IN THE CHAIR: MR COX
President

(The sitting was opened at 5.05 p.m.)

  President. – I declare resumed the session of the European Parliament adjourned on Thursday, 29 January 2004.⁽¹⁾

  President. The final draft agenda as drawn up pursuant to Rules 110 and 110a of the Rules of Procedure by the Conference of Presidents at its meeting of Thursday, 5 February 2004 has been distributed. I have not received any requests for changes to the agenda for Monday.

Tuesday

  Cercas (PSE). – (ES) Mr President, as rapporteur for the own-initiative report on Directive 93/104/EC on the organisation of working time, I would request that the vote take place on Wednesday rather than tomorrow, since negotiations are being held between various parliamentary groups and they asked me a moment ago if we could do this. If possible, therefore, we would like to be able to continue working tomorrow and vote on the report on Wednesday.

  Pronk (PPE-DE). – Mr President, I support this proposal because it gives us a chance to find a solution to this very cumbersome dossier.

(Parliament agreed to the request)

Wednesday

President. As regards the oral questions on nuclear disarmament, I have received a request from the Verts/ALE Group to wind up the debate with a motion for a resolution which could be put to the vote at the next sitting in Brussels.

  Frassoni (Verts/ALE). – (IT) Mr President, the aim of the resolution is to prepare the guidelines before the conference to revise the Treaty of Non-Proliferation.

Traditionally, we conclude such debates with a resolution; it therefore seemed right to do so in this case too, even though the resolution will be put to the vote during the next sitting.

  Schulz (PSE). – (DE) Mr President, I believe that this is one of the most important policy issues currently under consideration and discussion in the sphere of international politics. We frequently adopt resolutions that I do not believe are quite as significant as this, so we are very much in favour of there being a resolution to wind up this debate.

  President. Does anyone wish to speak against the request?

  Suominen (PPE-DE). – Mr President, my Group is against a resolution.

(Parliament agreed to the request)

(The order of business was thus established).⁽¹⁾

  Bradbourn (PPE-DE). – Mr President, it has recently been brought to my attention that the Maltese Labour Party has submitted up to 1 600 petitions to the Constitutional Court in Malta, the effect of which is to disbar Maltese citizens temporarily abroad for work or study from voting in the coming European elections. Should this be the case, this seems to be against the letter and the spirit of both EU law and convention, in that many of these nationals are outside of their home territory for perfectly legitimate reasons.

If this is true, this seems to be behaviour that is not consistent with the democratic process which this House would accept as the norm for a country which is shortly to become a Member State of the European Union. I ask you therefore to investigate whether an attempt is being made to gerrymander the electoral process in Malta and to report back to this House with your findings.

  President. I shall indeed enquire into the matter and report back to you, Mr Bradbourn.

  De Rossa (PSE). – Mr President, everybody in this House is concerned about the human rights situation in Colombia, and the visit of the President of Colombia, Mr Uribe, gives this House the opportunity to make plain our concerns about that situation.

I rise specifically, Mr President, to ask you to raise with Mr Uribe, the President-in-Office and the Commission the question of support for a proposed conference on humanitarian rights later this year. It has been proposed by the Alianza umbrella organisation – an alliance of 115 NGOs and civil organisations in Colombia – which is seeking to engage the civilian population in finding solutions to the 40 years of conflict. Mr President, I will send you the details of this proposal and ask you to consider them and to raise this matter with President Uribe when you meet him.

  President. I would welcome your note on the matter.

Exceptionally, President Uribe will appear before the Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy during the working day tomorrow. There will be a direct opportunity for members of that committee to bring issues to his attention.

  Tannock (PPE-DE). – Mr President, I would like to protest at the leniency shown by President Musharraf of Pakistan to the television confession of Dr Abdul Qadeer Khan. This House has criticised Pakistan's exports of nuclear technology in the past and received condemnation from its government for doing so. It is extraordinary that the sale of such dangerous WMD know-how to regimes as brutal as North Korea results in a presidential pardon and the right to keep the illegally acquired payments. It smacks of a public scapegoating exercise in the face of embarrassing evidence of official covert support by the government.

Secondly, I would like to send my condolences to the people of Moscow for the recent atrocious suicide bomb attack on their metro, which resulted in at least 39 deaths and 150 casualties, with everything pointing to Chechen terrorists organised by a Saudi al-Qa'ida follower. I ask those in this House who proclaim the glory of the Chechen freedom fighters how they account for the murder of innocent Muscovites?

  Napolitano (PSE). – (IT) Mr President, in a few days’ time it will be the 20th anniversary of the adoption by the European Parliament of the Draft Treaty Establishing the European Union, created and proposed by Altiero Spinelli. The Conference of Presidents called on the political groups to look into the possibilities for celebrating both this anniversary and the 25th anniversary of the death of Jean Monnet, one of the greatest creators of European integration.

I would, however, like to draw your attention, Mr President, to the dissimilar nature of these two anniversaries. Celebrating the anniversary of the Spinelli draft means not so much paying homage to Altiero Spinelli himself, as appreciating the far-sightedness of the European Parliament that, 20 years ago, drew up and proposed the first treaty of a constitutional nature, something which it makes sense to stress today in the light of our renewed commitment to ensure that Europe is in fact finally given a Constitution.

(Applause)

  President. As you correctly observed, Mr Napolitano, your suggestion was discussed by the Conference of Presidents. It was decided that, in the last parliamentary session in May, we should observe a number of those anniversaries. However, with regard to the specific observation you made about the Spinelli report and the leadership of the European Parliament, I will be happy to mark that day by making a declaration on behalf of this House, in line with your preference and your suggestion to the Conference of Presidents.

  Segni (UEN). – (IT) Mr President, referring back to what Mr Napolitano said, frankly it seems to me that your reply had very little substance to it; what we need here is, instead, much more than that.

This is not about commemorating Altiero Spinelli, but rather about seizing the opportunity of this important and historic date, which calls for a special sitting and not for one among many celebrations. It would also be the opportunity to take a much bigger and more important step: let the European Parliament do as much as it did then, with Spinelli: that is to say, in order to promote the European Constitution, immediately adopt the text that resulted from the Convention, so concluding an act which, even without legal value, would have a huge political value.

This is what I ask of you, Mr President: that the European Parliament have the courage, twenty years on, to implement the same initiatives. I call on you and on the chairmen of the political groups, above all those who refer to the European idea, to do this. I hope that they are true to their tradition.

  Martin, Hans-Peter (PSE). – (DE) Mr President, I just wanted to raise something briefly. A report by me on industrial associations has been put on this week’s agenda, without my knowledge, and, above all, also contrary to everything agreed by Parliament with the authorities here. I learned of this when someone from The Times in London phoned me about it. On being asked how this could come to pass, the Parliament office responsible stated that it had been done with the groups’ agreement. When I asked them, I was told it was the Parliamentary services that had done it. This does not show this House in a very favourable light. I now note – with gratitude, of course – that the report’s arrival will be subject to the rapporteur’s agreement, as certain groups are aware that it is the subject of important negotiations that are still in progress. In practice, though, it would have been nice for this to have been done a bit more transparently and efficiently.

  President. I will get back to you on the detail when I have had a chance to study the matter.

  Figueiredo (GUE/NGL). – (PT) Mr President, Portuguese newspapers have recently reported appalling cases of mistreatment, abuse and even slavery, to which Portuguese workers have been subjected in various EU countries, such as France, the Netherlands and the United Kingdom.

The Portuguese newspaper Jornal de Notícias this morning ran a story entitled ‘More Portuguese citizens ill-treated in the Netherlands’, which stated that the Dutch authorities had been informed of the situation. According to the story, however, the reports from that country are marked by unprecedented abuse perpetrated against Portuguese workers. There are accounts of mistreatment of workers in some companies in the Netherlands, or at the hands of gangmasters; workers are denied the most basic of rights, such as sufficient food to eat and accommodation fit for human habitation; real organised networks are said to be operating in various countries to recruit workers, which is absolutely scandalous.

Immediate action must be taken, Mr President, to put an end to this state of affairs. I request, Mr President, that the Commission and the Council be notified and that immediate action be taken to eradicate the problem of these appalling attacks on workers’ rights and on human rights in general.

  President. I would like you to send to my office copies of the material you referred to. I will indeed take up the matter, as you suggest.

Mr Martin, the report for which you are rapporteur was placed on the agenda following the normal procedures. However, having learned of your difficulties as regards its scheduling and in deference to you as rapporteur, it has been withdrawn from the agenda.

  Martin, Hans-Peter (PSE). – (DE) Mr President, I apologise for bringing this issue up again; I have so far heard that only in the original language. I would just like to reiterate that there was a clear agreement with the Parliamentary services that this report would not be put on the agenda until March or April. I then learned from The Times in London that it was given a slot in February. Only then did I say, ‘please, not yet!’ This is where you must not confuse cause and effect!

  President. The Conference of Presidents will decide when it returns to the agenda, but it is not on the agenda now. That is the answer to your question.

  Hudghton (Verts/ALE). – Mr President, last week the Commission ruled against the level of assistance being given by the Charleroi airport authorities to a certain airline. Not only do I sympathise with the public authorities responsible for Charleroi, I admire them for trying to take action to stimulate much-needed economic growth and jobs, in the light of declining traditional industries.

The benefits of low-cost air travel have been felt over a much wider area than just around Charleroi. For example, the route from Glasgow-Prestwick to Charleroi is the only air link from the west of Scotland, a very populous area, to the capital of Europe area. While I recognise that the Commission sees fit to implement state aid regulations in certain ways, what about the consumers? I hope that the Commission will not be over-enthusiastic and end up disadvantaging consumers, including many groups who wish – and need – to visit our headquarters and the other European institutions to learn more about how Europe actually works.

  Frahm (GUE/NGL). – (DA) Mr President, 25 years ago, the Islamic Republic of Iran was founded, leading to the violent infringement of human rights and, in particular, the violation of women’s rights. The question is, whether we are now seeing the start of a similar development in occupied Iraq.

On 29 December, a number of rulings concerning divorces, marriages and children etc. were replaced by Sharia law in the otherwise secular state of Iraq. Now, I hear that the leader of the Organisation of Women's Freedom in Iraq is under violent attack from Islamic groups. Her name is Yamha Mohammed. I should very much like to ask you to protest, on behalf of Parliament, against the attacks on women’s rights that are now gathering speed in Iraq, and also to protest to the occupying forces, that is to say the alliance of so-called volunteers, against this development.

  McKenna (Verts/ALE). – Mr President, I too would like to raise the issue of the visit by the Colombian President, Mr Uribe, to this Parliament. My Group was not in favour of this invitation, and, as I understand it, neither was the ELDR Group nor the GUE/NGL Group. It is unfortunate that the PSE Group did not support us on this.

There is a great danger that President Uribe will use this as a propaganda stunt to give the impression at international level that everything is fine. You only have to look at the UN reports on Bogota, whenever they are published, to find accounts of gross human rights violations. The recently introduced legislation, in particular the anti-terrorist statute which was adopted in December, gives judicial powers to the armed forces. This is another area of grave concern.

This Parliament has to be very careful that it does not allow President Uribe to use this opportunity as a propaganda stunt, to give an impression that somehow the human rights situation in Colombia is improving. We know from the grassroots organisations on the ground that this is far from the truth. That false message must not be allowed to be sent out from this Parliament.

  Patakis (GUE/NGL). – (EL) Mr President, it is a disgrace for the European Parliament to receive the president of Colombia, Álvaro Uribe Vélez, tomorrow with honours. It is a disgrace for the socialists who made the proposal and for everyone who accepted it. Mr Uribe and his government, with the support of the USA, are responsible for the death of thousands of trade union farmers and other grass-roots fighters. They refuse ethnic reconciliation, they show contempt for the numerous recommendations of the UN Commission on Human Rights and they seek to suppress grass-roots dissatisfaction with military means. Mr Uribe's presence here shows that the European Union is moving towards getting involved in the ‘Columbia’ plan, through which the USA intervenes cruelly in this country, in an aim to achieve general control over the area.

We condemn all external intervention and call for all governments to stand by the side of the grass-roots forces in Columbia so that the bloodshed and the activities of the paramilitary forces stop, peace is protected and human rights are respected. We express the undivided solidarity of the Communist Party of Greece with the Columbian people who, we are sure, will win in the end.

  Sanders-ten Holte (ELDR). – (NL) Mr President, what I have to say has to do with the safety of MEPs and the measures taken by Parliament to that end. On 19 January, I left the Parliament building in Brussels around 8 p.m. by the exit onto the Wiertzstraat, going towards the rue de Wavre. Barely 100 metres from the Parliament building, having halted at a red light, I heard an enormous bang and the passenger-side window of my car was smashed in. My handbag, which had been on the floor, was snatched. I can assure you that a lady’s handbag contains everything imaginable – cards, passport, and so on. Such a thing can of course happen anywhere, but I find it an extraordinarily serious matter that it should happen so close to the Parliament building. What I find incomprehensible is that this happens time and time again; I could name more than one other Dutch lady MEP to whom it has happened.

I came back to the Parliament building, where I had a very kind reception; about that I have no complaints. The security guards came when called but – you are probably not aware of this – I could not make a phone call outside Belgium. I could not, therefore, make a call to block my credit cards, and I think that you will understand why that was my first concern. The police were then called and I was able to go with them to the police station, albeit only by following them in my damaged car. I managed to get to the police station, where there was an officer who spoke Flemish, but not the sort that has any similarity with Dutch. He was a kind man, and there was nothing wrong with him, but it all got very involved. As I of course had nothing left on me – no money, no driving licence – I was told that I would be given an escort to Carglass, but that was not forthcoming. It was at around midnight that I got to my hotel, where I was dealt with more efficiently.

I have sustained enormous loss, and I now want to ask you to ensure first of all that, in any such situation an international call can be made from the exits to the Parliament building if an MEP wishes to do so, and that assistance is available in getting to the police station, for I could have been a Dane with absolutely no knowledge of Dutch or a citizen of any other country. It would of course also be very useful if money were available to make it possible to take a taxi. Moreover, I think it is of the utmost importance that there should be better security protection for MEPs. As I have just said, the loss is enormous. I will not say how much is involved, but I expect Parliament to see to it that I am fully reimbursed.

  President. I did not wish to interrupt you, Mrs Sanders-ten Holte, because of the personal nature of the attack you mentioned and for which, I am sure, you have the complete sympathy of Members of the House. I shall ask Parliament's security services to draw up a report on this for us and for the Bureau to see what general lessons we could learn as regards some of your suggestions. We are also in ongoing discussions with the Belgian authorities regarding security in Brussels. I would add that, so far, these have not resulted in a satisfactory or sufficient response as regards the requirements of this House.

  Gollnisch (NI). – (FR) Mr President, I would like very briefly to go back over the resignation of Mr David Kay, the US official in charge of finding weapons of mass destruction in Iraq, possessed, it would seem, by that country’s government.

I would also like to go back over the statements made by the British specialist, Mr Kelly, which were followed by his suspicious death. Finally, I would like to go back over a recent admission by President Bush, this Sunday, in an interview broadcast by NBC, stating that Saddam Hussein and the Iraqi regime did not, in all likelihood, possess weapons of mass destruction, but that the war was nonetheless justifiable because, if they did not have weapons of mass destruction, it could perhaps have been possible for them to obtain them one day.

I believe that we should be concerned about this because it clearly means two things. First of all, Mr Bush and Mr Blair lied in a cynical and serious way. Then, a population has been starved for ten years under a false pretext, a war was launched under a false pretext and a State has been destroyed, also under a false pretext, with the backing of a number of governments of the European Union, which is an extremely serious fact.

