Agenda 2000: for a stronger and wider Union

With the adoption of about twenty legislative measures, the Union completed its "Agenda 2000" project in 1999. The original Commission Communication on which the project was based, "Agenda 2000: For a stronger and wider Union", comprises a single complete framework offering a clear and coherent vision of the Union's future on the threshold of the 21st century. Its primary aim was to ready the Union for its greatest challenges: the reinforcement of its policies and the accession of new members, within a strict financial framework.

The measures adopted, using the communication as a basis, are in line with the Agenda guidelines: the budget effort has been consolidated, there is a greater concentration of resources, stricter implementation (simplification and decentralisation), good preparation for the integration of the new Member States.

Background

The Agenda 2000 legislative package results from the combined effort of all the institutions; it was conceived at the Madrid European Council in December 1995.

At that meeting, and with a view to opening accession negotiations with the applicant countries, the Heads of State and Government invited the Commission to submit its opinions on the various applications, together with a composite paper on enlargement. At the same time, the Commission was invited to prepare, on the basis of a thorough analysis of the Union's financing system, a communication on the Union's future financial framework, having regard to the prospects of enlargement.

The communication "Agenda 2000 : For a stronger and wider Union" [COM(97) 2000], which the Commission presented on 16 July 1997, was a comprehensive response to these requests. The communication describes, in a single text, the overall prospects for the development of the European Union and its policies, the horizontal problems occasioned by enlargement and the shape of a future financial framework for the first seven years of the new millennium, in the context of an enlarged Union. The Commission simultaneously made known its opinions on the accession applications of the ten countries of central and eastern Europe.

The Commission communication highlighted a number of priorities in particular: the need to maintain the policy of economic and social cohesion, to pursue the reform of the common agricultural policy, to strengthen growth, employment and living conditions through the Union's internal policies and to allow the accession of new members, while maintaining budgetary discipline.

To translate these priorities into legal instruments, on 18 March 1998 the Commission presented legislative proposals on the various topics set out in its communication. At its meeting in Berlin on 24 March 1999, the European Council reached a political agreement on the Commission's proposals, so allowing the institutions to continue examining the Agenda 2000 legislative package and to adopt the final measures before or immediately after the election of the new Parliament in June 1999.

The resulting package of legislation covers four main, closely related areas: the reform of the common agricultural policy, structural policy reform, the pre-accession instruments and the new financial framework. The Commission has also proposed an amendment to the financial regulation on trans-European networks. Some other priority areas covered in the original Commission Communication - internal policies, external action, administrative reforms - did not necessitate a translation into specific legislative measures. They have, nevertheless, an important position in the financial perspectives.

The reform of the common agricultural policy

The agricultural reforms are continuing and they consolidate the changes introduced by the reforms of 1988 and 1992. The reforms have many aims: to increase the competitiveness of Community agricultural products on the domestic and world markets, to integrate environmental and structural considerations more into the implementation of the common agricultural policy, to ensure a fair income for farmers, to simplify agricultural legislation and decentralise its application, to improve food safety, to strengthen the Union's position in the new round of WTO negotiations and to stabilise agricultural spending in real terms at its 1999 level.

Two types of measures will assist in achieving these objectives. Firstly, new regulations amending the common organisations of the markets in wine, arable crops, beef and veal and milk and, secondly, measures of a more horizontal nature.

Both the arable crops and milk sectors will see gradual reductions in their intervention prices. In the case of beef and veal, the basic price will be reduced, while the intervention price will be maintained at its existing level, as a safety net.

These reductions will be partly offset by a series of direct aids to farmers, calculated on the basis of the annual production of the agricultural product involved. In the beef and veal sector, slaughter premiums and an increase in extensification and suckler cow premiums are also provided for. The reform of the milk sector will enter into force in the 2005/06 marketing year, with a three-stage reduction of 15 % in the intervention price and an increase in the quotas of 1.5 %.

The new regulation governing the market in wine will ensure a controlled increase in production potential by maintaining the current ban on new plantings until 2010. Some less-favoured regions may, however, qualify for an exemption from this ban. The new rules also replace the various existing forms of distillation with one kind, called "crisis distillation", applicable on a voluntary basis where the market is exceptionally disrupted. Furthermore, to simplify matters, the 23 regulations that previously governed the wine sector have been consolidated into a single new regulation.

The Community premiums can be supplemented by national aids, within limits.

A horizontal regulation, applying to the various common market organisations, urges the Member States to take account of the farmers' compliance with environmental requirements and employment thresholds when granting their direct aids.

The reductions in the market support prices are accompanied by an increase in aids to farmers with a view to improving competitiveness on both domestic and world markets, thereby reducing the risk of a return to costly overproduction, some of which cannot be sold.

A second horizontal regulation aims to decentralise the management of the European Agricultural Guidance and Guarantee Fund (EAGGF). Under this new regulation on the financing of the common agricultural policy, the Member States will be able to administer their share of the EAGGF appropriations, while having to comply with certain Community criteria.

