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									East of England Europe and International Affairs Panel,                       4 March 2005


DISCUSSION PAPER                                          Brussels Office Report

Item 4




Report from the Head of the Brussels Office


    1. Success

    John Fitzgibbon (Business Advisor) has succeeded in persuading the
    European Commission to use Cambridge as the location for an EU
    Conference on Enterprise. The date, still to be confirmed, is expected to be
    during the UK Presidency of the Council (July 1st to 31 December this year).
    EEDA‟s Chief Executive and Chairman agreed to support BO efforts, and the
    decision was confirmed on 17 February.
    Although this is not strictly a UK Presidency event, it will be easily understood
    as having more direct relevance to businesses in our region, than the informal
    EU Ministerial meetings that are on the programme for a number of UK cities.

    2. What’s being debated?

2.1 In the last three weeks, several important new documents have been issued
on the „Big Issues‟. These include several important topics of relevance to the
East of England. The key ones are:
           Growth and Competitiveness
           The EU budget
           Structural Fund reform
           The Commission Work Plan for 2005
           The draft new Social Policy Agenda for 2005-2010
           The review of the Sustainable Development Strategy (Gőteborg)
           The 2005 Work Plan for the Public Health Programme

This Report outlines the main points arising under the above.

3. Growth and Competitiveness

3.1 Growth and Competitiveness have become the central and most important
theme in Commission proposals. The now familiar mantra of making the EU the
„most dynamic and competitive knowledge-based economy in the world, capable
of sustainable economic growth, with more and better jobs and greater social
cohesion, and respect for the environment‟, (Lisbon Strategy, 2000), has
remained stubbornly “more pipedream than reality” (new Competition
Commissioner Neelie Kroes).


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3.2 The issue for the EU in 2005 is how to create a new momentum to ensure
growth and competitiveness for the enlarged EU, without weakening its
commitment to sustainable development nor to its „social model‟. It is not
possible to consider growth, without taking on board the other two policy areas
and the revived proposals for the budget that are its consequence.

3.3 In 2003, Commission President Prodi tried to come up with a new Growth
Initiative to inject life into the flagging process. This was met with some strong
reservations at the time, but the idea is definitely on the agenda again.

3.4 In November a panel of experts reported on the state of play for EU growth
and competitiveness (“Lisbon”). This formed the basis for a Commission report
issued on February 2. A report on the experts‟ broad findings was made to the
European and International Affairs Panel of EERA in December 2004. The
Commission‟s response will now go to the Spring Council of EU leaders for
consideration (March 22-23). A more detailed Report is available from the
Brussels Office.

4.Budget

4.1 Given the need for growth and enhanced competitiveness, there is not just
    ongoing consideration of the size of the EU budget, but crucially, what the
    new emphases will be for spending.
4.2 Apart from the arguments over the total size of the EU budget 2007-2013,
    Member States are being asked to consider what the emphases for
    spending should be, i.e how much funding should go into the different
    headings. Member States have been asked to consider the following before
    the General Affairs Council of February 21st:
    Are they willing to create a new heading in the budget for 2007-2013, to
      pay for growth and competitiveness?
    This would cover the completion of a fully-integrated single market; a very
      substantial increase in R & D spending; extra funding for transport and
      ICT networks; the prioritization of employment and training; and an
      extension of the social policy agenda.
    The total amount foreseen for such a budget line would be about 13% of
      total spending (121.7 billion).
    The comparative weight of the different items in the basket would be : R &
      D roughly 55% of this budget; transport and communications networks
      19%; education and training 11%; promoting competitiveness and
      innovation 3%; and 0.5% for the social agenda.
    Would they support a Growth Adjustment Fund, to enhance the
      responsiveness of expenditure to changed circumstances of
      competitiveness?
    This would amount to a billion euros per annum, with up to another billion
      coming from unspent funds within the cohesion (Structural Funds) budget


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         – drawn for example, from programme funds under the claw-back rule
         (“n+2”).
        Member States‟ reactions on February 21st will form the basis of a draft
         compromise proposal, to be tabled at the March 22-23 Summit of EU
         leaders.

4.3 One controversial proposal under the new growth strategy is for an EU
Directive on corporation tax, seen as a key means of completing the internal
market. This would aim to create a common base for the calculation of such
taxes, to increase competition between the Member States. Corporation tax
represents about 3% of EU GDP. Although it is not about harmonization of taxes
at this point, there is stiff opposition from five Member States – interestingly these
are Estonia, the Czech Republic, Malta, Ireland and the UK. This type of
Directive would require unanimity – a huge hurdle in itself.