  Korakas (GUE/NGL). – (EL) Mr President, I should like to express my disgust and anger at the despicable anti-communist resolution adopted by the recent 16th conference of the Group of the European People's Party (Christian Democrats) and European Democrats, which likens the barbaric, monstrous Nazi-fascism to communism and calls for a new witch-hunt to begin of the members and cadres of the communist parties who remain faithful to their high ideals.

The Group of the European People's Party abuses and insults the memory of the millions of communists who gave their very lives to deliver mankind from the Nazi monster. At the same time, it shows that it supports, or even dictates the primitive anti-communism and blatant violations of human rights which prevail in the former socialist candidate countries. It revives a spirit of vindictiveness which only presages hardships for our peoples. We do not forget that the persecution of communists has always been followed by the persecution of every progressive perception. The peoples do not forget that Hitler also started persecutions with the communists.

With this disgraceful and extremely dangerous resolution, the Group of the European People's Party really is seeking to stop the workers' fight against reactionary, anti-grass roots policies. They want to strike the pioneers of this fight, the communists who remain faithful to their ideals, because the followers are their friends and protégées.

  Evans, Robert J.E. (PSE). – Mr President, a few days ago, 19 Chinese people lost their lives in Morecambe Bay in the north-west of England. They were cockle picking on the sands, the tide came in and they were all drowned. Would you agree with me that this tragedy, whilst clearly on British soil – or in British waters – is equally a European or international issue, and that we must work together to counter the international people-smuggling gangs that were exploiting these poor people who were being paid as little as one pound per day for their work?

Furthermore, this case once again highlights the clear need to establish an effective and efficient common European system for asylum and the same for immigration, including legal migration, as a matter of urgency. It is clear that what is a United Kingdom tragedy one day could easily occur in another country's territory on another day.

(Applause)

  Corbett (PSE). – Mr President, I rise in response to the outrageous comments just made by Mr Gollnisch, who implied that David Kelly, and I quote: 'died in suspect circumstances', and that Tony Blair lied.

The recent judicial inquiry has looked at all the facts surrounding these tragic circumstances and concluded quite clearly that there were no suspect circumstances surrounding the death of Mr Kelly, as he implied, and that Mr Blair did not lie to the House of Commons on this matter.

Whatever one's view of the Iraqi conflict – and there are different views in this House, in my country, and indeed in my party, and I have my own view on this – it is essential that we debate this matter based on the facts, not on fiction.

(Interjection from Mr Gollnisch: 'No weapons of mass destruction is a fact!')

  President. The fact is that I am now the one with the microphone that works!

  Ludford (ELDR). – Mr President, I would like to draw attention to the complete disarray regarding free movement of citizens from the new Member States. It now seems – but it is by no means certain – that, with a mere 11 weeks to go until 1 May, 13 Member States will take advantage of the facility to put obstacles in the way of free movement. This has led to a spotlight on the two remaining states – Ireland and the United Kingdom – and to hysterical press reactions about being swamped by benefit tourists. I hold no brief for the way the British press is reacting, nor for the rather uncertain reaction of the United Kingdom Government, but I believe that the original decision to allow full free movement was and is economically, politically and morally right.

Commission forecasts show that maybe every year there would have been one mobile worker from the East for every 1000 inhabitants in the West, if it had been shared among all states. There may have been some justification for special measures in border areas, but the way this panic has spread and infected most Member States is shameful. It treats the new Member State citizens as second class, contrary to all the promises they were given, and it displays – as on so many other issues such as Iraq, the Constitution and the budget – a depressing lack of EU solidarity. Could you at least raise this with the Commission and Member States in the Council to try and make the transitional periods as brief as possible?

  Collins (UEN). – Mr President, the Commission's decision concerning the commercial arrangements which Ryanair has with Charleroi airport is very misjudged. It flies in the face of economic reason and is a serious blow to the development of the low-cost airline industry in Europe.

Ryanair has developed Charleroi airport from being a deserted field to catering for over two million passengers a year. Low-cost air travel is supported by the citizens of Europe. The European Commission has yet to explain clearly what it intends to do to support low-cost air travel in Europe in the future.

The problem now is the lack of clarity regarding state aid for regional airports in Europe. There is now great uncertainty from the perspective of regional airports across the length and breadth of the European Union with regard to how we are going to develop the low cost-airline industry in the future.

The Commission judgment was simply wrong and the Commission has yet to explain the future policy direction for the low-cost airline sector in Europe.

  Dillen (NI). – (NL) Mr President, both I and my colleague Mr Claeys put ourselves electronically on the speakers’ list this morning for one minute each and it now appears that we are not on it.

  President. I will ask the services to check on that, but I have been operating on a 'catch-the-eye' system. I do not have a list in front of me.

  Dillen (NI). – (NL) Mr President, I have an electronic attestation on my computer to the effect that I am registered.

  President. I should like to recall to colleagues that we open with a system of 'catch-the-eye'. I do not know what the meaning is of an 'electronic communication', but, for future reference, wave your hands and I will try to accommodate you.

  Dillen (NI). – (NL) Mr President, in preparation for the Chinese president’s visit to France, the French foreign minister, Dominique de Villepin, has come to Brussels to ask for the lifting of the arms embargo on China. The fact is that France is dreaming about concluding lucrative contracts with Beijing, which will push up its arms industry’s turnover, and so the Chinese president received an imperial welcome in France. Nothing was said about human rights; Tibet is being oppressed, but it would appear that the French president does not even know where it is. When you have the opportunity to sell some of your friend Monsieur Dassault’s Mirage jet fighters, you prefer not to think about a few boring old monks. Jacques Chirac, who can wax so lyrical about tolerance in his own country, evidently did not have the time to read the reports of the various human rights organisations, which, year in and year out, detail the Chinese offences: censorship, arbitrary arrests, overcrowded prisons, re-education camps and the absence of free expression of opinion. Jacques Chirac even managed to describe the forthcoming referendum in Taiwan as an act of aggression against China. That the European Union has no option but to do business with China is something we have to be able to accept, but supplying weapons is a completely different matter. We are therefore in full agreement with Mr Watson’s statement that this arms embargo is one of the last means available to the European Union, whereby it can force the Communist dictatorship in China to respect human rights.

(Applause)

  President. The next item is the report (A5-0040/2004) by Giorgos Katiforis, on behalf of the Committee on Economic and Monetary Affairs, on the role and methods of credit rating agencies (2003/2081(INI)).

  Katiforis (PSE), rapporteur. – Mr President, the report I have the honour of presenting is an own-initiative report on credit rating agencies, which are business organisations of good standing in the markets. However, their reputation has been shaken somewhat by the recent spate of financial scandals, starting with Enron and ending with Parmalat. The Parmalat fraud is especially relevant as it concerns bondholders: precisely the section of the market that rating agencies are supposed to protect. Until a few days before the crash of these companies, they were unable to do anything about protecting the public. These failures have prompted debates in the United States, investigations in the US Congress, the US Securities and Exchange Commission, the International Organization of Securities Commission and other international fora.

There is a specific European angle on this matter. Rating agencies that are one hundred years old in the United States are relative newcomers in Europe. In some cases they have given indications of not understanding European business mentality. They have created friction, especially in Germany. The other point of special European interest is the inevitable remark that whatever the nature of the regulation of the agencies – however mild and indirect – it has its seat exclusively in the United States, in the form of the Securities and Exchange Commission. The fact that nothing similar exists in Europe makes for an unbalanced transatlantic relationship which might become troublesome if it is not redressed in time.

These considerations prompted the original proposal of the report in favour of the formation of a European registration authority to be considered by the Commission, an authority to which agencies would report on their activities and with which they could establish a regulatory dialogue, a dialogue of equals based on the European Security Ratings Committee, on topics of mutual interest – excluding, of course, any intervention in the substance of the opinions issued by the agencies. It is interesting that the Securities and Exchange Commission has recently expressed interest in making contact with the CSR on this matter.

The majority of the Committee on Economic and Monetary Affairs found this proposal too avant-garde and recommended re-examining the whole area of operations of rating agencies without including in their recommendation anything as specific as the creation of a European registration authority. With all due respect for the majority opinion of my colleagues, I beg to differ for two reasons. Firstly, because a regulatory authority operates in the United States and, secondly, because – as I have already said – the lack of a corresponding authority in Europe creates a potentially harmful imbalance.

I have therefore asked my political group to help me out by resubmitting the proposal for a European registration agency in the form of an amendment, and I urge all colleagues who originally may have differed on this point to think again. This is not a party political issue, but it is certainly a political issue because it involves the interests of Europe as a whole. The alternative is that the agencies will eventually – such is the strength of feeling in favour of some regulation of their activities – be forced to report to 15 or 25 national financial authorities in Europe, something the agencies themselves must view with horror.

Rating agencies must continue to do good work. We have proposed no heavy-handed regulation, but, without a European registration agency, we will be failing to attain what is obviously our main objective. While thanking my colleagues for supporting various other useful proposals, I urge them to think again about this.

  Diamantopoulou, Commission. Mr President, the European Commission welcomes the European Parliament's decision to draw up a report on the role and methods of rating agencies. I would like to congratulate the rapporteur on his initiative, which is timely.

As you all know, the role of rating agencies is increasing nowadays. In the past, credit ratings focused mainly on sovereign debt. However, in the last decade, the role of credit ratings has become ever more crucial, with the growth of corporate bond issuances and the inclusion of references to credit ratings in several pieces of financial legislation, including banking legislation. Besides, as everybody knows, recent major scandals have raised questions on the role of rating agencies in general: we cannot forget the Enron case in 2001, or the recent Parmalat case, among others. Therefore, it is clear that it is now time to take action, as Mr Katiforis rightly pointed out.

There are at least four issues to be resolved regarding credit rating agencies. First, the legal treatment of the question of access by rating agencies to inside information from issuers is currently unclear in Europe. There is no harmonised European legislation, nor even any regulation at national level. If rating agencies are to have access to inside information from issuers, we should ensure that the same information is available to all rating agencies. I think Mr Katiforis’ report reflects this. Another solution would be to prohibit rating agencies from access to inside information from issuers, as is done in the case of financial analysts.

The second issue regarding credit rating agencies in the context of Enron and Parmalat concerns the level of skill of agency staff, as well as the transparency of their methodology. It would be sensible to think about measures to tackle this issue and we clearly agree with Mr Katiforis on this. With this is mind, a directive adopted by the Commission last December, implementing the Market Abuse Directive as regards fair presentation of investment recommendations, could be a good starting point.

The third issue commonly raised is the lack of competition among credit rating agencies. In practice, the worldwide industry is nearly an oligopoly. We therefore welcome Mr Katiforis' call to promote more competition in Europe. The establishment of objective criteria for entrance or development of other players in the industry might help.

The fourth and last issue, probably the most debated, regards conflicts of interest for credit rating agencies and these take two different forms. On the one hand, there is a suspicion that the provision of advisory services by rating agencies to companies they rate might influence the outcome of the rating process. Therefore, such advisory services should be disclosed along with the rating. Once again, the directive adopted by the Commission last December, implementing the Market Abuse Directive as regards disclosure of conflicts of interest, could be a good starting point to tackle this question. The second conflict of interest, and the most controversial, relates to the remuneration of rating agencies by the companies they rate. If the rating agency is paid by an issuer, rather than by subscribers, it casts doubts regarding the possibility of 'downgrade rigidity' when ratings are updated. This question is not new but now needs to be resolved.

We have to take action fast on these four issues. The European Commission committed itself to that at the Oviedo European Council in April 2002. We have to respect our commitment before new scandals occur. The European Commission will thus be able to take a position on the subject by the summer or autumn of 2004 at the latest. Among other contributions, Mr Katiforis’ report will be an important element to guide us.

In conclusion, the question remains of what the United States is going to do on this matter. We must be realistic. The top two worldwide rating agencies are American. It would be reasonable to take this into account, as Mr Katiforis rightly stressed. For the moment, however, the American Securities and Exchange Commission is silent on the subject, despite calls for changes from Congress. If the United States wants to achieve convergence with us before we adopt a position, we would appreciate having a clear view from its side on this crucial topic quickly. We will keep you informed in due course.

IN THE CHAIR: MR PUERTA
Vice-President

  Radwan (PPE-DE). – (DE) Mr President, Commissioner, ladies and gentlemen, and Mr Katiforis, whom, for a start, I warmly thank for the report on the future assessment of rating agencies.

What is this actually about? It is a fact that rating agencies have, in the capital market, a very great deal of power and influence over enterprises. Upgrading or – in particular – downgrading is significant for an enterprise, in that it makes for major problems with the raising of capital, financial problems, and that does of course have indirect effects on jobs. Rating agencies, though, also assess countries; in Germany, for example, they assess the Federal states. It follows that the upgrading and downgrading of German federal states has effects on the taxpayer. I am not making this point by way of criticism, but only as an observation. There are three rating agencies in the market; even though I am a defender of competition and would very much welcome it if they were to be joined by more, I think that an administrative, public solution would be the wrong one. If anything, the creation of any more rating agencies, or at any rate, of a European one, should be in response to the market, but all attempts to do so to date have been unsuccessful.

If we take into account the power that the rating agencies have, and our tendency, in legislating on financial markets, towards ever more regulation and supervision, then we have to give some thought to how we are to handle them in future. It is for this reason that I regard Mr Katiforis’ report as very important, in that it is the first in Europe to give attention to this topic. It is also important that Europe should do so. I would describe all three of the existing rating agencies as being predominantly Anglo-Saxon. Not that there is anything intrinsically wrong with that; but there are, after all, different financial structures within the European Union and around the world, with different rules, and not every rule that works on one side of the Atlantic must likewise be applicable on the other. That is why I see it as highly significant that we should make the attempt at the European level. In so doing, we should not give so much attention to what the Americans are doing in this field, for – after all – rating agencies also want to do business in this part of the world.

All this we have to consider in the context of Basel II, in which rating – whether internal or external – will increasingly apply in the financing of small and medium-sized enterprises. It will become normal, and the quintessential difference between external and internal rating will be that internal rating will, in the Member States, be subject to financial supervision, whereas external rating will not. What is at issue is whether we can carry on in future with only internal rating being supervised, while external rating is not. My main reason for raising this point is that I am told, by people in industry and in the financial sector, that businesses themselves find it very difficult to get the relevant information about their own rating, so one can scarcely speak in terms of a normal customer relationship between enterprises and rating firms.

This makes it important that we should now demand that the Commission should analyse this issue, do some work on it, say precisely how things currently stand, and make proposals. That is why I very largely share Mr Katiforis’ concerns. The outcome should, however, be left open; we should not already be calling for registration and supervision, which can be left to the end of the process. We can, though, aim to get the rating agencies to give an undertaking, which would include a commitment to transparency, and which the Commission should take as a basis for its work. This process could well involve the rating agencies making their own proposals. I regard it as a matter of urgency – as does the Group of the European People’s Party (Christian Democrats) and European Democrats – that we should get this process underway now, that we should monitor it with a critical eye, and that the Commission should submit its proposals in the middle of next year.

  Berès (PSE). – (FR) Mr President, Commissioner Diamantopoulou, Mr Katiforis, well done on this initiative, well done on the content of this report. I believe that it comes at an important time.

Whenever people try to take on board that ‘macro’ thinking of ours which we defend point by point, in particular in the Committee on Economic and Monetary Affairs, one thing that occasionally strikes them is the gap that sometimes exists – and which I am grateful for your having to some extent highlighted, Commissioner – between, on the one hand, the social model we claim to embody and, on the other hand, the standards we employ and the specific work we are involved in.

