Index 
Texts adopted
Wednesday, 8 July 2015 - StrasbourgFinal edition
Negotiations for the Transatlantic Trade and Investment Partnership (TTIP)
 Stabilisation and Association Agreement with the former Yugoslav Republic of Macedonia (protocol to take account of the accession of Croatia) ***
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Negotiations for the Transatlantic Trade and Investment Partnership (TTIP)
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European Parliament resolution of 8 July 2015 containing the European Parliament’s recommendations to the European Commission on the negotiations for the Transatlantic Trade and Investment Partnership (TTIP) (2014/2228(INI))
P8_TA(2015)0252A8-0175/2015

The European Parliament,

–  having regard to the EU directives for the negotiations for the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the US, unanimously adopted by the Council on 14 June 2013(1) and declassified and made public by the Council on 9 October 2014,

–  having regard to Articles 168 to 191 of the Treaty on the Functioning of the European Union (TFEU), and in particular to the precautionary principle enshrined in Article 191(2),

–  having regard to the Joint Statement of the EU-US Summit of 26 March 2014(2),

–  having regard to the joint statement of 20 March 2015 by Commissioner Cecilia Malmström and US Trade Representative Michael Froman regarding the exclusion of public services in EU and US trade agreements,

–  having regard to the Council Conclusion on TTIP of 20 March 2015,

–  having regard to the Council conclusions on TTIP of 21 November 2014(3),

–  having regard to the joint statement of 16 November 2014 by US President Barack Obama, Commission President Jean-Claude Juncker, European Council President Herman Van Rompuy, UK Prime Minister David Cameron, German Chancellor Angela Merkel, French President François Hollande, Italian Prime Minister Matteo Renzi and Spanish Prime Minister Mariano Rajoy, following their meeting on the margins of the G20 Summit in Brisbane, Australia(4),

–  having regard to the European Council conclusions of 26-27 June 2014(5),

–  having regard to President Juncker’s political guidelines of 15 July 2014 addressed to the next Commission and entitled ‘A New Start for Europe: My Agenda for Jobs, Growth, Fairness and Democratic Change’(6),

–  having regard to the Commission’s communication to the College of the Commission of 25 November 2014 on transparency in TTIP negotiations (C(2014)9052)(7), to the Commission decisions of 25 November 2014 on the publication of information on meetings held between Members of the Commission and organisations or self-employed individuals (C(2014)9051) and on the publication of information on meetings held between Directors-General of the Commission and organisations or self-employed individuals (C(2014)9048), to the judgments and opinions of the Court of Justice of the European Union (C-350/12 P, 2/13, 1/09) on access to documents of the institutions and the decision of the European Ombudsman of 6 January 2015 closing her own-initiative inquiry (OI/10/2014/RA) concerning the European Commission on dealing with requests for information and access to documents (Transparency),

–  having regard to the joint statement of 3 December 2014 by the EU-US Energy Council(8),

–  having regard to the EU integrated approach to food safety (‘farm to fork’) established in 2004(9),

–  having regard to the Commission report of 13 January 2015 on the online public consultation on investment protection and investor-to-state dispute settlement (ISDS) in the TTIP (SWD(2015)0003),

–  having regard to the EU’s textual proposals tabled for discussion with the US in the TTIP negotiating rounds, in particular those which have been declassified and made public by the Commission, inter alia the EU position papers entitled ‘TTIP regulatory issues - engineering industries’(10), ‘Test–case on functional equivalence: proposed methodology for automotive regulatory equivalence’(11), and ‘Trade and sustainable development chapter/labour and environment: EU paper outlining key issues and elements for provisions in the TTIP’(12), and the textual proposals on technical barriers to trade (TBT)(13), sanitary and phytosanitary measures (SPS)(14), customs and trade facilitation(15), small and medium-sized enterprises (SMEs)(16), possible provisions on competition(17), possible provisions on state enterprises and enterprises granted special or exclusive rights or privileges(18), possible provisions on subsidies(19), and dispute settlement(20), initial provisions on regulatory cooperation(21),

–  having regard to the opinion on ‘The Transatlantic Trade and Investment Partnership (TTIP)’ of the Committee of the Regions (ECOS-V-063) adopted during the 110th plenary session (11-13 February 2015), and to the opinion of the European Economic and Social Committee of 4 June 2014 on ‘Transatlantic trade relations and the EESC's views on an enhanced cooperation and eventual EU-USA FTA’,

–  having regard to the Final Inception Report of 28 April 2014 by ECORYS for the Commission entitled ‘Trade Sustainability Impact Assessment (Trade SIA) in support of negotiations of a comprehensive trade and investment agreement between the European Union and the United States of America’(22),

–  having regards to the Commission's 2015 report on Trade and Investment Barriers (COM(2015)0127) (23),

–  having regard to the ‘Detailed Appraisal of the European Commission’s Impact Assessment on EU-US Transatlantic Trade and Investment Partnership’ published on April 2014 by CEPS for the Parliament,

–  having regard to its earlier resolutions, in particular those of 23 October 2012 on trade and economic relations with the United States(24), 23 May 2013 on EU trade and investment negotiations with the United States of America(25), and 15 January 2015 on the annual report on the activities of the European Ombudsman 2013(26),

–  having regard to Rules 108(4) and 52 of its Rules of Procedure,

–  having regard to the report of the Committee on International Trade and the opinions of the Committee on Foreign Affairs, the Committee on Development, the Committee on Economic and Monetary Affairs, the Committee on Employment and Social Affairs, the Committee on the Environment, Public Health and Food Safety, the Committee on Industry, Research and Energy, the Committee on the Internal Market and Consumer Protection, the Committee on Agriculture and Rural Development, the Committee on Culture and Education, the Committee on Legal Affairs, the Committee on Civil Liberties, Justice and Home Affairs, the Committee on Constitutional Affairs, and the Committee on Petitions (A8-0175/2015),

A.  whereas exports through trade and growth through investments are key drivers of jobs and economic growth which do not require government investments;

B.   whereas the EU’s GDP is heavily dependent on trade and export and benefits from trade and investment based on rules and whereas an ambitious and balanced agreement with the US should support the reindustrialisation of Europe and help to achieve the 2020 target for an increase in the EU’s GDP generated by industry from 15 % to 20 % by strengthening trans-atlantic trade in both goods and services; whereas it has the potential to create opportunities especially for SMEs, micro enterprises (in accordance with the definition of Commission Recommendation 2003/361/EC), clusters and enterprise networks which suffer disproportionally more from non-tariff barriers (NTBs) than larger companies, as the latter have economies of scale that allow them easier access to markets on both sides of the Atlantic; whereas an agreement between the two biggest economic blocs in the world has the potential to create standards, norms and rules, which will be adopted at a global level, which would serve to the advantage of third countries as well and which would prevent a further fragmentation of world trade; whereas failure to negotiate an agreement will allow other third countries with different standards and values to assume this role instead;

C.  whereas nine Member States of the European Union have already signed a bilateral agreement with the USA, so allowing TTIP to take inspiration from good practice and better enable the obstacles encountered by these Member States to be overcome;

D.  whereas the recent crises on the EU's borders and developments around the world show the need to invest in global governance and a system based on rules and values;

E.  whereas, given the growing interconnectedness of global markets, it is crucial that policy makers shape and promote the interaction of markets; whereas proper trade rules and removing unnecessary barriers are fundamental to creating added value while maintaining and developing a strong, competitive and diversified industrial base in Europe;

F.  whereas EU's attempts to deal with the challenges of climate change, environmental protection and consumer safety have resulted in high regulatory costs for EU enterprises, coupled with high energy feedstock and electricity prices, which – if left unaddressed in TTIP – may accelerate the process of delocalization, deindustrialization and job losses thereby threatening EU reindustrialization and employment targets, that will also defeat the very policy targets that EU regulations seek to achieve;

G.   whereas a well-designed trade agreement could contribute to harnessing the opportunities of globalisation. Whereas a strong and ambitious trade agreement should not only focus on reducing tariffs and NTBs but should also be a tool to protect workers, consumers and the environment; whereas a strong and ambitious trade agreement is an opportunity to create a framework by strengthening regulation to the highest level, in line with our shared values, thereby preventing social and environmental dumping and ensuring a high level of consumer protection in light of the shared objective of open competition on a level-playing field;

H.  whereas even though, common high standards are in the interest of consumers, it should be recognised that convergence also makes sense for businesses, as the higher costs stemming from higher standards may be better compensated by increased economies of scale in a potential market of 850 million consumers;

I.   whereas previous trade agreements have shown significant benefits for the European economy, it is difficult to assess the real impact of TTIP on both the EU and US economies and to predict while negotiations are ongoing and studies show contradictory results; whereas TTIP alone will not resolve longstanding structural economic problems and their underlying causes in the EU but should be seen as an element in a broader European strategy to create jobs and growth, and expectations for TTIP should be commensurate with the level of ambition that will be reached in the negotiations;

J.  whereas the consequences of the Russian embargo have clearly demonstrated the continuous geopolitical relevance of agriculture, the importance of having access to a range of different agricultural markets and the need for strong and strategic trade partnerships with reliable trade partners;

K.  whereas it is important for European agriculture to secure a mutually beneficial trade deal with the US in order to advance Europe’s position as a key player on the global market without jeopardising the current quality standards of European agricultural products and future improvement of those standards, while preserving the European agricultural model and ensuring its economic and social viability;

L.   whereas trade and investment flows are not an end in themselves and the well-being of ordinary citizens, workers and consumers as well as increased opportunities for business as drivers of growth and jobs are the benchmarks for a trade agreement; whereas TTIP should be considered a model for a good trade agreement responding to these requirements in order to serve as an example for our future negotiations with other trade partners;

M.   whereas a certain degree of confidentiality is required in negotiations in order to achieve a high quality outcome, and the limited level of transparency in which the negotiations have been conducted in the past has led to deficiencies in terms of democratic control of the negotiation process;

N.  whereas President Juncker has clearly reiterated in his Political Guidelines that he wants a balanced and reasonable trade agreement with the United States and that – while the EU and the US can go a significant step further in recognising each other’s product standards and working towards transatlantic standards – the EU will not sacrifice its (food)-safety, health, animal health, social, environmental, and data protection standards and cultural diversity; recalling that the safety of the food we eat, the protection of Europeans’ personal data and its services of general interest are non-negotiable unless the aim is to achieve a higher level of protection;

O.  whereas it is important to ensure a satisfactory conclusion of the negotiations on the Safe Harbor and the Data Protection Umbrella Agreement;

P.  whereas President Juncker has also clearly stated in his political guidelines, that he will not accept that the jurisdiction of courts in the Member States is limited by special regimes for investment disputes; whereas now that the results of the public consultation on investment protection and ISDS in the TTIP are available, a reflection process – taking account of the contributions – is currently being undertaken within and between the three institutions, while exchanging with civil society and the business sector, on the best way to achieve investment protection and equal treatment of investors while ensuring states’ right to regulate;

Q.  whereas Parliament fully supports both the decision of the Council to declassify the negotiation directives and the Commission’s transparency initiative; whereas the lively public debate across Europe on TTIP has shown the need for the TTIP negotiations to be concluded in a more transparent and inclusive manner taking into account the concerns voiced by European citizens and communicating the negotiation results to the general public;

R.  whereas since July 2013 talks between the US and the EU have been going on, but up to now no common text has been agreed;

S.  whereas TTIP is expected to be a mixed agreement requiring ratification by the European Parliament and all 28 EU Member States;

1.  Believes that the EU and the US are key strategic partners; stresses that the Transatlantic Trade and Investment Partnership (TTIP) is the most significant recent EU-US project and should reinvigorate the transatlantic partnership as a whole, beyond its trade aspects; emphasises that its successful conclusion is of high political importance;