4.4 The final shape of the EU budget 2007-2013 will directly determine the size
of the budget available for regions such as ours, for example under the new
arrangements for Objective 2 and R & D funding.

4.5 A similar proposal was made by Professor Andre Sapir two years ago and
supported by President Prodi. Despite strong opposition at the time, several
elements have re-surfaced, with growth now looking clearly like a leading
direction for both policy and spending.

        The link between the new Lisbon proposals and the Structural Funds, was
         made more explicit before Christmas by the new Regional Policies
         Commissioner, Danuta Hübner.

        It is not yet clear whether the resurgence of growth as a leading direction
         for the EU, might also mean provision for „backing the winners‟ under
         regional policies. Earlier in this long debate and reform process, there did
         appear to be some scope for backing winners under the thematic
         approach for Objective 2, but this faded over time. We are listening
         closely…

5. Structural Fund reform

5.1 In Brussels the European Commission will be presenting its plans for reform
to leading regional representatives from across Europe on March 3rd, against the
growth and competitiveness background (Lisbon strategy). It is understood that
EEDA and GO:E are likely to be invited via DTI.

5.2 For the latest timetable on the Brussels process, see annex to papers
elsewhere on this agenda. For more detail of Brussels developments, see the
most recent BO reports including that of 4 February..




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6. Commission Work Plan 2005

6.1 The Commission recently published its 2005 work programme, which sets
out the legislative proposals, reports and other initiatives it intends to present this
year. The Brussels Office focuses on distinct policy areas within this Work
Programme, depending on regional priorities.

6.2 The Work Programme rolls forward annually and is not always completely up
    to date nor comprehensive.

6.3 This year three central priorities are identified that will form the basis of the
    Commission‟s work:
    enhancing prosperity through measures to increase competitiveness,
      economic growth and employment,
    pursuing the objectives of solidarity (e.g. cohesion, social protection, and
      environmental protection), and security, (e.g. the Hague programme on
      justice and home affairs, fighting crime and terrorism, managing
      immigration, and being better prepared for natural disasters and security
      threats),
    enhancing the EU‟s role in the wider world.


6.4 The Work Plan therefore reflects the aim of consistency across all the
expected work areas, with a special emphasis in 2005 on growth and
competitiveness, sustainable development, and social policy.

7. The new Social Agenda in brief

7.1 The mid-term review of the Lisbon Agenda brings with it the need to refresh
the European Social Agenda. While this is chiefly in the national domain for
Member States, there is still scope for regional partners and particularly key
agencies, to make their views known through national channels in particular. As
previously, the European Social Fund and the new PROGRESS programme will
be the means used to deliver much of the Social Agenda, for example through
the European Employment Strategy (EES). The ESF will play the role of catalyst
in regions such as the East of England, and support transnational exchanges of
experience. The EES will have a re-vamp under the growth and competitiveness
arrangements, this year.

7.2 The existence of an EU Social Agenda has to date been strongly supported
by the European Parliament. The following is just an overview of what this is
about. The BO prepares more detailed and focussed papers for key regional
players, which are currently being distributed to all as part of our review of
information provision.



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7.3 The aim of the new Social Agenda in modernising labour markets and social
security systems, is also proactive: it seeks to “help people seize the
opportunities created by international competition, technological advance and
changing population patterns while protecting the most vulnerable in society”.

 It should be noted that the EU social model is also being promoted as a global
example to ensure greater account is taken of the social dimensions of
globalisation in EU relations with bodies such as the UN, the OECD
(Organisation for Economic Co-operation and Development) and the ILO
(International Labour Organisation).

7.4 There are two key priorities:

        Employment

        Fighting poverty and promoting equal opportunities.

7.5 Employment covers:

        Creating a European labour market,

            o    by making it easier for people to take pension and social security
                entitlements with them when working in different Member States

            o Creating an optional framework for collective bargaining across
              frontiers

            o Making proposals for transition periods affecting workers from the
              new Member States

            o Getting more people, especially youth and women, into better-
              quality jobs

            o Updating labour law e.g on contracts,

            o Introducing a new health and safety strategy

            o Managing re-structuring through employers and union talks

7.6 Poverty and equal opportunities covers:

            o The impact of ageing populations; new partnerships between the
              generations; Green Paper on demography expected this year on
              the „intergenerational dimension‟

            o Supporting the Member States in reforming pensions, health care
              and poverty arrangements




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East of England Europe and International Affairs Panel,                 4 March 2005


            o Tackling discrimination and inequality, including minimum wage
              schemes, discrimination against groups such as the Roma

            o Equal opportunities

            o Clarifying the role and characteristics of social services of general
              interest

7.7 On the latter point, clarification will be issued on the State Aids dimension of
   financing Services of General Economic Interest (SGEI), and specifically
   defining compatibility with EU rules. Current consultations on this indicate that
   exemptions may be granted on public service compensations of a limited
   sum. It is expected that, if accepted, special conditions might apply to bodies
   such as hospitals and housing associations.