If we are to talk about rating agencies and if we are to be delighted with our rapporteur’s initiative, it is because the market is blind and because, in this blindness, rating agencies have obtained, or are obtaining, an altogether essential decision-making power that will have far-reaching consequences for the future of enterprises and, therefore, of jobs.

In view of this, I would like to make three remarks. The first is that what we say here cannot be seen as separate from the global debate on corporate governance. What type of corporate governance do we want for our social model in Europe? What division of roles between capital and labour do we want? What role should redistribution have? These are the questions that we should answer by way of the solutions that we envisage for the operation of these agencies in particular, but not only for these agencies. I remember the debates that we had on the issue of accounting standards, and we are seeing the wayward effects of the so-called autonomy of the IASB. I do not want the same thing to happen to us where rating agencies are concerned.

My second remark is that if, in Europe, we want the improvement in the operation of rating agencies to contribute to protecting our social model, then we cannot leave aside the issue of corporate social responsibility. In this area too, agencies are now coming into being. They are European initiatives. I am thinking, in particular, of Mrs Nicole Notat’s agency in France, Vigeo. These are complementary developments that we should reflect upon.

Finally, my third remark, Commissioner, is an expression of regret at not having heard your opinion on the amendment, proposed by our rapporteur and to be fully supported both by myself and my group, in favour of establishing European registering and regulatory agencies.

  Villiers (PPE-DE). – Mr President, firstly I would like to thank the rapporteur for his excellent work on this issue. It is topical and Mr Katiforis has brought great insight into this issue. I am particularly grateful that he has taken on a number of the concerns I expressed in my amendments. I hope that a deal may be reached between the PPE-DE Group and the rapporteur. That has not proved possible – so far – but I am sure there is a great deal in his report that we very much support.

In a slightly shock reversal of the normal roles within the PPE-DE Group, I found that the rest of my Group were more cautious about the idea of further regulation than I was: usually I am the one in my Group arguing for a more deregulatory approach. What is very important – and it was stated clearly by Mr Radwan, the shadow rapporteur – is that yes, this is an important issue; yes, questions need to be answered about how ratings agencies work and yes, questions need to be asked about whether we should have a registration scheme for ratings agencies. The conclusion the Group came to was that we should not prejudge the outcome of this process.

It is important that Members of Parliament and committees look carefully at the issues raised by Mr Katiforis in his report, but we do not want to prejudge the outcome and say at this point that yes, we should have a European registration authority. We in this Group are wary of the cost of regulation. We are concerned about what a significant step it would be to bring rating agencies within a regulatory framework or a registration scheme, and we must be cautious in our response to recent financial scandals.

There is a tendency among some financial commentators to assume that we must have further regulation following Parmalat, and the organisations that are most squarely in the frame for further regulation and registration are rating agencies. We should look objectively and calmly at what happened at Parmalat and see what response is necessary so as to avoid any hasty or knee-jerk reactions, because it is difficult to see how changing the scheme or regulation for rating agencies could have prevented the Parmalat scandal.

There will always be people who are prepared to break the law, as they were at Parmalat, and no matter how wide-ranging and effective the scheme of regulation, whether it be for hedge funds or rating agencies or whatever else, we are not going to prevent that kind of criminal conduct. We can try and make it happen less often, but it is impossible to prevent. Questions have to be asked about rating agencies and how they function, but it is premature to reach the conclusion that further regulation or a registration scheme are necessarily needed at this stage.

  Ettl (PSE). – (DE) Mr President, I can tell Mrs Villiers that we should not, at any rate, be saying that we do not know what we are asking for or what we want.

It is unfortunate that the work done by the Committee on Economic and Monetary Affairs has left us with little of the original draft report – little, that is, that would demand greater transparency of the rating agencies, and require that they be monitored more closely. Now, in the aftermath of global financial scandals ranging from WorldCom to Parmalat, is surely the time for rating agencies to be registered and their practices monitored. In view of Basel II’s recognition of external rating, and of the consequences resulting from it, the message we are giving now to the Commission is not a matter for indifference.

This report takes a tolerant view of an oligopoly that is almost impossible to monitor, one that is quite contrary to all the practices of the internal market. Of the hundred largest enterprises in the European Union, 80 are monitored by only three agencies, which should, therefore, be able to do a better job of rating them. The information used to produce an assessment is also important when deciding where to invest. This is where we cannot lag behind current developments in the USA, where, only recently, serious problems resulted in the existing system of rating agency supervision, which is in the hands of the Securities and Exchange Commission, being substantially tightened up.

I am sorry to have to tell Mr Katiforis that the signal this own-initiative report sends to the Commission is too moderate and gives us too little cause to hope that we will end up with a trustworthy instrument. I will nonetheless conclude by endorsing his appeal that, in view of the many current uncertainties, we should explore every avenue whereby a European Registration Authority may be established.

  Karas (PPE-DE). – (DE) Mr President, Commissioner, Mr Katiforis, ladies and gentlemen, this report and this issue are of particular significance in view of the many questions that are being raised. Previous speakers have already shown you how the rating agencies have gained twofold significance – on the one hand as a result of notorious scandals, and on the other as a result of the consumer credit directive or the development of Basel II.

Let us be frank, and admit that every customer of a bank, and certainly anyone taking out a loan, is the subject of some form of rating process. Above all, rating agencies assess companies and countries. These evaluations lead to debates on the level of interest rates, the amount of equity capital and the stock exchange prices; they also have an effect on customers’ confidence in the business and country in question. It also, of course, follows that we have to bear in mind that the whole philosophy behind rating agencies is largely of Anglo-Saxon origin and that there are three large firms in this field that carry out ratings – major and significant ones – in Europe too. That being so, we also have to consider the fact that all these rating agencies possess a quality mark – an American one awarded by the Securities and Exchange Commission. If, then, we are to talk in terms of more competition, we need not only European agencies, but also a quality mark, for some kind of quality mark has the natural effect of building confidence and enhancing the agency’s value in the market.

We therefore want to put the case for Europe’s rating agencies to be promoted and for them to respond specifically to the characteristics and needs of small and medium-sized enterprises. We want to advocate the introduction of a European quality mark, or, best of all, a global one, to accompany Basel II, and we want a debate on internal and external rating. We favour freedom of opinion and the agencies’ independence, and we want greater transparency.

That is why I regard it as intolerable that there should be no licensing procedure whatever for rating agencies. It may be that starting with financial market supervision, and with equal treatment for internal and external ratings so that agencies can be registered, that is to say, authorised, is a good approach that we should adopt, instead of creating new authorities.

  Santos (PSE). – (PT) Mr President, I too wish to offer my praise for this report. It is an excellent initiative and I, like most Members of this House who have spoken, hope that we will be able, in the course of proceedings, specifically in plenary, to make Mr Katiforis’s original philosophy a reality. As Mr Katiforis stated, the crux of the issue at stake today, regarding this own-initiative report, is whether or not the activities of the rating agencies should be regulated and if so, whether such regulation should take place at national or European level. As the rapporteur suggested in his explanatory statement, this is clearly a political decision, and this debate clearly bears out this view. However, the rapporteur was initially unquestionably in favour of regulation, and regulation at European level, even though voices closely associated with the sector have been raised against such a move.

Representatives of the sector appreciate that their activities form part of the sphere of economic information and that what is at stake, therefore, is to guarantee complete freedom for such economic information. The need for information is obviously not incompatible with the needs and interests of regulation and while it has to be admitted that rating agencies have, by and large, performed respectably under the current system, it is also clear that we face new problems today – and there have been some spectacular examples of these, as Members who spoke before me have already mentioned – that require new solutions and probably a new system.

Moreover, there is no doubt that the rapporteur’s options are in line with the legislative approach adopted by the EU within the framework of financial services. To my mind, it is therefore in the public interest to establish bodies to regulate credit rating, especially because, as we all know, the outcome of this activity already has a decisive impact on the legitimacy and eligibility of certain financial assets for certain types of application used by the general public.

Consequently, I feel that the rapporteur’s first initiative, which was not accepted in its entirety by the Committee on Economic and Monetary Affairs, must be endorsed and supported by plenary. It is extremely bold, yet completely justified.

  Diamantopoulou, Commission. Mr President, it was a very interesting discussion and it is obvious that this is a hot political and economic issue.

Members discussed many questions. I would particularly like to underline the discussion on regulation: whether this regulation concerns only transparency and criteria of transparency or whether it should be more binding. Then there is the interesting issue of an independent authority, what kind of entity that would be and whether we should agree to establish it at European level. Another major issue is the registration of these companies and whether they have to be registered at European or at national level.

The Commission agrees with many of the points the Katiforis report has made, but it will present its final position at the end of spring or at the latest in autumn. I would like to thank Mr Katiforis again for his very interesting contribution.

  President. Thank you very much, Commissioner.

The debate is closed.

The vote will take place tomorrow from 11.30 a.m.

  President. The next item is the debate on the report (A5-0026/2004) by Mr Cercas, on behalf of the Committee on Employment and Social Affairs, on the organisation of working time (revision of Directive 93/104/EEC) (2003/2165(INI)).

  Cercas (PSE), rapporteur. – (ES) Mr President, Commissioner, ladies and gentlemen, the main aim of my report is to examine two articles of Council Directive 93/104/EC on certain aspects of the organisation of working time.

This important directive was approved ten years ago in order to regulate certain factors which are essential to the health and safety of salaried workers, such as daily rest periods and holidays. The directive also indicates the maximum weekly working time of 48 hours, although it allows it to be calculated as an average over a reference period of four months.

The approval of this important directive – which is one of the most important in Community social legislation – was not a straightforward process. The resistance of the United Kingdom was only overcome by the Court of Justice and, for ten years, we had to have two temporary exceptions with regard to the reference period for calculation of the 48 weekly hours, and with regard to the application of the 48 hours weekly working time in those countries that want to implement this exception if the workers wish, provided that this wish is expressed freely and reliably: this is what is known as individual opting-out.

The Commission and the Council should have re-examined these temporary exceptions before 26 November last year. Regrettably, however, the Commission did not communicate its analyses or proposals by that date. Up until 30 December 2003 it did not present us with any Communication nor open up a consultation period, and furthermore its text lacks specific proposals on the trickiest issues. What the Commission has done – and we should thank it – has been to commission a study by the University of Cambridge – carried out by Barnard, Deakin and Hobbs – on the way opting-out has been used in the country which approved it, in other words, the United Kingdom. This report provides us with in-depth knowledge of the negative consequences of its widespread use and abuse in a labour market in which it has been applied in a generalised manner.

My report refers exclusively to the re-examination of these two exceptions in order to respond not with waffle, but with clarity, to the question the Directive obliges us to ask: 10 years after its adoption, does it make sense to maintain the extension of the reference periods? Does it make sense to maintain the principle that it is possible not to apply the maximum 48 hours by means of individual opting out? I say in my report that both questions must be answered in light of the principles which governed the adoption of the Directive: the health and safety of workers. These must be accompanied by a third: flexibility, as indicated by the Commission in its communication. We must ensure that the professional and family lives of Europeans are reconciled.

My proposals are also clear. According to our objective information, there is no reason to abrogate the extension of the reference periods which have proven to be useful and have not, at least for the moment, had serious consequences for the health and safety of workers, but on the other hand, there is overwhelming evidence that opting-out seriously jeopardises minimum health and safety rights, and seriously jeopardises the reconciliation of family and professional life.

The debate and the vote within the Committee on Employment and Social Affairs have been very tough. I hope that tomorrow we can continue working and bringing positions closer together. I personally have maintained an open attitude to the element of flexibility, also with regard to the problem of the duty hours of doctors which has been introduced into this debate. I have been flexible, just as the Directive is flexible. Now, I have always stated, and I will do so until the end, that individual opting-out sets extremely dangerous precedents: minimum rights, Mr President, are inalienable.

If today workers are being obliged or allowed to surrender basic rights, such as maximum hours, tomorrow, on the basis of the same argument, they could be allowed to surrender other essential elements of their health and safety, to work in environments in which they suffer noise, dust, the removal of protective barriers at work sites, to surrender maternity rights and many other things. And all in the name of individual freedom, which disappears when it is applied. It is a horrendous precedent.

I will end, Mr President, by saying that our Charter of Fundamental Rights and Article 137 of the Treaty oblige us to resist the wishes of those who do not want European rules. Opting-out is not a flexible rule: it is the absence of rules. By allowing basic minimum rights legislation not to be applied to someone, we would be advocating the absence of rules. I hope that all Members of this House will give this full consideration. We cannot offer victory to people who do not want the social Europe to be built, to those allergic to minimum rules, which workers on our continent have enjoyed for more than a century.

  Diamantopoulou, Commission. (EL) Mr President, I must thank Mr Cercas for his excellent report in connection with the revision of a directive which is one of the foundation stones of Community labour law.

As we have heard, the main objective of this directive, which is also both its political framework and its legal basis, is to protect workers from the harmful effects on their health and safety from working excessively long hours, inadequate rest or irregular working hours.

The directive is in fact a framework of minimum health and safety requirements as regards daily and weekly rest, the maximum working week, annual paid leave and the length of night shifts. Of course, we must not overlook the fact that, although the legal framework is the health and safety of workers, it also relates directly to the productivity of enterprises. Enterprises which have workers without these minimum acceptable limits clearly cannot achieve the required productivity.

The Commission, as required due to the expiry of the ten-year period from publication of the directive, presented its report on 30 December and announced the revision of the working time directive. The Commission, taking account of the manner in which this directive was implemented in the 15 Member States, is obliged to evaluate two provisions in this directive. First, the derogations regarding reference periods and how the maximum working week is calculated. Mr Cercas questioned if we need to debate this matter, which has not created any particular problems. However, we have numerous branches which have problems and which would be interested in a different reference period and this has translated into proposals and discussions by both employers and employees. Secondly, the possibility of individual exceptions from the maximum working time, the famous 'opting out'.

Of course, these two issues cannot be addressed without taking account of recent developments in the case law of the European Court of Justice, which qualifies the time which a doctor is at home on call as working time, insofar as he is called to the health centre during the period he is at home. Consequently, the Commission communication expressly concerns itself with the results of these judicial cases. We cannot look at the two provisions which need to be revised without taking account of the ruling of the courts. This is an extremely complicated issue which, as you too emphasise in your report, requires detailed evaluation of any repercussions of this change of legislation. That is why the Commission has started a broad consultation procedure.

At the same time, we are asking for the opinion of the social partners within a special framework of procedures, as laid down in the Treaty, and we are already in the first stage of consultations in accordance with Article 138 of the Treaty. I must stress here that, according to the Treaty, the role of the social partners is very different, it is independent, and the framework within which the Commission is starting the debate cannot but be broad and the first approach cannot result in directions set by the Commission, because the social partners themselves must consult in the first and second stages, so that we have their positions. That is why I would say, as you will have observed, that this first communication has a fairly general framework.

Nonetheless, there are various points on which I think we are fairly clear and which I support.

The first is that we cannot but have a careful analysis and evaluation of the repercussions and consequences of any change, first, on workers, because on questions of health and safety there can be no compromises, and secondly, on the functioning of enterprises.

Secondly, we need to address the matter in all its aspects. It is, as we said, a fundamental directive for labour law and we must categorically avoid any exclusively sectoral approach. Of course, this does not mean that we must not take account of various important problems, such as in the field of health which, following the rulings by the Court, could be extended to other branches with similar problems.

The third point is the correlation between working time and equal opportunities. This is an innate link which exists in the directive which, essentially, helps encourage the Member States to take measures which improve compatibility between working and family life.