2.  Addresses, in the context of the ongoing negotiations on TTIP, the following recommendations to the Commission:

   (a) regarding the scope and the broader context:
   (i) to ensure that transparent TTIP negotiations lead to an ambitious, comprehensive and balanced trade and investment agreement of a high standard that would promote sustainable growth with shared benefits across Member States, with mutual and reciprocal benefits between the partners, increase international competitiveness and open up new opportunities for EU companies, in particular SMEs, support the creation of high-quality jobs for European citizens, directly benefit European consumers; the content and the implementation of the agreement are more important than the speed of the negotiations;
   (ii) to emphasise that while the TTIP negotiations consist of negotiations on three main areas – ambitiously improving reciprocal market access (for goods, services, investment and public procurement at all levels of government), reducing NTBs and enhancing the compatibility of regulatory regimes, and developing common rules to address shared global trade challenges and opportunities – all these areas are equally important and need to be included in a comprehensive package; TTIP should be ambitious and binding on all levels of government on both sides of the Atlantic, the agreement should lead to lasting genuine market openness on a reciprocal basis and trade facilitation on the ground, and should pay particular attention to structural measures to achieve greater transatlantic cooperation while upholding regulatory standards and consumer protection and preventing social, fiscal and environmental dumping;
   (iii) to keep in mind the strategic importance of the EU-US economic relationship in general and of TTIP in particular, inter alia as an opportunity to promote the principles and values, anchored in a rules-based framework, that the EU and the US share and cherish and to design a common approach and vision to global trade, investment and trade-related issues such as high standards, norms and regulations, in order to develop a broader transatlantic vision and a common set of strategic goals; to bear in mind that given the size of the transatlantic market, TTIP is an opportunity to shape and regulate the international trade order in order to ensure that both blocs thrive in an interconnected world;
   (iv) to ensure, especially given the recent positive developments taking place in the World Trade Organisation (WTO), that an agreement with the US serves as a stepping-stone for broader trade negotiations and is not pre-empting or counteracting the WTO process; bilateral and plurilateral trade agreements should generally speaking be considered as a second-best option and must not prevent efforts made in order to reach significant improvements on the multilateral level; TTIP must ensure synergies with other trade agreements currently being negotiated;
   (v) to bear in mind that the TFEU defines EU trade policy as an integral part of the Union’s overall external action and, therefore, to evaluate the implications of the final agreement, acknowledging opportunities, such as easier market access due to common trans-Atlantic standards, and risks, such as trade diversion from developing countries due to tariff preference erosion;
   (vi) to ensure that the agreement guarantees full respect for EU fundamental rights standards through the inclusion of a legally binding and suspensive human rights clause as a standard part of EU trade agreements with third countries;
   (b) regarding market access:
   (i) to ensure that the market access offers in the different areas are reciprocal, equally ambitious and reflect both parties’ expectations, underlines that the different proposals for those areas must be balanced;
   (ii) to aim at the elimination of all tariff duties while respecting that there are a number of sensitive agricultural and industrial products on both sides for which exhaustive lists will have to be agreed upon during the negotiation process; to foresee for the most sensitive products appropriate transitional periods and quotas and in a few cases their exclusion, taking into account the fact that in many cases those products have higher production costs in the EU owing to EU rules;
   (iii) to have a safeguard clause incorporated into the agreement, as is clearly set out in the negotiating mandate, which would be invoked where a rise in imports of a particular product threatened to cause serious harm to domestic production, with specific reference to food production and to the energy-intensive, carbon-leakage, chemicals, raw materials and steel sectors in the EU;
   (iv) to keep in mind that as the EU is the largest trading bloc worldwide there are important offensive interests for the EU in the highly specialised services sector, for instance in the area of engineering and other professional services, telecommunication, financial or transport services;
   (v) to increase market access for services according to a "hybrid list approach", using for market access "positive lists", whereby services that are to be opened up to foreign companies are explicitly mentioned and new services are excluded while ensuring that possible stand-still and ratchet clauses only apply to non-discrimination provisions and allow for enough flexibility to bring services of general economic interest back into public control as well as to take into account the emergence of new and innovative services and using "negative list approach" for national treatment;
   (vi) the negotiations should meaningfully address and remove the current US restrictions on maritime and air transport services owned by European businesses as a result of US legislation such as the Jones Act, Foreign Dredging Act, the Federal Aviation Act and the US Air Cabotage law and in relation to capital restrictions on foreign ownership of airlines, which seriously hinders market access for EU companies as well as innovation in the US itself;
   (vii) to build on the joint statement reflecting the negotiators’ clear commitment to exclude current and future Services of General Interest as well as Services of General Economic Interest from the scope of application of TTIP, (including but not limited to water, health, social services, social security systems and education), to ensure that national and if applicable local authorities retain the full right to introduce, adopt, maintain or repeal any measures with regards to the commissioning, organisation, funding and provision of public services as provided in the Treaties as well as in the EU's negotiating mandate; this exclusion should apply irrespective of how the services are provided and funded;
   (viii) to strive hard to ensure mutual recognition of professional qualifications, notably via the creation of a legal framework with federal states that have regulatory powers in this domain, in order to enable EU and US professionals to practise on either side of the Atlantic and to facilitate mobility of investors, professionals, highly -skilled workers and technicians between the EU and the US in sectors covered by TTIP;
   (ix) to bear in mind that visa facilitation for European service and goods providers is a key element for taking advantage of the agreement and to increase, in the context of the negotiations, political pressure on the US to guarantee full visa reciprocity and equal treatment for all citizens of EU Member States without discrimination as regards their access to the US;
   (x) to combine market access negotiations on financial services with convergence in financial regulation at the highest level, in order to support the introduction and compatibility of necessary regulation in order to reinforce financial stability, to ensure adequate protection for consumers of financial goods and services and support ongoing cooperation efforts in other international forums, such as the Basel Committee on Banking Supervision and the Financial Stability Board; to ensure that these cooperation efforts do not limit the EU and member states regulatory and supervisory sovereignty, including their ability to ban certain financial products and activities;
   (xi) to establish enhanced cooperation between the EU, the Member States and the US, including mechanisms for more efficient international cooperation with the aim to set global higher standards against financial and tax criminality and corruption;
   (xii) to ensure that the EU’s acquis on data privacy is not compromised through the liberalisation of data flows, in particular in the area of e-commerce and financial services, while recognizing the relevance of data flows as a backbone of transatlantic trade and the digital economy; to incorporate, as a key point, a comprehensive and unambiguous horizontal self-standing provision, based on Article XIV of the General Agreement on Trade in services (GATS), that fully exempts the existing and future EU legal framework for the protection of personal data from the agreement without any condition that it must be consistent with other parts of the TTIP; to negotiate provisions which touch upon the flow of personal data only if the full application of data protection rules on both sides of the Atlantic is guaranteed and respected to cooperate with the United States in order to encourage third countries to adopt similar high data protection standards around the world;
   (xiii) to keep in mind that the consent of the European Parliament to the final TTIP agreement could be endangered as long as the US blanket mass surveillance activities are not completely abandoned and an adequate solution is found for the data privacy rights of EU citizens, including administrative and judicial redress, as stated in the paragraph 74 of Parliament’s resolution of 12 March 2014(27);
   (xiv) to ensure that the trust between the EU and US, which was damaged by mass surveillance scandals, be rapidly and fully restored;
   (xv) to include am ambitious chapter on competition ensuring that European competition law is properly respected particularly in the digital world; to ensure that private companies can compete fairly with state-owned or state-controlled companies; to ensure that state subsidies to private companies should be regulated and subject to a transparent control system;
   (xvi) to call for open competition in and development of the digital economy, which is by nature global but has its main bases in the EU and the USA; to emphasise in the negotiations that the digital economy must be central to the transatlantic market, with leverage in the global economy and in opening up global markets further;
   (xvii) to keep in mind regarding information society services and telecommunications services, that it is of particular importance that the TTIP ensure a level playing field with equal and transparent access based on reciprocity for EU service companies to the US market and with an obligation on US service providers to respect and comply with all relevant industry and product safety standards and consumer rights when providing services in Europe or to European customers;
   (xviii) to ensure via a legally binding general clause applicable to the entire agreement, in full compliance with the UNESCO Convention on the protection and promotion of the diversity of cultural expressions, that the parties, reserve their right to adopt or maintain any measure (in particularly those of a regulatory and/or financial nature) with respect to the protection or promotion of cultural and linguistic diversity, in line with the relevant Articles as established in the Treaty on the Functioning of the European Union, as well as media freedom and media pluralism, irrespective of the technology or distribution platform used and keeping in mind that the mandate given to the European Commission by the Member States explicitly excludes the audiovisual services;
   (xix) to specify that nothing in the agreement shall affect the ability of the EU or EU Member States to subsidise and provide financial support to cultural industries and cultural, educational, audiovisual and press services;
   (xx) to confirm that fixed book price systems and price fixing for newspapers and magazines will not be challenged by the obligations under the TTIP agreement;
   (xxi) to ensure with a general clause the right of EU Member States to adopt or maintain any measure with regard to the provision of all educational and cultural services which work on a non-profit basis and/or receive public funding to any degree or state support in any form, and to ensure that privately funded foreign providers meet the same quality and accreditation requirements as domestic providers;
   (xxii) given the huge interest on the part of European companies, notably SMEs, in obtaining non-discriminatory access to public contracts in the US both at federal and sub-federal level, for example for construction services, civil engineering, transport and energy infrastructure and goods and services, to have an ambitious approach to the chapter on public procurement, while respecting the compliance of the chapter with the new EU public procurement and concession directives, with a view to remedying, in line with the principle of reciprocity, the large disparity that currently exists in the degree of openness of the two public procurement markets on both sides of the Atlantic by significantly opening up the US market (still governed by the Buy American Act of 1933) at federal and sub-federal level alike building on commitments made in the Agreement on Government Procurement (GPA) and by removing the restrictions that currently apply at federal, state and local level alike in the United States; and to set up mechanisms to guarantee that commitments entered into by the US federal authorities will be honoured at all political and administrative levels;
   (xxiii) to ensure, with the aim of creating open, non-discriminatory and predictable procedural requirements ensuring equal access for EU and US companies, especially SMEs, when tendering for public contracts, that the US increases the transparency of the adjudication process in force on its territory;
   (xxiv) to promote EU-US cooperation at the international level in order to promote common sustainability standards for public procurement at all federal and sub‑federal levels of government, inter alia in the implementation of the recently revised Government Procurement Agreement; and the adoption and observation of social responsibility standards by businesses based on the Guidelines for Multinational Enterprises of the Organisation for Economic Co‑operation and Development (OECD);
   (xxv) to ensure that the US states are included in the negotiation process in order to achieve meaningful results in opening up US public procurement contracts to EU companies;
   (xxvi) to be aware regarding public procurement of the sensitive nature of the fields of defence and security and to take into account the objectives set by the Heads of States and Governments during the 2013 Defence Council to promote the establishment of a European security and defence market and of a European defence technological and industrial base (EDTIB);
   (xxvii) to ensure that the negotiations on rules of origin aim at reconciling the EU and US approaches and at establishing effective rules of origin, thereby avoiding that rules of origin are undermined by other agreements, to consider the negotiations as an opportunity to move towards common standards for compulsory origin marking of products; given the conclusion of the negotiations for the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada and the potential upgrade of the EU-Mexico free trade agreement, the possibility and scope of cumulation will need to be considered; however to keep in mind that the purpose of TTIP is to facilitate trade in genuinely US and EU made products and not to allow imports from third countries, therefore exclusions for certain products will need to be considered on a case by case basis and exclusions from all type of cumulation should be granted for sensitive sectors;
   (xxviii) to ensure that TTIP is an open agreement, and to look for ways in which valued partners, which have an interest in the TTIP negotiations because of Customs Union agreements with either the EU or the US, can be more actively informed of the developments;
   (c) regarding regulatory cooperation and coherence pillar and NTBs:
   (i) to ensure that the regulatory cooperation chapter promotes a transparent, effective, pro-competitive economic environment through the identification and prevention of potential future non-tariff barriers to trade, which disproportionately affect SME's, and the facilitation of trade and investment while developing and securing the highest levels of protection of health and safety in line with the precautionary principle laid down in Article 191 TFEU, consumer, labour environmental and animal welfare legislation and of cultural diversity that exists in the EU; to support, whilst fully respecting regulatory autonomy, the establishment of a structured dialogue and cooperation between regulators in the most transparent way possible and involving stakeholders; to include cross-cutting disciplines on regulatory coherence and transparency for the development and implementation of efficient, cost-effective, and more compatible regulations for goods and services; negotiators on both sides need to identify and to be very clear about which technical procedures and standards are fundamental and cannot be compromised, which ones can be the subject of a common approach, which are the areas where mutual recognition based on a common high standard and a strong system of market surveillance is desirable and which are those where simply an improved exchange of information is possible, based on the experience of several years of talks in a variety of fora including the Transatlantic Economic Council and the High Level Regulatory Cooperation Forum to ensure similarly that it will not affect standards that have yet to be set in areas where the legislation or the standards are very different in the US as compared with the EU, such as, for example, the implementation of existing (framework) legislation (e.g. REACH), or the adoption of new laws (e.g. cloning), or future definitions affecting the level of protection (e.g. endocrine disrupting chemicals); to ensure that any provisions on regulatory cooperation in the TTIP do not set a procedural requirement for the adoption of Union acts concerned by it nor give rise to enforceable rights in that regard;