The Agenda 2000 package for agriculture has been supplemented by a Regulation on rural development, a genuinely second pillar of the common agricultural policy, which will secure the future of the Community's rural areas by promoting:

• the accompanying measures introduced in 1992 (early retirement, agro-environmental measures and forestry);
• measures to diversify agricultural holdings (support for the processing and marketing of agricultural products, vocational training, promotion and diversification of agriculture, etc.);
• structural adaption of the holdings and the installation of young people.

The common agricultural policy has been one of the bedrock policies of European integration since its inception. Placed as it is at the heart of the social model advocated by the European Union, it will remain important for the construction of Europe.

Structural policy reform

As the Berlin European Council has stressed, improving the effectiveness of the Structural Funds and the Cohesion Fund is the cornerstone of the Agenda 2000 reforms. This means ensuring that structural assistance is more concentrated both in geographic terms and in terms of the object of assistance and it means improving the management of the Funds, while continuing to pursue the objective of economic and social cohesion in an increasingly diverse Union. The funding ceiling for the structural policy has been set at EUR 213 billion for the 2000-06 period for the current Member States; this represents a slight increase on the preceding period (1994-99: EUR 208 billion).

The policy changes agreed upon relate to the Structural Funds proper (the European Social Fund, the European Regional Development Fund, the Financial Instrument for Fisheries Guidance, the European Agricultural Guidance and Guarantee Fund, Guidance Section), and to the Cohesion Fund.

The new general conditions applying to assistance from the Structural Funds are laid down in a horizontal regulation containing general provisions on the Structural Funds.

Under this regulation, Community aid will henceforth concentrate on three priority Objectives instead of the previous six:

• the development and adjustment of regions whose development is lagging behind (Objective 1),
• the economic and social conversion of regions experiencing structural difficulties (Objective 2),
• the adjustment and modernisation of education, training and employment policies and systems (Objective 3).

The principle of greater concentration has also been applied to the Community Initiatives, which fall in number from 13 to 4. The only Initiatives kept are Interreg (cross-border cooperation), Leader (rural development), Equal (the fight against discrimination in the labour market) and Urban (regeneration of cities, towns and suburbs in crisis).

The regulation also provides for more decentralised management of the Structural Funds by the Member States under the Commission's general supervision, as well as greater participation on the part of civil society, the regional and local authorities and the social partners in drawing up and implementing the structural programmes.

The general regulation on the Structural Funds is supplemented by three more specific regulations setting out, for each of the Funds involved (the European Regional Development Fund, the European Social Fund and the Financial Instrument for Fisheries Guidance) the aims to be achieved and the types of measure qualifying for assistance. The Guidance Section of the EAGGF is henceforth covered by the new regulation on rural development.

Like the Structural Funds, the Cohesion Fund will continue to be a central pillar of economic and social cohesion in the Union in the period 2000-06.

The Cohesion Fund 's main objective remains unchanged: to fund environmental and trans-European transport projects in those Member States with a gross national product (GNP) below 90 % of the Community average. An additional criterion for eligibility, requiring the beneficiary Member States to draw up and comply with an economic stability programme, will continue to apply.

A mid-term review, planned for 2003, will decide which Member States no longer meet the eligibility criteria.

Internal policies

The general thrust of Agenda 2000 as regards the Union's internal policies has been kept.

The allocation for internal policies in the perspective has been increased and should grow gradually each year from EUR 5.9 billion in 2000 to EUR 6.2 billion in 2006. Expenditure will focus on the following priorities: research, training and major networks. In the case of trans-European networks (transport, energy and telecommunications infrastructure), the new financial regulation adopted under Agenda 2000 encourages private investment and the use of venture capital for financing projects of common interest. It also encourages multi-annual programming. The networks will thus be able to mobilise enough funding to help to improve competitiveness and strengthen economic and social cohesion in the context of enlargement.

External action

The European Union will become a global player in the 2000-06 period and its commitments for foreign policies will grow gradually, from EUR 4.55 billion to EUR 4.61 billion. These resources will be mobilised through an approach that integrates all the policies while ensuring a well balanced geographic distribution, having regard to the political commitments and to the priorities given to those countries in greatest need.

Maintenance of the financial resources as a percentage of GDP will ensure a strong European presence on the world stage. The Union will continue to be the largest donor of international aid, whether humanitarian, development or reconstruction aid.

Administrative expenditure

Rising from EUR 4.56 billion in 2000 to EUR 5.1 billion in 2006, administrative expenditure will be subject to the same constraints as those imposed on the administrative budgets of the Member States; this discipline will apply equally to all the institutions.

As in the case of the other headings of the financial perspective, the intention is to add value to, and mobilise better, the human resources of a public service founded on competence, independence and permanence. The new Commission's priority will be to rethink its own role and redefine its mission on the basis of what has already been undertaken.

The challenge of enlargement

The prospect of Union enlargement to take in ten countries of central and eastern Europe (Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia) and Cyprus was one of the main reasons for the Agenda 2000 reforms.

In Part Two of the 1997 Agenda 2000 communication, the Commission included, along with its opinions on the various accession applications, recommendations on reinforcing the applicant countries' preparations.