The fourth point concerns 'opting out'. There are various types of approach. I would say there are two extremes, the first being that we have no facility to opt out of the maximum working time, in other words we completely abolish 'opting out', and the second being that we generalise 'opting out'. This generalisation would, essentially, leave employers and employees the facility to decide on working times and the entire employment framework.

Both extreme views create significant problems: the first takes no account of the special characteristics of branches, of a large number of branches and, more importantly, of the special characteristics which might arise from rulings such as that by the Court, with very serious consequences in the specific case of health systems. If there are also rulings of this type in other branches in the future, then other branches will have similar problems. The second extreme position, which concerns overall acceptance of 'opting out' as a way of operating the job market, essentially abolishes all the fundamental frameworks of the European Union based on workers' rights which essentially take account of health and safety and which link productivity with the worker as a person.

I would say from the outset that I am opposed to both these extreme approaches. Of course, we must accept that the institutional framework which the directive in question had for 'opting out' allowed for it to be abused. That is also why there are countries in which we have systematic abuse of 'opting out' in all branches, in all categories of enterprise, with very serious problems for the workers.

I therefore think that we should see and resolve these basic outstanding issues, taking account, on the one hand, of the need to use 'opting out' and, on the other hand, of the existence of new criteria and binding positions on the Member States, so that there is control of their use and not their abuse.

Because this directive is clearly of very great importance and affects the job market and the economy and has a direct impact on the lives of millions of workers in Europe and, at the same time, on enterprises and the economy of Europe, we need real, substantial consultation with all the agencies involved and, of course, as we said, with the social partners.

Our objective is for this procedure to bring us to a better legislative framework which takes account of the real impact on the job market and best serves the basic objective of the directive, which is to protect the health and safety of workers. I think that Parliament has the first word in this consultation process.

Your report is extremely topical and material. I would like to assure you that it is the basis for preparations and, of course, is only the Commission's first debate and approach with Parliament. Over all the coming months we shall have the opportunity for constant debate and exchanges of opinion, so that we take account of your particular positions.

  Bushill-Matthews (PPE-DE). – Mr President, I wish to begin by congratulating the Commissioner and thanking her for her wise, practical and helpful comments today and also for the report by the Commission, which was extremely well balanced. I mean no disrespect to the rapporteur, and I hope he will forgive me for saying that I cannot make the same comments about his own report. As he knows, together with the ELDR Group, we nearly managed to defeat it in committee, but virtually none of our amendments were accepted. Yet they so nearly won through and, had we succeeded, we would not have had to trouble the House on this occasion. Needless to say, we are retabling those amendments and we hope that the full House will do justice to them in the vote on Wednesday.

The sad thing about the report was that essentially it stated in black and white that there should be no opt-out at all under any circumstances and that the UK should be taken to court for alleged abuses, as if to say: my mind is made up, do not confuse me with the facts.

I would like to share some facts with the House this evening. Opting out from the working time directive is voluntary: nobody can legally be forced to sign an opt-out and it is important to give people the flexibility to work longer hours and earn the overtime if they wish. Research in the UK has indicated that 2.5 million people work longer than the maximum hours stated in the directive, but two thirds of them get paid for the extra hours so would lose out if the opt-out were removed. It is true that some workers would like to work fewer hours, but not if the cut in hours means a drop in pay. More than seven out of ten of those working longer hours said they would not want fewer hours if it meant less pay. There is no evidence that health and safety have been compromised in any of these circumstances.

I would now just like to talk briefly about the report by Barnard, Deakin and Hobbs, which the rapporteur referred to. He stated that, according to its conclusions, there have been abuses on a massive scale. I have to say that the conclusions say nothing of the kind. It was interesting that, when the Commission report itself came out, there was an article in the Financial Times on Tuesday, 6 January, co-authored by Catherine Barnard and Simon Deakin, professing surprise at the way their report had been misinterpreted.

I would just like to quote three short paragraphs. 'It is true that we did uncover evidence of some abuses of the opt-out system. Sometimes, the opt-out was presented as a standard contract term to new staff, which they would have to take positive steps to avoid. But this was unusual. What was striking was that, for every employee who felt under pressure to opt out, we found others who wanted the right to choose what hours they worked and what salary, status and job satisfaction they gained as a result (...). We quickly discovered a gap between the rhetoric around reducing working hours and the reality of working life for many people. In one example given to us, workers in the tobacco industry could lose hundreds of pounds a week in overtime pay if they were limited to working 48 hours.'

They state in the final paragraph that 'a complete ban on long hours would be unfeasible in many companies and industries or would be simply disregarded.'

Those are the facts, not as presented by the rapporteur.

Therefore the conclusion has to be that the opt-out must stay and abuses, if any, must go. I would hope that Members on all sides of the House could support that.

Finally, I would just mention the SIMAP and Jaeger judgments. They are the important issues we should be addressing and our amendments try to focus on those issues, because we have to try to resolve the very clear problems that the Court of Justice has raised.

In conclusion, I know that on the record in September UK Labour MEPs said that they voted unanimously against retaining the opt-out, but it is never too late to repent. I still cherish the hope that on Wednesday they will vote with us in the interests both of employment and employees.

  Hughes (PSE). – Mr President, I congratulate the rapporteur for his excellent work on the organisation of working time. As the Commissioner said, this is an issue which touches every worker and family within the European Union. However, although I clearly understand that individual Commissioners do not always get what they want when they want it, I am very disappointed with the way the issue of working time has been handled by the Commission as a whole. It had ten years to prepare and produce proposals on the operation of derogations on the opt-out and annualisation; the review and communication were clearly required by November 2003 and yet, incredibly, the Commission still managed to miss the deadline.

When the communication came, it was, quite frankly, hardly worth the paper it was printed on. It is a weak document and gives no clear signal on the best direction for action. It should not, in my opinion, be allowed to stand as a proper instrument for the opening of the first phase of consultation between the social partners under the procedure included in Article 138. I hope the social partners will make that clear.

Also, by the time the Commission got around to producing the communication, it was being bombarded with notifications from Member States that they would begin to use the opt-out in their health-care sectors in response to the SIMAP and Jaeger rulings. No doubt some Member States were being opportunistic in this respect, but the Commission had had three years to react to SIMAP; its inaction could therefore lead to the neutering of a central piece of EU health and safety law. In our view, a blanket spread in the use of the opt-out is not the answer to SIMAP and Jaeger. We want speedy and specific action from the Commission in response to those judgments and then time to sensibly revise other provisions in the original directive.

As to how we solve those difficulties, we could look to social partner agreements or re-rostering arrangements that have been put in place in certain parts of the EU to deal with the implications of those cases. Or we could look at the type of definition we adopted to cover the case of relief drivers and overnight ferry tripsin dealing with working time for drivers. As well as working time and rest time the notion of periods of availability was included there.

More generally, people like Mr Bushill-Matthews are constantly telling me that the opt-out is essential to give companies the flexibility they need to operate. It is strange then, in my view, that until recently only one Member State used this opt-out: the others were managing just fine and would still be managing in their health-care sectors if not for the SIMAP and Jaeger judgments. The truth is that the directive is flexible. More relaxed arrangements apply to a whole range of occupations and activities and the reference periods are generous. I for one would also be quite happy to look at whether annualisation of working time could be made a more realistic option in all Member States.

Overall, the Socialist Group takes the view that an opt-out from a health and safety directive is a dangerous nonsense. The possibility was created for purely political reasons ten years ago and it was a bad idea from the start. A general opt-out is bad for the welfare of workers, bad for a proper work-life balance, damaging to efforts to encourage women to return to the labour market and, as the statistics show, not at all helpful in the drive to boost productivity. It is not the direction a Union committed to transforming itself into the most dynamic, knowledge-based economy in the world should even think of taking.

So I, for one, will not repent and I will certainly not join Mr Bushill-Matthews on Wednesday.

  Lynne (ELDR). – Mr President, I am pleased that the Commission brought forward the consultation document. It would have been useful, however, to have brought it forward before Mr Cercas drew up the report, but I am very pleased that we were able to table oral amendments. Nevertheless this is not the ideal way of working and I would like to register that point.

I tabled a number of amendments, a lot of them with the PPE-DE Group, and some of my own. The main point – and I am very pleased the Commissioner touched on this – is that the individual opt-out should be kept, but that it should be truly voluntary and measures should be taken to tackle any abuse. But as Mr Bushill-Matthews said, that abuse is not as widespread in the UK as the rapporteur leads us to believe. Indeed, as Mr Bushill-Matthews and the rapporteur have repeatedly said, the authors of the research – Barnard, Deakin and Hobbs – stated that the abuse was widespread. Those people have distanced themselves from what you have written in your report and indeed would distance themselves from your statement today.

To answer Mr Hughes' point, one of the reasons for maintaining the opt-out is that in the UK we do not have collective agreements. That is one of the main reasons we use the opt-out. Other Member States use derogations because they have collective agreements. Decisions can be made between both sides of industry: trade unions and employers will get together and decide what they want to do on the Working Time Directive. But because we do not have that – at least not to any great extent – we need the flexibility for our businesses to be able to cope.

Wages are not a competence of the EU, nor should they be. We should not be discussing pay. But workers in the UK are on low wages, even though we have a national minimum wage. They quite often add to their take-home pay by doing overtime. If we get rid of the opt-out, there will be many cases of workers not being able to do overtime and therefore not getting a reasonable pay level. We are not the only country that uses it either: Germany, France, the Netherlands, Spain and Luxembourg are all either using it or going to use it in the health or catering industries.

Another problem is the length of reference period. Tourism and agriculture have a particular problem because of different working patterns and because of the times of year that they work. The Commission must also look at the SIMAP and Jaeger judgments. It is very important that we do that on health and come forward with proposals.

I hope enough MEPs will join us tomorrow when we vote, in particular those Labour MEPs who voted against us in committee and against the UK Labour Government.

  Figueiredo (GUE/NGL). – (PT) Mr President, ladies and gentlemen, Commissioner, as we know, this 1993 directive, which lays down minimum conditions governing the organisation of working time, with a view to ensuring a high level of health and safety for workers, should have been transposed into national law by 1996, establishing the possibility of limited derogation. The truth of the matter is that various Member States have used and abused these derogations and have not complied with the provisions therein, especially the upper limit of working time in sectors such as health, and the hotel and catering industries. Once again, now that the seven-year deadline has elapsed, the Commission has regrettably given no clear signal as to how the problems that have come to light are to be solved.

Hence my endorsement of most of the proposals contained in the Cercas report, in particular the provision of an amended directive resolving existing problems and ensuring a higher level of health and safety protection for workers. I also welcome the comparison study on the repercussions of long working hours on the family and on health, and the effect on both sexes. A further welcome proposal is the provision of protection for freelance workers and others whose safety is endangered by workers exhausted from working such long hours.

The Court of Justice has ruled in a number of cases, and has included time spent on call as working time, thereby confirming the fundamental principle that time not entirely available to workers due to work commitments must be regarded as working time. I congratulate Mr Cercas on the work he has carried out and, as he states in his report, derogations in the form of individual opt-out clauses must be scrapped and we must work towards reducing the pressures and eliminating the abuses that undermine family life.

My group, the Confederal Group of the European United Left, has tabled proposals that would enable us to extend these rights a little further. We have called for a revision of the directive, initially reducing the maximum working week from 48 to 42 hours; and for a gradual reduction in the working week to 36 hours, over the course of the next seven years. We hope that this would lead to further reductions in working time and a redistribution of work in the Member States, which are effective ways of reconciling family and professional life, of promoting equal rights for women and of combating unemployment.

Lastly, I deplore the fact that the Group of the European People’s Party (Christian Democrats) and European Democrats persists in disparaging the report approved by the Committee on Employment and Social Affairs, which only serves to show that they are perfectly happy to perpetuate an unacceptable state of affairs that undermines effective health and safety protection of workers. You can therefore be sure that we shall be voting against these proposals, as we did in the Committee on Employment and Social Affairs.

  Bouwman (Verts/ALE). – (NL) Mr President, Commissioner, ladies and gentlemen, although we have kept afloat in somewhat choppy waters, I do think it quite worthy of comment that the debate is being dominated by a number of speakers from the United Kingdom. This is something with which we are not wholly unfamiliar and to which I shall return shortly.

I want to start by thanking our rapporteur for having drafted an outstanding report. Everyone knows how narrow the vote was in our committee, and that it could have had a different result, so the Commission is aware of the differing views that exist in this House. We, though, have to look at each of them very carefully. This own-initiative report was nevertheless a necessary one. We actually wanted to talk about amendments to the directive, of which, as I see it, there is without a doubt a great need. I shall also be putting forward arguments as to why this is the case.

To be sure, the Commission has taken its time, and this is where I endorse Mr Hughes’ comments on the communication with which we have been presented. The material available to us and the study as published are enlightening, but they are not normative. Those who have dealt with this for some time actually knew what this was about. Yet again, as I see it, the actual blame for this rests with the Member States rather than with the Commission. A number of Member States are engaging in delaying tactics to gain the temporary support of the others in a while, such as the accession countries, which also may well be advocates of weakening necessary regulation. There are, of course also, and not least the employers, and, above all, there is all the heavy lobbying that is going on at the moment. As recently as last Thursday lunchtime, I was phoned up by the British social security minister, who asked me what I, for God’s sake, thought I was doing by signing up to a few pertinent amendments. I really do think that is going a bit far. I am pleased that he wanted to approach me, but I am doing no deals by the by, especially as that would mean bypassing the problems that exist.

Let me start with the general individual opt-out. The question we have to ask ourselves is whether we want, at European level, social minimum rules, especially on highly topical matters where even the ILO – in 1919, I think – said that 48 hours is enough? Do we want a minimum regime? Do we want these rules to be a means of protecting safety and health, or do we want to move towards a situation that is slowly starting to take shape and which I would describe as social policy competition among Member States? That, at the moment, is what this is all about.

Let me give you one example. At the moment – and the Dutch Council of Ministers is also represented here – discussions are going on in the Netherlands about adjusting Dutch legislation on working hours along the lines of the European minimum regime. That is to say, in the Netherlands too, it is proposed that the 60 hours should no longer be a matter for consultation, but should be a norm. That is certainly going a long way. I know that this debate is going on in other countries as well, and I do not think that we can leave it to the social partners. On this issue, their advice may be sought, but such advice must not be determinative in the way that several amendments on this point propose.

I will deal very briefly with workers on call, a problem that we should try to resolve. Although I am happy with the Commission’s proposals, there is a great deal left to be done; not only as regards doctors, but also as regards firefighters – and I could say the same of a number of other services. This is an issue that is generating a lot of heat in certain Member States. As far as I am concerned, we have to be prompt and unambiguous in our dealings with each of them. I urge the Irish and the Dutch to give their full attention to this thorny problem, which, within the life of this Parliament, we will probably no longer be dealing with in the form of an amended directive.

  Titford (EDD). – Mr President, I have always considered this directive to be an infringement of workers' rights to work the hours they wish, believing that it is an inalienable right of the individual to chose one's own balance between work and leisure time.

The legislation was ill-conceived and did not take into consideration the difficulties experienced by small businessmen and by many professions. It is essential that the opt-out be retained, in particular for certain occupations. In the United Kingdom, the National Health Service could not run without the willingness of dedicated doctors and nursing staff to work long hours. In this regard it is imperative to remove the farcical rule that says that a doctor is working when he is asleep in bed purely because, technically, he is on call – but then, common sense is not a capability that this Parliament often utilises.

