaining a ‘critical mass’ of production for the entire EU shipbuilding sector, while at the same time promoting research and innovation throughout the sector and related areas. In this context, the EESC welcomes the positive role played by the European Defence Action Plan, drawn up recently by the Commission.

Research, development and innovation

4.17.

The European Commission should establish a contractual public-private partnership for the maritime industry to allow the sector to further invest in meeting the shipping industry's regulatory and societal challenges and in untapping the economic potential of Blue growth activities. A specific (European) innovation support programme should promote European innovations.

4.18.

Europe should furnish financial support for European research and development. Similarly, European innovations should be appropriately protected in terms of intellectual property rights. The European Patent Office should effectively monitor European patents, including in the European MT sector, and impose penalties in the event of infringements.

4.19.

The future (9th) Framework Programme should provide sufficient (financial) support to the maritime industry to enable it to cope with major future (International or European) regulatory or societal challenges, such as the greening of shipping (6), digitalisation, breakthrough technologies, and connected or automated shipping.

4.20.

The EESC believes that the future 9th Framework Programme should also include a chapter on the financial support of European industry to enable it to make full use of the economic potential of the blue economy in Europe.

---

(1)  ‘New trends in the shipbuilding and marine supply industries’.

(2)  SEA Europe — The Voice of Maritime Civil & Naval Industries in Europe, 2017 newsletter.

(3)  http://ec.europa.eu/growth/sectors/maritime/shipbuilding/ec-support_en

(4)  Sectoral council on skills.

(5)  EESC opinion (OJ C 209, 30.6.2017, p. 1).

(6)  As an international industry competing on a global level, the shipping and maritime technology industries prefer international solutions — through the International Maritime Organisation in London — with regard to the greening of shipping.

Opinion of the European Economic and Social Committee on ‘Economic and social cohesion and European integration of the Western Balkans — challenges and priorities’

(exploratory opinion)

(2018/C 262/03)

Rapporteur:	Andrej ZORKO
Co-rapporteur:	Dimitris DIMITRIADIS

Consultation	Bulgarian Presidency, 5.9.2017
Legal basis	Article 304 of the Treaty on the Functioning of the European Union Rule 30 of EESC Rules of Procedure
Section responsible	REX
Adopted in section	28.3.2018
Adopted at plenary	19.4.2018
Plenary session No	534
Outcome of vote (for/against/abstentions)	189/2/1

1.   Conclusions and recommendations

1.1.

The European Economic and Social Committee (EESC) welcomes the fact that the EU integration of the Western Balkan countries and their economic and social cohesion is one of the Bulgarian Presidency's priorities.

1.2.

The EESC is convinced that the enlargement of the European Union, and in particular the spread of its democratic values and legal standards to the Western Balkan region, is in the interest of both the Western Balkan countries and the EU. The enlargement policy is a key component of the EU's global strategy and also the cornerstone of Europe's stability and prosperity. Therefore, the EESC proposes that the integration of the Western Balkan countries be one of the top priorities of the EU in the future, provided that these countries continue on their path towards fulfilling the necessary conditions for EU accession (1).

1.3.

The EESC welcomes the EU-Western Balkans heads of states and governments summit to be held on 17 May in Sofia. In cooperation with our partners, the EESC will be co-organising the Western Balkans Civil Society Conference (15 May, Sofia) ahead of the summit. The EESC is committed to organising, ahead of each such a summit, a joint event with representatives of civil society organisations (2) from the Western Balkans and the EU. The EESC invites the EU institutions and EU Member States to regularly involve heads of states from the countries of the Western Balkans in EU summits, as proof that the EU considers this region to be part of its future.

1.4.

The EESC hopes that the summit in Sofia will confirm the renewed momentum for the EU’s commitment to the region and encourage other future presidencies to keep the integration of the Western Balkan countries high on their priorities. The enlargement of the EU to the countries of the Western Balkans should go in parallel with the reinforcement of the political project of the EU and its institutions.

1.5.

The EESC calls the heads of states at the EU summit in Sofia to set out their clear commitment to more consistent and direct support for civil society organisations at all levels. It should also promote more direct public support for independent media.

1.6.

The EESC encourages the heads of states at the EU summit in Sofia to assume a proactive role in bilateral disputes by promoting targeted cooperation with both the OSCE and the Council of Europe and by supporting civil society’s role in solving such bilateral disputes.

1.7.

The EESC is also convinced that the effective enlargement of the European Union and the promotion of its values in the countries of the Western Balkans ensure security and stability, enhance social and economic development and prosperity, consolidate democracy and the rule of law, facilitate the free movement of people and goods, stimulate investment policy and foster mobility.

1.8.

The EESC believes that respect for the rule of law and minority rights is of paramount importance for the democratic, economic and social development of the countries of the Western Balkans.

1.9.

The EESC also believes that the role of education and of a free and independent media is very important in order to overcome the disputes of the past and enhance democratic values.

1.10.

The EESC notes that the EU accession process remains a key motivation for reforms in the countries of the Western Balkans. The EESC points out the lack of attention given to the economic and social effects of the reforms carried out, considering the major difference in people's economic and social security between EU Member States and candidates for membership. Therefore, the EESC recommends that social, economic and territorial cohesion be assessed when evaluating the fulfilment of EU membership criteria.

1.11.

The EESC considers that infrastructure, transport and energy issues must be a high priority in the negotiations with the Western Balkan countries. The EESC also believes that the creation of a digital society and the development of digital skills in all Western Balkan countries should benefit both the public and private sector. The EU can and should contribute to improving infrastructure and to rolling out a broadband network in these countries, which in some cases is far below the EU average.

1.12.

The EESC proposes that the EU institutions consider having a functioning social and civil dialogue at national level as one of the criteria for EU membership.

1.13.

The EU should draw up a specific roadmap for negotiations with the Western Balkan countries, with a precise timeline and tangible commitments for each Western Balkan country. It would also be necessary to draw up a communication strategy for EU Member States, which would highlight the benefits of the EU's enlargement policy on Western Balkan countries, particularly in terms of ensuring peace, stability, prosperity and economic and social development.

1.14.

The EESC encourages the Commission to include respect for minority rights and gender equality among the top priorities in the EU accession negotiations with the countries of the Western Balkans.

1.15.

The EESC welcomes the Commission's new strategy for the Western Balkans ‘A credible enlargement perspective for and enhanced EU engagement with the Western Balkans’ (3), published on 6 February 2018, and its six flagship initiatives that range from strengthening the rule of law, reinforcing cooperation on security and migration through to joint investigation teams, the European Border and coast guard, expanding the EU Energy Union to the Western Balkans, lowering roaming charges and rolling out broadband in the region.

1.16.

The EESC expresses its readiness to engage with civil society from the Western Balkans in order to contribute to taking concrete action in the areas of rule of law, security and migration, socio-economic development, connectivity, digital agenda and reconciliation and good neighbourly relations, as stipulated in the Action Plan in Support of the Transformation of the Western Balkans for 2018-2020.

1.17.

The EESC is convinced that the Commission could develop specific programmes that would enable the countries of the Western Balkans to achieve faster social convergence. Uneven and slow progress in addressing these issues is clearly an important factor contributing to the slow progress of their EU integration in general. A new impetus for Europeanisation is urgently needed.

1.18.

Social partners and other civil society organisations, both at EU and national level, must be meaningfully involved in the entire process of the EU integration of the Western Balkan countries. It is necessary to strengthen the capacities of civil society organisations through technical and economic support, by facilitating their access to European funding sources (Commission, European Investment Bank, EBRD, etc.), and by informing them in a timely and detailed manner about the accession negotiations process.

1.19.

The EESC encourages social partners and other civil society organisations in the countries of the Western Balkans to work closely together during the EU integration process, both at national and at regional level.

2.   Political situation

2.1.

The Western Balkans is still a politically unstable region, but it is also a growth region with considerable potential.

2.2.

The EESC recommends that the Commission, the Council and the European Parliament intensify their communication efforts to explain the benefits and challenges of enlargement policy to European citizens and civil society organisations should be a close partner and conveyor of messages in this process (4).

2.3.

It is extremely important that the integration of the Western Balkans continues to be a priority for the EU in the future — not only during the Bulgarian Presidency — and that the EU actively contributes to the stability and peace of the Western Balkans and offers the perspective of accession to the Euro-Atlantic organisations. Such memberships can also contribute to stability in the region by guaranteeing its security and prosperity, and offer the prospect for nations to be reunited in a borderless Europe.

2.4.

The EESC welcomes the announcement of the EU summit in Sofia with the participation of the leaders from the EU and the Western Balkan countries, but believes that the summit should also give a more active role to representatives of civil society organisations at EU level.

2.5.

The EESC welcomes the recently announced ‘Berlin Process Plus’ agenda (5) which provides special funds for developing businesses, vocational training, infrastructure, and technology, and projects including transport links between the least-connected countries of the region. This ‘Marshall Plan’ is expected to accelerate a customs union and a common market in the Balkans. Nevertheless, this regional cooperation should not cause a delay in the enlargement process or be seen as its substitute.

2.6.

The EESC notes that in the countries of the Western Balkans, there is a desire and readiness for reforms that would entail integration into the European Union, but points out that success remains dependent on the extent to which state institutions are able to effectively implement and enforce them, as well as on the achieved degree of ownership of the process by civil society organisations and the population in general. A specific roadmap for EU accession negotiations with a precise timeline and tangible commitments for each country of the Western Balkans could motivate these countries to implement necessary reforms faster.

2.7.

The EESC stresses that it has developed very good links with society organisations in the Western Balkans and that it is well aware of the situation in these countries. The EESC is convinced that civil society Joint Consultative Committees (JCCs) should attempt to fill ‘empty niches’ that are not covered by other bodies in the negotiation process and focus on a selected number of areas. In this respect, the EESC asks for a better exchange of information between JCCs and the Commission, the Council and the European Parliament. The EESC calls for strengthening the role of these JCCs (6).

2.8.

Corruption, the impact of organised crime, the general weakness of state institutions and of the rule of law, bilateral disputes, and discrimination against minority groups also represent major and continuing problems for both participation and integration.

2.9.

The Copenhagen Criteria are the rules that define whether a country is eligible to join the European Union (7). The criteria require a state to have the institutions to guarantee democratic governance and the rule of law, respect human rights, have a functioning market economy, and accept the obligations and mission of the EU.

2.10.

All Western Balkan countries cannot join the EU at the same time. The EESC welcomes the fact that Serbia and Montenegro are the current front-runners in the process of integration. It also expresses the expectation that the former Yugoslav Republic of Macedonia and Albania will start negotiations with the EU as soon as possible. It welcomes the fact that Bosnia and Herzegovina submitted the answers to the Commission's questionnaire and that the Commission is currently assessing the possibility of granting it EU candidate status.

2.11.

Western Balkan countries are still affected by the wounds of wars and conflicts, ethnic hatred, irredentist designs, and frozen conflicts which might erupt again. It is necessary to strongly encourage the settlement of the most pressing bilateral issues before their accession to the EU, although insisting on solutions to all outstanding issues could delay this process.

2.12.

The EESC also believes that civil society can play an important role by bringing the younger generations from different countries together and opening public dialogue on a number of issues that are crucial for the region. Economic development, the improvement of living standards, and employment and social security are conducive to peaceful regional coexistence.

2.13.

The Western Balkan countries could set up national councils for European integration that would bring high-level political authorities and key civil society organisations together on a regular basis, with a view to making the process of EU integration more transparent and publicising it more widely (8).

2.14.

The EESC has already identified the role of civil society during the accession process and very clearly indicated that civil society engagement in the accession process consists of: (1) direct involvement in the actual negotiations (i.e. screening, preparation of national positions, overseeing progress); (2) social and civil dialogue related to policy formulation and legislative harmonisation with the acquis; (3) participation in the programming of pre-accession funding; (4) independent monitoring of progress and the social effects of the reform processes. The performance of these roles requires adequate financial support, through national government and EU pre-accession funding (9).

2.15.

The EESC notes that the EU's interest in quickly and effectively integrating the Western Balkan countries into the EU has decreased, due to other political priorities and the lack of a European enlargement strategy, but also due to different policy approaches by the Member States. In recent years, due to disappointed expectations, Euroscepticism in Western Balkan states has grown. This has weakened the impact of accession criteria and slowed down reforms. This is particularly noticeable in terms of ensuring the rule of law, the freedom of the media and the prevention of corruption.

2.16.

Western Balkan countries are reforming, but at very different paces. Much more should be done to battle rampant corruption, organised crime and money laundering. Judicial independence is also crucial for a healthy democracy.

2.17.

The EESC deems it necessary to strengthen the fight against terrorism in the Western Balkan countries and strongly supports the Western Balkan Counter-Terrorism initiative (WBCTi) (10).

2.18.

The EESC believes that cooperation between the Western Balkan countries and the EU and its relevant agencies (such as Europol) should be further expanded in order to accelerate the enlargement process. This measure is particularly urgent in areas such as security and migration.

3.   Economic stability and prosperity

3.1.

Economies in the Western Balkans continue to grow, with real GDP growth in the region expected to expand by 2,6 % in 2017. This is expected to increase to 3,0 % in 2018, driven by private consumption and investment, as well as a gradual recovery of credit, remittances and major infrastructure projects. Compared to the situation in 1995, living standards have increased considerably in all six Western Balkan states. Despite that, the six countries still remain among the poorest in Europe. Moreover, economic convergence of Western Balkan states has lost momentum since the crisis and lags behind the convergence shown by new central-eastern and south-eastern European Member States.

3.2.

The process of economic convergence in the Western Balkans is extremely long. It is therefore imperative to create an environment that will enable/speed up foreign investment, and to adopt appropriate economic reforms, boost competitiveness and create high-quality jobs.

3.3.

The EESC welcomes the progress made in terms of the economic integration of the Western Balkans, as leaders of the region have vowed to deepen ties and work together towards joining the European Union, and it calls for greater involvement on the part of social partners and other CSOs in drawing up economic reform programmes (ERPs), as well as joint conclusions with specific recommendations for each country in the region (11).

3.4.

The EESC is convinced that candidate countries need stronger reform incentives. In particular, it is necessary to encourage closer regional cooperation in order to facilitate the fulfilment of the criteria for EU membership.

3.5.

The EESC believes that it is necessary to leverage the new inflows of FDI into manufacturing sectors by supporting local supply chains and upgrading the skills and technological capacity of SMEs.

3.6.

Energy and transport should be a factor for the development and interconnectivity of the region. This would ensure that the citizens of the countries of the Western Balkans are given a clear idea of the social, economic and environmental benefits of accession to the EU. For example, energy efficiency and energy saving are factors in generating activity for businesses and in creating green jobs as well as traditional jobs.

3.7.

The EESC supports the Transport Community Treaty signed by the EU and the Western Balkan countries on 12 July 2017 and encourages the parties to further develop it. In this regard, the European Commission, the European Investment Bank and the countries of the Western Balkans should concentrate their investments to connect the EU TEN-T Core Network and the infrastructure of the Western Balkans. A shared programme, with the identification of available funds and the definition of a common schedule, is therefore now necessary.

3.8.

The improvement of infrastructure will reduce transport and energy costs and facilitate large investments in the area. Moreover, the promotion of the digital upgrading of the Western Balkans will contribute to business development, increased productivity and improvements in quality of life.

3.9.

The EESC also believes that investment in complementary approaches to traditional economic policies (circular economy, social economy, mainstreaming of sustainable development goals (SDGs)) can ensure overall growth and employment.

3.10.

The EESC observes that in all Western Balkan countries, the state still retains an outsized role, while the private sector is smaller than in the seven small transition economies of Europe (12).

3.11.

The EESC believes that the state needs to become a more efficient and reliable provider of public services and to ensure a favourable environment for private enterprises.

3.12.

The EESC is of the opinion that small and medium-sized enterprises, which make up the majority of businesses, could become the engines of economic growth in all six Western Balkan countries. In order for this to be achieved, a reduction in bureaucracy, a more transparent public administration, fighting corruption and a fully independent judiciary are necessary.

3.13.

The EESC supports the conclusions of the 6th Western Balkans Civil Society Forum and expresses deep concern about the shrinking space for civil society in an increasing number of countries in the Western Balkans. It notes that the EU and its Member States committed themselves to promoting space for civil society and enhancing support for building the capacity of CSOs to strengthen their voice in the development process and to advance political, social and economic dialogue.

3.14.

The EESC points out that civil society organisations must be meaningfully involved in the economic, social, public and legislative reform process in all Western Balkan countries. It is necessary to strengthen their capacities through technical and financial support, by facilitating their access to European funding sources and by informing them in a timely manner about the accession process.

4.   Social stability — unemployment — emigration

4.1.

Since the economic crisis, income and especially social convergence between poorer and richer countries in the EU has been slowing down and in certain cases has gone into reverse. This is undermining the EU's own ambitions and calling into question its attractiveness for future members. Poverty, high unemployment, informal economy, low wages, corruption, malfeasance, emigration of skilled workers, discrimination against minorities and brain drain are affecting all Western Balkan countries.

4.2.

Although the Western Balkan countries show convergence towards EU28 levels, their pace is rather slow and lags behind the EU region. Data shows that full convergence with EU living standards can take as much as 40 years.

4.3.

Wage convergence has not been established within the countries of the Western Balkans. In some countries, the wage gap with the EU has even increased, which affects the economic and social security of people in the Western Balkan countries. Most countries of the Western Balkans have not experienced any increase in real wages since the crisis. Although statutory minimum wages exist in all Western Balkan states, these in many cases do not cover a minimum subsistence level for families.