   (ii) to base negotiations on SPS and TBT measures on the key principles of the multilateral SPS and TBT agreements and to protect European SPS standards and procedures; to aim in the first place at the elimination or significant reduction of excessively burdensome SPS measures including related import procedures; in particular to ensure that pre-approvals, obligatory protocols or pre-clearance inspections are not applied as a permanent import measure; to achieve increased transparency and openness, mutual recognition of equivalent standards, exchanges of best practices, strengthening of dialogue between regulators and stakeholders and strengthening of cooperation in international standards-setting bodies; to ensure in negotiations on SPS and TBT measures, that the high standards that have been put in place in order to ensure food safety, human, animal or plant life or health in the EU are not compromised in any way;
   (iii) to recognise that, where the EU and the US have very different rules, there will be no agreement, such as on public healthcare services, GMOs, the use of hormones in the bovine sector, REACH and its implementation, and the cloning of animals for farming purposes, and therefore not to negotiate on these issues;
   (iv) to encourage the US side to lift the ban on beef imports from the EU;
   (v) with regard to the horizontal regulatory cooperation chapter, to foster bilateral regulatory cooperation in order to avoid unnecessary divergence, particularly as regards new technologies and services, for the benefit of European and US competitiveness and consumer choice; to achieve this through enhanced information exchange and to improve the adoption and implementation of international instruments, whilst respecting the subsidiarity principle, on the basis of successful precedents such as ISO standards or under the United Nations Economic Commission for Europe's (UNECE) World Forum for Harmonisation of Vehicle Regulations (WP.29); to remember that the recognition of equivalence of the greatest possible number of vehicle safety regulations based on a verified equivalent level of protection would be one of the most important achievements of the agreement; to ensure that the prior impact assessment for each regulatory act should measure its impact on consumers and the environment next to its impact on trade and investment; to promote regulatory compatibility without compromising the legitimate regulatory and policy objectives and the competences of the EU and US legislators;
   (vi) to aim to continue to guarantee a high level of product safety within the Union while eliminate unnecessary duplication of testing that causes a waste of resources, in particular on low-risk products;
   (vii) to address customs issues that go beyond the WTO Trade Facilitation Agreement (TFA) rules and stress that, in order to achieve real administrative burden removal, there is a need to work towards a maximum degree of regulatory alignment on customs and border related policies and practices;
   (viii) to define clearly, in the context of future regulatory cooperation, which measures concern TBT and duplicated or redundant administrative burdens and formalities and which are linked to fundamental standards and regulations, or procedures serving a public policy objective;
   (ix) to fully respect the established regulatory systems on both sides of the Atlantic, as well as the European Parliament’s role within the EU’s decision-making process and its democratic scrutiny over EU regulatory processes when creating the framework for future cooperation while at the same time ensuring the utmost transparency and being vigilant about having a balanced involvement of stakeholders within the consultations included in the development of a regulatory proposal and not do delay the European legislative process; to specify the role, the composition and the legal status of the Regulatory Cooperation Body, taking into consideration that any direct and compulsory application of its recommendations would imply a breach of the law-making procedures laid down in the Treaties; to also monitor that it fully preserves the capacity of national, regional and local authorities to legislate their own policies, in particular social and environmental policies;
   (d) regarding the rules:
   (i) to combine negotiations on market access and regulatory cooperation with the establishment of ambitious rules and principles bearing in mind that each pillar has specific sensitivities, on issues such as, but not limited to, sustainable development, energy, SMEs, investment and state-owned enterprises;
   (ii) to ensure that the sustainable development chapter is binding and enforceable and aims at the full and effective ratification, implementation and enforcement of the eight fundamental International Labour Organisation (ILO) conventions and their content, the ILO's Decent Work Agenda and the core international environmental agreements; provisions must be aimed at further improving levels of protection of labour and environmental standards; an ambitious trade and sustainable development chapter must also include rules on corporate social responsibility based on OECD Guidelines for Multinational Enterprises and clearly structured dialogue with civil society;
   (iii) to ensure that labour and environmental standards are not limited to the trade and sustainable development chapter but are equally included in other areas of the agreement, such as investment, trade in services, regulatory cooperation and public procurement;
   (iv) to ensure that labour and environmental standards are made enforceable, by building on the good experience of existing FTAs by the EU and US and national legislation; to ensure that the implementation of and compliance with labour provisions is subjected to an effective monitoring process, involving social partners and civil society representatives and to the general dispute settlement which applies to the whole agreement;
   (v) to ensure, in full respect of national legislation, that employees of transatlantic companies, registered under EU member state law, have access to information and consultation in line with the European works council directive;
   (vi) to ensure that the economic, employment, social, and environmental impact of TTIP, is also examined by means of a thorough and objective ex-ante trade sustainability impact assessment (SIA) in full respect of the EU Directive on SIA, with clear and structured involvement of all relevant stakeholders, including civil society; asks the Commission to conduct comparative in-depth impact studies for each Member State and an evaluation of the competitiveness of EU sectors and their counterparts in the US with the aim to make projections on job losses and gains in the sectors affected in each Member State, whereby the adjustment costs could be partly taken up by EU and Member State funding;
   (vii) to retain the objective of dedicating a specific chapter to energy, including industrial raw materials; to ensure that in course of the negotiations the two sides examine ways to facilitate energy exports, so that TTIP would abolish any existing restrictions or impediments of export for fuels, including LNG and crude oil, between the two trading partners, with the aim of creating a competitive, transparent and non-discriminatory energy market thereby supporting a diversification of energy sources, contributing to security of supply and leading to lower energy prices emphasises that this energy chapter must integrate clear guarantees that the EU's environmental standards and climate action goals must not be undermined; to encourage EU-US cooperation to end fuel tax exemptions for commercial aviation in line with the G-20 commitments to phase out fossil fuel subsidies;
   (viii) to ensure that the right of either partner to govern and to regulate the exploration, exploitation and production of energy sources remains untouched by any agreement, but that the principle of non-discrimination is applied once exploitation is decided; to keep in mind that nothing in the agreement should undermine legitimate non-discriminatory democratic decisions with regard to energy production, in accordance with the precautionary principle; to ensure that access to raw materials as well as to energy should also be granted on a non-discriminatory basis for companies from either the EU or the US and quality standards for energy products must be respected, including those for energy products related to their impact on CO2 emissions such as the one enshrined in the Fuel Quality Directive;
   (ix) to ensure that TTIP supports the use and promotion of green goods and services, including through facilitating their development, and simplifies their exports and imports thereby tapping into the considerable potential for both environmental and economic gains offered by the transatlantic economy and complementing the on-going plurilateral negotiations on the Green Goods agreement with the aim of contributing to fight combat global warming and to create new jobs in the green economy;
   (x) to ensure that TTIP serves as a forum for the development of ambitious and binding common sustainability standards for energy production and energy efficiency, always taking into account and adhering to existing standards on both sides such as the EU energy labelling and eco-design directives and to explore ways to enhance cooperation on energy research, development and innovation and promotion of low-carbon and environmentally friendly technologies;
   (xi) to ensure that TTIP contributes to the sustainable management of fishery resources, particularly through cooperation between the parties in combatting illegal, unreported and unregulated fishing (IUU);
   (xii) to ensure that TTIP includes a specific chapter on SME’s in TTIP based on the joint commitment of both negotiating parties and aims at creating new opportunities in the US for European SMEs (including micro enterprises), on the basis of SME exporters’ actual reported experience, for instance by eliminating double certification requirements, by establishing a web-based information system about the different regulations and best practices, by facilitating access to support schemes for SME, by introducing ‘fast-track’ procedures at the border or by eliminating specific tariff peaks that continue to exist; it should establish mechanisms for both sides to work together to facilitate SMEs’ participation in transatlantic trade and investment, for instance through a common SME ‘one-stop shop’ with SMEs stakeholders playing a key role in its establishment, which would provide specific information they need to export to, import from or invest in the US, including on customs duties, on taxes, on regulations, on custom procedures and on market opportunities;
   (xiii) to ensure that TTIP contains a comprehensive chapter on investment including provisions on both market access and investment protection, recognising that access to capital can stimulate jobs and growth; the investment chapter should aim at ensuring non-discriminatory treatment for the establishment of European and US companies in each other’s territory, while taking account of the sensitive nature of some specific sectors; these should look to enhance Europe as a destination for investment, increase confidence for EU investment in the US and also address investors' obligations and responsibilities by referring, inter alia, to the OECD principles for multinational enterprises and to the UN principles on Business and human rights as benchmarks;
   (xiv) to ensure that investment protection provisions are limited to post-establishment provisions and focus on national treatment, most-favoured nation, fair and equitable treatment and protection against direct and indirect expropriation, including the right to prompt, adequate and effective compensation; standards of protection and definitions of investor and investment should be drawn up in a precise legal manner protecting the right to regulate in the public interest, clarifying the meaning of indirect expropriation and preventing unfounded or frivolous claims; free transfer of capital should be in line with the EU treaty provisions and should include a prudential carve-out not limited in time in the case of financial crises;
   (xv) to ensure that foreign investors are treated in a non-discriminatory fashion, while benefiting from no greater rights than domestic investors, and to replace the ISDS system with a new system for resolving disputes between investors and states which is subject to democratic principles and scrutiny, where potential cases are treated in a transparent manner by publicly appointed, independent professional judges in public hearings and which includes an appellate mechanism, where consistency of judicial decisions is ensured, the jurisdiction of courts of the EU and of the Member States is respected, and where private interests cannot undermine public policy objectives;
   (xvi) to ensure that TTIP includes an ambitious, balanced and modern chapter on and precisely defined areas of intellectual property rights, including recognition and enhanced protection of geographical indications and reflects a fair and efficient level of protection, without impeding the EU’s need to reform its copyright system and while ensuring a fair balance of IPRs and the public interest, in particular the need to preserve access to affordable medicines by continuing to support the TRIPS flexibilities;
   (xvii) to consider it to be of great importance that the EU and the US remain committed and engaged in global multilateral patent harmonisation discussions through existing international bodies and thus cautions against attempting to introduce provisions on substantive patent law, in particular with regard to issues relating to patentability and grace periods, into the TTIP;
   (xviii) to ensure that the IPR chapter does not include provisions on the liability of internet intermediaries or on criminal sanctions as a tool for enforcement, as having been previously rejected by Parliament including the proposed ACTA treaty;
   (xix) to secure full recognition and strong legal protection of EU geographical indications and measures to deal with improper use and misleading information and practices; to guarantee the labelling, traceability and genuine origin of these products for consumers and the protection of the know-how of producers as an essential part of a balanced agreement;
   (e) regarding transparency, civil society involvement, public and political outreach:
   (i) to continue ongoing efforts to increase transparency in the negotiations by making more negotiation proposals available to the general public, to implement the recommendations of the European Ombudsman, in particular relating to the rules on public access to documents;
   (ii) to translate these transparency efforts into meaningful practical results, inter alia by reaching arrangements with the US side to improve transparency, including access to all negotiating documents for the Members of the European Parliament, including consolidated texts, while at the same time maintaining due confidentiality, in order to allow Members of Parliament and the Member States to develop constructive discussions with stakeholders and the public,; to ensure that both negotiating parties should justify any refusal to disclose a negotiating proposal;
   (iii) to promote an even closer engagement with the Member States, who were responsible for the negotiating mandate which directed the European Commission to open negotiations with the US, with the aim of forging their active involvement in better communicating the scope and the possible benefits of the agreement for European citizens, as committed to in the Council Conclusions adopted on 20 March 2015, in order to ensure a broad, fact-based public debate on TTIP in Europe with the aim of exploring the genuine concerns surrounding the agreement;
   (iv) to reinforce its continuous and transparent engagement with a wide range of stakeholders, throughout the negotiation process; encourages all stakeholders to participate actively and to put forward initiatives and information relevant to the negotiations;
   (v) to encourage Member States to involve national parliaments in line with their respective constitutional obligations, to provide all the necessary support for Member States to fulfil this task and to strengthen outreach to national parliaments, in order to keep national parliaments adequately informed on the ongoing negotiations;
   (vi) to build on the close engagement with Parliament and to seek an even closer, structured dialogue, which will continue to closely monitor the negotiating process and to engage on its part with the Commission, the Member States, and the US Congress and Administration, as well as with stakeholders on both sides of the Atlantic, in order to ensure an outcome which will benefit citizens in the EU, the US and beyond;
   (vii) to ensure that TTIP and its future implementation is accompanied by a deepening of transatlantic parliamentary cooperation, on the basis and using the experience of the Transatlantic Legislators Dialogue, leading in future to a broader and enhanced political framework to develop common approaches, reinforce the strategic partnership and to improve global cooperation between the EU and US;

3.  Instructs its President to forward this resolution containing the European Parliament’s recommendations to the Commission and, for information, to the Council, the governments and parliaments of the Member States, and the US Administration and Congress.