The current opt-out is open to all Member States. The fact that France, Germany and the Netherlands are now following the UK's example in deploying it in relation to the medical professions serves to demonstrate that the line the UK has always taken is the practical one.

With enlargement around the corner, some consideration must be given as to how this directive will affect the newcomers' individual labour markets. In my own experience when visiting Malta last year, the leading topic for all political parties was the Working Time Directive. The majority of people in Malta work in excess of 48 hours per week and need to do so for their own benefit and for the island's economy.

All Member States need the flexibility to organise their own working time. The EU should recognise this and return this responsibility to national governments.

  Pronk (PPE-DE). – (NL) If I may put Mr Titford’s mind at rest, the Dutch Government is not following the United Kingdom’s example; it is in fact dealing with another problem, one with which we are also concerning ourselves today. On the one hand, it is very irritating that this House is virtually turning into a sort of House of Commons, in that we are now giving our attention solely to problems that are in fact not even specific to the UK, but are specifically English. That, of course, becomes very tiresome, especially for those participants in the debate who do not originate from that country. There is also the second problematic aspect, namely the legal cases referred to earlier: the Jaeger case and others. This is where I really do think that the Commission has not shown sufficient leadership. It ought to have been apparent that the combination of the interpretation of these legal acts and the existence of the opt-out would create difficulties and to the objectives of the directive being undermined. It waited a long time and gave what were in fact wholly inadequate answers as to what the solution might be. Not to mention such other things as, for example, the people who then think they too can use this for their own purposes by, contrary to what the directive intended, creating more difficulties. That can happen at any time and it is at that point that the whole thing starts to unravel.

This is where I differ from many others in my belief that we have to be quick. The fact is that we have to give priority to dealing with the points that are relevant to hospitals, the fire service and a few more of the sort of things that are relevant not only to the United Kingdom; then we will be able to talk about the opt-out. That is, at the moment, still inadequately expressed in our report and it is certainly inadequately expressed in what the Commission is saying. It is still doing no more than creating options, which seems to indicate that we have a very long process ahead of us, but, at the time, all the Member States resolved to avail themselves of the opt-out, so you never know what is going to happen.

In conclusion, I myself think an opt-out is always a sign of failure, of your inability to completely sort matters out, which is also the underlying problem here. I still think that we have to be looking for alternatives to the opt-out, but you cannot say that you cannot get rid of it unless you offer alternatives. If you have no alternative, you cannot say that the opt-out is wrong. You have to say, ‘the opt-out is wrong, but here are the alternatives to it’. That is what we actually have to work towards with this report. We will certainly have to aspire to it in the course of further consultation. First, though, we have to close the loophole in the directive as quickly as possible, or in the place where at least the Member States think it is. Then we will, in any case, have all the Member States behind us – with the exception of the United Kingdom, but including, I am sure, the Member States in Eastern Europe. We can then take a look at the last part of the second opt-out.

IN THE CHAIR: MR PROVAN
Vice-President

  Weiler (PSE). – (DE) Mr President, Commissioner, ladies and gentlemen, I would like to address a number of remarks by previous speakers relating to firms’ need for leeway and room to manoeuvre, and to their productivity. What we are talking about here is not rules on 35-hour or 38-hour weeks, but the option that exists in certain Member States of a week of 55 or more hours. I have to say that I regard this opting-out arrangement as absolutely absurd. Figures like that belong in the nineteenth century; I am convinced that the productivity of our businesses is not dependent on them and that they will not make us the most modern and the most efficient economic region in Europe. What matters most of all to businesses is the options available for machinery’s runtimes and operating times, rather than any unnecessary extension of working time. Businesses care about modern forms of labour organisation. In fact, Germany is a good example of how the social partners can be involved in the shared development of modern types of employment, organisation of work and working times.

I might add that it is this that has enabled us to lead the world in the export field.

Let it also be said that the figures, data and times currently under discussion do not seem to take account of the possibility of workers having such things as children and families. Who, after all, is capable of being away from home for 48, 55 or more hours in a week? I might remind you that the Working Times Directive was meant, as one of its objectives, to be an instrument for reconciling work and family life.

Mr Pronk said something very good about the opt-out, namely that it has actually failed. Had it been a derogation with a limited lifespan, nothing could have been said against it. Now, though, in the meantime, there are several countries that want to adopt this British model, and it is unfortunate that these include Germany, the Netherlands, Spain, and most of the accession countries that will be joining us on 1 May.

I doubt that the Commissioner will often have come across so much public approval as there has been as a result of the rulings of the European Court of Justice in connection with hospital doctors. It is, for this reason, vital that we counteract every tendency to hand these things back to the national level. It is in this area that European social policy is under scrutiny, as are guaranteed European standards, for if we make it possible for these matters to be handed back to the national level, you can be sure that the same thing will happen in many other cases in the life of the next Parliament.

In order to nip that sort of thing in the bud, we want the precise legal framework, which you have promised us. We are happy to go along with that, but let there be no turning back!

  Schmid, Herman (GUE/NGL). (SV) Mr President, it is approximately a hundred years since the labour movement in Europe demanded statutory working time. Eight hours’ work, eight hours’ leisure time and eight hours’ sleep were what were then demanded. Gradually, that programme was implemented. It was important in many ways, because it meant that companies stopped competing on the basis of working time. They had to compete in other areas instead. It also meant that workers were protected and that society was given a fixed framework for work, schooling, leisure and other activities.

I am really shocked that the Group of the European People’s Party (Christian Democrats) and European Democrats, together with several other political groups, seem to want to break with this tradition and, instead, go back to the situation that existed a hundred years ago when a voluntary ethos prevailed in the labour market. I note that there is no talk of voluntary agreements between trade unions and employers’ organisations. Instead, the talk is of voluntary agreements between individual employees and individual employers. That is a retrograde step that is incomprehensible. I do not understand how people can argue in that way or put forward a proposal along those lines. It is deeply irresponsible and will lead to strife and conflict in the labour markets. In a labour market so exposed to competition, it will lead to a situation in which people are forced to take jobs on the conditions that apply. Call it voluntary or involuntary, but the fact is that, in a labour market exposed to competition, people may expect to have a pre-determined market value. They have to take what is on offer. So much for matters being voluntary.

As many have said, family life is also affected. Parents are forced to work hours that make it difficult to combine work and family life and take care of their children. I also want to add that all of us, as consumers, are affected. This has not been emphasised so much, but we are in danger, for example, of being injured when we are operated on by exhausted surgeons or of being run over when we encounter lorry drivers that are half asleep. We are all victims of stress and of pressure at work. It would be much better for all parties if we could agree to put an end to these opt-outs obtained by the United Kingdom at the time when the directive was adopted. In actual fact, they were contrary to the rule concerning competition under equal conditions. Now, employers in other countries are saying, ‘If the United Kingdom can have opt-outs, we too want opt-outs.’ This will lead to the exception becoming the rule. That is not something we can live with. We must therefore call a halt and instead go down the opposite route. We must remove the United Kingdom’s opt-out and find other ways of solving these flexibility problems, for we cannot cope successfully without labour legislation that is applicable across the board.

  Lambert (Verts/ALE). – Mr President, I welcome this report and I welcome the Commission's public consultation on it. For those who are interested, the details are on the website.

If we are honest we all know the problems that long hours of work bring for health and safety, productivity and social relationships, both for the individual and within the family. A number of Member States, for example, are very concerned about children being left without appropriate adult care at times while their parents and carers are at work. We know that the 'long hours' culture, for whatever reason, brings strain, stress and potential breakdown.

I find myself in the interesting position of agreeing with Mr Hughes this evening, and certainly with most of what Mr Pronk said, about the 'on call' issue being resolvable, between social partners, in various sectors and in other ways. The issue about who owns your time, who controls it, who says where you have to be at what point, is a key question when deciding whether or not you are actually at work.

As for the dedication of doctors, yes, there is enormous dedication there but I do not feel safe at the hands of a doctor who has been on call for 72 hours and is swaying with tiredness while he is trying to make a decision how to treat me. That is a personal experience.

We are told that many people want to work longer hours because they really love their jobs – just as we all do. Good. But we also recognise that there is more to life than paid work. We are seeing again in certain countries a decline in voluntary work, for example, with all the repercussions that has for wider society.

We are also told that we need additional flexibility so that people can do overtime to earn a living wage. If this has to be done on a regular basis, I contend that there is a problem with the basic wage paid, rather than the right to continue compulsory overtime. We all know about the pressures exerted by teams to make sure you turn up for that overtime, whether you want to or not.

A lot of this debate sounds to me at times rather like gender discrimination: people claim it does not exist because they have never experienced it. Part of this is the question whether or not people have a real choice, say in the UK with its opt-out, as to whether or not they work longer hours.

We know of the enormous pressure exerted on people by employers, by methods of working, by just-in-time production, by a whole set of things such as the macho work culture that says you are not dedicated to your job unless you are in at 8 a.m. in the morning and still there at 10 p.m. at night. I am sure that a number of the staff in this Parliament will recognise that feeling.

The issue of flexibility is about who makes that decision. I would be happier with a lot of the UK's arguments if I felt there really was a concerted effort by the UK Government to apply the rules. But I do not see any evidence of this and it is not what I am hearing at meeting after meeting either.

  Andersen (EDD). – (DA) Mr President, the Commission has prepared a draft amendment of a directive relating to the EU labour market.

The purpose of the original directive was, out of health and safety considerations, to safeguard employees against unduly long working days by setting a maximum working time of 48 hours per week. The directive nonetheless makes it possible for the employee, by means of his signature, to permit this maximum of 48 hours per week to be worked only as an average over a whole year. Employers are accorded flexibility at the expense of employees’ welfare. This has, for example, led to millions of Britons increasing their working time to more than 48 hours per week since the directive was introduced. It is a sick way in which to organise labour market legislation. The directive supports the principle of individual agreements that is contrary to the collective agreement model that exists in Denmark. Among Danes, there is considerable backing for the national model in which, for example, working time and wage conditions are established through free negotiations between independent trade unions and employer associations. Employees use ballots to agree upon the conditions under which they wish to work.

The directive on working time is an example of the EU’s needing to keep clear of labour market policy and leave this to the Member States. The proximity principle must be taken seriously. Unfortunately, we are now in a situation in which the EU has already legislated in this area. The report on revising the directive proposes closing those gaps in it that employers have misused to exploit the unfair individual agreements. In practice, employers have, upon employing people, in many cases put pressure on them to accept longer working hours. This individualisation is unacceptable as a basis for labour market agreements.

To conclude, therefore, we are voting in favour of the rapporteur’s report and against the majority of the many amendments.

  Pérez Álvarez (PPE-DE). – (ES) Mr President, Commissioner, rapporteur, we are dealing with a report which I believe to be of profound social, legal and political importance.

This is because the completion of the internal market must lead to an improvement in working conditions, because the Community will support and complement the Member States’ actions in the fields of health and safety protection of workers, as laid down in Article 137 of the EC Treaty, and because all workers have the right to a restriction of maximum working time, to daily and weekly periods of rest, and an annual period of paid holiday, as well as to work in conditions which respect their health, their safety and their dignity, as laid down in the European Union's Charter of Fundamental Rights.

The issue is very simple, therefore, on a theoretical level. The first aspect is the reference periods for the application of Article 6 (maximum weekly working time): four months, as laid down in Article 16 of the Directive, or, where appropriate, the possibility of extension in the cases laid down in Article 17: up to six and twelve months if implemented by means of collective agreements or agreements between social partners. The second aspect is the power not to apply Article 6 if the worker is in agreement, the system of opting-out, as has been said here already.

Clearly, a consequence of extending the reference periods would be to increase the flexibility available to companies. The only limit would be the eleven hours of rest daily or the twenty-four hours of rest weekly, but the directive would be losing its purpose and only regulating the maximum four-monthly, six-monthly or annual working time, depending on the particular case.

With regard to opting-out, the potential for abuse is obvious, particularly in a situation of legal equality but not economic equality between the protagonists in working life.

Directive 93/104/EC is intended to guarantee a higher level of health and safety protection for workers, as reiterated in Directive 2000/34/EC. We should therefore seek effective solutions to the cases and activities which require them, such as those involved in the judgments mentioned here, Simap or Jäger, but with objective criteria and conditions, to be used generally and in a non-abusive fashion; and under no circumstances turning the exception into the general rule.

I therefore believe that before the vote we should seek agreements which combine legal guarantees for workers with creating more flexibility, in the spirit of Directive 93/104/EC.

  Moraes (PSE). – Mr President, a number of references were made to us, the British Labour MEPs. We clearly recognise the importance of this issue for our political group and for working people, particularly the issue of work/life balance and health and safety. That has been established and eloquently spoken about by a number of speakers. We do not want to see a long-hours culture; we want to see higher productivity. We want to see working people have the kind of work that allows them the leisure they deserve. We fully support the repeated statements by our government stating that the opt-out should not be abused and that the exercise of the opt-out must be truly voluntary to be legal under UK law.

We need clarification of the SIMAP and Jaeger judgments. As British Labour MEPs, we also believe that it is inappropriate for infringement proceedings to be taken against the UK Government. We have tabled Amendment 1, which deletes the recommendation that the UK Government should be subject to infringement proceedings. However, we believe in the principle of working time and want to see progress, particularly in the health sector.

  Patakis (GUE/NGL). – (EL) Mr President, the proposals by the European Commission on working time obey the demands of the employers for flexible working time. They increase the level of exploitation of the working class and maximise the profits of big business.

According to these proposals, workers will be at the immediate disposal of employers whenever, when and for as long as the employer wants, without overtime pay, a fact which the European Court of Justice itself has condemned.

Thus they abolish basic rights of the workers, such as a set working day, eight hours or seven hours, five days a week. Collective working agreements are being cast aside and fixed term contracts are being extended. The right to insurance and normal leave is being violated, while greater flexibility in employment relations is being promoted.

Any positive arrangements are gainsaid by the planned derogations and the application of the 'opting-out' clause imposed by the United Kingdom and also used by other countries. In it, the workers are dragged under the pressure of securing a job. It is a form of modern paid slavery, which forces a large percentage of the workforce to work an average of between 48 and 70 hours a week, with deteriorating health and safety conditions and very serious repercussions on the mental and physical health of workers.

We support the reduction in working time, the introduction of a genuine 35-hour week of seven set working hours a day, five days a week, an increase in wages and full insurance and employment rights which will apply universally to all workers and all enterprises. We are fighting together with the workers to overturn the current anti-labour framework and flexible forms of employment.

  Hermange (PPE-DE). – (FR) Mr President, I would like to stress the importance of the text on which we are going to vote on the revision of the directive on the organisation of working time, which, as Mr Pronk stressed, Commissioner, ought to have taken place by 23 November 2003. It is because we have waited for too long that we find ourselves in this situation.

Recently, President Prodi presented to us a document entitled ‘Delivering Lisbon’. We cannot deny that, to make Europe the most dynamic economic power in the world, we need to have policies that perform to help businesses adapt to new production conditions and to ever-increasing economic competition whilst taking into account the safety and health of workers.

This is why, in order to adapt to the realities of the market, we need to evolve in a relatively flexible framework. Given this, organisation of working time is dependent on a number of factors and on the characteristics of the sector of activity concerned and of the profession in question. It is on that basis, for example, that we have already legislated for mobile workers in the transport sector, but we have recognised and accepted the concept of flexibility for people driving goods vehicles over 3.5 tonnes. We also have a certain number of problems as regards homeworkers and also those working in situations that involve caring for others, because private and professional life are often intermingled in this area. That is the first point.