4.4.

The EESC also notes that as a result of high unemployment, labour migration from all six Western Balkan countries is still a dominant issue. It is estimated that a quarter of the population in all six Western Balkan states has moved abroad. Even if remittances from migrant workers are an important source of income and contribute to the domestic economy in the short term, mass migration and population loss have severe long-term consequences for these countries' economic development potential (13).

4.5.

With the exception of Montenegro, in the Western Balkan region, low-skilled young people and women were most affected by decreases in employment levels. It is also crucial that in 2015 more than 70 % of the unemployed in all six Western Balkan countries were out of work for more than a year on average (14).

4.6.

The EESC is convinced that the EU and Western Balkan countries should pay more attention to the quality of life and social security of these states' citizens. The EESC suggests that consideration should be given to the possibility of applying the principles of the European Pillar of Social Rights when assessing the fulfilment of conditions for EU membership. The Commission could also develop specific programmes that would allow the countries of the Western Balkans to achieve faster social convergence.

4.7.

The EESC also expresses the expectation that there is a need to further strengthen competitiveness and to enhance structural reforms in all six Western Balkan countries in order to reinforce the labour market and to slow down emigration. Civil society organisations should be genuinely consulted when developing structural reforms (15).

4.8.

The EESC emphasises that labour market trends in the region reveal high inactivity rates among women and urge governments to provide support to ensure that higher employment levels for women are achieved. The EESC also encourages the Commission to include gender equality among the top priorities in the EU accession negotiations with the countries of the Western Balkans.

4.9.

The EESC is convinced that respecting minority rights and their culture is fundamental for the development of a democratic civil society in all Western Balkan countries.

4.10.

The EESC believes that the role of education in all Western Balkan countries, including equal access to education systems, is crucial in terms of promoting European values, cultivating tolerance towards minorities, fighting against prejudices, and strengthening social cohesion.

4.11.

The EESC also believes that a ‘social cohesion agenda’ must remedy skills gaps and skills mismatches by improving the efficiency and effectiveness of education systems. Enhanced financial support for vocational education programmes would help address the skills mismatch in the labour market and reduce the high levels of unemployment.

4.12.

The EESC welcomes initiatives by state educational and cultural institutions, academia or civil society organisations on reconciliation, good neighbourhood relations, and a critical approach to the past.

---

(1)  The basic principles of the EU strategy towards the Western Balkans were set out by the Commission on 6 February 2018 in its Communication ‘A credible enlargement perspective for and enhanced EU engagement with the Western Balkans’, COM(2018) 65 final.

(2)  In accordance with the established terminology of the EESC, the concepts ‘civil society’ and ‘civil society organisations’ in this opinion include social partners (i.e. employers and trade unions) and any other non-state actors.

(3)  COM(2018) 65 final, 6.2.2018.

(4)  OJ C 133, 14.4.2016, p. 31.

(5)  http://shtetiweb.org/berlin-process/

(6)  OJ C 133, 14.4.2016, p. 31.

(7)  https://ec.europa.eu/neighbourhood-enlargement/policy/glossary/terms/accession-criteria_en

(8)  OJ C 133, 14.4.2016, p. 31.

(9)  OJ C 133, 14.4.2016, p. 31.

(10)  http://wbcti.wb-iisg.com/, https://ec.europa.eu/neighbourhood-enlargement/sites/near/files/ipa_ii_2016_039-858.13_mc_pcve.pdf

(11)  Final declaration from the 6th Western Balkans Civil Society Forum.

(12)  World Bank Group, The Western Balkans: Revving up the Engines of Growth and Prosperity, 2017.

(13)  ‘Unemployment in the Western Balkans region is significantly higher than the EU28 average with some improvements in the last few years. In particular, Bosnia and Herzegovina, FYROM and Montenegro suffer from persistently high unemployment, but even the 13,5 % current unemployment rate in Serbia, best in the region after recent improvements, is much too high in comparison with the EU Member States. Despite staggeringly high unemployment, about 230 000 jobs were created in the region in the 12 months through June 2017 (a 3,8 % increase); more than half were in the private sector. As a result, employment (in terms of number of jobs, but not in worked hours) returned to pre-2008 levels in all Western Balkan countries except Bosnia and Herzegovina’, World Bank Group, Western Balkans Regular Economic Report, No 12, Fall 2017.

(14)  World Bank Group, Western Balkans Labor Market Trends 2017.

(15)  As outlined in EESC opinion EU Enlargement Strategy (OJ C 133, 14.4.2016, p. 31) and in the final declaration of the 6th EESC's Western Balkans Civil Society Forum held in Sarajevo, 10-11 July 2017.

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Completing the Better Regulation Agenda: Better solutions for better results

(COM(2017) 651 final)

(own-initiative opinion)

(2018/C 262/04)

Rapporteur:

Bernd DITTMANN

Plenary Assembly decision	15.2.2018
Legal basis	Rule 29(2) of the Rules of Procedure
Section responsible	Single Market, Production and Consumption
Adopted in section	9.3.2018
Adopted at plenary	19.4.2018
Plenary session No	534
Outcome of vote (for/against/abstentions)	185/0/0

1.   Conclusions and recommendations

1.1.

The EESC is of the view that the Better Regulation Agenda should become a permanent programme in delivering high-quality Union legislation without undermining key policy objectives or creating deregulation pressure. It should be continued, further developed and improved by the new Commission after 2019.

1.2.

The EESC calls on the Commission to provide a detailed roadmap of the forthcoming Better Regulation evaluation and clarify which form of involvement of the EESC and stakeholders is envisaged.

2.   The Commission’s Communication on Better Regulation

2.1.

On 24 October 2017 the Commission issued the Communication Completing the Better Regulation Agenda: Better solutions for better results (1) (hereafter ‘the Communication’).

2.2.

In this Communication, the Commission takes stock of the implementation progress of the Better Regulation Agenda (hereafter ‘the Agenda’) since its adoption in May 2015.

2.3.

In 2018, the Commission will evaluate the better regulation system en bloc. The present opinion serves as a response to the Communication as well as input to the preparations for this forthcoming evaluation.

3.   General remarks

3.1.

The EESC welcomes the Commission’s continued commitment to Better Regulation and its on-going efforts to implement the objectives set out in the Agenda in May 2015 as outlined in the Communication. Better Regulation is a process subject to constant improvement and requires commitment and contribution from all actors involved.

3.2.

Better Regulation should help create accountable, participatory and transparent policymaking processes that deliver simple, clear, coherent, fit-for-purpose and easily implementable rules. This is an essential precondition to ensure public trust in the EU and its institutions. It should help create effective and consistent regulatory frameworks that enable innovation and sustainable growth and support the completion and proper functioning of the Single Market.

3.3.

Better Regulation should not result in over-bureaucratisation of EU policymaking. Political decisions must not be replaced by technical procedures.

3.4.

In a previous opinion (2), the EESC emphasised that Better Regulation ‘is not intended to be about “more” or “less” regulation in the EU, or about deregulating specific policy areas or giving other areas greater priority and thus calling into question the values for which the EU stands: social protection, environmental conservation and fundamental rights (3). Better Regulation is first and foremost a tool for ensuring that evidence-based political objectives can be achieved effectively, in the light of these values, without environmental or consumer rights or social standards being restricted or the shifting of responsibilities within the institutional structure by the establishment of new bodies. Better Regulation cannot and must not be substituted for political decisions’.

3.5.

The EESC acknowledges the implementation progress of the Agenda to date. It welcomes in particular the more methodical use of impact assessments and ex post evaluations; the more systematic consultation of stakeholders; the revised Better Regulation guidelines and toolbox; the REFIT programme and REFIT Platform; and the appointment of the Regulatory Scrutiny Board (RSB).

3.6.

The EESC is actively involved in Better Regulation, notably through its participation in the REFIT Platform and drafting of ex post evaluations. It refers to its many opinions in this context (4). Nevertheless, the Committee is not accounted for in the Agenda or in the Communication. The Committee is not part of the Interinstitutional Agreement on Better Law-making either. This shows that the Commission and the legislators continue to take insufficient account of the role and function of the Committee as enshrined in the Treaties and of the knowledge and expertise of its members and the civil society they represent.

3.7.

Participation in the Better Regulation programme and its respective instruments and procedures requires financial and human resources that not all civil society organisations have at their disposal (e.g. the generation of data, participation in public consultations, etc.). The same holds true for small enterprises. The EESC calls upon the Commission to ensure that the Better Regulation programme remains open and accessible to all organisations and interests, irrespective of their size and their financial and human resources.

4.   Specific remarks

4.1.

The EESC is the institutional voice of organised European civil society and serves as intermediary between the EU legislators and civil society organisations and social partners. The EESC has gathered considerable experience with and expertise on all issues relating to Better Regulation. It wishes to remind the Commission here of some of its specific recommendations on aspects covered by the Communication as well as on other aspects which it deems necessary to stress.

4.2.

The EESC believes that the Communication provides a good general overview of the implementation progress of the Agenda in the respective areas of Better Regulation. However, it remains too vague on the exact measures the Commission envisages to develop the better regulation programme further. Furthermore, the Communication fails to provide a reference to and outline of the forthcoming evaluation of the better regulation programme in 2018, its key focus areas, and which form of involvement of the EESC as well as stakeholders is planned.

4.3.   Proportionality and subsidiarity

4.3.1.

The EESC welcomes the Commission’s focus on key priorities and ‘being big on the big things’. It reiterates that the Union should only act where the principles of subsidiarity and proportionality are respected and where common action adds value for all.

4.3.2.

As stated in its opinion (5), the EESC is ‘in favour of clarifying the principles of subsidiarity and proportionality which are sometimes used as arguments by opponents of legislative initiatives, without sufficient substantiation of their underlying reasoning’.

4.3.3.

The EESC takes note of the appointment of a Task Force on Subsidiarity and Proportionality (6). It calls upon the Task Force to take due account of the Committee’s opinions and recommendations on this issue.

4.3.4.

The EESC calls for improved monitoring of subsidiarity and proportionality and stronger involvement of Member States and their parliaments in ex post assessments.

4.3.5.

The EESC calls upon the Commission to better promote tool No 5 of the Better Regulation Toolbox (‘legal basis, proportionality and subsidiarity’) across its services (horizontally and vertically) to increase compliance with this tool when drafting impact assessments.

4.4.   Impact Assessments (IAs)

4.4.1.

The EESC refers to the suggestions it made in its opinion (7) on how to improve the European impact assessment ecosystem.

4.4.2.

IAs should be the standard procedure for any new legislative proposal including delegated and implementing acts. Where proposals are not put forward with an IA, the Commission needs to explain in detail the reasons and provide all data and evidence that led to and/or supports its proposal.

4.4.3.

The Better Regulation Guidelines explicitly refer to the fact that impact assessments can and must be undertaken for legislative initiatives as well as delegated and implementing acts. We encourage the Commission therefore to evaluate in greater detail and with greater transparency towards stakeholders and the EESC the need to perform an IA on these acts. The fact of having performed an IA on the legislative text from which the delegated and implementing acts stem cannot suffice to justify the non-performance of an IA on the derived acts. Each individual act must be evaluated on its own merits, especially because delegated and implementing acts can have crucial repercussions on stakeholders and civil society overall.

4.4.4.

The Better Regulation Guidelines and Toolbox (8) are the central handbook for Commission services when conducting IAs. However, the EESC points out that the guidelines and toolbox are developed primarily for the specific use of EU services and their specifications cannot offer stakeholders the possibility to understand how to properly use the tools necessary for impact analysis. Therefore, the EESC asks the Commission to make those tools accessible to the greater public with an operational version.

4.4.5.

However, the EESC observes a lack of compliance with these guidelines resulting in deficient IAs. This is confirmed and substantiated by the 2016 annual report of the Regulatory Scrutiny Board (RSB) (9). The EESC thus encourages the Commission to more strongly promote the Better Regulation principles across its services, e.g. through mandatory regular staff training programmes.

4.4.6.

The RSB 2016 annual report shows that Commission services only partly implement the Board’s recommendations after receiving an initial negative opinion. The EESC thus proposes that the RSB have a suspending veto in cases where it issues a double-negative opinion compelling the Commission service to revise its IA until the necessary quality requirements are met. The RSB should not have any veto on political decisions.

4.4.7.

The EESC supports the ‘think small first’ principle and encourages the Commission to strengthen the focus on SMEs, including micro and very small enterprises, in its impact assessments.

4.5.   Transparency, legitimacy and accountability

4.5.1.

On the Transparency Register, the EESC welcomes the 2016 Commission proposal for a legally-binding Interinstitutional Agreement for a mandatory Transparency Register which besides the Commission and Parliament would also cover the Council.

4.5.2.

The EESC welcomes the fact that the public consultation for important initiatives will now be available in all official languages, with all others being held at least in French, German and English. The EESC reminds the Commission of the need to provide translations of impact assessment summaries in all official languages (10).

4.5.3.

On stakeholder engagement, the EESC refers to its opinion (11) and to the REFIT Platform opinion (12) which the EESC representatives in the REFIT Platform helped draft. The EESC welcomes the efforts made by the Commission to improve its stakeholder consultation mechanisms but believes that additional efforts are necessary to increase participation, openness and accountability, and the effectiveness and coherence of such consultations. To this end, the EESC encourages the Commission to consider and fully implement the suggestions outlined in the two above-mentioned opinions.

4.5.4.

Given its representative function, the EESC is well suited to help identify stakeholders most affected by a proposed policy measure and help gather experience with legislation already in place. The Commission should consult the EESC more closely when developing consultation strategies and identifying relevant target groups, both ex ante and ex post.

4.6.   Simplifying legislation and tackling unnecessary costs

4.6.1.

In its opinion (13), the EESC states that ‘European legislation is an essential factor in integration, not a burden or cost to be reduced. On the contrary, when proportionate it is an important guarantee of protection, promotion and legal certainty for all European stakeholders and citizens’.

4.6.2.

At the same time, the EESC states in its opinion (14) that it is ‘essential to avoid needless regulatory costs. Regulatory costs need to be proportionate to the benefits they create’.

4.6.3.

The EESC firmly supports the ‘evaluate first’ principle. As it stated in its opinion (15), the EESC can ‘play a useful role as an intermediary between legislators and those using EU legislation. The EESC (…) continuously adapts its working methods to help assess the quality of the application of Community law. Thus it has recently decided to take an active part in the evaluation of the legislative cycle, carrying out its own ex post evaluations of the Community acquis.’

4.6.4.

As stated in its opinion (16), the Committee ‘advocates a qualitative approach which operates on an equal footing with quantitative analysis, taking into account research into the expected benefits of the legislation’. Besides regulatory costs, regulatory benefits, including net benefits, should also be quantified where appropriate and should be more systematically be taken into account in Commission impact assessments.

4.6.5.

The EESC is of the view that certain costs are indispensable to achieve policy objectives. Costs should only be reduced when it is proven that they are not necessary to achieve the policy objective. The EESC shares the Commission’s view that the reduction of unnecessary costs should be based on evidence from a ‘case-by-case’ assessment and not on simple numerical targets, so that the intended objectives of the legislation are fully maintained.

4.6.6.

On REFIT, the EESC refers to its relevant opinions (17). The EESC participates in REFIT through its membership in the REFIT Platform with three members from its three Groups who attend the Platform meetings on a rotating basis. The members work closely to identify political priorities for the EESC and prepare joint positions for the Platform meetings on the basis of agreed positions set out in past opinions.

4.6.7.

The EESC reiterates that the focus of the work of the REFIT Platform is ex post. The Platform is tasked to examine suggestions made via the Lighten the Load website and develop suggestions on how to simplify already existing EU legislation. The Platform should not be used to propose new legislation.

4.6.8.

The EESC notes that the specific interests of SMEs are not explicitly represented in the REFIT Platform. The Committee therefore calls upon the Commission to invite an appropriate representative to take part in the REFIT Platform Stakeholder Group.

4.7.   Assessment of alternative approaches for simplification and reducing costs

4.7.1.

On setting regulatory burden reduction targets in the area of better regulation, the EESC is of the view that regulatory burden reduction targets should be set ex post in the context of the REFIT programme and based on comprehensive evaluation including civil society and stakeholder dialogue.

4.7.2.

Considering the difficulty in obtaining the necessary data to establish scientifically sound baseline calculations for setting ex ante regulatory burden reduction targets, the EESC is not in favour of setting such targets, either for individual sectors or for the economy as a whole. The same holds true for politically set numerical targets such as the one-in, one-out principle.

4.8.   Implementation and enforcement of Union law

4.8.1.

On implementation and enforcement of Union law, the EESC refers to its numerous opinions (18).

4.8.2.

The applicability of Union legislation needs to be considered early in the policymaking process as part of the impact assessment. The EESC urges the Commission services to adhere strictly to the impact assessment guidelines outlined in chapter IV of the Better Regulation Toolbox (‘implementation, transposition and preparing proposals’). Special attention should be given to the specificities of the different national political and legal systems, and the different resources and capacities Member States have available to transpose and apply European law.

4.8.3.

Regulatory burden is generated mostly at national level because of the transposition and application of Union law by Member States’ authorities (overregulation). In its opinions (19), the EESC states that most failures to apply or implement Union law properly arise from failure to transpose directives. The EESC therefore advocates having recourse to regulations rather than directives to avoid inconsistent regulatory frameworks across the EU (20). The existing level of protection of citizens, consumers, workers and the environment must however not be decreased in any Member State.

4.8.4.