(1) http://data.consilium.europa.eu/doc/document/ST-11103-2013-DCL-1/en/pdf
(2) http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/ec/141920.pdf
(3) http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/145906.pdf
(4) http://europa.eu/rapid/press-release_STATEMENT-14-1820_en.htm
(5) http://data.consilium.europa.eu/doc/document/ST-79-2014-INIT/en/pdf
(6) http://ec.europa.eu/priorities/docs/pg_en.pdf
(7) http://ec.europa.eu/news/2014/docs/c_2014_9052_en.pdf
(8) http://europa.eu/rapid/press-release_IP-14-2341_en.htm
(9) http://ec.europa.eu/dgs/health_consumer/information_sources/docs/from_farm_to_fork_2004_en.pdf
(10) http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153022.pdf
(11) http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153023.pdf
(12) http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153024.pdf
(13) http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153025.pdf
(14) http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153026.pdf
(15) http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153027.pdf
(16) http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153028.pdf
(17) http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153029.pdf
(18) http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153030.pdf
(19) http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153031.pdf
(20) http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153032.pdf
(21) http://trade.ec.europa.eu/doclib/docs/2015/february/tradoc_153120.pdf
(22) http://trade.ec.europa.eu/doclib/docs/2014/may/tradoc_152512.pdf
(23) http://trade.ec.europa.eu/doclib/docs/2015/march/tradoc_153259.pdf
(24) OJ C 68 E, 7.3.2014, p. 53.
(25) Texts adopted, P7_TA(2013)0227.
(26) Texts adopted, P8_TA(2015)0009.
(27) Texts adopted, P7_TA(2014)0230,


Stabilisation and Association Agreement with the former Yugoslav Republic of Macedonia (protocol to take account of the accession of Croatia) ***
PDF 241kWORD 59k
European Parliament legislative resolution of 8 July 2015 on the draft Council decision on the conclusion, on behalf of the European Union and its Member States, of the Protocol to the Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the former Yugoslav Republic of Macedonia, of the other part, to take account of the accession of the Republic of Croatia to the European Union (05548/2014 – C8-0127/2014 – 2013/0386(NLE))
P8_TA(2015)0253A8-0188/2015

(Consent)

The European Parliament,

–  having regard to the draft Council decision (05548/2014),

–  having regard to the draft Protocol to the Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the former Yugoslav Republic of Macedonia, of the other part, to take account of the accession of the Republic of Croatia to the European Union (05547/2014),

–  having regard to the request for consent submitted by the Council in accordance with Article 217 and Article 218(6), second subparagraph, point (a)(i), and Article 218(8), second subparagraph, of the Treaty on the Functioning of the European Union (C8-0127/2014),

–  having regard to Rule 99(1), first and third subparagraphs, Rule 99(2), and Rule 108(7) of its Rules of Procedure,

–  having regard to the recommendation of the Committee on Foreign Affairs (A8-0188/2015),

1.  Gives its consent to conclusion of the Protocol;

2.  Instructs its President to forward its position to the Council, the Commission and the governments and parliaments of the Member States and of the former Yugoslav Republic of Macedonia.


Stabilisation and Association Agreement with Serbia (protocol to take account of the accession of Croatia) ***
PDF 239kWORD 59k
European Parliament legislative resolution of 8 July 2015 on the draft Council decision on the conclusion, on behalf of the European Union and its Member States, of the Protocol to the Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the Republic of Serbia, of the other part, to take account of the accession of the Republic of Croatia to the European Union (06682/2014 – C8-0098/2014 – 2014/0039(NLE))
P8_TA(2015)0254A8-0189/2015

(Consent)

The European Parliament,

–  having regard to the draft Council decision (06682/2014),

–  having regard to the draft Protocol to the Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the Republic of Serbia, of the other part, to take account of the accession of the Republic of Croatia to the European Union (06681/2014),

–  having regard to the request for consent submitted by the Council in accordance with Article 217, Article 218(6), second subparagraph, point (a)(i), and Article 218(8), second subparagraph, of the Treaty on the Functioning of the European Union (C8‑0098/2014),

–  having regard to Rule 99(1), first and third subparagraphs, Rule 99(2), and Rule 108(7) of its Rules of Procedure,

–  having regard to the recommendation of the Committee on Foreign Affairs (A8-0189/2015),

1.  Gives its consent to conclusion of the Protocol;

2.  Instructs its President to forward its position to the Council, the Commission and the governments and parliaments of the Member States and of the Republic of Serbia.


Scientific and technological cooperation with India: renewal of the agreement ***
PDF 240kWORD 59k
European Parliament legislative resolution of 8 July 2015 on the draft Council decision concerning the renewal of the Agreement for scientific and technological cooperation between the European Community and the Government of the Republic of India (05872/2015 – C8-0074/2015 – 2014/0293(NLE))
P8_TA(2015)0255A8-0179/2015

(Consent)

The European Parliament,

–  having regard to the draft Council decision concerning the renewal of the Agreement for scientific and technological cooperation between the European Community and the Government of the Republic of India (05872/2015),

–  having regard to Council Decision 2002/648/EC of 25 June 2002 concerning the conclusion of the Agreement for scientific and technological cooperation between the European Community and the Government of the Republic of India(1),

–  having regard to the request for consent submitted by the Council in accordance with Article 186 and Article 218(6), second subparagraph, point (a)(v), of the Treaty on the Functioning of the European Union (C8‑0074/2015),

–  having regard to Rule 99(1), first and third subparagraphs, Rule 99(2), Rule 108(7) and Rule 50(1) of its Rules of Procedure,

–  having regard to the recommendation of the Committee on Industry, Research and Energy (A8-0179/2015),

1.  Gives its consent to renewal of the agreement;

2.  Instructs its President to forward its position to the Council, the Commission and the governments and parliaments of the Member States and of the Republic of India.

(1) OJ L 213, 9.8.2002, p. 29.


Scientific and technological cooperation with the Faroe Islands: Horizon 2020 ***
PDF 241kWORD 59k
European Parliament legislative resolution of 8 July 2015 on the draft Council decision on the conclusion of the Agreement for scientific and technological cooperation between the European Union and the Faroe Islands associating the Faroe Islands to Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020) (05660/2015 – C8-0057/2015 – 2014/0228(NLE))
P8_TA(2015)0256A8-0180/2015

(Consent)

The European Parliament,

–  having regard to the draft Council decision (05660/2015),

–  having regard to the draft Agreement for scientific and technological cooperation between the European Union and the Faroe Islands associating the Faroe Islands to Horizon 2020 ‑ the Framework Programme for Research and Innovation (2014‑2020) (14014/2014),

–  having regard to the request for consent submitted by the Council in accordance with Article 186, Article 218(6), second subparagraph, point (a) and Article 218(8), first subparagraph, of the Treaty on the Functioning of the European Union (C8-0057/2015),

–  having regard to Rule 99(1), first and third subparagraphs, Rule 99(2), Rule 108(7) and Rule 50(1) of its Rules of Procedure,

–  having regard to the recommendation of the Committee on Industry, Research and Energy (A8-0180/2015),

1.  Gives its consent to conclusion of the agreement;

2.  Instructs its President to forward its position to the Council, the Commission and the governments and parliaments of the Member States and of the Faroe Islands.


Long-term shareholder engagement and corporate governance statement ***I
PDF 489kWORD 170k
Text
Consolidated text
Amendments adopted by the European Parliament on 8 July 2015 on the proposal for a directive of the European Parliament and of the Council amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement and Directive 2013/34/EU as regards certain elements of the corporate governance statement (COM(2014)0213 – C7-0147/2014 – 2014/0121(COD))(1)
P8_TA(2015)0257A8-0158/2015

(Ordinary legislative procedure: first reading)

[Amendment 1, unless otherwise indicated]

AMENDMENTS BY THE EUROPEAN PARLIAMENT(2)
P8_TA(2015)0257A8-0158/2015
to the Commission proposal
P8_TA(2015)0257A8-0158/2015

DIRECTIVE (EU) 2015/...
OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement, Directive 2013/34/EU as regards certain elements of the corporate governance statement and Directive 2004/109/EC

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 50 and 114 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national Parliaments,

Having regard to the opinion of the European Economic and Social Committee(3)

After consulting the European Data Protection Supervisor,

Acting in accordance with the ordinary legislative procedure,

Whereas:

(1)  Directive 2007/36/EC of the European Parliament and of the Council(4) establishes requirements in relation to the exercise of certain shareholder rights attaching to voting shares in relation to general meetings of companies which have their registered office in a Member State and whose shares are admitted to trading on a regulated market situated or operating within a Member State.

(2)  Although they do not own corporations, which are separate legal entities beyond their full control, shareholders play a relevant role in the governance of those corporations. The financial crisis has revealed that shareholders in many cases supported managers' excessive short-term risk taking. Moreover, ▌the current level of “monitoring” and engagement in investee companies by institutional investors and asset managers is often inadequate and too much focused on short-term returns, which leads to suboptimal corporate governance and performance of listed companies.

(2a)  Greater involvement of shareholders in companies' corporate governance is one of the levers that can help improve the financial and non-financial performance of those companies. Nevertheless, since shareholder rights are not the only long-term factor which needs to be taken into consideration in corporate governance, they should be accompanied by additional measures to ensure a greater involvement of all stakeholders, in particular employees, local authorities and civil society.

(3)  In the Action Plan on European company law and corporate governance the Commission announced a number of actions in the area of corporate governance, in particular to encourage long-term shareholder engagement and to enhance transparency between companies and investors.

(4)  In order to further facilitate the exercise of shareholder rights and engagement between listed companies and shareholders, listed companies should have the right to identify their shareholders and directly communicate with them. Therefore, to improve transparency and dialogue, this Directive should provide for a framework to ensure that shareholders can be identified. [Am. 29]

(5)  The effective exercise of their rights by shareholders depends to a large extent on the efficiency of the chain of intermediaries maintaining securities accounts for shareholders, especially in a cross-border context. This Directive aims at improving the transmission of information by intermediaries through the equity holding chain to facilitate the exercise of shareholder rights.

(6)  In view of the important role of intermediaries they should be obliged to facilitate the exercise of rights by shareholders ▌when shareholders would like to exercise these rights themselves or would like to nominate a third person to do so. When shareholders do not want to exercise the rights themselves and have nominated the intermediary as a third person, the latter should be obliged to exercise these rights upon the explicit authorisation and instruction of the shareholders and for their benefit.