The second point is that, in addition to these differences according to sectors, we must draw attention to the specific characteristics of national industrial relations systems. Some Member States call on collective or workforce agreements to establish the average working time, whilst others resort to individual derogations which make it possible for workers in, for example, supervisory positions, not to be subjected to restrictions in working time.

I do, of course, agree with the fact that the European Union is duty bound to lay down minimum conditions governing the organisation of working time in order to guarantee a high level of health and safety protection for workers. Should it not at the same time, though, give enterprises the option of reacting contrary to general practice when faced with different constraints? This is why it seems to me that the rapporteur’s opinion would have to be qualified by accepting, for example, as you initially proposed, Commissioner, the gradual abolition of the opt out, provided for in Article 18 of the Directive, in return for the introduction, in the future draft revision of the directive, of a derogation at Article 6 to allow periods of inactivity partially to be taken into account. This would probably be a transitional solution that would make it possible to have minimal social rules whilst, at the same time, taking into account the constraints of each sector.

  Thorning-Schmidt (PSE). – (DA) Mr President, the basis of the whole working time directive is now in the process of being eroded. Pressure is being exerted from two sides. This comes firstly in relation to the individual opt-out. Mr Bushill-Matthews and Mrs Lynne are very enthusiastic about these individual opt-outs. I think, however, that we are obliged now to ask them why, if individual opt-outs are so fantastic, this provision should not be extended to apply to all legislation concerning health and safety in the workplace. Why stop here? Why not go further and include noise, asbestos and other areas if it is such a splendid principle?

There is also a prevailing misunderstanding that it is the individual opt-out that makes it possible to work long hours. I should like to invite both Mr Bushill-Matthews and Mrs Lynne to get out and about in Europe and visit a few workplaces and to come to Denmark where they will see that it is, in actual fact, possible to work very long hours in various industries in Denmark and, at the same time, to comply with the directive, for it is very flexible.

Nor, at the same time, must we of course forget that we are concerned here with health and safety in the workplace. It is not just something that the Social Democrats have lighted upon in order to be officious and over-zealous or in order to limit individual flexibility. We also know that the statistics are clear in their implications. We know that there is a clear connection between long working hours and accidents at work. Moreover, it is generally known that the number of sick days is increasing and that long working hours do not in actual fact mean higher productivity.

Nor can we ignore the fact that it is women who will be placed in a difficult position if we simply extend working time, the natural consequence being that a number of women will perhaps withdraw completely from the labour market. I am certain that the right-hand side of the Chamber too will appreciate that this would be very unfortunate for the European economy.

The second pressure on the working time directive stems directly from the fact that the Commission has neglected to say what it intends to do as a consequence of the Jaeger and SIMAP Judgments. These rigid judgments have sent shock waves through the national and regional health authorities which simply cannot imagine how they are to make ends meet if on-call hours are to be fully charged for.

I would go so far as to say to the Commission that, if it does not do something soon and produce a proposal, it will itself contribute to the image of the EU as something removed from the real world and unable to come up with flexible solutions.

We badly need a revision of the directive that abolishes the individual opt-out but that constantly provides for flexibility where there is a need for this, for example in the health sector. I would also ask the right wing today to take note of the fact that no one is asking for a very rigid directive. We are all asking for flexibility, but we must not of course destroy the principles behind having legislation in this area.

Finally, I should like to ask for the revised directive also clearly to indicate that it can be implemented with the help of collective agreements. I say this not just to harp on about time-honoured Danish practices, but also because this method of implementation puts a stop to the individual ways of doing things and, at the same time, provides for a very high-level de facto implementation of the directive. That is why this is a sound way of proceeding, and that is why I should like to ask the Commission specifically to state in the directive that the directive can be implemented by means of collective agreements.

  Lulling (PPE-DE). – (FR) Mr President, the exercise that we are currently carrying out to revise a 1993 directive on the organisation of working time is worthwhile. It should not, however, have diverged either needlessly or too far from the objective pursued, that is to say the possible amendment of the directive in order to guarantee a better level of health and safety protection for workers.

The opinion of the Committee on Women’s Rights and Equal Opportunities is, unfortunately, another typical example of that very process, since it made a brilliant job of missing the point of the report.

I had tabled a series of amendments aimed at removing from the text of this opinion the obvious falsehoods, according to which working hours are apparently being extended all over the place in the European Union and long working hours being imposed in our Member States, with negative effects on our health, well-being and appetite for life. The opinion then concludes by heaping criticism on the would-be culture of long working hours for high level professionals and others, managers in particular.

These generalisations and falsehoods do not serve our objective, designed to promote a better level of health and safety protection for workers. For some here, a massive reduction in working time is the universal remedy for all problems. That being said, I agree that the Lisbon Agenda, which sets the goal of a 60% employment rate for women by 2010, will not be respected without prior progress in reconciling professional life and family responsibilities. I also agree that couples need to be better at dividing domestic tasks and educational responsibilities and, on this subject, there should be a response on the part of men, because women are still forced to take on, to a disproportionate degree, the double burden of professional work, on the one hand, and of family responsibilities on the other.

I regret that my attempts to qualify the statements of some Members and to re-establish the truth did not find favour with the Committee on Women’s Rights and Equal Opportunities and, above all, I regret that the rapporteur repeated certain falsehoods, in particular that which would have us believe that working hours continue to be extended in the European Union when, in the majority of Member States, the opposite is true.

My group has tabled a host of amendments designed to re-establish truth and reason on this sensitive issue and aimed, in particular, at those populists who would have our European citizens believe that they can always work a lot less to earn a lot more than their colleagues in other parts of the world.

  Andersson (PSE). (SV) Mr President, I wish to thank the rapporteur, who has prepared a very constructive report.

Sometimes when I listen to the speeches, I get the feeling that health and safety aspects as they relate to the private individual – which, strictly speaking, is what the legislation is really about – are not the main point. I am, to be honest, frightened when I hear the British representatives of the Group of the European People’s Party (Christian Democrats) and European Democrats and of the Group of the European Liberal, Democrat and Reform Party. They say that, in view of the fact that certain jobs have such low wages, we must allow employees to work longer hours so as to compensate for these low wages. What is this other than the model that exists in the United States where people sometimes need two or three jobs in order to be at all able to take care of their families? Is that what we agreed to in the Lisbon Process? Certainly, we must have competitiveness and growth, but we must also have challenging social objectives and the opportunity to combine family life and working life. These principles, about which we have expressed our opinions, are directly contrary to flexibility of that kind.

The problem is that the exception has become the rule in the United Kingdom. It is never the intention that an exception should become the rule, but it has become so in the UK. If the opt-out is extended, there is a danger of the Member States competing by means of longer working time in order to attract production. Is that the kind of Europe we want: one in which we compete in terms of social legislation? No, I do not want a Europe like that.

I think, however, that we must have flexibility, just as Mrs Thorning-Schmidt said. I do not, however, see the individual opt-out as a possibility. Think how dependent the individual employees are on their companies when they are to agree upon wages and working time. The word ‘voluntary’ does not apply, no matter what people say. It is much better to involve the two sides of industry. There are differences between various industries and, sometimes, certain industries may require special arrangements in order to achieve flexibility and, at the same time, maintain the principles of health and safety. I therefore recommend collective agreements through which this flexibility can be achieved.

I am not in favour of renationalisation, because it would have the same effect. It would mean countries competing with each other by attracting capital available to them because of their not prioritising health and safety.

We want to use our European model to stimulate competitiveness but, at the same time, have challenging social objectives and the opportunity of combining working life and parenthood. Let us comply with this model, in which case we must remove the individual opt-out, at the same time as preserving flexibility and a high level of safety.

  President. That concludes the debate.

The vote will be at noon on Wednesday.

  President. The next item is the report (A5-0013/2004) by Colette Flesch, on behalf of the Committee on Development and Cooperation, on the work of the ACP-EU Joint Parliamentary Assembly in 2003 (2003/2007(INI)).

  Flesch (ELDR), rapporteur. – (FR) Mr President, debates on this report in the Committee on Development and Cooperation took place in a constructive climate, and I would like to thank Members for the amendments that they tabled and that it was possible to incorporate into this report, thus improving the motion for a resolution put to you.

The striking fact of 2003 was certainly that the Joint Parliamentary Assembly could return to a normal rhythm of work following the cancellation of the November 2002 session due to circumstances of which you are aware. On this issue, the result of the mission carried out by the ACP Co-President and four ACP parliamentarians in Harare should be particularly welcomed. They managed to persuade the Zimbabwean Government to agree to the head of its delegation in the Assembly no longer being someone who is covered by the Council’s restrictive measures. The ACP Co-President’s personal commitment to ensuring that only the head of the Zimbabwean delegation can take the floor during the session in Rome should also be welcomed.

Aside from this important aspect, six points deserve to be mentioned as regards the work of the Assembly in 2003. The entry into force of the new Rules of Procedure allowed the debates to be better structured. The more informal organisation of Question Time with the Commission, at the sixth session in Rome, proved its worth and led to a livelier debate. It was possible to organise and carry out four joint missions in 2003. The Women’s Forum was a success both at the 5th session in Brazzaville and at the 6th session in Rome. It was possible to significantly improve and deepen cooperation between the Joint Parliamentary Assembly and the United Nations. Finally, two important reports were adopted, one on children’s rights, and those of child soldiers in particular, and the other on the use of the European Development Fund and the discussions initiated on its budgetisation.

For the future, Mr President, the Committee on Development and Cooperation basically proposes to invite the Assembly and its Bureau to continue to organise Question Time to make it livelier and more informal; to re-balance the agenda of the sessions and to give more speaking time to Members of the Assembly; to ensure better continuity between sessions by strengthening the facilities of the Standing Committees; to improve the availability of documents, in particular via greater use of the Internet; to develop the role of the Assembly in the implementation of the political dialogue provided for in Article 8 of the Cotonou Agreement; to continue its work on human rights through greater involvement of civil society; to make practical arrangements for sending to Zimbabwe a joint delegation, freely chosen, provided that it can move around freely and meet anyone it wishes; to develop the role of the Assembly as a forum for dialogue with the World Trade Organisation; and, finally to take into consideration the desire of Members of the Assembly that the sessions in Europe take place under good conditions, outside of the workplaces of the European Parliament.

To summarise, Mr President, the Committee on Development and Cooperation gives a positive view of 2003. The difficulties of the previous year, which culminated in the cancellation of the session of November 2002, have been overcome thanks to efforts on both sides, in particular from the Co-Presidents and the Bureau of the Assembly. The latter was also able to resume a normal rhythm of work. Improvements have been made to the organisation of its work, allowing it to make its voice heard more clearly and to actively participate in the political dialogue provided for in the Cotonou Agreement. I hope, Mr President, that our Assembly will be able to adopt the report by the Committee on Development and Cooperation.

  Diamantopoulou, Commission. (EL) Mr President, I should like first of all to express my satisfaction on this very informative report concerning the work of the Joint Parliamentary Assembly, which is very useful not only for us, but also for the interested agencies which somehow create relations between Europe and these countries.

As the members of the Assembly know and as noted in Mrs Flesch's report, my colleague Poul Nielson is actively involved in the work of this Assembly and the Commission services are trying in any way they can to support it with documents and information, while the experts in the standing committees are also now preparing the Assembly reports. Thus, I think that the Commission's genuine interest is clear, as is its close and efficient cooperation with the Joint Parliamentary Assembly.

I should like to mention three points. The first is that we absolutely welcome the setting up of these three standing committees following the approval of the new rules of procedure in 2003. Thanks to preparatory cooperation between these committees, the reports present a high degree of accuracy and the debates in plenary are much clearer, specific and detailed.

Secondly, I believe that the setting up of the Women's Forum is very important. This forum has provided the possibility for women's opinions to be heard and the possibility for mutual support. Thus, there is the possibility for the Assembly's proposals to be enriched with issues which relate to equality of the two sexes and the broader participation of women.

Finally, the Joint Parliamentary Assembly is a very important forum for political dialogue between MEPs and MPs from the ACP countries and, consequently, it is the Commission's duty to support this entire effort.

I should like to take advantage of the seventh plenary Assembly in Addis Ababa to inform you, even though you already know, that two of our colleagues, Pοul Nielson and Pascal Lamy, will be speaking, and I should like to express my best wishes for a successful Assembly.

  Korhola (PPE-DE). – Mr President, the report on the work of the ACP-EU Joint Parliamentary Assembly contains some important considerations. It is good to see that the degree and quality of cooperation between the Joint Parliamentary Assembly and the United Nations reached unprecedented levels. I think its is especially worthwhile that enhanced cooperation with the UN is visible in the matter of child soldiers, as is evident from the report. This is an area where the battle cannot be ended before it is completely won. Even one child soldier is a gross injustice to humanity and its future.

There are an estimated 300 000 child soldiers under the age of 18 involved in some 40 conflicts throughout the world. Using children as soldiers is a violation of their human rights and deprives them of their childhood and the chance for education and building a better future as a result. Being a soldier always causes serious psychological and often also physical damage in children.

The use of child soldiers has increased with, for example, the development of weapons technology, as children can be made to use ever lighter and smaller weapons. The reason for the increase in the use of child soldiers is also due to the nature of modern warfare: most of today’s armed conflicts are civil wars. In the time of the First World War just 10% of the war’s casualties were civilians. Now the corresponding figure is 90%. Civil wars are waged between different ethic groups, which in practice means civilian populations. In this way children become targets and easily recruited additional troops. Children obey orders more readily than adults. Children have had to witness atrocities and carry them out themselves under coercion. Many guerrilla movements even prefer child soldiers to fully-grown combatants. Furthermore, children are prepared to take risks that adults would refuse to. One example is Iran, where children were used as messengers in minefields.

The International Save the Children Alliance was heard when the UN Security Council met in mid-January 2003 to discuss the plight of children in armed conflicts. The debate was preceded by the third report by the UN Secretary-General on children and armed conflicts. For the first time in an official report those responsible for using child soldiers were named. This is a significant step forward because it allows international pressure to be put on those who grossly violate children’s rights.

This otherwise excellent report is still in need of some small stylistic improvements. The Question Time in Rome was certainly animated, as points 6 and 26 state and which is all too commendable, but as it is actually mentioned twice, one gets the impression that this is an altogether unusual exception to the rule and that the basic nature of our work is lifeless and anaemic.

  Kinnock, Glenys (PSE). – Mr President, I can assure the last speaker that we are neither lifeless nor anaemic in the work that we undertake in the Joint Parliamentary Assembly. The references which the excellent rapporteur makes are to the fact that we now have a parliamentary status and a very different way of working but, most important, the ACP representation is of elected Members of Parliament and not of ambassadors, which used to be the case in the past. I am sure if the previous speaker were to look at the evidence she would see that was the case. It is because we have this parliamentary status under the Cotonou Partnership Agreement that we have a new and dynamic maturity.

The parliamentary assembly is a very special institution: it is the democratic arm of ACP-EU cooperation and provides a voice for the people in the 93 countries which are represented there. It is our task to build credible and workable partnerships through dialogue and consultation between our respective parliaments.

In our last Joint Assembly we worked on the EPA trade negotiations, human rights, governance, the European Development Fund and environmental concerns. Our entire effort is to ensure that we deliver the promise and vision of Cotonou. Our work should reflect that unique subscription between the EU and 78 ACP countries to those values which are enshrined in the agreement. Those values are central to our work here in Parliament and to our work with developing countries, and that is democracy, the rule of law and, above all, the eradication of poverty.