The EESC believes that proper implementation of Union legislation is a joint and coordinated effort by the principal actors, i.e. the Commission, the European Parliament, the Council and the Member States, involving to the utmost extent possible the regional and local level as well as civil society and stakeholders. The EESC considers the Commission to be the leading actor in coordinating this effort and, as stated in its opinion (21), in ‘promoting confidence between enforcement authorities in supporting networks of public authorities, the systematic assessment of their performance and the identification and spread of best practices’.

4.8.5.

In its Communication the Commission proposes several measures to improve the implementation of Union legislation. These include establishing a more systematic approach to monitoring and evaluating the performance of legislation in the context of the Interinstitutional Agreement on Better Law-making; supporting Member States with implementation plans; and developing country reports mapping national strengths and weaknesses regarding implementation. The EESC welcomes the Commission’s special attention to this issue and the proposed measures but finds it regrettable that none of them appear to envisage including the EESC.

4.8.6.

As called for in its opinion (22), ‘when particular directives are being transposed, the Committee would like to provide its own distinct input into the European Parliament’s own-initiative report on the implementation of EU legislation by Member States by homing in on the additions made by the Member States when transposing’.

4.8.7.

Lastly, the EESC welcomes the strategic approach the Commission has set out to its infringement policy in its Communication ‘EU law: Better results through better application’ (23). It encourages the Commission to more quickly and rigorously pursue cases where Member States incorrectly transpose EU legislation or fail to do so at all.

4.9.   Working with the other institutions

4.9.1.

The EESC represents the organised end-users of Union law and as such should be seen by the Council, the European Parliament and the Commission as a partner and resource to assess the practicability of legislative projects from a hands-on and empirical perspective.

4.9.2.

Considering the active role the EESC plays in Better Regulation and law-making as outlined above, the Committee strongly urges the Commission, European Parliament and Council to include the Committee formally into the Interinstitutional Agreement on Better Law-making.

---

(1)  COM(2017) 651 final.

(2)  OJ C 13, 15.1.2016, p. 192.

(3)  COM(2015) 215 final.

(4)  Cf. inter alia: Ad hoc group on Monitoring the application of EU legislation; OJ C 487, 28.12.2016, p. 51; OJ C 303, 19.8.2016, p. 45; OJ C 13, 15.1.2016, p. 192; OJ C 345, 13.10.2017, p. 67; OJ C 13, 15.1.2016, p. 145; OJ C 434, 15.12.2017, p. 11; OJ C 291, 4.9.2015, p. 29; OJ C 230, 14.7.2015, p. 66; OJ C 43, 15.2.2012, p. 14; OJ C 248, 25.8.2011, p. 87; OJ C 18, 19.1.2011, p. 95; OJ C 128, 18.5.2010, p. 103; OJ C 277, 17.11.2009, p. 6; OJ C 100, 30.4.2009, p. 28; OJ C 204, 9.8.2008, p. 9.

(5)  OJ C 487, 28.12.2016, p. 51.

(6)  C(2017) 7810.

(7)  OJ C 434, 15.12.2017, p. 11.

(8)  SWD (2017) 350 and https://ec.europa.eu/info/better-regulation-toolbox_en

(9)  Regulatory Scrutiny Board, Annual Report 2016, https://ec.europa.eu/info/sites/info/files/2016-rsb-report_en.pdf Cf. especially p. 13 and p. 15.

(10)  OJ C 434, 15.12.2017, p. 11 (point 4.3.1).

(11)  OJ C 383, 17.11.2015, p. 57.

(12)  REFIT Platform Opinion on submissions XXII.4.a by the DIHK and XXII.4.b by a citizen on Stakeholder consultation mechanisms. Date of Adoption: 7.6.2017.

(13)  OJ C 303, 19.8.2016, p. 45.

(14)  OJ C 487, 28.12.2016, p. 51.

(15)  AHG ECA Putting EU law into practice landscape review. Ad hoc Group on ‘Monitoring the application of EU legislation’, OJ C 81, 2.3.2018, p. 81.

(16)  OJ C 434, 15.12.2017, p. 11.

(17)  OJ C 230, 14.7.2015, p. 66; OJ C 303, 19.8.2016, p. 45.

(18)  Ad hoc group; OJ C 303, 19.8.2016, p. 45; OJ C 291, 4.9.2015, p. 29; OJ C 18, 19.1.2011, p. 95; OJ C 175, 28.7.2009, p. 26; OJ C 204, 9.8.2008, p. 9; OJ C 325, 30.12.2006, p. 3; OJ C 24, 31.1.2006, p. 52; OJ C 24, 31.1.2006, p. 39.

(19)  Ad hoc group; OJ C 13, 15.1.2016, p. 192.

(20)  OJ C 18, 19.1.2011, p. 95.

(21)  OJ C 24, 31.1.2006, p. 52.

(22)  OJ C 303, 19.8.2016, p. 45.

(23)  C(2016) 8600 (OJ C 18, 19.1.2017, p. 10).

Opinion of the European Economic and Social Committee on the

Communication from the Commission to the European Parliament, the European Council, the Council and the European Central Bank — Further steps towards completing Europe’s economic and monetary union: a roadmap

(COM(2017) 821 final)

Communication from the Commission to the European Parliament, the European Council, the Council and the European Central Bank — New budgetary instruments for a stable euro area within the Union framework

(COM(2017) 822 final)

Communication from the Commission to the European Parliament, the European Council, the Council and the European Central Bank — a European Minister of Economy and Finance

(COM(2017) 823 final)

Proposal for a Council directive laying down provisions for strengthening fiscal responsibility and the medium-term budgetary orientation in the Member States

(COM(2017) 824 final — 2017/0335 (CNS))

Proposal for a Council regulation on the establishment of the European Monetary Fund

(COM(2017) 827 final — 2017/0333 (APP))

(2018/C 262/05)

Rapporteur:	Mihai IVAŞCU
Co-rapporteur:	Stefano PALMIERI

Consultation	European Commission, 12.2.2018 and 28.2.2018
Legal basis	Article 304 of the Treaty on the Functioning of the European Union
Section responsible	Economic and Monetary Union and Economic and Social Cohesion
Adopted in section	26.3.2018
Adopted at plenary	19.4.2018
Plenary session No	534
Outcome of vote (for/against/abstentions)	152/3/2

1.   Conclusions and recommendations

1.1.

The EESC appreciates the proposed roadmap for completing the European Economic and Monetary Union (EMU) but its support is not full and enthusiastic, since a number of social, political and economic issues, highlighted in our previous opinions, were not taken into consideration. The completion of the EMU requires first of all strong political commitment, efficient governance and better use of the available finances, in order to actually cope with both risk reduction and risk sharing among Member States. For these reasons the EESC underlines that the principles of responsibility and solidarity at EU level should go hand in hand.

1.2.

The EESC is extremely disappointed that the two institutional consultative committees of the EU — the EESC and the CoR — are omitted from the communication and that the role of the European Parliament remains rather limited. Furthermore, there is no mention of enhanced participation of the social partners and organised civil society in the European Semester evaluation.

1.3.

The EESC has repeatedly argued that there is a clear lack of strategic vision for the future and of a capacity to respond adequately to other economic and financial crises. The EMU package should be evaluated and implemented, bearing in mind that Europeans need more and better Europe.

1.4.

The Social Union, as advocated by the EESC, is missing from the list of unions making up the EMU, while no commitment to integrate the European Pillar of Social Rights is visible.

1.5.

The EESC is obliged to warn again that, the longer the current savings-oriented policy continues without an effective investment plan, the more Europe’s prosperity is at risk.

1.6.

‘Fixing the roof while the sun is shining’ is vital and needs to be done rapidly, following an up-to-date evaluation of the reasons why ‘the roof is broken’ and of the responsibility for this. The EESC highlights the need to develop new financial instruments for crisis prevention and countering pro-cyclical measures.

1.7.

The completion of the Banking Union and of the Capital Markets Union should remain top priority on the agenda. The current proposal contains absolutely nothing about the European Deposit Insurance Scheme, although the EESC has already delivered an opinion on the subject (1). Furthermore, steps must be taken to immediately and effectively address the problem of non-performing loans (NPL).

1.8.   European Monetary Fund (EMF)

1.8.1.

The proposed task of the new EMF — to provide a common backstop for the Single Resolution Fund — is extremely important and fully supported. However, the EESC highlights the need to make sure that this measure will not act like a golden parachute, encouraging banks to take unnecessary and dangerous risks.

1.8.2.

It is of paramount importance for the EMF to have a more active role in the EU context, like the International Monetary Fund internationally: supporting economic development and absorbing shocks, not just preventing bank crises.

1.9.   Treaty on Stability, Coordination and Governance (TSCG)

1.9.1.

The TSCG should be incorporated into EU law, together with the transformation of the ESM into the EMF, without cherry-picking opportunities for the Member States.

1.9.2.

While acknowledging the flexible interpretation given to the Stability and Growth Pact (SGP), the EESC considers that it is not enough and recommends that discussions should be opened at EU level on excluding value-adding strategic public investment from the scope of application of the SGP. This should be seen not as a cost, but rather as a source of future revenue, making for a smooth business cycle and ensuring both the creation of quality jobs and the reduction of inequalities, in line with calls made in previous EESC opinions (2) and with the United Nations Sustainable Development Goals (SDGs) (3).

1.9.3.

Public investment — including social investment — would indeed deliver stronger demand in the short term but also expand growth potential in the long term, thus also addressing the question of public debt sustainability.

1.10.   New budgetary instruments

1.10.1.

The EESC fully supports the proposal to introduce a dedicated convergence facility for the Member States on their way to joining the euro. Technical support must be targeted at obtaining real convergence.

1.10.2.

To reduce the existing divergence among EU economies, the macroeconomic stabilisation function is particularly important as Member States are less and less able to act independently due to EMU constraints.

1.11.   Minister of Economy and Finance (MEF)

1.11.1.

The EESC supports the creation of a Minister of Economy and Finance for EMU as a first step to enhancing the coherence of policies that are currently fragmented. Such a person should represent the euro area in international bodies, manage in full transparency the proposed dedicated euro area budget, and define the desired aggregate fiscal stance of the euro area and how it should be achieved.

1.11.2.

However, the Commission’s proposal takes the risk of excessive consolidation of executive power in the hands of one person. The EESC therefore calls for further reflection and enhancement of the democratic accountability of the proposed minister.

2.   Introduction and general comments

2.1.

After years of crisis management, in which the intergovernmental method was preferred in order to overcome the institutional deficiencies of an incomplete Economic and Monetary Union (EMU), the EESC welcomes this renewed approach of using the community method, the only one capable of ensuring the democratic legitimacy of the decision-making process at EU level and deepening EU integration. Within this framework, the completion of the EMU requires strong political commitment, efficient governance and better use of the available financial resources.

2.2.

The EESC appreciates that the proposed roadmap is ambitious in scope and time and goes in the right direction, as indicated in its previous opinions (4). However, its support is not full and enthusiastic, since a number of social, political and economic issues — also highlighted in previous opinions — were not considered in this package.

2.3.

First, the role of the European Parliament (EP) remains too limited and the two institutional consultative committees of the EU — the EESC and the CoR — are omitted. There is no mention of an enhanced social and civil dialogue on the European semester through more active involvement of the social partners and civil society. The EESC has suggested in a previous opinion that ‘for reasons of democratic accountability and ownership, the process of the European Semester should involve the European Parliament, national parliaments, the social partners and civil society. The social dimension must be included on a par with the economic dimension’ (5).

2.4.

The speedy and efficient finalisation of the Banking Union is of paramount importance in ensuring a competitive European business environment and creating a real single European currency.

2.5.

Moreover, the social union, as advocated by the EESC, is missing from the list of unions comprising the EMU. There is no commitment to integrate the European pillar of social rights, announced in November 2017 in Gothenburg (6), in the euro area governance. Social rights should enjoy the same level of importance as economic freedoms, in order to enforce the concept of ‘social market economy’ enshrined in the Treaty.

2.6.

In addition, the Commission seems to be reluctant or afraid to use the term ‘political union’, replacing it instead with weaker and less explicit terms such as ‘democratic accountability’ and ‘strengthened governance’. This is not justified if it is clearly explained that ‘political union’ does not necessarily mean a single political entity, but rather a series of small steps which recognise the need for common political governance at EU level in certain domains. This concept has been very clearly explained by the EESC in its opinions (7).

2.7.

The Economic and Monetary Union Package should be evaluated and implemented bearing in mind that Europeans need more and better Europe. The EESC has repeatedly argued that there is a lack of strategic vision for the future and of a capacity to respond adequately to the economic and financial crisis. The basic principle of EU economic governance should be that of achieving greater added value at EU level than through Member States acting individually (8).

2.8.

Despite the on-going recovery, the effects of the economic crisis are still present in our day-to-day life and in the current policies of the Member States. The EESC has warned that the longer the current savings-oriented policy — primarily focused on making spending cuts — continues without an effective investment plan to generate revenue through growth, social cohesion and solidarity, the more it will become clear that Europe’s economic integration and prosperity is at risk from growing social inequalities (9).

2.9.

Furthermore, the capital markets are far from being integrated and are not yet capable of absorbing symmetric and asymmetric shocks, as was the case with the United States. Given the evolution of Brexit negotiations and the forthcoming withdrawal from the European Single Market of one of the largest capital markets in the world, further fragmentation is anticipated. Steps must be taken to counter this.

3.   Establishment of the European Monetary Fund (EMF)

3.1.

The EESC welcomes the transformation of the European Stability Mechanism (ESM) into the EMF, believing that the institutional anchoring proposed will further increase confidence in the EU’s ability to respond to future financial and economic crises.

3.2.

The EESC highlights the need to develop new financial instruments for crisis prevention and foster anti-cyclical measures. The ‘fixing the roof while the sun is shining’ metaphor applies here just as it does to the entire package. As the EMF will succeed the ESM, with its current financial and institutional structures, it is very important to develop its abilities and capabilities under the direct surveillance of the Commission, the Council and the European Parliament, and in close cooperation with the European Central Bank.

3.3.

A very important new feature in the Commission’s proposal is the ability of the EMF to provide a common backstop to the Single Resolution Fund, as agreed by the Member States in 2013. While acknowledging that the backstop will offer increased credibility to the banking sector, the EESC highlights the need to ensure that the proposed measure will not act as a golden parachute, encouraging banks to take unnecessary and dangerous risks.

3.4.

The EU does not need to strengthen financial control over the Member States but rather make the existing financial instruments more effective and sustainable. The new EMF should have a more active role in the EU context, like that of the International Monetary Fund internationally, supporting economic development across the EU and absorbing symmetric and asymmetric shocks, not just preventing banking crises.

3.5.

Notably, the EMF should be able to rapidly intervene and counter any asymmetric shocks which cannot be dealt with at Member State level and which could potentially spread to other EU countries, thus endangering the integrity of the euro area and the Single Market. Member States whose currency is not the Euro, but who are part of the Banking Union, should also be able to benefit from the EMF, subject to their subscription and contribution to the authorised capital stock.

3.6.

Rising levels of non-performing loans continue to weigh on banks’ balance sheets and represent a huge burden for the further financing of the EU economy. They contract the credit supply, distort the allocation of credit, worsen market confidence and slow down economic growth. Measures to reduce the levels of NPL are immediately required and should remain a top priority on the European institutions’ agenda.

3.7.

The need to boost the credibility of the new EMF should be accompanied by measures to prevent crises and protect taxpayers from liability for the debts of insolvent banks.

3.8.

The EMF should act in cooperation with the European Central Bank (ECB), since the former could help stave off speculative attacks on Member States, while the latter can only activate financial resources to fend off attacks on large economic systems. In this respect, the EESC regrets that in the package the Commission has not proposed opening a debate on improving the ECB’s statute in order to introduce growth and full employment as a second target of monetary policy, in addition to price stability.

3.9.

The EESC supports the consultative role given to the European Parliament regarding the appointment process of the managing director of the EMF and the yearly reporting obligation towards the Parliament, Council and Commission.

3.10.

The current proposal contains absolutely nothing about a European Deposit Insurance Scheme — the Commission did in fact made a proposal on the subject in November 2015 but the legislators have not been able to agree on it so far, although the EESC has already delivered its opinion (10).

4.   Integration of the Treaty on Stability, Coordination and Governance (TSCG) into the EU legal framework

4.1.

The EESC strongly believes that the TSCG and the ESM were both established at the height of the crisis as intergovernmental solutions which broadly embody the principles of responsibility and solidarity at EU level. In the Committee’s view, these principles go hand in hand and we cannot advance in one without the other. They must be therefore incorporated together and enjoy equal standing under EU law, without cherry-picking by the Member States. Responsibility and solidarity should come together as a package.

4.2.

While the proposed directive to integrate the TSCG into EU law takes into account the flexible interpretation given to the Stability and Growth Pact (SGP) rules by the Commission, the EESC has already argued that this flexibility is not enough and that discussions should be opened at EU level on a fully-fledged rule which excludes value-adding public investment from the scope of the SGP, generally referred to as the ‘golden rule’.

4.3.

The EESC therefore considers problematic the proposal that the TSCG, and especially the Fiscal Compact, be integrated into the EU legal framework without any additional flexibility, especially concerning public investment or social considerations. Where necessary, this kind of investment should be targeted towards improving productivity and competitiveness, through financing projects related to research and development, physical and social infrastructure, the digitalisation of the economy and the continuous development of skills to cope with technological change and global openness.

4.4.