(7)  In order to promote equity investment throughout the Union and the exercise of rights related to shares, this Directive should establish a high degree of transparency with regard to costs of services provided by intermediaries. In order to prevent price discrimination of cross-border as opposed to purely domestic share holdings, any differences in the costs levied between domestic and cross-border exercise of rights should be duly justified and should reflect the variation in actual costs incurred for delivering the services provided by intermediaries. Third country intermediaries which have established a branch in the Union should be subject to the rules on shareholder identification, transmission of information, facilitation of shareholder rights and transparency of costs to ensure effective application of the provisions on shares held via such intermediaries.

(8)  Effective and sustainable shareholder engagement is a relevant element of listed companies’ corporate governance model, which depends on checks and balances between the different organs and different stakeholders. Proper involvement of stakeholders, in particular employees, should be considered an element of utmost importance in developing a balanced European framework on corporate governance.

(9)  Institutional investors and asset managers are often important shareholders of listed companies in the Union and therefore can play a significant role in the corporate governance of these companies, but also more generally with regard to the strategy and long-term performance of these companies. However, the experience of the last years has shown that institutional investors and asset managers often do not engage properly with companies in which they hold shares and ▌that capital markets often exert pressure on companies to perform in the short term, which jeopardizes the long–term financial and non-financial performance of companies and leads, among several other negative consequences, to a suboptimal level of investments, for example in research and development to the detriment of the long-term performance of the companies ▌.

(10)  Institutional investors and asset managers are often not transparent about investment strategies and their engagement policy ▌, implementation and results thereof. Public disclosure of such information would have a positive impact on investor awareness, enable ultimate beneficiaries such as future pensioners optimise investment decisions, facilitate the dialogue between companies and their shareholders, enhance shareholder engagement and strengthen companies’ accountability to stakeholders and civil society.

(11)  Therefore, institutional investors and asset managers should develop a policy on shareholder engagement, which determines, amongst others, how they integrate shareholder engagement in their investment strategy, monitor investee companies, including their environmental and social risks, conduct dialogues with investee companies and their stakeholders and exercise voting rights. Such engagement policy should include policies to manage actual or potential conflicts of interests, such as the provision of financial services by the institutional investor or asset manager, or companies affiliated to them, to the investee company. This policy, its implementation and the results thereof should be publicly disclosed and sent to the institutional investors’ clients on an annual basis. Where institutional investors or asset managers decide not to develop an engagement policy and/or decide not to disclose the implementation and results thereof, they shall give a clear and reasoned explanation as to why this is the case.

(12)  Institutional investors should annually disclose to the public how their ▌investment strategy is aligned with the profile and duration of their liabilities and how it contributes to the medium to long-term performance of their assets. Where they make use of asset managers, either through discretionary mandates involving the management of assets on an individual basis or through pooled funds, they should disclose to the public the main elements of the arrangement with the asset manager with regard to a number of issues, such as whether it incentivises the asset manager to align its investment strategy and decisions with the profile and duration of the liabilities of the institutional investor, whether it incentivises the asset manager to make investment decisions based on medium to long-term company performance and to engage with companies, how it evaluates the asset managers performance, the structure of the consideration for the asset management services and the targeted portfolio turnover. This would contribute to a proper alignment of interests between the final beneficiaries of institutional investors, the asset managers and the investee companies and potentially to the development of longer-term investment strategies and longer-term relationships with investee companies involving shareholder engagement.

(13)  Asset managers should be required to publicly disclose ▌ how their investment strategy and the implementation thereof is in accordance with the asset management arrangement and how the investment strategy and decisions contribute to medium to long-term performance of the assets of the institutional investor. Moreover, asset managers should publicly disclose the portfolio turnover, whether they make investment decisions on the basis of judgements about medium to long-term performance of the investee company, ▌and whether they use proxy advisors for the purpose of their engagement activities. Further information should be disclosed by the asset managers directly to the institutional investors, including information on the portfolio composition, on the portfolio turnover costs, on conflicts of interest which have arisen and how they have been dealt with. This information would allow institutional investors to better monitor asset managers, and provide incentives for a proper alignment of interests and for shareholder engagement.

(14)  In order to improve the information in the equity investment chain Member States should ensure that proxy advisors adopt and implement adequate measures to ensure to the best of their ability that their voting recommendations are accurate and reliable, based on a thorough analysis of all the information that is available to them and are not affected by any existing or potential conflict of interest or business relationship. Proxy advisors should adopt and follow a code of conduct. Departures from the code should be declared and explained, together with any alternative solutions which have been adopted. Proxy advisors should report on the application of their code of conduct on a yearly basis. They should disclose certain key information related to the preparation of their voting recommendations and any actual or potential conflict of interest or business relationships that may influence the preparation of the voting recommendations.

(15)  Since remuneration is one of the key instruments for companies to align their interests and those of their directors and in view of the crucial role of directors in companies, it is important that the remuneration policy of companies is determined in an appropriate manner without prejudice to the provisions on remuneration of Directive 2013/36/EU of the European Parliament and of the Council(5) and taking into account the differences in board structures applied by companies in the different Member States . Directors’ performance should be assessed using both financial and non-financial performance criteria, including environmental, social and governance factors.

(15a)  The remuneration policy for company directors should also contribute to the long-term growth of the company so that it corresponds to a more effective practice of corporate governance and is not linked entirely or largely to short-term investment objectives.

(16)  In order to ensure that shareholders have an effective say on the remuneration policy, they should be granted the right to vote on the remuneration policy, on the basis of a clear, understandable and comprehensive overview of the company's remuneration policy, which should be aligned with the business strategy, objectives, values and long-term interests of the company and should incorporate measures to avoid conflicts of interest. Companies should only pay remuneration to their directors in accordance with a remuneration policy that has been voted by shareholders. The voted remuneration policy should be publicly disclosed without delay. [Am. 30]

(17)  To ensure that the implementation of the remuneration policy is in line with the approved policy, shareholders should be granted the right to hold an advisory vote on the company’s remuneration report. In order to ensure accountability of directors the remuneration report should be clear and understandable and should provide a comprehensive overview of the remuneration granted to individual directors in the last financial year. Where the shareholders vote against the remuneration report, the company should, where necessary, enter into dialogue with the shareholders in order to identify the reasons for rejection. The company should explain in the next remuneration report how the vote of the shareholders has been taken into account. [Am. 31]

(17a)  Increased transparency regarding the activities of large companies, and in particular regarding profits made, taxes on profit paid and subsidies received, is essential for ensuring the trust and facilitating the engagement of shareholders and other Union citizens in companies. Mandatory reporting in this area can therefore be seen as an important element of the corporate responsibility of companies to shareholders and society.

(18)  In order to provide stakeholders, shareholders and civil society easy access to all relevant corporate governance information the remuneration report should be part of the corporate governance statement that listed companies should publish in accordance with article 20 of Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013(6).

(18a)  There is a need to differentiate between procedures for establishing the remuneration of directors and systems of wage formation for employees. Consequently, the provisions on remuneration should be without prejudice to the full exercise of fundamental rights guaranteed by Article 153(5) Treaty on the Functioning of the European Union (TFEU), general principles of national contract and labour law, and the rights, where applicable, of the social partners to conclude and enforce collective agreements, in accordance with national law and customs.

(18b)  The provisions on remuneration should also, where applicable, be without prejudice to provisions on the representation of employees in the administrative, management or supervisory body as provided for by national law.

(19)  Transactions with related parties may cause prejudice to companies ▌, as they may give the related party the opportunity to appropriate value belonging to the company. Thus, adequate safeguards for the protection of companies’ interests are of importance. For this reason Member States should ensure that material related party transactions should be approved by the shareholders or by the administrative or supervisory body of the companies, in accordance with procedures which prevent a related party from taking advantage of its position and provide adequate protection for the interest of the company and of shareholders which are not related parties, including minority shareholders. For material transactions with related parties ▌companies should publicly announce such transactions at the latest at the time of the conclusion of the transaction and accompany the announcement by a report ▌assessing whether the transaction is on market terms and confirming that the transaction is fair and reasonable from the perspective of the company, including minority shareholders. Member States should be allowed to exclude transactions entered into between the company and joint ventures and one or more members of its group, provided that those members of the group or joint ventures are wholly owned by the company or that no other related party of the company has an interest in the members or in the joint ventures, and transactions entered into in the ordinary course of business and concluded on normal market terms.

(20)  In view of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995(7)it is necessary to strike a balance between the facilitation of the exercise of shareholders' rights and the right to privacy and the protection of personal data. The identification information on shareholders should be limited to the name and contact details of, including full address, telephone number and, if relevant, e-mail address and the numbers of shares owned and voting rights held by the corresponding shareholders. This information should be accurate and kept up-to-date, and intermediaries as well as companies should allow for rectification or erasure of all incorrect or incomplete data. This identification information on shareholders should not be used for any other purpose than the facilitation of the exercise of shareholder rights, of shareholder engagement and of the dialogue between the company and the shareholder.

(21)  In order to ensure uniform application of the Articles on identification of shareholders, on transmission of information, on facilitation of the exercise of shareholder's rights and on the remuneration reports, the power to adopt delegated acts in accordance with Article 290 of the TFEU should be delegated to the Commission in respect of defining the specific requirements regarding the transmission of information on the identity of shareholders, the transmission of information between the company and the shareholders and the facilitation by the intermediary of the exercise of rights by shareholders, and the standardised presentation of the remuneration report. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level. The Commission, when preparing and drawing up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and of the Council.

(22)  In order to ensure that the requirements set out in this Directive or the measures implementing this Directive are applied in practice, any infringement of those requirements should be subject to penalties. To that end, penalties should be sufficiently dissuasive and proportionate.

(23)  Since the objectives of this Directive cannot be sufficiently achieved by the Member States in view of the international nature of the Union equity market and action by Member States alone is likely to result in different sets of rules, which may undermine or create new obstacles to the functioning of the internal market, the objectives can rather, by reason of their scale and effects, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.

(24)  In accordance with the Joint Political Declaration of Member States and the Commission of 28 September 2011 on explanatory documents(8), Member States have undertaken to accompany, in justified cases, the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. With regard to this Directive, the legislator considers the transmission of such documents to be justified,

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Amendments to Directive 2007/36/EC

Directive 2007/36/EC is amended as follows:

(1)  Article 1 is amended as follows:

(a)  In paragraph 1, the following sentence is added:"

“It also establishes specific requirements in order to facilitate shareholders' engagement in the long term, including the identification of shareholders, the transmission of information and the facilitation of the exercise of shareholder rights. It additionally creates transparency on the engagement policies of institutional investors and asset managers and on the activities of proxy advisors and lays down certain requirements with regard to directors' remuneration and related party transactions.”

"

(aa)  The following paragraph is added after paragraph 3:"

“3a. The undertakings referred to in paragraph 3 shall in no case be exempted from the provisions laid down in Chapter Ib.”

"

(b)  The following paragraph is added after paragraph 3a:"

3b. Chapter Ib shall apply to institutional investors and to asset managers to the extent that they invest, directly or through a collective investment undertaking, on behalf of institutional investors, in so far they invest in shares. It shall also apply to proxy advisors.

"

(ba)  The following paragraph is added after paragraph 3b: "

"3c. The provisions of this Directive are without prejudice to the provisions laid down in sectorial EU legislation regulating specific types of listed companies or entities. The provisions of sectorial EU legislation shall prevail over this Directive to the extent that the requirements provided by this Directive contradict the requirements laid down in sectorial EU legislation. Where this Directive provides for more specific rules or adds requirements compared to the provisions laid down by sectorial EU legislation, those provisions shall be applied in conjunction with the provisions of this Directive".