We are conscious of the difference of opportunity that exists between our ACP colleagues and ourselves. We have access to staff and technology to assist us with our work, and far greater opportunities to cooperate and work together, as we are now in our preparations for Addis Ababa at the end of this week.

In addition, we have far more of a tradition of parliamentary scrutiny. I am delighted that Commissioner Nielson has on a number of occasions expressed his support for the Joint Assembly and for financial resources to be made available for us to be more effective in our work and for the participation of ACP Parliaments to be greater, because, after all, it is their legitimacy and accountability as parliamentarians that is at the heart of our work.

I am encouraged by the growing confidence of ACP parliamentarians, and that has been demonstrated, as Mrs Flesch says, by the extensive participation now from both sides in the debates we are having. We comment on it because it is growing and developing as confidence increases. In the past it was the European parliamentarians who dominated every debate and that, I am glad to say, is no longer the case. They are absolutely hungry for information in order that they can be more effective in their parliaments.

I know that some countries – such as Senegal – are making a priority of parliamentary training and capacity-building in their national indicative programmes. But we need to do more to encourage more JPA parliaments to have this facility. We are now preparing for the seventh session of the JPA in Addis Ababa this weekend and I am sure that we will continue to work in an increasingly impressive and focused way in 2003.

  Maes (Verts/ALE). – (NL) Mrs Flesch, I should like to congratulate you mainly on the tone of the positive, yet critical, remarks in your explanation. I am finding it a little harder to come to terms with certain euphoric elements that I will highlight in the text itself.

As Mrs Kinnock pointed out at great length, the new Rules of Procedure of the ACS-EU Joint Parliamentary Assembly have created structures allowing for a real, fruitful dialogue. It appears to me a little premature to herald it as a world model at this stage. There is no doubt that in future, it can become a world model in the field of development cooperation and a place in which people with equal rights can have an open and transparent dialogue, inter alia about democracy and the protection of human rights, thus enabling us to enter into binding agreements with each other. We are not that far yet.

There are structures in place and both sides must now make effective use of them. This will require an increase in resources on the ACP side and quite possibly, a change in mentality on both, because the EU partner will also change following the accession of ten new countries. I wonder whether the sound results which we have already achieved in the joint working party, and which are reflected, among others, in the report on child soldiers, can be repeated shortly in our general assembly, where the tone of discussion has picked up a great deal, even though I still sometimes miss the ACP's equal participation. Our forum should develop into an effective North-South Parliament with a real impact on the orientation of our attitudes, for example with regard to world trade. Not only do we want fair trade, we also want free trade. I think that we will have to determine our policy in tandem with the ACP beforehand and that we should not always agree among the rich before we head to a conference in Cancun or wherever.

The UN's Millennium Declaration lists major issues in which we would like to make real improvement, for example by halving global poverty and with regard to good governance, health, education and an end to the oppression of women, these should all be items on the agenda, the progress of which we can measure in the framework of the ACP-EU meetings. We must become real partners in the development of North and South, and I should like to emphasise that consultation is necessary at all times if we are to be spared the disastrous effects of such incidents as those in Zimbabwe.

IN THE CHAIR: MR DAVID MARTIN
Vice-President

  Souchet (NI). – (FR) Mr President, the cooperation system that links the European Union to the ACP countries is marked by a dual evolution in opposite directions. On the one hand, the original institutions implemented by the Lomé Conventions and confirmed by the Cotonou Convention, notably the Joint Parliamentary Assembly, have manifestly endured and are livelier than ever, and the report by Mrs Flesch clearly shows the innovative developments in the Joint Assembly in 2003. At the same time, however, the objectives and the substance of the cooperation, which these institutions are there to implement, are tending to weaken, degenerate, be trivialised, break apart and dissolve, to the point where, soon – if we let this carry on – they will consist only of financial aid with an upper limit and of standard free trade agreements that could be more a source of difficulty for the ACP countries than real instruments to aid their development.

As the rapporteur stresses, the creation in 2003 of three standing committees, in particular a Committee on Economic Development, Finance and Trade responsible for looking at the extremely delicate issue of negotiating future partnership agreements, reinforces the continuity of the Parliamentary Assembly and allows the quality of its work to be improved. The system of co-rapporteurs is original, and the work of the committee will lead to stronger, more finely tuned, better prepared and less routine resolutions, which will lead to much more in-depth debates than was possible in the plenary.

If, however, the institutional framework is enhanced and fine-tuned, we need to ask ourselves about the future of the cooperation instruments themselves. If future economic partnership agreements merely apply the principle of equality of competitors, is there not a risk that they will create insurmountable accounting problems for ACP countries by making them lose out on a large part of their customs revenue, which is an important, and sometimes an essential, part of their budget? Moreover, is there not a risk that putting Community merchandise and local products in direct competition with each other without sufficient safeguards will weaken or even suffocate a number of sectors of activity in the ACP countries?

If we want to do our bit to avoid these wayward developments, then this unique North-South parliamentary forum that is the Joint Assembly, must ensure that major negotiation of partnership agreements is carried out with the necessary ambition and energy, in particular in the area of agriculture, which is the platform for development. The ACP countries will, however, only have a sufficiently strong agriculture if it is adequately protected as a budding industry as it gets off the ground. The Cotonou framework, that of regional economic zones, can be seen as the most appropriate framework to promote the establishment of homogeneous regional common markets with a common external tariff.

It is by working in this direction, Mr President, that ACP and European countries will no longer find themselves on different playing fields in future negotiations regarding agriculture and world trade.

  Theorin (PSE). (SV) Mr President, allow me firstly to say that the report is constructive and provides a correct description of the work in the ACP-EU Joint Parliamentary Assembly. The work has acquired a better structure with the three committees, something that has improved the preparatory work prior to the plenary. Question time has also improved. It may of course be further improved if the answers to the questions reach MEPs in good time, so that the Commission does not merely read out the answers but provides scope for debate.

I personally should like to emphasise the constructive cooperation between the ACP-EU Assembly and the UN when it comes both to child soldiers and children’s vulnerability in war and to the debate concerning the International Criminal Court. These are two major and important political issues of precisely the kind that our Assembly should engage with, for they are about finding sound forms of cooperation in which both sides learn from each other and support the policy we consider to be important in the international arena.

The United States has removed its financial support from those countries that do not back the US’s demands that all Americans in general must be exempted from being brought before the International Criminal Court for serious war crimes. This measure can and must be supported both politically and financially by the ACP-EU, especially by the EU. It is gratifying to note that, of the Latin American and West Indian countries, it is only Belize that has given in to the US’s action and, of the African countries, only Nigeria, whose President ratified an agreement with the United States that was contrary to the Nigerian constitution and in defiance of the Nigerian Parliament. It is gratifying that most other countries have resisted the pressure from the United States. The ACP-EU Assembly plays an important political and economic role in major, crucial issues in the international arena.

  President. That concludes the debate.

The vote will be tomorrow at 11.30 a.m.

  President. The next item is the report (A5-0015/2004) by Hans Modrow, on behalf of the Committee on Development and Cooperation, on the communication from the Commission to the Council and the European Parliament on the reform of state-owned enterprises in developing countries with focus on public utilities: the need to assess all the options (COM(2003) 326 – 2003/2158(INI))

and

the communication from the Commission to the Council and the European Parliament on European Community cooperation with third countries: the Commission’s approach to future support for the development of the business sector (COM(2003) 267 – 2003/2158(INI).

  Modrow (GUE/NGL), rapporteur. – (DE) Mr President, this report is based on two Commission communications, both of which are evidence of the efforts the Commission is making to take action in the areas to which they refer, whilst not drawing a veil over the highly contradictory way in which the process is moving now that it is underway. It follows that the underlying principle – of cautious and balanced actions – is the right one. The Commission has various options in mind for the reform process, and the report makes reference to them.

For the rapporteur, the most important thing is still that every orientation and every reform measure must be aimed at combating poverty, consistently and without ideological blinkers. Containing poverty, and eventually overcoming it, will be the greatest challenge facing the human race in the twenty-first century. The progress made so far is, however, modest at best, and new setbacks are constantly hindering or even nullifying it.

It is for that reason that the report, like the Commission communication, discusses a wide variety of options, although there is no mistaking the different emphases and priorities adopted by the Commission and the rapporteur. Although services of general interest are the subject of controversy in the Member States of the European Union, they may, in those countries, be regarded as relatively stable, but problems are nevertheless ever-present. That is far more the case in the developing countries and will remain so for longer, for they often totter on the brink of a catastrophe. The European Union’s efforts should, above all, be devoted to supporting and motivating them. Whilst the Commission, and also several of my fellow-Members of this House, are strongly in favour of privatisation, all the experience we have had, including in the EU’s Member States, leads me to urge that, along with a responsible role for the public sector and the State, the focus should be on cooperative solutions and also the involvement of the private sector in these states. In the private business sector, priority should be given to the promotion and development of small- and medium-sized enterprises, which lay the foundation for more jobs and self-supporting economic development in developing countries.

I cannot, in principle, endorse Mr Deva’s amendments. Were they to be adopted, the report would lose its critical view of things and would not be equal to the nuanced handling of the reform process that is necessary. Nor, too, are they in line with the primary tendency of the report as adopted by the committee. Finally, they do not go as far as the Commission in terms of willingness to enter into dialogue, and are incompatible with the character of the reform process.

As rapporteur, I have endeavoured to propose and achieve workable solutions. Far from sticking rigidly to principles and to ideological points of view, everything should be subordinated to the great goal of the war on poverty.

  Diamantopoulou, Commission. (EL) Mr President, the Commission welcomes the report by Mr Modrow and the support which it gives to the application of the two communications.

It is clear that the Commission, with these two communications, is trying to highlight the importance of the business sector to development. The development of businesses and the existence of a dynamic private sector are basic factors in economic development and are the main source of employment in developing countries, especially if account is taken of the unofficial sector of the economy.

We outlined the experience which the Commission has as regards the support of the private sector, the benefits which derive from action at Community level and the need to harmonise the various means. Thus, we can determine sectors which reflect the actions undertaken by the Commission, on the one hand, and those which are rightly left to others to implement, on the other.

As far as state-owned enterprises are concerned, our intention is to contribute to their reform in developing countries. It is clear that there are huge losses and inefficiency in state-owned enterprises but, of course, this reform needs to be integrated into the framework of plans to restore macro-economic and financial balances and promote development.

We avoided adopting easy or simplified ideological approaches. Finally, we have not put an end to the discussion on ownership, by which I mean if they are state-owned or private enterprises or partnerships between the public and private sectors. Our objective is to expose all the arguments and analyse them so that, once we have objectively got all the interpretations, we can make a final choice which reflects the needs of each country and each sector.

I would remind you that the Commission has always had a constant position on these programmes, which always took account of the social repercussions of programmes to liberate the economy and it is interesting that, over the years, even the Bretton Woods institutions have adopted the same stand. We recognise the huge importance of domestic investors, as well as the investments which European small- and medium-sized enterprises can make, especially those which have experience and knowledge. We highlight the need to lay down suitable regulatory frameworks and supervisory mechanisms; these are issues of vital importance on which the Commission wishes to put its experience and the high level of expertise which it has at the disposal of the developing countries.

As I mentioned, we place great emphasis on the need to attract investors and create a favourable environment. This strategy has as its objective the development of the credit sector in developing countries, the promotion, as an efficient means of funding, of small enterprises and micro-credit institutions which play a vital role in granting small loans to the unofficial sector of the economy, which mainly includes enterprises run by women. The two communications are complementary and have been drafted on the criterion and with the ultimate objective of further reducing poverty.

I hope that, with the debate in Parliament and your resolution on it, we shall make a better contribution to the understanding of the need to invigorate business development in these countries and help the necessary reform of state-owned enterprises.

  Ó Neachtain (UEN), draftsman of the opinion of the Committee on Industry, External Trade, Research and Energy. – Mr President, I congratulate the rapporteur, Mr Modrow, for taking the initiative to produce a report on this important subject. I am pleased to be associated with the report as draftsman of the opinion of the Committee on Industry External Trade, Research and Energy. I am particularly pleased that the Committee on Development and Cooperation decided to integrate fully the recommendations which I made on behalf of the Industry Committee.

I would like to highlight what I believe are some of the key elements in the reform of state-owned and private enterprises in developing countries. Later in the week, corporate governance is on the agenda in this House, following the recent Parmalat case in Italy. We are all aware also of the Enron scandal in the United States. In other words, the issues of the efficient running of enterprises are as pertinent in western, developed market economies as they are in developing countries. Nevertheless, it must be acknowledged that a thriving and efficient private sector can play a major role in developing the economy of third countries and in combating poverty.

I fully support the idea of EU assistance to the business sector in developing countries through intermediaries. I share the Commission's view that reforms of state-owned enterprises must take account of the capacity and resources of the countries involved. Many of the enterprises in question are essential to development in the fields of energy, water, transport and infrastructure.

Reform of state-owned enterprises in developing countries should not be confined to privatisation measures. An overriding goal should be to ensure affordable access to services of general interest, such as water supply, drainage, energy supply, education and health services. The EU should encourage reform strategies which involve domestic investors and devote particular attention to decentralised solutions involving small and medium-sized enterprises.

In conclusion, I believe that businesses in developing countries should be assisted, particularly in the fields of good governance, institution building and consultancy. Our own SME sector should be actively engaged in this process.

  Deva (PPE-DE). – Mr President, I applaud the development of the rapporteur's ideas in recent years on this subject. I enjoyed working with him in the Committee on Development and Cooperation on this report.

There is no single holistic approach to the management of public utilities that fits all developing countries. Evidence from post-independent developing countries in the past 50 years shows that state-owned enterprises have, in the majority of cases, failed to efficiently and cost-effectively provide water, waste management, municipal services, road transport, aviation services, mining, reforestation and energy supplies, thereby making them a considerable burden on the state budget, hindering economic growth and impoverishing the poorest. Poverty, diseases and lost economic opportunities have increased because of the state management of public utilities by bureaucrats whose first priority is job security and not economic efficiency: just look at the failed Soviet system.

It is imperative to get the private sector involved in the provision of public services in developing countries in order to increase cost efficiency as well as economic growth. The private sector alone can generate sustainable employment and is the driving force of every modern economy. Public utilities in developing countries should be privatised through open international procedures that are transparent, quick and not onerous, and able to meet sustainable development and public interest criteria. Ideally, the award of a tender should be the sole task of an independent, foreign financial institution, acting alone, according to international norms and reporting conditions, and one that has no conflict of interest in that country or in that project.

I have studied this process for many years and have sadly come to a very sad and bitter conclusion: many foreign direct investors are put off by tedious and laborious tender procedures, consultants' reports, evaluation committees and committees to evaluate other evaluations – devices constructed by officials of developing countries and consultants to international bodies to earn money either through fees or corruption. These procedures are an open door to the impoverishment of countries through delay, vacillation and corruption. The more decision-makers there are in the loop, the more corruption there is.

Such corruption takes various forms.

The first form is that of accelerating a decision and overlooking a better bid by making payments to high government officials, such as are to be found in East Asian countries. The other form of less detectable corruption to be found in South Asian countries and Africa is making payments to block the success of another more favourable bid by a competitor. In the former case, despite the corruption and the more inferior services now provided, the job gets done and some form of utility is provided, while in the latter nothing ever gets done and the economy suffers. The former is endemic in the North and East Asian countries, while the latter is epidemic in South Asia and Africa.

When large transnational companies are encouraged to invest, through foreign direct investment, in developing countries, they should also be empowered to make offset investments. By offset investments I mean that they should be able to put a part of that investment into social capacity-building, into schools, hospitals, training colleges and youth centres, so that there is a public element in the privatisation of a public utility whereby everybody around the utility benefits. This is the way forward, with transparency and openness.