Balanced budgets that do not allow debt-financed public investment will negatively affect economic development (through increases in taxes and cuts in public spending). Public investment — at its lowest level in the EU for the last 20 years — should not be seen as a cost, and therefore as part of public deficits, but rather as a source of future revenue, in order to make for a smooth business cycle and ensure growth and job creation.

4.5.

The EESC endorses the Report of the High-Level Task Force chaired by Romano Prodi and Christian Sautter, about boosting investment in social infrastructure in Europe, in order to accelerate job creation and improve people’s wellbeing, health, housing and skills (11).

4.6.

If an agreement is reached that future-oriented productive public investment will receive more favourable treatment, the integration of the TSCG together with the EMF into EU legal framework has the potential to strengthen our fiscal toolbox and foster more effective, legitimate and democratic governance of the EMU.

5.   New budgetary instruments for a stable euro area

5.1.

The macroeconomic stabilisation function is particularly important as its absence was one of the causes of the strategic crisis in the EU. While Member States are less able to act independently and change the labour market and welfare system, no social safety net has yet been put in place at EU level enabling everyone to reap the benefits of growth and global competition (12).

5.2.

The EESC totally supports the proposal to introduce a dedicated convergence facility for the Member States that are on their way to joining the euro area. This would strengthen the role of the euro area internationally and would increase the use of the Euro as a currency. Technical support must be targeted to obtaining real convergence, so as to counter and mitigate any risks to the general welfare of the citizens and economies of the euro area candidate countries.

5.3.

Sound fiscal policies and investment-oriented spending must be the way forward, bearing in mind that high ratios between public debt and GDP are often the result of economic crisis and recession. The EESC therefore calls for a smooth mechanism that can be rapidly activated in the event of a downturn and considers the proposed rate of 1 % of GDP adequate.

5.4.

The EESC is in favour of creating a euro area budget as part of the EU budget. This would avoid creating new institutions that could drive a political wedge between euro area and non-euro area countries. Serious reform of the EU budget is in any case needed.

5.5.

An autonomous and substantial euro area budget, with its own dedicated tax revenue, would provide a temporary but significant transfer of resources in the event of regional shocks, counteract severe recessions in the area as a whole and ensure the necessary financial stability, with a macroeconomic stabilisation function to safeguard investment and prevent unemployment and insecurity, as has already been argued by the EESC (13).

6.   European Minister of Economy and Finance

6.1.

The EESC has repeatedly argued (14) the necessity of a Minister of Economy and Finance for EMU, as a first step to enhancing the coherence of policies that are currently fragmented due to the number of different institutions involved. Such a person should represent the EMU in international bodies. He or she should manage his or her own dedicated budget, guided by the principles of simplicity, transparency, equity and democratic accountability. The minister should also be in charge of defining the desired aggregate fiscal stance of the euro area and how it should be achieved.

6.2.

The functions and attributes described in the Commission’s communication are more in line with those of a euro area finance minister than one for the entire EU. But in the Commission’s proposal, the position is not that of a real and effective minister of finance and the misnomer could create mistaken expectations and confusion.

6.3.

The EESC considers that the merger of a position in charge of euro area representation at EU level with that of the president of the Eurogroup, the chair of the Board of Governors of the new EMF and the vice-president of the European Commission would be an excessive consolidation of executive power in the hands of one person. Moreover, the EESC considers it undemocratic to propose that the Eurogroup president should automatically receive two mandates in order to synchronise his Eurogroup mandate with that of the European Commission.

6.4.

The EESC fears that, in its current form, the proposed structure would confuse the role of the Commission with that of the Council, undermining the fine balance between Community interests and national interests on which the EU is built. The EESC therefore calls for further reflection and enhancement of the democratic accountability of the proposed minister.

6.5.

It is also unclear in the communication if more ministerial positions will be created or if this is just one individual case. This position will only make sense when the EU has its own budget and its own revenues from taxation, accompanied by instruments and policies to manage the budget, and hence being able to foster economic growth and social equality.

---

(1)  European Deposit Insurance Scheme (OJ C 177, 18.5.2016, p. 21).

(2)  Euro area economic policy (2016) (OJ C 177, 18.5.2016, p. 41); Euro area economic policy (2017) (OJ C 173, 31.5.2017, p. 33); and Euro area economic policy 2017 (additional opinion) (OJ C 81, 2.3.2018, p. 216).

(3)  The Sustainable Development Goals.

(4)  CCI/Major economic policy reforms (OJ C 271, 19.9.2013, p. 45); Completing EMU — the next European legislature (OJ C 451, 16.12.2014, p. 10) and Completing EMU: The political pillar (OJ C 332, 8.10.2015, p. 8).

(5)  Deepening EMU by 2025, point 1.5 (OJ C 81, 2.3.2018, p. 124).

(6)  European Pillar of Social Rights

(7)  Completing EMU: The political pillar (OJ C 332, 8.10.2015 p. 8) and Deepening EMU by 2025 (OJ C 81, 2.3.2018, p. 124).

(8)  EU finances by 2025, points 1.2 and 1.3 (OJ C 81, 2.3.2018, p. 131).

(9)  The community method for a democratic and social EMU, point1.2 (OJ C 13, 15.1.2016, p. 33).

(10)  European Deposit Insurance Scheme (OJ C 177, 18.5.2016, p. 21).

(11)  L. Fransen, G. del Bufalo and E. Reviglio, Boosting Investment in Social Infrastructure in Europe. Report of the High-Level Task Force on Investing in Social Infrastructure in Europe, European Economy Discussion Paper, No 74, January 2018.

(12)  EU finances by 2025, point 3.3.1 (OJ C 81, 2.3.2018, p. 131).

(13)  EU finances by 2025, point 3.3 (OJ C 81, 2.3.2018, p. 131).

(14)  Restarting growth, point 3.2 (OJ C 143, 22.5.2012, p. 10); Completing EMU: the political pillar, points 4.3.1 and 4.3.4 (OJ C 332, 8.10.2015, p. 8); Euro area economic policy (2016), point 3.5 (OJ C 177, 18.5.2016, p. 41); Euro area economic policy (2017), point 1.13 (OJ C 173, 31.5.2017, p. 33) and Deepening EMU by 2025, point 1.11 (OJ C 81, 2.3.2018, p. 124).

Opinion of the European Economic and Social Committee on the

‘Proposal for a Regulation of the European Parliament and of the Council on the prudential requirements of investment firms and amending Regulations (EU) No 575/2013, (EU) No 600/2014 and (EU) No 1093/2010’

(COM(2017) 790 final — 2017/0359 (COD))

and on the

‘Proposal for a Directive of the European Parliament and of the Council on the prudential supervision of investment firms and amending Directives 2013/36/EU and 2014/65/EU’

(COM(2017) 791 final — 2017/0358 (COD))

(2018/C 262/06)

Rapporteur:

Jarosław MULEWICZ

Consultation	European Parliament: COM(2017) 790 final: 18.1.2018 and COM(2017) 791 final: 18.1.2018 Council of the European Union: COM(2017) 790 final: 14.2.2018 and COM(2017) 791 final: 14.2.2018
Legal basis	Articles 114 and 304 of the Treaty on the Functioning of the European Union
Section responsible	Section for Economic and Monetary Union and Economic and Social Cohesion
Adopted in section	26.3.2018
Adopted at plenary	19.4.2018
Plenary session No	534
Outcome of vote (for/against/abstentions)	193/2/3

1.   Conclusions and recommendations

1.1.

The EESC welcomes the Commission's proposals and hopes that they will contribute effectively towards meeting the goals set by the Commission.

1.1.1.

The EU needs stronger capital markets to promote investment, unblock existing and provide new sources of financing for companies, offer better financial opportunities for households, and strengthen the Economic and Monetary Union. The Commission is committed to putting in place all the elements completing the Capital Markets Union by 2019.

1.1.2.

The second goal relates to Brexit and the need to attract investment firms to the EU. The UK's decision to withdraw from the Union creates the need to update the regulatory framework in the EU to attract financial firms. Acting as an important hub for capital markets and investment activities, the UK has the largest number of European Economic Area (EEA) investment firms, with roughly half of them based there. The next most important hubs are Germany, France, the Netherlands and Spain. Most EEA investment firms are small or medium-sized. The European Banking Authority (EBA) estimates that some eight investment firms, concentrated in the UK, control around 80 % of the assets of all investment firms in the EEA.

1.1.3.

The third goal is to create a dedicated legal framework for investment firms. The current prudential framework focuses on credit institutions and the risks associated with them. Investment firms do not take deposits or make loans. This means that they are a lot less exposed to credit risk and the risk of depositors withdrawing their money at short notice. Their services focus on financial instruments, which unlike deposits are not payable at par but fluctuate according to market movements. However they do compete with credit institutions in providing investment services, which credit institutions can offer to their customers under their banking licence. Credit institutions and investment firms are therefore distinct types of institution. However, systemic investment firms do not escape the scope of CRR/CRD IV (1), but are treated as financial institutions. Such firms, by virtue of becoming credit institutions, should therefore continue applying Regulation (EU) No 575/2013 and Directive 2013/36/EU and be subject to supervision by the authorities, including the ECB in the framework of the Single Supervisory Mechanism, in charge of credit institutions.

1.1.4.

With the fourth goal the Commission aims to create a single EU integrated regulatory framework for investment firms. Because of their different business profiles, investment firms are subject to many legal exemptions according to the country, which creates regulatory complexity for many firms, especially those operating in many countries. This creates additional risk. Implementation of the current legal framework by the Member States gives rise to fragmentation in the overall regulatory landscape for investment firms, with scope for harmful regulatory arbitrage. This could threaten the integrity and functioning of the single market. The prudential rules for investment firms proposed by the Commission apply to a majority of small and medium-sized investment firms in all the EU Member States.

1.2.

The EESC notes that, however unintended, the relocation of the UK-based investment firms would be to Member States which are in the banking union or euro area, and in particular to financial centres in euro area countries such as Germany, France, Luxembourg, the Netherlands and Ireland. Member States that do not belong to the euro area would be overlooked.

1.3.

The EESC is pleased that SMEs are expected to be among the main beneficiaries of the Directive and the Regulation. A more proportionate and appropriate prudential framework for them should improve conditions for conducting business and eliminate barriers to entry. This applies in particular to capital requirements and administrative burdens. The EESC notes that the rules may encourage innovative firms seeking to grow through digital means. This includes facilitating access to finance for SMEs which are not banks or investment firms themselves. A more suitable prudential framework should help free up capital from unproductive regulatory procedures and allow small investment firms to offer better services to their customers, including other SMEs. This should contribute to helping investment firms act as intermediaries in mobilising investments from savers across the EU and thereby facilitating non-bank sources of finance for European companies.

1.4.

The proposed Directive and Regulation on the prudential requirements and supervision of investment firms establish the necessary norms and requirements for initial capital and existing capital, supervisory powers, publication and remuneration. This diminishes risk, which is inherent in the financial operations of investment companies. The question remains of the extent to which the risk borne by investment companies will be passed on to the individual investors and companies that are their clients. If firms act exclusively as agents for their clients and limit their services to investment advice or portfolio management, the risk inherent in the financial instruments will mostly reside with the client.

1.5.

It remains to be seen whether the unilateral introduction by the EU of a specific legal framework for investment firms in the Union, without taking account of markets such as the USA, Japan, China and India, and in the light of globalisation and electronic markets, will trigger a flight of investors from Europe. Owing to the complexity of the MiFID II legal framework and the need to register financial products, between 20 % and 50 % of products are no longer offered. Therefore, in the case of a specific legal framework for investment firms, the new rules should be monitored and amended in a flexible way if financial markets respond negatively. The EESC shares concerns that financial transactions, amounting to 54 % of global GDP, pose a considerable risk. However, they also offer a major opportunity for development finance. If the legal framework is not amended in a flexible way, then, despite the best of intentions, investment firms from the United Kingdom will move to the USA instead of the EU.

2.   Background

2.1.

There are many different types of investment firms in the EU, with different services and different clients. EBA data show that at the end of 2015 there were 6 051 investment firms in the European Economic Area (EEA). Most investment firms are SMEs. The EBA estimates that about eight investment firms control 80 % of the assets. These are firms that are based in the United Kingdom. According to EBA information, around 40 % of EEA investment firms are authorised exclusively to provide investment advice. 80 % of EEA investment firms limit their activities to investment advice, reception and transmission of orders, portfolio management and execution of orders. Around 20 % are authorised to carry out dealing on their own account and underwriting, the services which are currently subject to the most stringent prudential requirements.

2.2.

Acting as an important hub for capital markets and investment activities, the UK has the largest number of EEA investment firms, with roughly half of them based there, the next most important hubs being Germany, France, the Netherlands and Spain. Most EEA investment firms are small or medium-sized. Currently, investment firms identified as systemic are typically subsidiaries of US, Swiss or Japanese banking groups/broker-dealers.

2.3.

Until now, the EBA has broken down investment firms into 11 categories, primarily determined by the investment services they are authorised to undertake under MiFID (2) and by whether they hold money and securities belonging to their clients. Investment firms which conduct a broad range of services are subject to the same requirements as credit institutions in terms of capital requirements for credit, market and operational risk, and potentially liquidity, remuneration and governance rules, while firms with limited authorisations (typically those which are considered less risky, i.e. investment advice, reception and transmission of orders) are exempt from most of these requirements. The EBA is proposing a new categorisation of investment firms: instead of 11 categories, there would be three main ones. Under the initial recommendations, systemic investment firms constitute Class 1 and would remain in the CRR/CRD IV. Class 2 firms are those which either: deal on own account and incur market and counterparty credit risk; safeguard and administer client assets; hold client money or are above given size thresholds (assets under management under both discretionary portfolio management and non-discretionary (advisory) transactions higher than EUR 1,2 bn; client orders handled of at least EUR 100 m/day for cash trades and/or at least EUR 1 bn/day for derivatives; balance sheet total higher than EUR 100 m; total gross revenues higher than EUR 30 m). These firms are required to calculate their capital requirements in relation to the new risk factors (K-factors). Class 3 firms are those which do not conduct the above activities and which are below all the above thresholds. Class 3 firms are not required to meet a capital requirement set in relation to the K-factors.

2.4.

The EU regulatory framework for investment firms consists of two main parts: first, the Markets in Financial Instruments Directive (MiFID) and, as of January 2018, MiFID II/MiFIR (3), which set out the conditions for their authorisation and organisational and business rules. Second, they are subject to the prudential framework under the Capital Requirements Regulation and Capital Requirements Directive CRR/CRD IV, in the same way as credit institutions. This is because they can compete with credit institutions in performing these investment services, which credit institutions can offer to their customers under their banking licence. Credit institutions are in turn subject to the key provisions of MiFID, aligning the conditions for the provision of investment services between investment firms and credit institutions both in terms of the investor protection and conduct provisions of MiFID and in terms of the key prudential requirements of the CRR/CRD IV.

2.5.

As mandated under the provisions of the CRR, a review of the prudential framework for investment firms was carried out in consultation with the EBA, the European Securities and Markets Authority (ESMA) and the competent national authorities. Following a call for advice by the Commission in December 2014, the EBA published a report on the current prudential framework for investment firms in December 2015, calling for changes to the current approach. Following a second call for advice by the Commission in June 2016, the EBA in November 2016 published a discussion paper on a potential new prudential regime for the vast majority of investment firms. The paper was open for comments for three months. Taking account of the feedback and the additional data it had gathered from investment firms together with national competent authorities, the EBA published its final recommendations in September 2017, inviting comments from stakeholders. The precise calibration of the recommendations for new capital requirements was supported by a detailed data-gathering exercise involving investment firms. This was carried out by national competent authorities on behalf of the EBA in two stages in 2016 and 2017.

2.6.

The EBA report provides a comprehensive and publicly available analysis of the status quo, with data on numbers and types of investment firms in the Member States. The report also puts forward a new regime for the majority of investment firms by carving them entirely out of the CRR/CRD IV framework and leaving only systemic investment firms within the scope of the latter, in accordance with the revised approach for identifying them in the proposal. The proposal is also consistent with MiFID and MiFID II/MiFIR. By setting prudential requirements that are tailored to the business and risks of investment firms, it clarifies when and why these requirements apply. As such, it would overcome some cases of arbitrary application of prudential requirements which currently arise because the requirements are set in relation to banking investment services listed in MiFID rather than to business conducted by investment firms.

2.7.

The findings of the EBA review (4) were discussed with Member States in the Financial Services Committee in March and October 2017 and in the Expert Group on Banking, Payments and Insurance in June and September 2017. Account was also taken of stakeholder input received on the Commission's inception impact assessment published in March 2017. Finally, the Commission also considered input received previously in the wide-ranging call for evidence on the efficiency, consistency and coherence of the overall EU regulatory framework for financial services. Given the detailed public consultation and data collection undertaken by the EBA, the Commission considered it unnecessary to run a general public consultation in parallel. It instead consulted stakeholders in a targeted fashion. The consultation included: — a round table with industry stakeholders (investment firms, investors, law firms, consultants) on 27 January 2017 on the EBA's draft proposals for a future regime; — a workshop on the costs of the current regime on 30 May 2017; — a workshop on the EBA's draft final recommendations on 17 July 2017.

2.8.

The EBA estimates that the new rules would increase capital requirements in aggregate for all non-systemic EU investment firms by 10 % compared with current requirements, and that they would decrease them by 16 % compared with total requirements applied as a result of Pillar 1 add-ons. The way in which these impacts would be distributed among investment firms depends on their size, which investment services they provide and how the new capital requirements will apply to them. On available own funds, the EBA considers that only a few firms — just a small number of investment advisors, trading firms and multiservice firms — would not have sufficient capital to comfortably meet the new requirements. However, for firms in this group whose increases would be over twice their current requirements, a cap could be granted for a number of years.