8. 2005 Review of the Sustainable Development Strategy

8.1 As the growth and competitiveness agenda (Lisbon) moves forward,
Sustainable Development is seen alongside the Social Agenda, as the other
main policy area needing to be maintained and in some respects, protected.
Sustainable Development was first launched as a broad EU Strategy in 2001 at
the European Council in Gőteborg.

8.2 In early February the Commission issued a Communication to the Council
and the European Parliament on the need both for stocktaking and for future
orientation. The EU sustainable development strategy is reviewed at the
beginning of each new Commission term.

    The Commission is inviting comment on its proposed orientations for the
    Strategy from regions and all parts of civil society as well as Member
    States, the European Parliament and the Council.

8.3 The Communication acknowledges that there are few signs that threats to
sustainable development have been reversed. It first recognises the success of
the existing sustainable development measures, in their commitment to changing
the way in which policies are made :

            o greater use of the Open Method of Co-ordination (active
              consultation of stakeholders who in turn put pressure on
              governments etc). This approach tends to involve regional Brussels
              Offices, who are invited to bring in a regional expert.

            o improving the coherence of policies by the use of tools such as the
              Impact Assessment

            o getting prices and incentives right; workable solutions have proved
              to be the Energy Tax Directive and the EU-wide allowance trading



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                scheme for greenhouse gas emissions, to meet Kyoto reduction
                targets

8.5 Investing in science and technology through the 6th Framework Programme,
   is being used to achieve a balance between economic growth and
   environmental sustainability. Several initiatives have been taken at EU level
   to encourage active involvement of citizens and businesses.

8.6 The motor behind this review however is clearly acknowledged as the
   prevalence of unsustainable trends in climate change and increasing threats
   to public health.

8.7 Future orientations proposed to the Council and Parliament :

        Three-dimensional nature of the policy: economic growth, social inclusion
         and environmental protection go hand in hand, across the world

        Reaffirm the new approaches to policy-making (Open Method, balanced
         Impact Assessment, Better Regulation agenda)

        Principle of the Polluter pays/cause of damage pays ; shift of taxation
         away from labour costs and to environmental concerns?

        Thorough assessment of the main unsustainable trends and relationships
         between them

        New objectives, targets and milestones

        Reinforcement of monitoring systems

        Effective ownership of the strategy via partnership between industry,
         NGOs, consumers, trade unions

    Clearly many of the above points demand closer examination and the BO is
    active in trying to associate colleagues and experts in the process.

    9. Staff news

    1. We have been able to secure the assistance for five months of a student,
    Peter Redfern. Peter, who hails from Bedfordshire, is taking an MA in
    European Parliamentary Studies at Leeds. His support is free of charge to the
    BO.

    2. Nina Cunningham, from EEDA, is expected from 22 February until the end
    of May, on placement. Her work within the BO team will focus in particular on
    the sustainable development event that the BO has been helping EEDA to
    prepare for the English RDAs. The event will take place in late May and
    involve several EU regions, as well as the other UK Brussels Offices.


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East of England Europe and International Affairs Panel,              4 March 2005


    3. Jenny Carson is on maternity leave until early May.

    Recommendations

    1. That the Brussels Office advance warning of EU developments in relevant
       policies and programmes and their role of bringing relevant information to
       the Panel be noted.

    2. A review of the way in which regional players are both identified and
       associated in responding to EU consultations would be a good idea, to
       enable potentially wider ownership of position papers, and promote the
       active use of consultation systems such as the Open Method. It is
       recommended that the Panel should be provided with a report on this as a
       management issue.

    3. It is recommended that responses and suggestions are worked up to the
       sustainable development proposals and the ongoing growth and
       competitiveness proposals, for endorsement by this Panel.

    4. For the social policy agenda, it is recommended that the appropriate
       Assembly Panel and other key regional players are engaged in
       appropriate responses.




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