  McAvan (PSE). – Mr President, I want to refer to the part of the report which concerns the reform of state-owned enterprises. I welcome the Commission's communication and I agree with the Commissioner that we need reform of state-owned enterprises. When resources are tight, we need to ensure that they are used effectively. I also agree that we have to be sensitive to the needs of the countries involved and not adopt dogmatic solutions.

If you look at our own history, public services have played a vital role in our economic development: they helped to end poverty and disease, and, by adopting the principle of universal access to public services, we managed to help eradicate poverty, raise living standards and create more equal societies. When we are looking at public services in the developing world, we must also focus on the eradication of poverty as a top priority of our reform of public services and state enterprises.

There is one other key ingredient we should not miss out on and that is the principle of public accountability. That accountability should include scrutiny by elected representatives, independent regulation and the involvement of civil society and NGOs. We have some models of good practice in our own countries to show how public services can be held accountable. If we have more accountability built into the way we look at reform in these countries, I am sure we will have the kind of public services which deliver for people, make sure resources are used effectively and help us to pursue our own development goals of eradicating poverty and raising living standards.

  Boudjenah (GUE/NGL). – (FR) Mr President, I will first of all give my enthusiastic support to the report by my colleague Mr Modrow, in which, to their credit, the two Commission Communications open up the debate on the position, role and responsibilities of State-owned and private enterprises in developing countries. According to Mr Modrow, the report has the virtue of pointing out the contradictions, and sometimes even the inconsistencies, in the European policy.

The Union is not actually impartial on the issue of strengthening or not strengthening State-owned sectors in countries with which it has close relations. Unfortunately, it too often advocates a policy of reducing public costs and deficits in response to the structural adjustment measures dear to international financial institutions, a policy which, in its wording, admittedly seeks to reduce poverty but which in reality can end up being to the total detriment of the peoples concerned. In this way, the incentives and pressures exerted on these countries with a view to privatising their economies has a price, and this is a high price to be paid by the men and women in these countries, a high price for the employees concerned, there as here. There is a chronic lack of connection between economic and financial objectives, and the need to satisfy, above all else, the needs and fundamental rights of these peoples.

In this framework, the often too exclusive call on the private sector is at best a deception and at worst a seizure of economic, social and political power, which slips from the control of the peoples in these countries. We are aware of the drastic social consequences of this. If this is not the case, why then does the Commission always refuse to carry out a transparent, public and openly debated assessment of the effect of liberalisation on employment, on the quality and the extent of the services provided and on working conditions in Europe itself? Yet, such an assessment would render more credible its call for the European Union’s experience on this matter to be considered. If combining a strong and modern State-owned sector and private enterprises could be desirable to meet needs, in particular in the services area, it is nonetheless a fact that the call for public-private partnerships at present actually does more to weaken public enterprises than to create an overall dynamic.

Faced with the jungle of competition, the safeguards – when there are any – that are meant to maintain, strengthen and modernise services of State-owned enterprises are not enough. Without employees being involved in decisions and the destiny of the enterprise, without consulting the peoples and without a genuine code of practice which restricts multinationals involved in developing countries, recourse to private investments amounts to financial takeovers by large corporations, without there being any improvement to the service and often to the detriment of the national interests of these countries. The ever more dominant role of these transnational companies in the world clearly benefits the financial, speculative and stock market system more than the people of the South.

I am, furthermore, surprised that the Commission is furthering privatisation as a means to fight corruption. In this regard, a great deal of experience in Europe and throughout the world far from verifies these assertions. The EU should strengthen its aid to the developing countries according to the criteria of whether enterprises are modernising by moving towards democratisation in decision-making processes, with more transparency in the operation of public service enterprises.

Finally, and I will conclude on this point, the fundamental rights of every person to health and education must remain in the public sphere, just as water, transport, health and energy should remain outside of the GATS.

  Maes (Verts/ALE). – (NL) Mr President, Commissioner, ladies and gentlemen, the Modrow report is right to highlight a number of painful areas in the privatisation mania that has swept many developing countries. The nationalisation episode in the decolonisation era was followed by an episode of wild privatisations of undertakings, only for these often to become impoverished. Invariably, it was the political elite that pocketed the profits and placed these in foreign bank accounts during both eras. Invariably, too, Western multinationals acted as corrupted undertakings in order to lay their hands, for a song, on vital national industries such as mining and raw materials. When I visit Africa, I am often embarrassed on their behalf about their unethical behaviour, by the way, for example, in which the Zambian copper sector, with the closure of the mines, has dragged along with it an entire social fabric, an economic fabric which has shattered an entire country.

I realise that the development of a country requires investments. However, can the European Union not play a more positive role so as to help create the conditions to ensure that the reforms in state-owned undertakings can progress in a more favourable sense for the sake of development? I am not calling for dogmatism but for true partnership. A poor country is often not equal to the financial power of a multinational whose budget is many times greater than that of that country itself. If even we are not able to enforce the ethical codes of conduct for undertakings, how can we expect those poor countries to do so?

I join the rapporteur in calling for more attention and more resources to make the transition of small undertakings in the informal sector to the formal economy possible, and also for more resources for women, who are often active in this informal sector. They must have the first claim on aid, because their undertakings are probably the most direct way in which the fight against poverty in their country can be tackled.

  Belder (EDD). – (NL) Mr President, support for the development of industry in developing countries is intended to improve those countries' trading position. Consequently, the Commission's striving towards a predictable legal framework and a decrease in corruption receives my wholehearted support.

With regard to the reform of state-owned undertakings, the Commission and the Modrow report are less convincing. First of all, the scope of both the Commission's policy framework and range of duties becomes too unwieldy. The Commission states that all other options must be examined before a developing country chooses to reform a state-owned undertaking. However, the Commission itself admits that the considerations to decide in favour of reform are political decisions. It is therefore unrealistic to make an objective consideration of the various options a requirement.

Secondly, there is social policy. According to the Commission's communication and the rapporteur, the requirement of social measures must run parallel to reforms. This sounds charitable, but is inappropriate. After all, the European Community has no powers in the field of employment policy and social policy in the developing countries. These fall outside the remit of technical support and European development cooperation.

Thirdly, in relation to the Member States' policies; there is hardly any reference in either the Commission communication or the Modrow report to the Member States' development cooperation in this field. The sustainable development relation between a developing country and a Member State could be the perfect framework in order to, for example, offer support in the event of redundancies.

Finally, the relation between state-owned undertakings and poverty reduction; the Commission wishes to use poverty reduction as an assessment criterion for granting support to state-owned undertakings. This is not in keeping with its neutral position on private versus State ownership. The criterion should either apply just as much to private undertakings, or should not apply at all. In conclusion, support to undertakings in developing countries has my blessing, but the line of approach in the case of state-owned undertakings raises essential questions.

  Claeys, Philip (NI). – (NL) Mr President, this report is, in my view, a modest sign of a favourable development. One of the major problems in the developing world was – and still is to a great extent – the absence of a truly free market economy.

In practice, socialistic and collectivistic experiments have generally exacerbated the problems rather than offered a solution to poverty. There appears to be a gradually growing consensus that governments alone will not bring universal happiness, and we have allowed free initiative to play a role. This is a positive development, and one that can only be applauded.

As the report states, there are different ways of reforming state-owned undertakings. Nobody can be opposed to gradual change. We should only add a word of caution with regard to obstacles as a result of all kinds of intermediate levels of government intervention which people might try to incorporate. It is, at any rate, positive that there is a willingness to provide small- and medium-size companies a role, both in situ and in the European Union. In my view, it is of the utmost importance for there to be a thorough and timely evaluation of the course of affairs, with no taboos, such as corruption, excessive bureaucracy, administrative inefficiency or even sheer incompetence. Moreover, this should not only apply to local governments, but also to NGOs and similar organisations, because, where dysfunction is concerned, these are only rarely called to task.

  Arvidsson (PPE-DE). (SV) Mr President, I wish to welcome the Communication from the Commission on the reform of state-owned enterprises in developing countries. I wish, however, at the same time to regret the generally negative attitude to free enterprise and private ownership that emerges in the draft report. The high living standards and prosperity achieved by the western world, Japan and Australia are not the results of monopoly and protectionism but of the free market economy’s and private enterprise’s many dynamic forces that promote development and prosperity.

In Europe, this state of affairs has been particularly clear. Half our continent has tried another method involving centralised control and large state monopolies. The inefficiency and collapse of monopoly socialism in Europe has been the experience of many European peoples and has provided them with a bitter lesson. It is a lesson that we ought, indeed have an obligation to, pass on to countries that wish to construct democratic welfare societies. The developing countries must be given the same opportunity to develop and create an economic model involving free competition and an open market economy. It is not the EU’s task to try to prevent a development towards competition that will bring prosperity in its wake. It is not too much in the way of a market economy that has been the big problem in the developing countries. On the contrary, the problem has been too little in the way of free economies and too much in the way of monopolies, something that has led to mismanagement, corruption and stagnation.

I fully share the view concerning people’s need for clean water, efficient drainage, elementary health care and medical treatment, basic education and access to energy. It is not, however, the form of ownership in itself that is the most important thing, but a high degree of flexibility and efficiency in delivering these services. Competition is very important in this area. The developing countries naturally need regulations that provide a legal framework, and perhaps this is an area in which the EU can be of great help to the developing countries. Current political solutions in many developing countries are, unfortunately, often ineffective and expensive and only reach a limited proportion of the population.

Those developing countries that have succeeded in taking the step from poverty to wealth and prosperity have all given priority to competition and efficiency, not centralised state control and the building of monopolies.

  Zrihen (PSE). – (FR) Mr President, Commissioner Diamantopoulou, ladies and gentlemen, I would like to thank Mr Modrow for the pertinence of his report since the idea is clearly to subordinate everything to the fight against poverty. It must be said, however, that one of the two Commission Communications – the one entitled ‘reform of state-owned enterprises in developing countries with focus on public utilities: the need to assess all the options’ – made for more than thought-provoking, but at the same time welcome, reading for me. Indeed, we read that numerous liberalisations and privatisations that were carried out quickly in developing countries, under the pressure of structural adjustment plans that are often imposed, have had disastrous consequences in terms of job losses and the deterioration, and increase in price, of the services concerned. We would like the Commission to show similar clarity and objectivity when dealing with services of general interest within the European Union itself.

As is called for in the draft report, an initial step in this direction would be for the Commission to finally agree to carry out a transparent, public and openly debated assessment of the effect of liberalisation on employment, on the quality and the extent of the services provided and on working conditions in Europe. This would be just as beneficial internally as it would be in terms of better understanding the state of affairs in the southern countries. As I say, our objective is clearly to combat poverty and ensure that this is not just all talk.

When we look more closely at the various examples quoted in the Communication, we can see that among the positive experiences are cases in which State-owned enterprises have remained State-owned but in which mismanagement and corruption have been combated, the enterprise has gained renewed dynamism and effectiveness in its management and, above all, a regulatory and political framework has been implemented, which has clear objectives that are ambitious in terms of development, accessibility and quality of service and that are, in particular, financed by tariff adjustment.

These different elements do not amount to a commercialisation of the State-owned enterprise according to the Commission’s definition but, instead, constitute, in my view, factors for good management of public utilities, which we also need to establish at European level, perhaps through a framework directive.

A final point is that those in favour of the general liberalisation of utilities though the GATS claim that opening up public utilities in developing countries can only benefit them. A more pragmatic analysis should favour a different economic development strategy: one that is centred on the local economic and social actors and small- and micro-enterprises – with account being taken, in particular, of women and basic public utilities – and one that, above all, does not hand such enterprises over to the reckless appetites of the multinationals. Excuse me at this point, however, for I think we are talking about ethics.

  Della Vedova (NI). – (IT) Mr President, Commissioner Diamantopoulou, Mr Modrow, when talking about support for the development of the business sector in cooperation policies with third countries and, in particular, developing countries, it is perhaps useful to remember what the Peruvian economist, Hernando de Soto, stated in his book The Mystery of Capital. He said that one of the main obstacles to economic development, the missing ingredient, in countries that would in fact enjoy considerable wealth, is the absence of property laws that are clearly defined and, therefore, protected by the certainty needed to give them genuine economic value. It is therefore clear that the most valuable contribution that the European institutions can make – and I would say, in general, the most important contribution that developed countries can make – is to guarantee legal infrastructure that protects legal certainty and to support and guide processes towards democratisation and the recognition of the principles of the rule of law.

The Commission document only briefly refers to this issue, which I consider to be key, and the report by the Committee on Development and Cooperation does, I am sorry to say, drop this reference and concentrates on the tragic consequences of the policies promoted by the International Monetary Fund and the World Bank. You see, I do not believe that it is right, even in such situations, to attribute liability to the International Monetary Fund and the World Bank for certain bankruptcies; I am thinking about the Argentinian affair, where it is ever clearer that the failure, the decline of the State itself, is not to be attributed to the Monetary Fund or the World Bank but to the level of corruption and the level of statism present in that economy.

It is said that we do not want to be ideological, but I fear that that is what we are in actual fact being. It is good to consider all the options; I believe, however, that the political option that we must propose is privatisation of enterprises with a view to seeking efficiency and investment. We want services to be available to the people, and to be available to an extent, and with a degree of quality, that satisfies needs that are not satisfied today. I believe that asking corrupt and inefficient public utilities to provide this service is wrong. The privatisation option – both in Europe and also in developing countries – is the politically desirable option.

  Korhola (PPE-DE). – Mr President, in addition to analysing the EU’s policy to date, these communications are intended to lay the basis for the Commission’s strategies to promote enterprise in developing countries and to prepare the Commission’s position on the reform of State-owned enterprises. I agree with the rapporteur that the main focus must be on combating poverty and safeguarding the availability of basic services, and that the priority is support for small and medium-sized enterprises.

In recent decades Structural Adjustment Programmes have been used to try and respond to the call for economic development. These have involved the opening up of markets and various types of arrangements, including privatisation. This, however, has not always improved the situation; on the contrary, it has contributed substantially to the spread of poverty in developing countries.

The Commission quite rightly states that that there are various options for reforming State-owned enterprises, such as reform of a public enterprise without altering its ownership structure, or partial privatisation. It is absolutely vital to take account of the parameters when selecting different types of reform. With privatisation, particular attention needs to be devoted to competition law and its implementation.

The various options for reform must be weighed up, and here it is essential to involve civil society, particularly users’ and consumers’ organisations, cooperatives and trade unions, in decision-making and in monitoring the measures taken. At all events, the stated overriding objective of the EU’s development cooperation – combating poverty – must be taken into account.

The Commission communication on the approach to future support for the development of the business sector in third countries also contains some good basic ideas. It is excellent that the Commission should put forward an overall strategy for the business sector. The basic aim of that strategy must simply be that there should be investment in the developing countries. People must be able to expect it. It cannot be based on the bottomless well principle.

It is important to have tangible support for SMEs and cooperatives by means of advice in the fields of services, training, business modernisation, and promotion of micro-enterprises, particularly by ensuring there is available funding. It is nevertheless essential to remember that enterprises and cooperatives in the developing countries also need customers that are going to spend their money, and the market with the greatest purchasing power is us, the EU. For that reason, the channels of fair and sustainable trade must be made to work in such a way that European consumers are able to support enterprises and producers in developing countries by means of their own purchasing decisions.

  President. That concludes the debate.

The vote will be tomorrow at 11.30 a.m.

(The sitting was closed at 8.50 p.m.)⁽¹⁾