"

(2)  In Article 2, the following points (d) to (jc) are added:"

“(d) ‘intermediary’ means a legal person that has its registered office, central administration or principal place of business in the European Union and maintains securities accounts for clients;

   (da) ‘large company’ means a company which meets the criteria laid down in Article 3(4) of Directive 2013/34/EU;
   (db) ‘large group’ means a group which meets the criteria laid down in Article 3(7) of Directive 2013/34/EU;
   (e) ‘third country intermediary’ means a legal person that has its registered office, central administration or principal place of business outside the Union and maintains securities accounts for clients;
   (f) ‘institutional investor’ means an undertaking carrying out activities of life assurance within the meaning of Article 2(3)(a), (b) and (c), and activities of reinsurance covering life insurance obligations and not excluded pursuant to Articles 3, 4, 9, 10, 11 or 12 of Directive 2009/138/EC of the European Parliament and of the Council(9) and an institution for occupational retirement provision falling within the scope of Directive 2003/41/EC of the European Parliament and of the Council(10) in accordance with Article 2 thereof, unless a Member States has chosen not to apply that Directive in whole or in parts to that institution in accordance with Article 5 of that Directive;
   (g) ‘asset manager’ means an investment firm as defined in point (1) of Article 4(1) of Directive 2014/65/EU of the European Parliament and of the Council(11) providing portfolio management services to institutional investors, an AIFM (alternative investment fund manager) as defined in Article 4(1)(b) of Directive 2011/61/EU of the European Parliament and of the Council(12) that does not fulfil the conditions for an exemption in accordance with Article 3 of that Directive or a management company as defined in Article 2(1)(b) of Directive 2009/65/EC of the European Parliament and of the Council(13); or an investment company authorised in accordance with Directive 2009/65/EC, provided that it has not designated a management company authorised under that Directive for its management;
   (h) ‘shareholder engagement’ means the monitoring by a shareholder alone or together with other shareholders, of companies on relevant matters including strategy, financial and non-financial performance, risk, capital structure, human resources, social and environmental impact and corporate governance, having a dialogue with companies and their stakeholders on these matters and exercising voting rights and other rights attached to shares;
   (i) ‘proxy advisor’ means a legal person that provides, on a professional basis, recommendations to shareholders on the exercise of their voting rights;
   (l) ‘Director’ means
   any member of the administrative, management or supervisory bodies of a company;
   chief executive officer and deputy chief executive officers, where they are not members of administrative, management or supervisory bodies;
   (j) ‘related party’ has the same meaning as in the international accounting standards adopted in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council(14);
   (ja) ̔assets’ means the total asset value presented on the company's consolidated balance sheet prepared in accordance with international financial reporting standards;
   (jb) ‘stakeholder’ means any individual, group, organisation or local community that is affected by or otherwise has an interest in the operation and performance of a company;
   (jc) ̔information regarding shareholder identity’ means any information allowing to establish the identity of a shareholder including at least:
   the names of shareholders and their contact details (including full address, telephone number and e-mail address), and, where they are legal persons, their unique identifier or, in case the latter is not available, other identification data;
   the number of shares owned and voting rights associated with those shares."

"

(2a)  In Article 2, the following paragraph is added:"

"Member States may include in the definition of Director referred to in point (l) of the first paragraph, for the purposes of this Directive, other individuals that cover similar positions."

"

(2b)  After Article 2, the following article is inserted:"

"Article 2a

Data protection

Member States shall ensure that any processing of personal data under this Directive is done in accordance with national laws transposing Directive 95/46/EC."

"

(3)  After Article 3, the following Chapters Ia and Ib are inserted"

“CHAPTER IA

IDENTIFICATION OF SHAREHOLDERS, TRANSMISSION OF INFORMATION AND FACILITATION OF EXERCISE OF SHAREHOLDER RIGHTS

Article 3a

Identification of shareholders

1.  Member States shall ensure that companies have the right to identify their shareholders, taking account of existing national systems.

2.  Member States shall ensure that, on the request of the company, the intermediary communicates without undue delay to the company the information regarding shareholder identity. Where there is more than one intermediary in a holding chain, the request of the company shall be transmitted between intermediaries without undue delay. The intermediary having the information regarding shareholder identity shall transmit it directly to the company.

Member States may provide that central security depositories (CSDs) are the intermediaries to be responsible for collecting the information regarding shareholder identity and for providing it directly to the company.

3.  Shareholders shall be duly informed by their intermediary that information regarding their identity may be processed in accordance with this article and, where applicable, that the information has actually been forwarded to the company. This information may only be used for the purpose of facilitation of the exercise of the rights of the shareholder, of engagement and dialogue between the company and the shareholder on company-related matters. Companies shall in any case be allowed to give third parties an overview of the shareholding structure of the company by disclosing the different shareholder categories. The company and the intermediary shall ensure that natural and legal persons are able to rectify or erase any incomplete or inaccurate data. Member States shall ensure that the companies and the intermediaries do not store the information regarding shareholder identity transmitted to them in accordance with this Article for longer than necessary and, in any event, for longer than 24 months after the company or the intermediaries have learnt that the person concerned has ceased to be a shareholder.

4.  Member States shall ensure that an intermediary that reports to the company the information regarding shareholder identity in accordance with paragraph 2 is not considered in breach of any restriction on disclosure of information imposed by contract or by any legislative, regulatory or administrative provision.

5.  To ensure uniform application of this Article, the Commission shall be empowered to adopt delegated acts in accordance with Article 14a to specify the minimum requirements to transmit the information laid down in paragraphs 2 and 3 as regards the format of the information to be transmitted, the format of the request, including the secure formats to be used, and the deadlines to be complied with. [Am. 24]

Article 3b

Transmission of information

1.  Member States shall ensure that if a company does not directly communicate with its shareholders, the information related to their shares shall be made available via the company’s website and transmitted to them or, in accordance with the instructions given by the shareholder, to a third party, by the intermediary without undue delay in all of the following cases:

   (a) the information is necessary to exercise a right of the shareholder flowing from its shares;
   (b) the information is directed to all shareholders in shares of that class.

2.  Member States shall require companies to provide and deliver the information to the intermediary related to the exercise of rights flowing from shares in accordance with paragraph 1 in a standardised and timely manner.

3.  Member States shall oblige the intermediary to transmit to the company, in accordance with the instructions received from the shareholders, without undue delay the information received from the shareholders related to the exercise of the rights flowing from their shares.

4.  Where there is more than one intermediary in a holding chain, information referred to in paragraphs 1 and 3 shall be transmitted between intermediaries without undue delay.

5.  To ensure uniform application of this Article, the Commission shall be empowered to adopt delegated acts, in accordance with Article 14a, to specify the minimum requirements to transmit information laid down in paragraphs 1 to 4 ▌as regards the content to be transmitted, the deadlines to be complied with and the types and format of information to be transmitted, including the secure formats to be used.

Article 3c

Facilitation of the exercise of shareholder rights

1.  Member States shall ensure that the intermediaries facilitate the exercise of the shareholder rights by the shareholder, including the right to participate and vote in general meetings. Such facilitation shall comprise at least one of the following:

   (a) the intermediary makes the necessary arrangements for the shareholder or a third person nominated by the shareholder to be able to exercise themselves the rights;
   (b) the intermediary exercises the rights flowing from the shares upon the explicit authorisation and instruction of the shareholder and for his benefit.

2.  Member States shall ensure that companies publicly disclose, via their website, the minutes of the general meetings and the results of votes. Member States shall ensure that companies confirm the votes cast in general meetings by or on behalf of shareholders, when they are cast by electronic means. In case the intermediary casts the vote, it shall transmit the voting confirmation to the shareholder. Where there is more than one intermediary in the holding chain the confirmation shall be transmitted between intermediaries without undue delay.

3.  To ensure uniform application of this Article, the Commission shall be empowered to adopt delegated acts, in accordance with Article 14a, to specify the minimum requirements to facilitate the exercise of shareholder rights laid down in paragraphs 1 and 2 of this Article ▌as regards the types of the facilitation, the form of the voting confirmation and the deadlines to be complied with. ▌

Article 3d

Transparency on costs

1.  Member States may allow intermediaries to charge the costs of the service to be provided by the companies under this chapter. Intermediaries shall publicly disclose prices, fees and any other charges separately for each service referred to in this chapter.

2.  Where intermediaries are permitted to charge costs in accordance with paragraph 1, Member States shall ensure that intermediaries publicly disclose, separately for each service, the costs for the services referred to in this chapter.

Member States shall ensure that any costs that may be levied by an intermediary on shareholders, companies and other intermediaries shall be non-discriminatory, reasonable and proportionate. Any differences in the charges levied between domestic and cross-border exercise of rights shall only be permitted where duly justified and shall reflect the variation in actual costs incurred for delivering the services.

Article 3e

Third country intermediaries

A third country intermediary who has established a branch in the Union shall be subject to this chapter.”

CHAPTER IB

TRANSPARENCY OF INSTITUTIONAL INVESTORS, ASSET MANAGERS AND PROXY ADVISORS

Article 3f

Engagement policy

1.  Member States shall, without prejudice to Article 3f(4), ensure that institutional investors and asset managers develop a policy on shareholder engagement (“engagement policy”). This engagement policy shall determine how institutional investors and asset managers conduct the following actions:

   (a) to integrate shareholder engagement in their investment strategy;
   (b) to monitor investee companies, including on their non-financial performance, and reduction of social and environmental risks;
   (c) to conduct dialogues with investee companies;
   (d) to exercise voting rights
   (e) to use services provided by proxy advisors;
   (f) to cooperate with other shareholders;
   (fa) to conduct dialogue and cooperate with other stakeholders of the investee companies.

2.  Member States shall, without prejudice to Article 3f(4), ensure that the engagement policy includes policies to manage actual or potential conflicts of interests with regard to shareholder engagement. Such policies shall in particular be developed for all of the following situations:

   (a) the institutional investor or the asset manager, or other companies affiliated to them, offer financial products to or have other commercial relationships with the investee company;
   (b) a director of the institutional investor or the asset manager is also a director of the investee company;
   (c) an asset manager managing the assets of an institution for occupational retirement provision invests in a company that contributes to that institution;
   (d) the institutional investor or asset manager is affiliated with a company for whose shares a takeover bid has been launched.

3.  Member States shall ensure that institutional investors and asset managers publicly disclose on an annual basis their engagement policy, how it has been implemented and the results thereof. The information referred to in the first sentence shall at least be available, free of charge, on the company's website. Institutional investors shall provide their clients with that information on an annual basis.

Institutional investors and asset managers shall publicly disclose, for each company in which they hold shares, whether and how they cast their votes in the general meetings of the companies concerned and provide an explanation for their voting behaviour. Where an asset manager casts votes on behalf of an institutional investor, the institutional investor shall make a reference as to where such voting information has been published by the asset manager. The information referred to in this paragraph shall at least be available, free of charge, on the company's website.

4.  Where institutional investors or asset managers decide not to develop an engagement policy or decide not to disclose the implementation and results thereof, they shall give a clear and reasoned explanation as to why this is the case. [Am. 25]

Article 3g

Investment strategy of institutional investors and arrangements with asset managers

1.  Member States shall ensure that institutional investors disclose to the public how their investment strategy (“investment strategy”) is aligned with the profile and duration of their liabilities and how it contributes to the medium to long-term performance of their assets. The information referred to in the first sentence shall at least be available, free of charge, on the company's website as long as it is applicable and shall be sent annually to the company's clients together with the information on their engagement policy.

2.  Where an asset manager invests on behalf of an institutional investor, either on a discretionary client-by-client basis or through a collective investment undertaking, the institutional investor shall annually disclose to the public the main elements of the arrangement with the asset manager with regard to the following issues:

   (a) whether and to what extent it incentivises the asset manager to align its investment strategy and decisions with the profile and duration of its liabilities;
   (b) whether and to what extent it incentivises the asset manager to make investment decisions based on medium to long-term company performance, including non-financial performance, and to engage with companies as a means of improving company performance to deliver investment returns;
   (c) the method and time horizon of the evaluation of the asset manager’s performance, and in particular whether, and how this evaluation takes long-term absolute performance into account as opposed to performance relative to a benchmark index or other asset managers pursuing similar investment strategies;
   (d) how the structure of the consideration for the asset management services contributes to the alignment of the investment decisions of the asset manager with the profile and duration of the liabilities of the institutional investor;
   (e) the targeted portfolio turnover or turnover range, the method used for the turnover calculation, and whether any procedure is established when this is exceeded by the asset manager;
   (f) the duration of the arrangement with the asset manager.

Where the arrangement with the asset manager does not contain one or more of the elements referred to in points (a) to (f), the institutional investor shall give a clear and reasoned explanation as to why this is the case. [Am. 26]

Article 3h

Transparency of asset managers

1.  Member States shall ensure that asset managers disclose, as specified in paragraphs 2 and 2a, how their investment strategy and implementation thereof complies with ▌the ▌arrangement referred to in Article 3g(2).