2.9.

The Treaty on the Functioning of the European Union gives the EU the power to lay down appropriate provisions concerning the establishment and functioning of the internal market (Article 114 TFEU). Directives are issued to make it easier for persons to take up and pursue commercial activities across the EU (Article 53 TFEU). This extends to legislation dealing with the prudential supervision of providers of financial services, in this case investment firms. The provisions of the proposed Directive under discussion replace those in CRD IV, which are also based on Article 53 TFEU as they relate to investment firms. The provisions of the proposed Regulation replace those in Regulation (EU) No 575/2013, which are also based on Article 114 TFEU as they relate to investment firms.

2.10.

The new rules will not have implications for the EU budget.

3.   Observations and comments

3.1.

The EESC welcomes the fact that the proposal sets out requirements for the appointment of prudential supervisory authorities, the initial capital and existing capital of investment firms, liquidity, concentration risk, the supervisory powers and tools for the prudential supervision of investment firms by the competent authorities, reporting and publication requirements and public disclosure, supervisory review and evaluation, corporate governance, and remuneration. Thus the Directive sets out rules for the supervision and control of investment firms and reduces all types of risk inherent in the business activities of investment firms. The Directive applies to all investment firms covered by MiFID II as of January 2018.

3.2.

The EESC draws attention to the fact that the proposal requires Member States to appoint an authority to exercise powers of prudential supervision under the Directive. Member States may either bestow these on an existing authority under CRD IV or vest them in a new authority. Competent authorities should have powers to review and evaluate the prudential situation of investment firms and, where necessary, to require changes in areas such as internal governance and controls, and risk management processes and procedures, as well as where necessary powers to set additional requirements, including in particular capital and liquidity requirements.

3.3.

In the EESC's view, it is important that the competent authorities are to cooperate closely with the public authorities or bodies responsible in their Member State for the supervision of credit institutions and financial institutions. Member States will have to ensure that competent authorities, as parties to the ESFS (European System of Financial Supervision), cooperate when ensuring the flow of appropriate and reliable information between themselves and other parties to the ESFS. In particular they should exchange information about: the management and ownership structure, compliance with capital requirements, concentration risk and liquidity of the investment firm, the administrative and accounting procedures and internal control mechanisms of the investment firm, and any other relevant factors that may influence the risk posed by the investment. In the EESC's view, this will make the European investment market more transparent.

3.4.

Competent authorities may provide the EBA, ESMA, the European Systemic Risk Board (ESRB), the central banks of the Member States, the European System of Central Banks (ESCB) and the ECB in their capacity as monetary authorities, and, where appropriate, public authorities responsible for overseeing payment and settlement systems, with confidential information where that information is necessary for the performance of their tasks. The EESC believes that this will lead to the creation of a European information system on investment firms which should, in theory, prevent firms that act dishonestly from carrying out financial operations.

3.5.

The initial capital requirements, especially for SME investment firms not holding clients' money or securities, increase slightly from EUR 50 000 to EUR 75 000. Systemic investment firms' initial capital requirements are regulated by the CRR/CRD IV directives. The EESC notes again that the proposal for a Directive on the prudential supervision of investment firms creates an opportunity for SMEs and SMEs growing through digital means in particular.

3.6.

Based on data from over 1 200 firms, 80 % of firms meet the proposed liquidity requirements. Around 70 % of firms have over three times the amount available. The EESC therefore believes that the new rules will not remove the vast majority of existing investment firms from the market.

3.7.

Remuneration policy in investment firms must be transparent and linked to the risks borne and profits generated. Remuneration systems must be controlled and approved by the supervisory bodies. Member States would require investment firms to disclose their remuneration policy and would ensure that investment firms provide competent authorities with information on the number of natural persons who receive remuneration of EUR 1 million or more per financial year. In such cases authorities must be provided with information on job responsibilities, the business area involved, the main elements of salary, bonus, long-term award, and pension contribution. The information would be forwarded to the EBA and published. The EESC believes that this is an appropriate course of action which seeks to link remuneration to the business performance of investment firms.

3.8.

The EESC is pleased to note that branches of foreign investment firms are subject to checks and would be required to provide annual information on the name, nature of activities and location of any subsidiaries and branches, the turnover, the number of employees on a full-time equivalent basis, profit or loss before tax, the tax on profit or loss, and public subsidies received.

3.9.

The EESC also supports the fact that, under Article 33 of the proposal for a Directive, the competent authorities would be required to take appropriate action where the review and evaluation referred to in point (e) of paragraph 1 of said article has shown that the economic value of the equity of an investment firm has declined by more than 15 % of its capital. This would generally be done by the investment firm increasing its own capital.

4.   Specific comments

4.1.

The EESC believes that, with the extension of MiFID to all derivatives markets in 2007, some specialised firms dealing in commodity derivatives were carved out entirely from the MiFID and prudential rules. The business of many of these firms involving financial instruments tends to revolve around hedging the risks of their parent companies related to the physical production, transmission, storage or purchase of the underlying physical commodities. Depending on the sector (e.g. energy, agriculture) their volume of hedging activity can be substantial, implying a major impact from capital requirements under the current framework. These firms will now operate under the proposed Directive on the prudential supervision of investment firms.

4.2.

In the EESC's view, it is important that the proposals for a Directive and a Regulation introduce new risk metrics (K-factors) and the possibility of phasing in and capping higher requirements. K-factors capture risk to customer (RtC) and, for firms that deal on their own account and execute client orders in their own name, risk to market (RtM) and risk to firm (RtF).

4.3.

The EESC notes that in its opinions on Banking reform — Capital requirements and resolution framework amendments (ECO/424) (5) and on the MiFID & MiFIR (INT/790) (6), and in other earlier opinions on CRR/CRD IV, it was always supportive of prudential rules for EU capital markets.

---

(1)  Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1). Together with Directive 2013/36/EU (Capital Requirements Directive, or CRD IV) (OJ L 176, 27.6.2013, p. 338), this provides the current prudential framework for investment firms.

(2)  Markets in Financial Instruments Directive: Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/ EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC (OJ L 145, 30.4.2004, p. 1).

(3)  Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349) and Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 684/2012 (OJ L 173, 12.6.2014, p. 84).

(4)  EBA report on investment firms, response to the Commission's call for advice of December 2014 (EBA/Op/2015/20). As set out in the relevant articles of the CRR mandating the review, this was carried out in consultation with the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the national competent authorities represented in these European Supervisory Authorities (ESAs).

(5)  OJ C 209, 30.6.2017, p. 36.

(6)  OJ C 303, 19.8.2016, p. 91.

Opinion of the European Economic and Social Committee on the ‘Proposal for a Council Recommendation on a European Framework for Quality and Effective Apprenticeships’

(COM(2017) 563 final — 2017/0244 (NLE))

(2018/C 262/07)

Rapporteur:	Imse SPRAGG NILSSON
Co-rapporteur:	Vladimíra DRBALOVÁ

Consultation	European Commission, 17.11.2017
Legal basis	Article 29 (1) of the TFEU
Plenary Assembly decision	17.10.2017
Section responsible	Employment, Social Affairs and Citizenship
Adopted in section	27.3.2018
Adopted at plenary	19.4.2018
Plenary session No	534
Outcome of vote (for/against/abstentions)	194/0/4

1.   Conclusions and recommendations

1.1.

The EESC appreciates the timeliness of this Recommendation, as significant apprenticeship reforms are taking place in most of the Member States and commends the European Commission's desire to establish a European common understanding of what constitutes a quality and effective apprenticeship.

1.2.

The Committee concurs that the European Commission's chosen legal instrument encourages the coordination of a common effort to improve the quality and effectiveness of apprenticeships. At the same time it leaves flexibility at national level.

1.3.

The EESC notes that the definition and criteria drawn up by the European Commission in the proposal for a Council Recommendation respect the diversity of the national schemes in the field of apprenticeships.

1.4.

The EESC welcomes the fact that the proposal for Recommendation invites Member States to promote the active involvement of social partners in the design, governance and implementation of apprenticeship schemes in line with national industrial relations systems and education and training practices.

1.5.

The Committee believes that the design, governance and implementation of apprenticeship schemes should also include the active involvement of those who are not traditionally seen as natural stakeholders in this field, but are equally relevant to the process, such as youth and parent organisations, students' unions, and apprentices themselves.

1.6.

The EESC acknowledges the positive role that apprenticeships can play in increasing skills and employability, particularly for young persons, but highlights that unemployment is a complex phenomenon and a holistic approach is needed to tackle its root causes beyond the issue of skills mismatch.

1.7.

The EESC believes that the proposal for Recommendation should have a stronger emphasis on the ways in which apprentices can foster greater ownership of the design and governance of their apprenticeship pathways. Giving apprentices an ability to influence their learning experience would create more productive learning experiences, which also benefits the placement provider.

1.8.

The Committee calls for clear links and effective coordination and synergies with the initiatives already launched by the EQAVET (1) network and related to EURES (2).

1.9.

The EESC calls for initiatives that explore the potential of transnational mobility of apprentices in the EU. These should take into account progress made in Member States, particularly with regard to the challenges involved in creating the necessary conditions for supporting apprentices' mobility.

1.10.

The EESC welcomes the intention to monitor the implementation of the Recommendation with the support of the Advisory Committee on Vocational Training (ACVT), as well as through the European Semester, and suggests the development of indicators to assess the impact at national level. The Committee stands ready to assess the implementation of the Recommendation in Member States, from the perspective of organised civil society.

2.   Context of the proposal for a Council Recommendation

2.1.

The proposal for a European Framework for Quality and Effective Apprenticeships follows up on the 2016 New Skills Agenda for Europe (3) and contributes to the implementation of EU's priority on jobs, growth and investment. The proposal complements the principles enshrined in the European Pillar of Social Rights and supports its implementation at national level. Quality and effective apprenticeships are also crucial to the successful implementation of the Youth Guarantee, and the proposal is a response to the increasingly pressing call to ensure better quality placements under the Youth Guarantee initiative.

2.2.

In the framework of the EU social dialogue programme of integrated projects 2014 — 2016, the European social partners undertook separate projects on apprenticeships: the ETUC focused on the quality of apprenticeships and BusinessEurope, UEAPME and CEEP focused on cost-effectiveness. Their work resulted in a joint statement, ‘Towards a Shared Vision of Apprenticeships’ (4), expressing the importance of both the quality and cost-effectiveness of apprenticeships.

2.3.

In July 2013 the European Alliance for Apprenticeships (EAfA) was established as a unique platform which bring together governments and stakeholders (businesses, social partners, chambers, VET providers, regions, youth representatives and think tanks) with the goal of strengthening the quality, supply and attractiveness of apprenticeships in Europe (5).

2.4.

The proposed instrument, a Council Recommendation, respects the principles of both subsidiarity and proportionality. As a legal instrument, it signals the commitment of Member States to the measures laid down in the Recommendation and provides a strong political basis for cooperation at European level in this area. Since apprenticeships are usually underpinned by a work contract or other contractual relationships, apprentices are therefore considered both work-based learners and workers. Therefore, the legal basis for this initiative lies in Articles 153, 166 and 292 TFEU.

2.5.

The overall objective of the Recommendation is to ‘increase the employability and personal development of apprentices and to contribute to the development of a highly skilled and qualified workforce, responsive to labour market needs’ (6). The specific objective is to ‘provide a coherent framework for apprenticeships based on a common understanding of what defines quality and effectiveness, taking into account the diversity of vocational education and training (VET) systems in Member States’.

2.6.

For the purpose of the Recommendation, apprenticeships are understood as follows: ‘formal vocational education and training schemes that combine substantial work-based learning in companies and other workplaces with learning based in education or training institutions, that lead to nationally recognised qualifications. These are characterised by a contractual relationship between the apprentice, the employer and/or the vocational education and training institution, with the apprentice being paid or compensated for her/his work.’

2.7.

To ensure that apprenticeship schemes are responsive to labour market needs and provide benefits to both learners and employers, the proposal establishes and recommends criteria for quality and effective apprenticeships in two complementary areas. In the first area, ‘learning and working conditions’, the specific criteria are: written contract, learning outcomes, pedagogical support, workplace component, pay and/or compensation, social protection, and health and safety conditions. In the second area, ‘framework conditions’, the specific criteria are: regulatory framework, involvement of social partners, support for companies, flexible pathways and mobility, career guidance and awareness raising, transparency, quality assurance and graduate tracking.

3.   General comments

3.1.

The EESC welcomes and supports the proposed Recommendation that follows on from and completes recent initiatives at all levels focused on the re-launch of quality and effective apprenticeships in the European Union.

3.2.

In the 2017 Rome Declaration, the Heads of State and Government pledged to work towards a ‘Union where young people receive the best education and training and can study and find jobs across the continent’. An essential part of the pledge was to provide young persons with skills that can ease their access to the labour market. An effective way to do this is through apprenticeships.

3.3.

It is clear that apprenticeships cannot be the solution to unemployment. Apprenticeships can be useful to upskill / reskill unemployed persons of all ages with a view to reintegrate them into the labour market. Apprenticeships should also be offered to persons of migrant background as an effective policy approach of promoting social inclusion and an integrated workforce. At the same time, it should be avoided that the apprenticeships are geared towards low-skilled jobs and poor training — that could damage the reputation of apprenticeships.

3.4.

As a form of work-based learning, apprenticeships allow individuals to acquire formal qualifications, as well as trade-specific skills and competences that match the needs of the labour market, thus enhancing their employability and employment perspectives (7). The learning experience should result in resilient skills and competences that can be used beyond the specific apprenticeship placement. It is a way to support the personal development of individuals and help them to acquire technical, digital, soft and social skills in an integrated way.

3.5.

They can be particularly effective tools to ease the transition from education and training into work (8). This transition period is increasingly lengthy for many young persons, and greater attention should be given to shortening it. Therefore, training opportunities such as apprenticeships should be made even more relevant, by laying down quality standards and introducing effective schemes.

3.6.

While apprentices are most often young learners, the Committee would like to emphasise that apprenticeship schemes should be designed to make them appealing to adults. Apprenticeships for mature learners provide the possibility to gain qualifications that increase employability and create new opportunities for career development.

3.7.

Employers face increasing shortages of workers with relevant skills to fit their needs and stay competitive. Apprenticeships can equip apprentices with the skills that enhance their employability, and which at the same time are needed by the labour market. If there is a match between the skills that are needed by both apprentices and employers, the apprenticeship schemes can be attractive for both parties. Furthermore, apprenticeships allow employers to train and invest in people, and to retain, over time, qualified and motivated employees (9).

3.8.

The EESC acknowledges that companies are analysing the ways in which they can engage in apprenticeship schemes to make them more attractive and beneficial for them. Furthermore the Committee underlines that effectiveness of apprenticeships is a multifaceted concept, not solely a cost-benefit analysis. On the one hand, effectiveness is about recognising that apprenticeship providers invest in creating a learning experience, and ‘expect return on investment over time in terms of a better skills fit, which encourages and fosters the supply of apprenticeship places’ (10). On the other hand, it is about effectively transferring persons into the labour market in a qualitative manner.

4.   Design and implementation of apprenticeship schemes — a partnership approach

4.1.

In many countries, existing apprenticeship systems and their attractiveness need improvement. Challenges include negative public perception of apprenticeships, learning value, lack of attractiveness for employers, and limited or absent partnership with organised civil society in the design, implementation and evaluation of schemes.

4.2.

Apprenticeships are first and foremost an educational opportunity and should therefore be based on a learner-centred approach, and be shaped around the best interests of learners, their capacities and possibilities, while also taking into account the needs of the labour market. This would mean ensuring that apprentices reach their full potential and achieve their learning objectives, which would also benefit employers.

4.3.

The views of apprentices should be taken into account in decisions that may directly affect them and their rights before, during and after their placements. They should have a say in the learning objectives of their placement, and have the opportunity to give feedback on the quality and effectiveness of their apprenticeship. The lack of representative structures hinders apprentices' opportunity to have their voices heard.

4.4.

Apprenticeships have the potential to help young persons, as well as adults, to acquire full competency and capabilities in an occupation or profession and enhance their employability. However, in many cases such potential is not harnessed, as the quality of apprenticeships is lacking, its learning value is not prioritised and apprentices' rights are not upheld as they should be.

4.5.

Moreover, the EESC believes that a dynamic labour market needs competences more than skills. Therefore, learning outcomes should be focused on resilient competences, rather than short-term skills.

4.6.

Apprenticeships should include a strong work-based dimension, where at least half of the educational time is spent on practically learning the specifics of the trade, and whenever possible this should be coupled with international experience.

4.7.

Work-placement trainers, mentors or supervisors should be duly certified and provided with the necessary skills, both pedagogical and trade-specific, to train apprentices. Furthermore, they should be provided with access to continuous training in accordance with the principle of life-long learning.

4.8.

A synergy between the quality, effectiveness and attractiveness of apprenticeships can only be ensured through close cooperation amongst all relevant stakeholders — training providers, social partners and other civil society organisations, apprentices, at national, regional and local levels.

4.9.

Structures should be set up at all levels of government, with the involvement of all relevant socio-economic stakeholders (e.g. apprenticeships providers, employers' organisations, trade unions, chambers, youth organisations, students' unions, apprentices), with clear processes and roles aimed at influencing and taking part in decisions related to the design, implementation and monitoring of apprenticeship schemes.