The main element of this "reinforced pre-accession strategy" - the conclusion of the Accession Partnerships with the eleven applicant countries - was already implemented in March 1998, two weeks before negotiations started with the six countries in the first wave to accede (Cyprus, Czech Republic, Estonia, Hungary, Poland and Slovenia).

Each Partnership takes the form of a multiannual programme comprising, in a single document, specific commitments on the part of the applicant country (on democracy, macroeconomic stabilisation and nuclear safety), a national programme to transpose the Community acquis, and the funding which the Union will employ to support the applicant country's preparations.

When the Accession Partnerships were concluded, the Phare Programme was the main financial instrument available to the Union to kick-start the applicant countries' pre-accession period. The programme has two priority objectives approved by the Luxembourg European Council: the improvement of administrative and legal capabilities (30 %) and investment linked to the adoption and application of the Community acquis (70 %). The Instrument for Structural Policies for Pre-accession (ISPA) and the Special Accession Programme for Agriculture and Rural Development (SAPARD) joined Phare in 1999. All three are involved in the Accession Partnerships concluded with each of the applicant countries.

A horizontal regulation on the coordination of aid to applicant countries aims to ensure coherence between the different aid forms.

Another of the Commission's recommendations in its 1997 Agenda 2000 communication has been put into effect: while still in their pre-accession phase, all the applicant countries can take part in certain Community programmes relating to education, the environment or research and development.

In accordance with the conclusions of the European Councils in Luxembourg and Cardiff, the presentation and implementation of the future financial framework make a clear distinction between expenditure on the Union as it is currently made up on the one hand and expenditure reserved for the future acceding countries, after enlargement, on the other.

The new financial framework

The new financial framework agreed by the Commission, Parliament and the Council will enable the Union to see enlargement and its internal reforms through without compromising the principle of budgetary discipline.

On the expenditure side, the expenditure planned for the 2000-06 period will remain well below this global ceiling. The new financial perspective (2000-06), which is annexed to the new Interinstitutional Agreement on budgetary discipline and improvement of the budgetary procedure, provides for stabilisation of the ceiling for payment appropriations at EUR 89.62 billion in 2006 (compare this with EUR 89.60 billion in 2000), which represents a smaller percentage of Community GNP (a fall from 1.13 % to 0.97 %).

General budgetary discipline will be reflected in the various expenditure categories, including those considered a priority such as external action, the common agricultural policy, structural policy and certain other internal policies (trans-European networks, research, education and training, environment and small and medium-sized enterprises).

Thanks to this general budget discipline and the expected growth in the Union's GNP, it will be possible to finance enlargement within the own resources ceiling of 1.27 % of GNP. At the next enlargement, the financial perspective will be revised to include supplementary expenditure linked to the enlargement.

An indicative financial framework established for a hypothetical Union of 21 Member States from 2002 gives, for each heading involved (agriculture, structural measures, internal policies, administration), the additional expenditure that would be occasioned by such an enlargement.

The new financial perspective provides for various mechanisms that allow some flexibility in the application of the financial framework. This involves in particular a procedure to revise the ceilings, an instrument offering general flexibility (to cover specific expenditure that cannot be financed within the ceilings) and three budgetary reserves (monetary reserve, reserve for guaranteeing loans to third countries, reserve for urgent assistance) to which the Union can turn should unexpected expenditure needs arise.

The reserve for loan guarantees to non-member states covers the operation of the Guarantee Fund for external actions. Following the adoption of the new regulation on the Guarantee Fund, which reduces the Fund's operating parameters, the reserve was proportionately reduced in the financial perspective.

In addition to the financial perspective, the Interinstitutional Agreement includes provisions to improve the annual budgetary procedure and interinstitutional cooperation. Thus, interinstitutional collaboration is reinforced and answers have been provided on a number of issues left unresolved by the previous Agreement (classification of expenditure, inclusion of the financial provisions in legislative instruments, general requirement to have a legal basis for the expenditure).

Union expenditure is henceforth stabilised in a consolidated framework.

As regards Union revenue, the institutions have decided to maintain the general shape of the own resources system. The system is intended to ensure sufficient resources, subject to the need for strict budgetary discipline, to be simple, transparent, fair and in line with each Member State's ability to contribute, and to have a satisfactory cost-benefit ratio.

The Berlin European Council invited the Commission to present as soon as possible a draft decision on own resources with a view to its entry into force, after ratification, at the start of 2002. The new decision will reduce the imbalances between the Member State's contributions. Thus, the maximum rate of call on VAT will fall gradually to 0.75 % in 2002 and to 0.50 % in 2004, while the percentage retained by the Member States when collecting customs duties will increase to 25 % with effect from 2001. The UK rebate will remain, with some technical adjustments to neutralise the windfall effects due to other changes in the own resources decision or resulting from enlargement. Furthermore, the financing of the UK rebate by the other Member States will be amended so that Austria, Germany, the Netherlands and Sweden see a reduction in their financing share to 25 % of the normal contribution.

The ceiling on own resources will be maintained at 1.27 % of the Community's GNP, corresponding to the 1999 level. The Commission has been invited to make a general reappraisal of the own resources system before 1 January 2006.