2.  Member States shall ensure that asset managers annually disclose to the public all of the following information:

   (a) whether or not, and if so how, they make investment decisions on the basis of judgements about medium-to long-term performance of the investee company, including non-financial performance;

   (b) the level of portfolio turnover, the method used to calculate it and an explanation if the turnover exceeded the targeted level;

   (c) whether or not, and if so, what actual or potential conflicts of interest have arisen in connection with engagement activities and how the asset manager has dealt with them;
   (d) whether or not, and if so how, the asset manager uses proxy advisors for the purpose of their engagement activities;
   (e) how, overall, the investment strategy and implementation thereof contributes to the medium to long-term performance of the assets of the institutional investor.

2a.  Member States shall ensure that asset managers annually disclose to the institutional investor with which they have entered into the arrangement referred to in Article 3g(2) all of the following information:

   (a) how the portfolio was composed and an explanation of any significant changes in the portfolio in the previous period;
   (b) portfolio turnover costs;
   (c) their policy on securities lending and the implementation thereof.

3.  The information disclosed pursuant to paragraph 2 shall at least be available, free of charge, on the asset manager's website. The information disclosed pursuant to paragraph 2a shall be provided free of charge and, in case the asset manager does not manage the assets on a discretionary client-by-client basis, it shall also be provided to other investors on request.

3a.  Member States may provide that, in exceptional cases, an asset manager may be allowed, if approved by the competent authority, to abstain from disclosing a certain part of the information to be disclosed under this Article if that part relates to impending developments or matters that are in the course of negotiation and its disclosure would be seriously prejudicial to the commercial position of the asset manager.

Article 3i

Transparency of proxy advisors

1.  Member States shall ensure that proxy advisors adopt and implement adequate measures to ensure to the best of their ability that their research and voting recommendations are accurate and reliable, based on a thorough analysis of all the information that is available to them, and are developed in the sole interest of their clients.

1a.  Member States shall ensure that proxy advisors refer to the code of conduct which they apply. Where they depart from any of the recommendations of that code of conduct, they shall declare it, explain the reasons for doing so and indicate any alternative measures adopted. This information, together with the reference to the code of conduct which they apply, shall be published on the proxy advisor's website.

Proxy advisors shall report every year on the application of that code of conduct. Annual reports shall be published on the proxy advisor's website and shall remain available, free of charge, for at least three years after the date of publication

2.  Member States shall ensure that proxy advisors shall on an annual basis publicly disclose all of the following information in relation to the preparation of their research and voting recommendations:

   (a) the essential features of the methodologies and models they apply;
   (b) the main information sources they use;
   (c) whether and, if so, how they take national market, legal, regulatory and company-specific conditions into account;
   (ca) the essential features of the research undertaken and voting policies applied for each market;
   (d) whether they have communication or dialogues with the companies which are the object of their research and voting recommendations and their stakeholders, and, if so, the extent and nature thereof;
   (da) the policy regarding prevention and management of potential conflicts of interest;
   (e) the total number and the qualifications of staff involved in the preparation of the voting recommendations;
   (f) the total number of voting recommendations provided in the last year.

That information shall be published on the website of proxy advisors and remain available, free of charge, for at least three years from the day of publication.

3.  Member States shall ensure that proxy advisors identify and disclose without undue delay to their clients ▌any actual or potential conflict of interest or business relationships that may influence the research and the preparation of the voting recommendations and the actions they have undertaken to eliminate or mitigate the actual or potential conflict of interest.”

"

(4)  The following articles are inserted:"

“Article 9a

Right to vote on the remuneration policy

1.  Member States shall ensure that companies establish a remuneration policy as regards directors and submit it to a binding vote of the general meeting of shareholders. Companies shall only pay remuneration to their directors in accordance with a remuneration policy that has been voted on at the general meeting of shareholders. Any change to the policy shall be voted on at the general meeting of shareholders and the policy shall be submitted in any case for approval by the general meeting at least every three years.

However, Member States may provide that the votes by the general meeting on the remuneration policy are advisory.

In cases where no remuneration policy has been implemented previously and shareholders reject the draft policy submitted to them, the company may, while reworking the draft and for a period of no longer than one year before the draft is adopted, pay remuneration to its directors in accordance with existing practices.

In cases where there is an existing remuneration policy and shareholders reject a draft policy submitted to them in line with the first subparagraph, the company may, while reworking the draft and for a period of no longer than one year until the draft is adopted, pay remuneration to its directors in accordance with the existing policy.

2.  The policy shall be clear, understandable, in line with the business strategy, objectives, values and long-term interests of the company and shall incorporate measures to avoid conflicts of interest.

3.  The policy shall explain how it contributes to the long-term interests and sustainability of the company. It shall set clear criteria for the award of fixed and variable remuneration, including all bonuses and all benefits in whatever form.

The policy shall indicate the appropriate relative proportion of the different components of fixed and variable remuneration. It shall explain how the pay and employment conditions of employees of the company were taken into account when setting the policy or directors' remuneration.

For variable remuneration, the policy shall indicate the financial and non-financial performance criteria, including, where appropriate, consideration for programmes and results relating to corporate social responsibility, to be used and explain how they contribute to the long-term interests and sustainability of the company, and the methods to be applied to determine to which extent the performance criteria have been fulfilled; it shall specify the deferral periods, vesting periods for share-based remuneration and retention of shares after vesting, and information on the possibility of the company to reclaim variable remuneration.

Member States shall ensure that the value of shares does not play a dominant role in the financial performance criteria.

Member States shall ensure that share-based remuneration does not represent the most significant part of directors' variable remuneration. Member States may provide for exceptions to the provisions of this subparagraph under the condition that the remuneration policy includes a clear and reasoned explanation as to how such an exception contributes to the long-term interests and sustainability of the company.

The policy shall indicate the main terms of the contracts of directors, including its duration and the applicable notice periods and terms of termination and payments linked to termination of contracts and the characteristics of supplementary pension or early retirement schemes. Where national law allows companies to have arrangements with directors without a contract, the policy shall in that case indicate the main terms of the arrangements with directors, including their duration and the applicable notice periods and terms of termination and payments linked to termination and the characteristics of supplementary pension or early retirement schemes.

The policy shall specify the company's procedures for the determination of the remuneration of directors, including the role and functioning of the remuneration committee.

The policy shall explain the specific decision-making process leading to its determination. Where the policy is revised, it shall include an explanation of all significant changes and how it takes into account the votes and views of shareholders on the policy and report in at least the previous three consecutive years.

4.  Member States shall ensure that after approval by the shareholders the policy is made public without delay and available, free of charge, on the company's website at least as long as it is applicable. [Am. 27 rev.]

Article 9b

Information to be provided in the remuneration report and right to vote on the remuneration report

1.  Member States shall ensure that the company draws up a clear and understandable remuneration report, providing a comprehensive overview of the remuneration, including all benefits in whatever form, granted, in accordance with the remuneration policy referred to in Article 9a, to individual directors, including to newly recruited and former directors, in the last financial year. It shall, where applicable, contain all of the following elements:

   (a) the total remuneration awarded, paid or due split out by component, the relative proportion of fixed and variable remuneration, an explanation how the total remuneration is linked to long-term performance and information on how the financial and non-financial performance criteria where applied;
   (b) the relative change of the remuneration of executive directors over the last three financial years, its relation to the development of the general performance of the company and to change in the average remuneration of employees over the same period;
   (c) any remuneration received or due to directors of the company from any undertaking belonging to the same group;
   (d) the number of shares and share options granted or offered, and the main conditions for the exercise of the rights including the exercise price and date and any change thereof;
   (e) information on the use of the possibility to reclaim variable remuneration;
   (f) information on how the remuneration of directors was established, including on the role of the remuneration committee.

2.  Member States shall ensure that the right to privacy of natural persons is protected in accordance with Directive 95/46/EC when personal data of the director are processed.

3.  Member States shall ensure that shareholders have the right to hold an advisory vote on the remuneration report of the past financial year during the annual general meeting. Where the shareholders vote against the remuneration report the company shall, where necessary, enter into a dialogue with the shareholders in order to identify the reasons for the rejection. The company shall explain in the next remuneration report how the vote of the shareholders has been taken into account.

3a.  The provisions on remuneration in this Article and in Article 9a shall be without prejudice to national systems of wage formation for employees and, where applicable, to national provisions on the representation of employees on boards.

4.  To ensure uniform application of this Article, the Commission shall be empowered to adopt delegated acts in accordance with Article 14a to specify the standardised presentation of the information laid down in paragraph 1 of this Article. [Am. 28]

Article 9c

Right to vote on related party transactions

1.  Member States shall ensure that companies, in case of material transactions with related parties ▌, publicly announce such transactions at the latest at the time of the conclusion of the transaction, and accompany the announcement by a report ▌assessing whether or not it is on market terms and confirming that the transaction is fair and reasonable from the perspective of the company, including minority shareholders, and providing an explanation of the evaluations the assessment is based on. The announcement shall contain information on the nature of the related party relationship, the name of the related party, the amount of the transaction and any other information necessary to assess the economic fairness of the transaction from the perspective of the company, including minority shareholders.

Members States shall define specific rules with regard to the report to be adopted in accordance with the first subparagraph, including the actor responsible for providing the reports, which shall be one of the following:

   an independent third party;
   the supervisory body of the company; or
   a committee of independent directors

2.  Member States shall ensure that material transactions with related parties are approved by the shareholders or by the administrative or supervisory body of the companies, in accordance with procedures which prevent a related party from taking advantage of its position and provide adequate protection for the interests of the company and of shareholders which are not related parties, including minority shareholders.

Member States may provide that shareholders have the right to vote on material transactions approved by the administrative or supervisory body of the company.

The intention is to prevent related parties from gaining an advantage from a special position and to provide proper protection for the company's interest.

2a.  Member States shall ensure that related parties and their representatives are excluded from the preparation of the report referred to in paragraph 1 and from the votes and decisions that take place in accordance with paragraph 2. Where the related party transaction involves a shareholder, this shareholder shall be excluded from any vote regarding the transaction. Member States may allow the shareholder who is a related party to take part in the vote provided that national law ensures adequate safeguards which apply during the voting process to protect the interests of shareholders who are not related parties, including minority shareholders, by preventing the related-party from approving the transaction despite the opposing opinion of the majority of shareholders which are not related parties or despite the opposing opinion of the majority of the independent directors.

3.  Member States shall ensure that transactions with the same related party that have been concluded in any 12 months period or in the same financial year and have not been subject to the obligations listed in paragraphs 1, 2 and 3 are aggregated for the purposes of application of those paragraphs. ▌

4.  Member States may exclude from the requirements in paragraphs 1, 2 and 3:

   transactions entered into between the company and one or more members of its group or joint ventures, provided that those members of the group or joint ventures are wholly owned by the company or that no other related party of the company has an interest in those members or in the joint ventures;
   transactions entered into in the ordinary course of business and concluded on normal market terms.

4a.  Member States shall define material transactions with related parties. Material transactions with related parties shall be defined taking into account:

   (a) the influence that the information about the transaction may have on the decisions of the subjects involved in the approval process;
   (b) the impact of the transaction on the company’s results, assets, capitalisation or turnover and the position of the related party;
   (c) the risks that the transaction creates for the company and its minority shareholders.

When defining material transactions with related parties, Member States may set one or more quantitative ratios based on the impact of the transaction on the revenues, assets, capitalization or turnover of the company or take into account the nature of the transaction and the position of the related party.”

"

(5)  After Article 14, the following Chapter IIa is inserted:"

“CHAPTER IIA

DELEGATED ACTS AND PENALTIES

Article 14a

Exercise of delegated powers

1.  The power to adopt delegated acts is conferred on the Commission subject to the conditions laid down in this Article.

2.  The power to adopt delegated acts referred to in Articles 3a(5), 3b(5), and 3c(3) and Article 9b shall be conferred on the Commission for an indeterminate period of time from ...*.

3.  The delegation of power referred to in Articles 3a(5), 3b(5), and 3c(3) and Articles 9b may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of that decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.