5.   Promoting apprenticeships

5.1.

To counteract the fact that apprenticeships are perceived as a less attractive or less prestigious educational path, particularly for young persons, it is necessary to promote apprenticeships as a valuable choice and as a learning opportunity of equal quality and not as an active labour market instrument.

5.2.

Promoting apprenticeships should be paired with efforts to address gender stereotypes based on traditional social roles, which still negatively affect apprenticeship placements, take-up and promotion and advertising.

5.3.

All relevant stakeholders, from policy makers to social partners, civil society organisations and educational institutions, play a crucial part in increasing the attractiveness of apprenticeships and they need to work together. Promotion of a better narrative concerning apprenticeships must go hand-in-hand with, and be conditional on, improving the quality and effectiveness of the schemes.

5.4.

Public authorities should invest more resources in implementing measures to promote apprenticeships at the local level to potential apprentices and encourage employers to provide apprenticeship opportunities.

5.5.

The EESC considers that there is the possibility to use the ESF to help establish or further develop quality and effective apprenticeship schemes in Member States which require greater financial and technical assistance to achieve the objectives of the framework.

5.6.

It is fundamental to provide employers, and in particular SMEs and micro-companies, with the financial and non-financial support they need to establish quality and effective apprenticeship placements and schemes.

5.7.

The process of building a new image of apprenticeships should be based on a fair, inclusive, non-discriminatory and innovative approach. The most disadvantaged persons in our society should have access to the best support and guidance to a quality education and work-based learning that fits their interests and aspirations. Measures should be put into place at all levels to tackle discrimination based on migrant status, socio-economic background, ethnicity, religion, age, gender or other status, hindering equal access to apprenticeship opportunities.

6.   Learning and working conditions

6.1.

The EESC believes that apprenticeships should be underpinned by a written and legally binding document, be it a learning agreement or written contract, between the employer, the apprentice and the educational or training institution. This document should clearly outline rights and obligations of all parties, and include a description of the learning objectives, tasks, as well as other relevant information on the placement (including but not limited to length, working hours, remuneration, etc.).

6.2.

The EESC strongly believes that apprentices have a right to decent remuneration and/or compensation, to be negotiated through collective agreements or in line with national or sectoral requirements. Adequate pay or compensation can enable more people to take up apprenticeships, particularly those from low-income backgrounds, and can help avoid the misuse of apprenticeships as unpaid, excessively flexible employment.

6.3.

The EESC reiterates the importance of ensuring that apprentices are adequately and promptly informed of any health and safety risk posed to them while undertaking their apprenticeship, and that apprentices are fully covered by health and safety regulations.

7.   Monitoring and evaluating apprenticeship schemes

7.1.

All apprenticeship providers should commit to quality standards. Mentoring by a competent supervisor should always be provided to apprentices before, during and after their apprenticeship, in order to make sure that learning objectives are achieved, the rights of the apprentice are upheld, and quality is ensured.

7.2.

A monitoring system should be put in place to observe the progress of apprentices in reaching their learning objectives, as well as the quality and effectiveness of the learning experience. The results of such an evaluation process should be shared with the apprentices and the apprenticeship providers to enable them to improve if needed. Where possible, this monitoring system could be utilised as a method of measuring the amount of apprenticeships that later lead the learner into employment.

8.   Recognising qualifications

8.1.

Apprenticeship schemes should lead to official qualifications, recognised at national, European and international level, in accordance with the European Qualification Framework. Recognised qualifications would enhance apprentices' employability and mobility in the country and within the EU. They should offer permeability and allow apprentices to enter higher education after their apprenticeships are concluded.

---

(1)  EQAVET — the European Quality Assurance in Vocational Education and Training.

(2)  EURES — the European job mobility portal.

(3)  COM(2016) 381 final.

(4)  European Social Partners, Joint Statement, Towards a Shared Vision of Apprenticeships, 30 May 2016.

(5)  European Alliance for Apprenticeships.

(6)  COM(2017) 563 final.

(7)  EESC opinion on ‘Improving the performance of national dual training systems’ (OJ C 13, 15.1.2016, p. 57).

(8)  Evidence shows that 60-70 % of apprentices move directly into a job following their apprenticeship, and in some cases this increases to 90 % (EC page on apprenticeships).

(9)  Cedefop, 2015, Briefing note — Making apprenticeships work for small and medium enterprises.

(10)  ACVT opinion on ‘A shared vision for quality and effective apprenticeships and work-based learning’, 2 December 2016.

Opinion of the European Economic and Social Committee on the Regulation of the European Parliament and of the Council amending Regulation (EC) No 1073/2009 on common rules for access to the international market for coach and bus services

(COM(2017) 647 final — 2017/0288 (COD))

(2018/C 262/08)

Rapporteur:

Raymond HENCKS

Consultation	European Parliament, 29.11.2017 Council, 22.11.2017
Legal basis	Article 91(1) of the Treaty on the Functioning of the European Union
Committee Bureau decision	17.10.2017
Section responsible	Section for Transport, Energy, Infrastructure and the Information Society
Adopted in section	5.4.2018
Adopted at plenary	19.4.2018
Plenary session No	534
Outcome of vote (for/against/abstentions)	200/0/4

1.   Conclusions and recommendations

1.1.

The EESC supports the Commission’s aim of improving mobility for citizens who travel long distances by coach or bus, encouraging the use of sustainable modes of transport, and making it possible to offer services that are more in line with the needs of the population, particularly those on the lowest incomes.

1.2.

However, the proposal to extend the scope of the common rules for access to the international market for coach and bus services to cover all regular services for hire or reward, including national services, run by a non-resident carrier, is considered problematic in some Member States.

1.3.

Applying the new rules on access to the market for regular international and national coach and bus transport services over a distance of less than 100 km or 120 km as the crow flies to urban and suburban services could, according to those countries, seriously undermine the fulfilment of the mission and public service obligations of a service of general economic interest (SGEI).

1.4.

The proposal for a regulation does not take account of the substantial differences between Member States in how they organise their coach and bus transport services and pricing, particularly of urban and suburban services, which are often provided free of charge or at reduced rates for all or for specific categories of travellers, in response to social and environmental needs and constraints which require specific and different rules. However, there are also Member States that have a more deregulated access to public transport markets.

1.5.

The proposed provision that, for international and national transport services (including urban and suburban services) over distances of less than 100 kilometres as the crow flies, access to the market may only be refused if the service offered would compromise the economic equilibrium of a public service contract could in some cases be difficult to reconcile with the need for a service of general interest that is affordable and of appropriate quality for all. All the market can do, in compliance with the legislation on fair competition, is offer a price determined on the basis of costs. However some Member States do have a fully or partly deregulated market, with reasonably good results. The proposal would in such cases risk a step backwards.

1.6.

The EESC questions if the proposal for a regulation complies with Article 5(3) of the Treaty on European Union (TEU) on the subsidiarity principle, insofar as Protocol 26 to the Treaty on the Functioning of the European Union (TFEU) gives national, regional and local authorities wide discretion in providing, commissioning and organising SGEIs in order to ensure a high level of quality, safety and affordability, equal treatment and the promotion of universal access and of user rights. However, as the long-haul national bus and coach services above 100 km are already deregulated in some Member States the strive for free market access for bus services as such could not be put in question.

1.7.

The EESC stresses that, if pursuant to such an application of the subsidiarity principle, the Member States are allowed the wide discretion afforded to them by the Treaty to organise their SGIs in line with the needs of the population, this of course will mean that also Member States with deregulated bus and coach markets can continue, and that the Commissions aim of a single market for such services will not be reached.

1.8.

Finally, the EESC stresses that establishing new coach and bus routes may entail a risk of adversely affecting public services using more sustainable modes of transport. The EESC finds it therefore reasonable that authorities can safeguard that services are using efficient low carbon vehicles that do not increase emissions, particularly rail services. The EESC therefore urges the Commission to link market liberalisation of road transport to a more clear usage of the polluter pays principle in all modes of transport.

2.   Introduction

2.1.

In accordance with Article 4(2)(g) of the TFEU, the European Union has shared competence with the Member States in the area of transport, and establishes, inter alia, under Article 91 TFEU: (a) common rules applicable to international transport to or from the territory of a Member State or passing across the territory of one or more Member States; (b) the conditions under which non-resident carriers may operate transport services within a Member State; […] 2. When the measures referred to in paragraph 1 are adopted, account shall be taken of cases where their application might seriously affect the standard of living and level of employment in certain regions, and the operation of transport facilities.

2.2.

By amending Regulation (EC) No 1073/2009 on access to the international market for coach and bus services the Commission intends, according to its own statements, to improve mobility for citizens who travel long distances and to encourage the use of sustainable modes of transport, and it should make it possible to offer services that are more in line with the needs of the population, particularly those on the lowest incomes.

2.3.

Some European languages do not make a distinction between ‘coach’ and ‘bus’. Distance is often one of the main criteria used in the regulation of long-distance coach services: for example, they must be more than 50 miles in the United Kingdom, and more than 100 kilometres in France and Sweden.

2.4.

In some Member States, the market for long-distance coach services is already at least partially liberalised. For example, the liberalisation of the German market was subject to two conditions: the routes must cover a distance of at least 50 kilometres and must not compete with rail. In France, the ‘Macron Law’ allows any operator to provide regular services for distances over 100 kilometres.

3.   Current EU rules

3.1.

Regulation (EC) No 1073/2009 of 21 October 2009 applies to the transport of more than nine people by coach and bus in the form of regular international passenger transport services, as well as, under certain conditions and on a temporary basis, the admission of non-resident carriers to operate national road passenger transport services in a Member State.

3.2.

Carriage from Member States to third countries is largely covered by bilateral agreements between the Member States and those third countries. However, the EU rules apply on the territory of Member States crossed in transit.

3.3.

EU rules do not apply to urban and suburban coach and bus services. Cabotage operations by non-resident carriers within a Member State are permitted with the exception of transport services that serve the needs of an urban centre or conurbation, or those that provide transport between such a centre and its surrounding areas. Cabotage operations may not be carried out independently of an international service.

3.4.

By contrast, the arrangements on the posting of workers for the purposes of providing a service do apply to coach and bus transport companies carrying out cabotage operations.

3.5.

Each year Member States must inform the Commission of the number of carriers holding a Community licence as of 31 December of the previous year and of the number of certified true copies corresponding to the vehicles in circulation on that date. On 31 December 2016, there were a total of 34 390 Community road passenger transport licences and 300 155 bus and coach licences, of which approximately 46 000 were used mainly for long-distance passenger transport.

4.   New measures proposed by the Commission

4.1.

The scope of application has been extended considerably and applies to all regular (international and national) coach and bus transport operations across the whole of the EU, operated as regular services by non-resident carriers.

4.2.

The current regulation, which defines ‘cabotage operations’ as ‘national road passenger services for hire and reward carried out on a temporary basis by a carrier in a host Member State’, has been amended by deleting ‘temporary’. As a result of this, cabotage services are considered to be regular services.

4.3.

From now on, regular cabotage operations are subject to holding a Community licence. Temporary cabotage transport operations are only permitted if they are covered by a contract concluded between the organiser and the carrier, and if they are occasional services.

4.4.

With regard to regular services, the new regulation distinguishes between international and national passenger transport services over distances of less than 100 kilometres as the crow flies and such services carrying passengers over distances of 100 kilometres or more as the crow flies.

4.5.

For regular international transport services carrying passengers and some regular national services over distances of 100 kilometres or more as the crow flies, market access has been fully liberalised.

4.6.

For regular international and national transport services (including urban and suburban services) over distances of less than 100 kilometres as the crow flies, access to the market may be refused if the service offered would compromise the economic equilibrium of a public service contract. The aforementioned distance of less than 100 km may be increased to 120 kilometres if the regular service to be introduced will serve a point of departure and a destination that are already served by more than one public service contract.

4.7.

Express services — i.e. services that carry passengers at specified intervals along specified routes without intermediate stopping points — are henceforth considered to be ‘regular services’, on a par with transport services that pick up and set down passengers at predetermined stopping points.

4.8.

An independent monitoring body for coach and bus passenger transport has been set up and will be responsible for: — carrying out economic analyses of whether a proposed new service would compromise the economic equilibrium of a public service contract. The conclusions of the regulatory body will be binding on the authorising authorities in the area of access rights to the international and national market, and its decisions will be subject to judicial review, — collecting and providing information on access to terminals, — deciding on appeals against decisions of terminal operators.

4.9.

Technical adjustments regarding Community licences, authorisations to access the market and other certificates shall be made by Commission delegated act.

4.10.

Carriers have a right to access the parking spaces for use by coaches and buses (terminals) in accordance with equal, transparent and non-discriminatory conditions.

5.   General comments

5.1.

Extending the scope of this regulation to cover all regular services for hire or reward run by a non-resident carrier means that the latter may operate regular national services under the same conditions as resident carriers and that when it is continuous and permanent, a cabotage operation is considered to be a regular service. In light of this, the regulation under consideration applies to all regular international and national coach and bus transport service operations.

5.2.

For international and national transport services over distances of 100 kilometres or more as the crow flies, the market is thus fully liberalised and potential public service contracts can no longer be taken into consideration in order to refuse access to the market.

5.3.

Access to the market for regular international and national coach and bus transport services over a distance of less than 100 km or 120 km as the crow flies may be refused if the economic equilibrium of a public service contract would be disturbed and if the independent supervisory body responsible for carrying out the relevant economic analysis agrees.

5.4.

In a change from the current regulation, the Commission’s new proposal no longer explicitly excludes urban and suburban coach and bus transport services, which will therefore be subject to the new rules.

5.5.

Moreover, the authorities responsible for granting market access may not reject an application solely on the grounds that the carrier offers lower prices than those offered by other road carriers, even though it has been established that private sector carriers, which are not bound by public service obligations, offer prices (e.g. EUR 1 for a long-distance journey) that clearly fall under the heading of dumping. The general, unrestricted wording of this provision could be seen as carte blanche for unfair competition.

5.6.

The proposal for a regulation does not take account of the substantial differences between Member States in how they organise their coach and bus transport services and in pricing, particularly of urban and suburban services, which are often provided free of charge or at reduced rates for all or for specific categories of travellers, in response to social and environmental needs and constraints which require specific and different rules. However, there are also Member States that have a more deregulated access to public transport markets.

5.7.

The EESC questions if the proposal for a regulation complies with Article 5(3) of the Treaty on European Union (TEU) on the subsidiarity principle, and finds the arguments set out in the justification statement (as provided for in Article 5 of Protocol 2 on the application of the principles of subsidiarity and proportionality) not totally convincing. However, as the long-haul national bus and coach services above 100 km are already deregulated in some Member States the strive for free market access for bus services as such could not be put in question.

5.8.

However, passenger transport is also a service of general economic interest (SGEI), as provided for by the Treaty and, as such, is subject to Article 106(2) of the TFEU, which states that ‘undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in this Treaty, in particular to the rules on competition, insofar as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them.’.

5.9.

This article refers to the primacy of good performance, which does not depend on an approach based on economic equilibrium.

5.10.

The common values applicable to the activities of SGEIs, which are covered in Protocol 26 on services of general interest (SGIs; in reference to Article 14 TFEU) are, inter alia: the essential role and the wide discretion of national, regional and local authorities in providing, commissioning and organising services of general economic interest, a high level of quality, safety and affordability, equal treatment and the promotion of universal access and of user rights.

5.11.

Economic equilibrium is therefore not one of the values that SGEIs must adhere to. It could in some cases also be difficult to reconcile economic equilibrium with a service that must be affordable for all. The market can, only offer a price determined on the basis of costs and thus cannot guarantee access for all to a service at an affordable price. However, it should also be noted that some Member States do have a fully or partly deregulated market, with reasonably good results. The proposal would in such cases risk being a step backwards.

5.12.

The supervisory body established by the regulation under consideration would only be able to assess whether or not the conditions of Article 106(2) of the TFEU and the conditions of Protocol 26 have been met, a power (finding a clear error) which up to now has fallen exclusively under the remit of the Commission, subject to an appeal to the European Court of Justice.

5.13.

In contrast with the Commission’s new proposal, Article 8(4)(d) of the current Regulation (EC) No 1073/2009 (which the Commission proposes to delete) is in line with the Treaty, maintaining that: ‘a Member State decides on the basis of a detailed analysis that the service concerned would seriously affect the viability of a comparable service covered by one or more public service contracts conforming to Community law on the direct sections concerned’.

5.14.

The EESC therefore believes that there is no need to amend the aforementioned provision established by Article 8, but instead that, in line with the subsidiarity principle, the Member States should retain the wide discretion accorded to them by the Treaty to organise their services of general interest in accordance with their needs, with the exception of clear errors found by the Commission.

5.15.

The EESC stresses that establishing new coach and bus routes may entail a risk of adversely affecting public services using more sustainable modes of transport — particularly rail services. There can therefore be no question of abandoning railway services along the same section for purely economic reasons.

5.16.

The EESC notes, with this in mind, that the purpose of legislation on the Single European Railway Area is to create a European railway area that is able to compete, sustainably, with other modes of transport.

5.17.

However, it is clear that competition between rail and road remains largely unfair, due to the fact that rail charges, to be paid by rail operators, and operating costs are around three times higher than costs incurred by coach service operators. Up to now, there has been no significant follow-up to the Commission’s announcement of ‘measures to internalise the external costs of transport in a coordinated and balanced manner across modes so that the charges reflect the level of the external cost imposed on society at large’.

5.18.

The EESC therefore urges the Commission to link market liberalisation of road transport to a more clear usage of the polluter pays principle in all modes of transport.

Opinion of the European Economic and Social Committee on the proposal for a Directive of the European Parliament and of the Council amending Directive 92/106/EEC on the establishment of common rules for certain types of combined transport of goods between Member States

(COM(2017) 648 final/2 — 2017/0290 (COD))

(2018/C 262/09)

Rapporteur:

Stefan BACK

Consultation	European Parliament, 29.11.2017 European Council, 4.12.2017
Legal basis	Article 91(1) of the TFUE
Section responsible	Section for Transport, Energy, Infrastructure and the Information Society
Adopted in section	5.4.2018
Adopted at plenary	19.4.2018
Plenary session No	534
Outcome of vote (for/against/abstentions)	159/1/3

1.   Conclusions and recommendations

1.1.

The EESC supports the initiative to update Directive 92/106/EEC (‘the Directive’) to render the combined transport concept more efficient and attractive and render transport more sustainable in accordance with the aims set out in the 2011 White Paper on transport policy and the undertakings made under the Paris Agreement.

1.2.

The EESC is in favour of extending the scope of the Directive to domestic operations to further reduce road transport.

1.3.

The EESC also takes favourable note of the efforts to simplify the Directive to make the concept more attractive and improve legal certainty.

1.4.

The EESC finds particularly useful the simplification of the delimitation of road transport legs, including the flexibility option opened to Member States which enables adaption to local conditions. Nevertheless, the EESC points out that the limit of 20 % of the distance between the initial loading and the final unloading points could lead to road transport distances well above the 300 kilometres beyond which the 2011 White Paper on transport favours a successive modal shift away from road transport.

1.5.

To facilitate access to information on the implementation of the Directive in each Member State and facilitate planning of combined transport operations, the EESC suggests an obligation on each Member State to make all pertinent information regarding the implementation of the Directive available on a dedicated website.

1.6.

The EESC approves the clarification and simplification provided by the exhaustive enumeration of the documentation that should be available for compliance control as well as by the provision that those documents may be produced in electronic form. The EESC suggests that wherever applicable, any national decisions authorising a longer road leg should also be part of the documents to be produced.

1.7.

The EESC appreciates the proposed obligation on Member States regarding investment in transhipment terminals and in particular the obligation to coordinate investments with neighbouring Member States. The EESC nevertheless questions whether the objective of a maximum distance of 150 kilometres from any location in the EU to the nearest terminal is realistic, bearing in mind the situation in areas with low population density and sparse rail and harbour networks, and therefore suggests that a clear flexibility option should be provided.

1.8.

In the EESC’s opinion, to increase certainty and speed up the effects of incentives to this transport, support measures to combined transport shall be considered compatible with the internal market and shall be exempted from the notification requirement according to State aid rules provided that support is less than a pre-defined ceiling.

1.9.

The EESC questions the usefulness of the proposed provision in Article 1(2) second paragraph which seeks to exclude certain inland waterway and maritime transport legs from being taken into account for combined transport operations. The EESC considers that this proposal is unclear and prone to diverging interpretations and also questions its usefulness since no similar selection criteria, clearly based on the idea of excluding choices that do not need encouragement, have been considered necessary with respect to rail transport.

1.10.

The EESC also finds it difficult to understand why the so-called ‘cabotage exemption’ in Article 4 of the Directive remains unchanged. As a matter of transport policy, the EESC on this point first refers to the currently pending proposals regarding market access in international road transport of goods with respect to cabotage and the current debate on market access and competition, including social aspects. The EESC also points to the general principle that service provision in a country other than that where the service provider is established should be done on a temporary basis. In the opinion of the EESC, there is nothing to prevent a provision stipulating that road haulage legs within the framework of a combined transport operation are separate transport operations, except where the entire transport operation is carried out with one lorry or one vehicle combination including the tractor and that Regulation (EC) 1072/2009 applies to all operations. Article 4 of the Directive should be amended accordingly.

1.11.

The EESC finds it surprising that the provision in Article 2 of the Directive which requires Member States to liberalise the combined transport operations referred to in Article 1 from all quota systems and systems of authorisation by 1 July 1993 is not included in the proposals to amend the Directive. As it now stands and in view of the extended scope of the Directive, this article could be interpreted as having a wider effect than probably intended, in particular regarding market access. The EESC would therefore suggest that this article be rephrased or deleted.

1.12.

The EESC takes note that the proposal to amend the Directive remains silent as to the applicability on combined transport of Directive 96/71 EC on the posting of workers. The EESC assumes that this directive will also apply with respect to combined transport operations and that this applies also with respect to the proposed lex specialis on posting in road transport proposed by the Commission (COM(2017) 278).

1.13.

The EESC would also underline the significant potential of digitalisation for facilitating and promoting combined transport. A few examples of possible ways forward have been mentioned above. The potential for development in this field is considerable for transport as a whole, including in combined transport.

1.14.

The EESC recommends that the possibility of a solution concerning transport costs, similar to Council Regulation (EC) 1405/2006, should also be examined by the Commission with respect to Cyprus and Malta.

2.   Background

2.1.

On 8 November 2017, the European Commission presented the second part of its mobility package headed by the keynote communication ‘Delivering on low-emission mobility’ (COM(2017) 675).

2.2.

The second part of the package includes the following proposals: — A proposal for new CO2 standards for cars and vans post-2020 with a proposal for the revision of Regulation (EC) 715/2007 with enhanced emission standards. — A proposal for the revision of the Clean Vehicles Directive 2009/33/EC to strengthen the provisions promoting public procurement of such vehicles. — A proposal to amend Directive 92/106/EEC on combined transport to further promote such transport with a view to encouraging transport concepts that reduce road transport. — A proposal to amend Regulation (EC) No 1073/2009 on access to the international market for bus and coach services in order to open up this market further and so promote cheaper public transport by bus in order to reduce car travel. — The package also contains an action plan on alternative fuels infrastructure in order to boost investment in the construction of such infrastructure, and so facilitate cross-border mobility in the EU using such fuels.

2.3.

The package includes a combination of supply- and demand-oriented measures to put Europe on the path to low emission mobility and strengthen the competitiveness of the European automotive and mobility ecosystem. It aims to provide greater policy and regulatory certainty and create a level playing field.

2.4.

The proposal covered in this opinion amends Directive 92/106/EEC on the establishment of common rules for certain types of combined transport of goods between Member States (the Directive) (COM(2017) 648) (the proposal). It contains the following main elements: — Combined transport no longer needs to be cross-border in nature. The Commission estimates that there is considerable potential for domestic combined transport in Member States. — The minimum distance requirement for non-road transport is eliminated. On the other hand, a new provision provides that sea or inland waterway transport may not be taken into account if there is no alternative. — Every load unit that complies with the criteria set out in ISO6346 or ENI 13044 or a road vehicle that is transported by rail, inland waterway or sea can be used in combined transport. — The current rule on limitation of road transport is modified to provide that the first and/or final road transport leg within the EU may be a maximum of a direct line of 150 km or 20 % of the distance as the crow flies in a direct line between the first loading point and the last unloading point. This limitation does not apply to empty load carriers nor to transport to or from the pick up or delivery point. — Member States may authorise longer distances than indicated in the preceding point to make it possible to reach the nearest terminal with adequate equipment and capacity. — For road transport to be accepted as part of a combined transport operation, the operator must demonstrate that the transport is part of a combined transport operation. The proposal indicates what information should be provided regarding the transport operation as a whole and with respect to the different parts of it. Additional information may not be requested. The information may be provided through different transport documents including in electronic form. It must be possible to produce the information during a roadside check. — Duly justified deviations from the planned route shall be accepted. — Member States are obliged to undertake the measures needed to support investments required in reloading terminals, in coordination with bordering Member States. — Each Member State must appoint one or several authorities to be responsible for the implementation of the Directive and to serve as contact point for implementation issues. — The proposal also requires the Member States to comply with a reporting duty with respect to the development of combined transport. — The current exemption from the rules on cabotage remains valid with respect to road transport operations (road legs), part of a cross-border transport operation between Member States, that occur entirely on the territory of a Member State. The Commission justifies this exemption by stating that consultations undertaken have demonstrated that this provision helps make combined transport solutions more attractive. The Commission also refers to the Court of Justice judgment in Case 2/84 (Commission v Italy) which takes the view that combined transport should be considered as one single interconnected international transport operation. — In the reasons given for the proposal, the Commission also points out that the rules on the posting of workers will apply to national combined transport, as they do to cabotage. No clear statement is made however with respect to the rules on the posting of workers and international combined transport operations.

3.   General comments

3.1.

The EESC supports the initiative to update the Directive on combined transport as a way to render the combined transport concept more efficient and attractive. This will make transport more sustainable, reduce road transport and GHG emissions, and contribute both to the objectives set out in the 2011 White Paper on transport policy and compliance with the undertakings of the EU and its Member States under the Paris Agreement.

3.2.

The EESC approves the move to broaden the scope of the Directive, by including domestic operations with currently untapped potential to develop combined transport and hence reduce road transport.

3.3.

The EESC also takes favourable note of the simplification of the regulatory framework for combined transport, intended to make the concept more accessible and improve legal certainty, both of which should make this concept more attractive.

3.4.

In this context, the improved clarity of the criteria describing the delimitation of road transport legs is particularly useful: the criteria are simple, clear and seem to leave no room for diverging interpretations. The EESC nevertheless concludes that the limit of 20 % of the distance as the crow flies between the initial loading and the final unloading points could lead to road transport distances that are above the 300 km limit beyond which the 2011 White Paper on transport favours a modal shift away from roads, particularly in regions with sparse networks or long distances between terminals. However, the EESC considers that the overall interest of making the combined transport concept interesting for users and the added value of a clear and simple definition takes priority, and therefore approves the proposed solution.

3.5.

The EESC also appreciates the element of flexibility granted to Member States to extend the road transport legs as required to make it possible to reach the geographically nearest transport terminal which has the necessary operational capacity for loading or unloading in terms of transhipment equipment, terminal capacity and appropriate rail freight services.

3.5.1

The EESC notes that it seems to be left up to the Member States to decide whether this authorisation should be granted through a generally applicable provision or on a case-by-case basis. The EESC underscores the importance of transparency, and therefore considers that national provisions on this matter as well as, wherever applicable, decisions in specific cases should be made available on a dedicated website, in accordance with the second paragraph of the new Article 9a, referred to in Article 1(7) of the proposal.

3.6.

In order to facilitate planning of combined transport operations and make the concept more attractive, the EESC would suggest that all pertinent information regarding implementation of the Directive in each Member State be made available on a dedicated website in each Member State and that a provision to that effect be introduced into the second paragraph of Article 9a of the proposal.

3.7.

The EESC approves the clarification in Article 3 of the proposal regarding the documents that are to be provided for the purpose of checks on compliance, the ban on requiring further documentation and the option to provide the documents required in electronic form. This provision facilitates operations and enhances legal certainty. Nonetheless, the EESC questions whether a copy of the decision taken should not also be available, in cases where a longer road leg has been authorised by a Member State under the third paragraph of Article 1(3) and where this authorisation is in the form of a dedicated decision.

3.8.

The EESC notes with satisfaction the emphasis on investment in transhipment terminals and the obligation to coordinate such investments with neighbouring Member States and with the Commission to ensure balanced and sufficient geographical distribution, particularly in the TEN-T network, and to give priority to ensuring that no location in the EU is more than 150 km from such a terminal. The EESC doubts however that this aim is realistic in areas with low population density and a sparse rail and port network.

3.9.

Support to combined transport needs to be notified to the European Commission and requires to be authorised according to State aid rules before being disbursed. Due to the lengthy procedures, the beneficiary of the aid most often receives the aid after 3 years from the moment the national public authority decided the aid and sometimes, when the schemes need to be modified, the beneficiary risk to lose all benefits. To reduce uncertainty and speed up the process, the EESC considers that aid less than a certain ceiling, for instance 35 % of the total costs, should be automatically considered compliant to the Treaty and be exempted from notification.

3.10.

The EESC would also draw attention to the possibilities offered to further develop combined transport through digitalisation. The proposal takes a step by allowing the use of electronic documents and the creation of dedicated websites in all Member States.

4.   Specific comments

4.1.

The EESC notes that the second paragraph of Article 1 of the proposal excludes from a combined transport concept any inland waterway or maritime transport for which there is no equivalent road transport alternative or which is unavoidable in a commercially viable transport operation. This provision appears to be linked to the elimination of a minimum distance requirement for inland waterway and maritime transport and delivers on the statement in recital (9) of the preamble that ‘It would therefore be useful to remove that minimum distance while maintaining the exclusion of certain operations such as those including deep sea shipments or short-distance ferry crossings.’ The EESC has doubts about both the substance and wording of this provision.

4.1.1

It appears that one of the effects of the 100 km requirement on inland waterway and maritime transport, as the Directive now stands, is to exclude short ferry transport and deep-sea shipping, as distinguished from short sea shipping. This follows from the fact that the 100 km requirement applies to transport carried out inside the EU. The proposal made in the second paragraph of Article 2 is clearly intended to have the same effect.

4.1.2

It seems however that the provision now proposed is likely to create uncertainty as to when it applies, possibly to the point of creating a regulatory obstacle to the implementation of combined transport projects. Thus, the criterion of ‘no equivalent transport alternative’ leaves open whether the equivalence should be assessed by time required, length in kilometres or cost. Likewise, the criterion ‘unavoidable in a commercially viable transport operation’ leaves a wide scope of interpretation.

4.1.3

The EESC therefore questions the usefulness of the proposed provision, particularly since no similar selection criteria, clearly based on the idea of excluding choices that do not need encouragement, have been considered necessary with respect to rail transport.

4.2.

The EESC also finds it difficult to understand why the so-called ‘cabotage exemption’ in Article 4 of the directive remains unchanged. As a matter of transport policy, the EESC would here refer firstly to the pending proposals regarding market access in international road transport of goods with respect to cabotage and the current focus on market access and competition, including social aspects. The EESC also bears in mind the general principle that service provision in a country other than that where the service provider is established should be performed on a temporary basis.

4.2.1

The EESC takes note of the two arguments invoked by the Commission in favour of the solution chosen. One is that answers given by businesses during consultations show that the current solution is seen as making combined transport attractive. The other is that a combined transport operation, under the definition provided by the Directive in its current wording, is to be seen as a single international transport operation. In support of this argument, the Commission invokes the case-law of the Court of Justice, specifically Case 2/84 (Commission v Italy).

4.2.2

In the opinion of the EESC, the argument based on Court of Justice case-law is simply founded on the fact that the Court was bound by the choice of the legislator to define combined transport in a way that allows it to be seen as one operation or journey. It is therefore merely a matter of whether the legislator decides to see the combined transport operation as a whole or as a number of different operations undertaken in the framework of a transport concept. In any case, the EESC points out that when the Directive was adopted, the legislator found it necessary to provide for free market access for hauliers ‘regarding the initial and/or final road haulage leg which form an integral part of the combined transport operation and which may or may not include the crossing of a frontier’.

4.2.3

In the opinion of the EESC, there is nothing to prevent a provision stipulating that road haulage legs within the framework of a combined transport operation are separate transport operations and that Regulation (EC) 1072/2009 applies to all road transport operations. Article 4 of the Directive should be amended accordingly.

4.3.

In this context, it is also surprising to note that the provision in Article 2 of the Directive requiring Member States to liberalise the combined transport operations referred to in Article 1 from all quota systems and systems of authorisation by 1 July 1993 is not included in the proposal, in particular taking into account the fact that the scope of the Directive is to be extended to cover national combined transport.

4.3.1

With the scope of the Directive extended to cover national combined transport operations, this provision will also apply to such operations. The wording of the provision is fairly wide and could be interpreted as dispensing combined transport from the rules on admission to the profession in Regulation (EC) 1071/2009 and from all restrictions to market access as far as combined transport is concerned.

4.3.2

The EESC assumes that such effects are not intended and would therefore suggest either deleting this article or rephrasing it in order to make it clear that the dispensation from quota systems and authorisations applies without prejudice to rules on access to the profession or market access, with respect to each mode involved.

4.4.

The EESC further notes that the proposal makes no mention of the applicability of the posting of workers directive to combined transport operations, with the exception of a reference in the explanatory memorandum to the applicability of the proposed lex specialis on posting of workers in road transport. This would mean that the rules on posting of workers under Directive 96/71/ EC would apply to road transport in the context of national combined transport.

4.4.1

The EESC assumes that the rules on posting of workers also apply to any posting within the framework of a combined transport operation which fulfils the criteria set out in Article 1 of Directive 96/71/EC and in the proposed lex specialis, when and if it is approved.

4.5.

The EESC takes note of the concerns over the cost of long sea links on peripheral islands such as Cyprus and Malta and the pertinence in that regard of the support regime established through Council Regulation (EC) 1405/2006 to compensate for transport costs with respect to agriculture on certain smaller Aegean islands, as raised by the EESC. The EESC suggests that the possibility of a similar solution for Cyprus and Malta should also be examined by the Commission.

Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the European Parliament and of the Council amending Directive 2009/33/EC on the promotion of clean and energy-efficient road transport vehicles’

(COM(2017) 653 final — 2017/0291 (COD))

(2018/C 262/10)

Rapporteur:

Ulrich SAMM

Consultation	European Parliament, 30.11.2017 Council of the European Union, 4.12.2017
Legal basis	Article 192 of the Treaty on the Functioning of the European Union
Section responsible	Transport, Energy, Infrastructure and the Information Society
Adopted in section	5.4.2018
Adopted at plenary	19.4.2018
Plenary session No	534
Outcome of vote (for/against/abstentions)	206/0/2

1.   Conclusions and recommendations

1.1.

The EESC endorses the rationale for the Clean Vehicles Directive — as part of the Clean Mobility Package — although it will have only a small impact compared to the general efforts needed to achieve the EU’s climate objectives and in particular the decarbonisation of transport, since this directive is limited to public procurement only. The directive aims to promote certain vehicle categories (emission zero at tail-pipe) which are the cleanest (rather than merely clean) technologies via demanding minimum targets for public procurement of such vehicles.

1.2.

The EESC would criticise the lack of clarity in this directive, in particular a scattering of information, with different definitions, and the complicated counting methods for ‘clean vehicles’ over two distinct time periods during which the definitions for emission thresholds will very likely change again. This complexity will raise serious uncertainties among the stakeholders.

1.3.

The EESC doubts, in view of the uncertainties about emission thresholds, that the transition period until 2025 will really help to bridge the technology gap until zero emissions at tail-pipe becomes broadly available and believes that this will tend more to irritate the decision-makers in public procurement. As a consequence, procurements might either be greatly delayed or even accelerated, but with old technology, which would then block possible future investments into new zero emission technology.

1.4.

For heavy-duty vehicles the uncertainties are greatest. There are no emission standards available to be used in the transition period and the zero at tale-pipe technology is less mature compared to light vehicles. For the first phase of the transition period natural gas with additions from biomethane are accepted but with a reduced weighting factor, while for the subsequent phase there are no thresholds or definitions given at all and no information is given on how to derive the new emission thresholds. The EESC concludes from these facts that the directive is premature concerning heavy vehicles and recommends separating this part from the present proposal and dealing with it at a later stage.

1.5.

The EESC welcomes the general technology-neutral approach, open towards new developments, which we can expect in view of the ongoing strong R&D efforts which are supported by the EU. But the EESC would like to note, however, that the directive does not follow this approach fully. Propulsion technologies other than electric vehicles with batteries also provide great potential for clean mobility. The EESC regrets that this is not well enough acknowledged by the directive, like for example 100 % fossil-free fuels or maybe in future synthetic fuels from waste or CO2, which are produced with excess electricity.

1.6.

In view of the ongoing developments in modern transport technology, for the years to come the EESC recommends therefore a more flexible approach rather than fixed emission thresholds and procurement targets. A mid-term review of the minimum targets for example seems to be the least to be done to allow for an adaptation of the values at a later stage.

1.7.

A major share of public procurement is related to local public transport bodies which are in the hands of cities and municipalities, the financial scope of which is quite limited. The EESC would like to raise strong concerns about the proportionality of this approach because it does not reflect at all on the additional financial burden for these public bodies and does not compare the proposal with other industry policy options. It is not evident, therefore, that an extra burden in public procurement for mainly cities and municipalities is the most efficient way to trigger industry activities and market developments.

1.8.

The EESC emphasises that any additional costs can lead to a significant burden for citizens through higher ticket prices, higher local taxes or even a reduction of the public transport offering. Moreover, the strong efforts towards clean air already made by cities and municipalities, including through extending the use of public transport, should be acknowledged and not hindered by new rules for procurement which demand minimum targets for whole Member States but are hard to meet and control at the level of municipalities with their large variety of small and large public transport bodies.

1.9.

As sub-contracting also falls under the scope of the Commission proposal, the EESC is concerned about the consequences the proposal may have on small and medium enterprises; in fact, many small local bus companies contribute to the provision of transport services in larger urban areas as sub-contractors to the local public transport operators; these companies may not have the vehicles available that are requested by this directive and might then no longer qualify as a sub-contractor.

1.10.

The EESC concludes that the main obstacle to the modernisation of public transport and the public procurement of clean vehicles is the lack of financial support and urges the Commission to reconsider the present proposal with a focus on financing, in particular by taking into account existing instruments. The specific financial support must take into account the diversity of countries, cities and regions in terms of economic strength and share of population living in urban areas with the overarching objective of harmonising the procurement of clean vehicles in all Member States.

1.11.

The EESC notes that besides the need to have more clean vehicles in public transport, it is essential to convince more citizens to use this transport by making it much more attractive (connections, comfort), rather than focusing on low ticket prices.

2.   Introduction

2.1.

The EU is committed to a decarbonised energy system as described in the ‘clean energy package’, which aims to accelerate, transform and consolidate the EU economy’s clean energy transition in accordance with the EU’s COP21 commitments, while retaining the important goals of economic growth and job creation.

2.2.

The EU has already done a lot. Greenhouse gas emissions in the EU were reduced by 23 % between 1990 and 2016, while the economy grew by 53 % over the same period. This success has been achieved in many sectors except in transport — a sector which contributes about 24 % of Europe’s greenhouse gas emissions (in 2015) and which has even seen a growth in emissions as the economic recovery in Europe goes on. Furthermore, the urgency regarding limiting air pollution in cities puts additional pressure on the need for clean transport.

2.3.

Consequently the EESC endorsed the European strategy for low-emission mobility (1), (2) including its aims and methods, which are in line with the 2011 EU transport policy white paper (3). Moreover, the ‘Clean Energy for all Europeans’ package of November 2016 and the strategy ‘Europe on the move’ (2017) included action to accelerate the deployment of clean vehicles which has been welcomed by the EESC (4), (5).

2.4.

The recent Clean Mobility Package (6) now includes specific legal initiatives such as the Clean Vehicles Directive (covered by this opinion), new CO2 standards for vehicles, an action plan for the trans-European deployment of alternative fuels infrastructure, the revision of the Combined Transport Directive, the Regulation on Passenger Coach Services and a battery initiative as an important strategy for the EU’s integrated industrial policy.

2.5.

Among the many instruments to decarbonise transport public procurement of clean vehicles as a demand-side stimulus can play an important role. Public procurement can provide a trigger for market development, as for example in the market segment of urban buses. Public fleet procurement of clean vehicles might also influence private purchases of clean vehicles.

3.   Shortcomings of the current (old) directive

3.1.

In order to promote the public procurement of clean vehicles the Commission introduced in 2009 Directive 2009/33/EC on the promotion of clean and energy efficient road transport vehicles, which has been welcomed by the EESC (7), (8).

3.2.

Public bodies in Europe, however, have purchased rather small volumes of low- and zero-emission and other alternatively fuelled vehicles under the scope of the Clean Vehicles Directive. For example for the time period of 2009-2015, an approximate average of only 1,7 % of all new buses represented battery-electric, fuel-cell electric, plug-in hybrid or natural gas vehicles.

3.3.

Some Member States or single regions or cities have already put ambitious public procurement frameworks in place that set minimum procurement requirements for clean, i.e. low- and zero-emission or other alternative fuels vehicles. However, this is not sufficient to set enough incentives and market stimulus within the whole Union.

3.4.

An ex-post evaluation carried out in 2015 identified significant shortcomings in the directive. The directive had little effect on the market uptake of clean vehicles across the EU because it has so far not stimulated the public procurement of clean vehicles. The main shortcomings identified are: — The directive does not clearly define ‘clean vehicles’. — The directive does not cover practices other than direct purchase by public bodies and does not address the renting, leasing or hire-purchase of vehicles, nor transport service contracts other than for public passenger transport. — The monetisation methodology described in the directive has been rarely used by public bodies because it is too complex.

3.5.

As part of the impact assessment, stakeholders were consulted in 2016 and 2017 about various options proposed to improve the directive. As a result, a set of amendments have been proposed to provide a definition of clean vehicles, and minimum procurement targets for light-duty vehicles as well as for heavy-duty vehicles. Such harmonised criteria applied at EU level are not in place yet.

4.   Proposals for a revised directive

4.1.

The revision ensures that the new directive provides a definition of clean vehicles and now covers all relevant procurement practices with more simplified and effective procedures. The important new elements are: — definition of clean vehicles based on a zero-emission at tail-pipe approach for light-duty vehicles and on alternative fuels for heavy-duty vehicles, — a transition period until 2025 during which low-emission vehicles are also considered as clean vehicles, however counted only with a weighting factor of 0,5, — provision to adopt a delegated act under this directive to adopt the same approach for heavy-duty vehicles as for light duty vehicles after legislation about emission standards for such vehicles has been adopted at EU level in the future, — extension to forms of procurement other than purchase, namely vehicle lease, public service contracts for public road transport services, non-scheduled passenger transport and hire of buses and coaches with driver, — definition of minimum procurement targets at Member State level differentiated by Member State and by vehicle segment categories, — discarding of the methodology for monetisation of external effects, — introduction of a reporting scheme for Member States on the implementation of the directive every three years, starting with an intermediate report in 2023 and full reporting in 2026 on the implementation of the target for 2025.

5.   Specific comments

5.1.

The EESC endorses the rationale for the Clean Vehicles Directive, although it will have only a small impact compared to the overall efforts needed to achieve the EU’s climate objectives, since this directive aims only at public procurement and not the private or commercial purchase of vehicles. Nevertheless, the directive might play an important role since public investments can provide a role model and help to develop the infrastructure, which could also be used by the private sector and thus also trigger private investments. Public investments in clean vehicles also have an immediate impact on clean air for citizens, in particular in city centres (for example in the vicinity of bus terminals).

5.2.

The EESC would criticise the lack of clarity in this directive (9), in particular the scattering of information, with different definitions, and the complicated counting methods for ‘clean vehicles’ over two distinct time periods (until 2025 and 2025-2030), during which the definitions for emission thresholds will very likely change again. This complexity will raise serious uncertainties among the stakeholders.

5.3.

The only simple rule in the directive is the definition and counting of vehicles with zero emissions at tail-pipe. This mainly relates to 100 % electric vehicles; however, it also allows for a deviation from this principle by accepting gas-fuelled heavy vehicles as ‘clean’ provided this gas is 100 % biomethane. All of the other rules are more complex like the counting of certain vehicles only as half a vehicle and the variety of fuel types depending on vehicle category and emission standards which are subject to changes in the near future.

5.4.

For a transition period (until 2025), light-duty vehicles below a certain threshold of emissions at tail-pipe are considered also as ‘clean vehicles’; however, they are counted only with the weighting factor 0,5. The thresholds are 40 CO2 g/km for vans and 25 CO2 g/km for passenger vans, which at present can only be achieved by plug-in hybrids. These thresholds will be changed as soon as the new Worldwide Harmonized Light Vehicles Test Procedure (WLTP) is implemented, which will be well before 2025. Thus the transition period is split into two parts. The consequences of such a change are unpredictable for the stakeholders based on the information given in the directive. The EESC doubts, in view of these uncertainties, that the transition period until 2025 will really help to bridge the technology gap until zero emissions at tail-pipe becomes broadly available and believes that this will tend more to irritate the decision-makers in public procurement. As a consequence, procurements might either be greatly delayed or even accelerated, but with old technology, which would then block possible future investments in new zero emission technology.

5.5.

For heavy-duty vehicles the uncertainties are even greater. There are no emission standards available to be used in the transition period and the zero at tale-pipe technology is less mature compared to light vehicles. For the first phase of the transition period, natural gas with additions from biomethane are accepted but with a reduced weighting factor, while for the subsequent phase there are no thresholds or definitions given at all. The Commission wants to implement these thresholds via a delegated act once they are defined, but there is no information given about the criteria for deriving these new emission thresholds. The EESC concludes from these facts that the directive is premature concerning heavy vehicles and recommends separating this part from the current proposal and dealing with it at a later stage.

5.6.

The EESC welcomes the general technology-neutral approach, open to new developments, which we can expect in view of the ongoing strong R&D efforts which are supported by the EU. But the EESC would like to note, however, that the directive does not follow this approach fully, as, for example, liquid fossil-free fuels are excluded.

5.7.

The promotion of battery driven electric vehicles (EV) is currently being strongly pushed forward in many countries worldwide together with an increasing number of car manufacturers. The ramping up of the market for electric vehicles, however, depends on many factors that the automotive industry can only influence to a limited extent like battery costs, battery recycling, charging infrastructure, fuel prices and public-sector procurement, as promoted by this directive.

5.8.

Propulsion technologies other than EVs with batteries also provide great potential for clean mobility. The EESC regrets that this is not well enough acknowledged by the directive. For example, 100 % fossil-free fuels (like bio-diesel HVO100 widely used in Sweden and other countries) or maybe in future synthetic fuels from waste or CO2, which are produced with excess electricity available in increasing amounts with the ongoing extension of fluctuating renewable energy sources.

5.9.

In view of the ongoing developments in modern transport technology, for the years to come the EESC recommends, therefore, a more flexible approach rather than fixed emission thresholds and procurement targets. A mid-term review of the minimum targets for example seems to be the least to be done to allow for an adaptation of the values at a later stage.

6.   Climate protection or industry policy

6.1.

It is obvious that this directive — in spite of its title — is not primarily targeting clean vehicles, climate protection and clean air; rather it is aimed at public procurement and industry policy, with a view to promoting certain vehicle categories which are the cleanest (rather than merely clean) technologies to be procured. A closer look at the various types of ‘clean vehicles’ and alternative fuels as defined in this directive unveils this discrepancy. Some types of fuels may help to improve the air quality in cities but they are not beneficial for the climate, for example when the electricity or the hydrogen for EVs comes from coal power plants. Vice versa, low emission vehicles with natural gas from biomethane, while being climate friendly, may nevertheless contribute to local air pollution. In the 2030 timeframe of the directive, completely fossil-free biofuels, although not accepted in this directive, will play a crucial role in fulfilling the EU’s climate targets. Moreover, the zero at tail-pipe approach does not at all reflect the carbon footprint of a vehicle over its whole lifetime.

6.2.

The main focus of the directive is on industry policy by using the public procurement of clean vehicles as a demand-side stimulus to provide a trigger for market development, as for example in the market segment of urban buses. The Commission assumes that public fleet procurement of clean vehicles can also influence private purchases of clean light vehicles since consumers will be influenced by an increase in citizens’ confidence that the technologies are mature and trustworthy and most importantly by an improved public recharging and refuelling infrastructure (smart charging) available for private users, in particular for people who do not have a private garage.

6.3.

The EESC would, however, like to raise strong concerns about the proportionality of this approach. The proposal claims to be in accordance with the principle of proportionality. It does, however, not reflect at all on the additional financial burden for the public bodies and does not compare the proposal with other industry policy options. It is not evident, therefore, that an extra burden in public procurement for mainly cities and municipalities is the most efficient way to trigger industry activities and market developments. Strong concerns have been expressed by local public transport organisations as well as representatives from cities and municipalities. The main points raised by these stakeholders are: — significant additional money is necessary for investments, which is far beyond their capacities, — many cities have already done a lot for clean transport, but the directive ignores all these efforts, — modern Euro VI diesel buses are ignored, although they have been set as a new standard in 2011 (10) and can bring cost-efficient reductions of public transport emissions, — plug-in hybrids are not accepted after 2025, — the infrastructure for electric charging of buses and trucks is quite distinct from charging light vehicles like private cars, therefore the synergy is rather limited, — exemptions have to be made for fire brigades, police, ambulance vehicles, — in some municipalities, public procurement involves rather low numbers of vehicles (fewer than 10) with which the minimum targets are hardly likely to be met, — the proposed reporting can only be realised with acceptable administrative efforts when a ‘clean vehicles’ category would be introduced into the official car registers.

6.4.

A major share of public procurement is related to local public transport bodies which are in the hands of cities and municipalities, the financial scope of which is quite limited. Any additional investment in the most advanced technology at higher costs (and risks) can lead to a significant burden for citizens through higher ticket prices, higher local taxes or even a reduction of the public transport offering. Moreover, the strong efforts towards clean air already made by cities and municipalities, including through extending the use of public transport, should be acknowledged and not hindered by new rules for procurement which demand minimum targets for whole Member States but are hard to meet and control at the level of municipalities with their large variety of small and large public transport bodies.

6.5.

As sub-contracting also falls under the scope of the Commission proposal, the EESC is concerned about the consequences the proposal may have on small and medium enterprises; in fact, many small local bus companies contribute to the provision of transport services in larger urban areas as sub-contractors to the local public transport operators; these companies may not have the vehicles available that are requested by this directive and might then no longer qualify as a sub-contractor.

6.6.

The EESC concludes that the main obstacle to the modernisation of public transport and the public procurement of clean vehicles is the lack of financial support and urges the Commission to reconsider the present proposal with a focus on financing, in particular by taking into account existing instruments like the strategic and structural funds (EFSI, ESIF) and the Connecting Europe Facility (CEF) and, most importantly, to define the right priorities for the next MFF. This specific financial support must take into account the diversity of countries, cities and regions in terms of economic strength and share of population living in urban areas with the overarching objective of harmonising the procurement of clean vehicles in all Member States. The EESC also notes that besides the need to have more clean vehicles in public transport, it is essential to convince more citizens to use this transport by making it much more attractive (connections, comfort), rather than focusing on low ticket prices.

---

(1)  COM(2016) 501 final.

(2)  OJ C 173, 31.5.2017, p. 55.

(3)  COM(2011) 144 final.

(4)  OJ C 246, 28.7.2017, p. 64.

(5)  OJ C 81, 2.3.2018, p. 195.

(6)  COM(2017) 675 final.

(7)  OJ C 51, 17.2.2011, p. 37.

(8)  OJ C 424, 26.11.2014, p. 58.

(9)  COM(2017) 653 final Annex 1.

(10)  Commission Regulation (EU) No 582/2011.