4.  As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council.

5.  A delegated act adopted pursuant to Articles 3a(5), 3b(5) and 3c(3) and Article 9b shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of three months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by three months at the initiative of the European Parliament or the Council.

Article 14b

Penalties

Member States shall lay down the rules on penalties applicable to infringements of the national provisions adopted pursuant to this Directive and shall take all measures necessary to ensure that they are implemented. The penalties provided for must be effective, proportionate and dissuasive. Member States shall notify those provisions to the Commission at the latest by [date for transposition] ▌and shall notify it without delay of any subsequent amendment affecting them.”

"

Article 2

Amendments to Directive 2013/34/EU

Directive 2013/34/EU is amended as follows:

(-1) In Article 2, the following point is added:"

"(17) 'tax ruling' means any advance interpretation or application of a legal provision for a cross-border situation or transaction of a company which might lead to a loss of tax in Member States or which might lead to tax savings for the company resulting from artificial intra-group transfers of profits."

"

(-1a) In Article 18, the following paragraph is inserted after paragraph 2:"

"2a. In the notes to the financial statements large undertakings and public-interest entities shall also disclose, specifying by Member State and by third country in which they have an establishment, the following information on a consolidated basis for the financial year:

   (a) name(s), nature of activities and geographical location;
   (b) turnover;
   (c) number of employees on a full time equivalent basis;
   (d) value of assets and annual cost of maintaining those assets;
   (e) sales and purchases;
   (f) profit or loss before tax;
   (g) tax on profit or loss;
   (h) public subsidies received;
   (i) parent companies shall provide a list of subsidiaries operating in each Member State or third country alongside the relevant data."

"

(-1b) In Article 18, paragraph 3 is replaced by the following: "

"3. Member States may provide that point (b) of paragraph 1 and paragraph 2a are not to apply to the annual financial statements of an undertaking where that undertaking is included within the consolidated financial statements required to be drawn up under Article 22, provided that that information is given in the notes to the consolidated financial statement."

"

(-1c) The following article is inserted:"

"Article 18a

Additional disclosure for large undertakings

1.  In the notes to the financial statements, large undertakings shall, in addition to the information required under Articles 16, 17, 18 and any other provisions of this Directive, publicly disclose essential elements of and information regarding tax rulings, providing a break-down by Member State and by third country in which the large undertaking in question has a subsidiary. The Commission shall be empowered to set out, by means of delegated act in accordance with Article 49, the format and content of publication.

2.  Undertakings of which the average number of employees on a consolidated basis during the financial year does not exceed 500 and which, on their balance sheet dates, have on a consolidated basis either a balance sheet which does not exceed a total of 86 million euros or a net turnover which does not exceeds 100 million euros shall be exempt from the obligation set out in paragraph 1 of this Article.

3.  The obligation set out in paragraph 1 of this Article shall not apply to any undertaking governed by the law of a Member State whose parent undertaking is subject to the laws of a Member State and the information of which is included in the information disclosed by that parent undertaking in accordance with paragraph 1 of this Article.

4.  The information referred to in paragraph 1 shall be audited in accordance with Directive 2006/43/EC."

"

(1)  Article 20 is amended as follows:

(a)  in paragraph 1, the following point (h) is added:"

“(h) the remuneration report defined in Article 9b of Directive 2007/36/EC.”

"

(b)  paragraph 3 is replaced by the following:"

“3. The statutory auditor or audit firm shall express an opinion in accordance with the second subparagraph of Article 34(1) regarding information prepared under points (c) and (d) of paragraph 1 of this Article and shall check that the information referred to in points (a), (b), (e), (f), (g) and (h) of paragraph 1 of this Article has been provided.”

"

(c)  paragraph 4 is replaced by the following:"

“4. Member States may exempt undertakings referred to in paragraph 1 which have only issued securities other than shares admitted to trading on a regulated market, within the meaning of point (14) of Article 4(1) of Directive 2004/39/EC, from the application of points (a), (b), (e), (f), (g) and (h) of paragraph 1 of this Article, unless such undertakings have issued shares which are traded in a multilateral trading facility, within the meaning of point (15) of Article 4(1) of Directive 2004/39/EC."

"

Article 2a

Amendments to Directive 2004/109/EC

Directive 2004/109/EC of the European Parliament and of the Council(15) is amended as follows:

(1)  In paragraph 1 of Article 2, the following point is added:"

"(r) 'tax ruling' means any advance interpretation or application of a legal provision for a cross-border situation or transaction of a company which might lead to a loss of tax in Member States or which might lead to tax savings for the company resulting from artificial intra-group transfers of profits.".

"

(2)  The following articles are inserted:"

"Article 16a

Additional disclosure for issuers

1.  Member States shall require each issuer to annually publicly disclose, specifying by Member State and by third country in which it has a subsidiary, the following information on a consolidated basis for the financial year :

   (a) name(s), nature of activities and geographical location
   (b) turnover
   (c) number of employees on a full-time equivalent basis
   (d) profit or loss before tax
   (e) tax on profit or loss
   (f) public subsidies received

2.  The obligation set out in paragraph 1 shall not apply to any issuer governed by the law of a Member State whose parent company is subject to the laws of a Member State and of which the information is included in the information disclosed by that parent company in accordance with paragraph 1.

3.  The information referred to in paragraph 1 shall be audited in accordance with Directive 2006/43/EC and shall be published, where possible, as an annex to the annual financial statements or, where applicable, to the consolidated financial statements of the issuer concerned.

Article 16b

Additional disclosure for issuers

1.  Member States shall require each issuer to publicly disclose annually, on a consolidated basis for the financial year, essential elements of and information regarding tax rulings, providing a break-down by Member State and by third country in which it has a subsidiary. The Commission shall be empowered to set out, by means of delegated acts in accordance with Article 27(2a), (2b) and (2c), the format and content of publication.

2.  The obligation set out in paragraph 1 of this Article shall not apply to any issuer governed by the law of a Member State whose parent company is subject to the laws of a Member State and whose information is included in the information disclosed by that parent company in accordance with paragraph 1 of this article.

3.  The information referred to in paragraph 1 shall be audited in accordance with Directive 2006/43/EC and shall be published, where possible, as an annex to the annual financial statements or, where applicable, to the consolidated financial statements of the issuer concerned."

"

(3)  In Article 27, paragraph 2a is replaced by the following:"

"2a. The power to adopt the delegated acts referred to in Article 2(3), Article 5(6), Article 9(7), Article 12(8), Article 13(2), Article 14(2), Article 16a(1), Article 17(4), Article 18(5), Article 19(4), Article 21(4), Article 23(4), Article 23(5) and Article 23(7) shall be conferred on the Commission for a period of 4 years from January 2011. The Commission shall draw up a report in respect of delegated power at the latest 6 months before the end of the four-year period. The delegation of power shall be automatically extended for periods of an identical duration, unless the European Parliament or the Council revokes it in accordance with Article 27a."

"

Article 3

Transposition

1.  Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive at the latest by [18 months after entry into force] ▌. They shall forthwith communicate to the Commission the text of those provisions.

When Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

2.  Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.

Article 4

Entry into force

This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Article 5

Addressees

This Directive is addressed to the Member States.

Done at …,

For the European Parliament For the Council

The President The President

(1) The matter was referred back to the committee responsible for reconsideration pursuant to Rule 61(2), second subparagraph (A8-0158/2015).
(2)Amendments: new or amended text is highlighted in bold italics; deletions are indicated by the symbol ▌.
(3) OJ C 451, 16.12.2014, p. 87.
(4) Directive 2007/36/EC of the European Parliament and of the Council of 11 July 2007 on the exercise of certain rights of shareholders in listed companies (OJ L 184, 14.7.2007, p. 17).
(5) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms (OJ L 176, 27.6.2013, p. 338).
(6) Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).
(7) Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data (OJ L 281, 23.11.1995, p. 31).
(8) OJ C 369, 17.12.2011, p. 14.
(9) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1)
(10) Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision (OJ L 235, 23.9.2003, p. 10).
(11) Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (recast) (OJ L 173, 12.6.2014, p. 349).
(12) Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011, p. 1).
(13) Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009, p. 32).
(14) Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (OJ L 243, 11.9.2002, p.1).
(15) Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004, p. 38).


Market stability reserve for the Union greenhouse gas emission trading scheme ***I
PDF 244kWORD 62k
Resolution
Text
European Parliament legislative resolution of 8 July 2015 on the proposal for a decision of the European Parliament and of the Council concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC (COM(2014)0020 – C8-0016/2014 – 2014/0011(COD))
P8_TA(2015)0258A8-0029/2015

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM (2014)0020),

–  having regard to Article 294(2) and Article 192(1) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8‑0016/2014),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Economic and Social Committee of 4 June 2014(1),

–  after consulting the Committee of the Regions,

–  having regard to the undertaking given by the Council representative by letter of 13 May 2015 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the report of the Committee on the Environment, Public Health and Food Safety (A8-0029/2015),

1.  Adopts its position at first reading hereinafter set out;

2.  Calls on the Commission to refer the matter to Parliament again if it intends to amend its proposal substantially or replace it with another text;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 8 July 2015 with a view to the adoption of Decision (EU) 2015/... of the European Parliament and of the Council concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Decision (EU) 2015/1814.)

(1) OJ C 424, 26.11.2014, p. 46.


Seafarers ***I
PDF 243kWORD 61k
Resolution
Text
European Parliament legislative resolution of 8 July 2015 on the proposal for a directive of the European Parliament and of the Council on seafarers amending Directives 2008/94/EC, 2009/38/EC, 2002/14/EC, 98/59/EC and 2001/23/EC (COM(2013)0798 – C7-0409/2013 – 2013/0390(COD))
P8_TA(2015)0259A8-0127/2015

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2013)0798),

–  having regard to Article 294(2) and Article 153(2) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C7‑0409/2013),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of 25 March 2014 of the European Economic and Social Committee(1),

–  having regard to the opinion of 3 April 2014 of the Committee of the Regions(2),

–  having regard to the undertaking given by the Council representative by letter of 13 May 2015 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the report of the Committee on Employment and Social Affairs and the opinion of the Committee on Fisheries (A8-0127/2015),

1.  Adopts its position at first reading hereinafter set out;

2.  Calls on the Commission to refer the matter to Parliament again if it intends to amend its proposal substantially or replace it with another text;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Position of the European Parliament adopted at first reading on 8 July 2015 with a view to the adoption of Directive (EU) 2015/… of the European Parliament and of the Council amending Directives 2008/94/EC, 2009/38/EC and 2002/14/EC of the European Parliament and of the Council, and Council Directives 98/59/EC and 2001/23/EC, as regards seafarers

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Directive (EU) 2015/1794.)

(1) OJ C 226, 16.7.2014, p. 35.
(2) OJ C 174, 7.6.2014, p. 50.


Scientific and technological cooperation with Switzerland: Horizon 2020 and ITER activities ***
PDF 244kWORD 60k
European Parliament legislative resolution of 8 July 2015 on the draft Council decision on the conclusion of the Agreement for scientific and technological cooperation between the European Union and European Atomic Energy Community and the Swiss Confederation associating the Swiss Confederation to Horizon 2020 - the Framework Programme for Research and Innovation and the Research and Training Programme of the European Atomic Energy Community complementing Horizon 2020, and regulating the Swiss Confederation's participation in the ITER activities carried out by Fusion for Energy (05662/2015 – C8-0056/2015 – 2014/0304(NLE))
P8_TA(2015)0260A8-0181/2015

(Consent)

The European Parliament,

–  having regard to the draft Council decision (05662/2015),

–  having regard to the draft Agreement for scientific and technological cooperation between the European Union and European Atomic Energy Community and the Swiss Confederation associating the Swiss Confederation to Horizon 2020 - the Framework Programme for Research and Innovation and the Research and Training Programme of the European Atomic Energy Community complementing Horizon 2020, and regulating the Swiss Confederation’s participation in the ITER activities carried out by Fusion for Energy (15369/2014),

–  having regard to the request for consent submitted by the Council in accordance with Article 186, Article 218(6), second subparagraph, point (a), Article 218(7) and Article 218(8), first subparagraph, of the Treaty on the Functioning of the European Union (C8‑0056/2015),

–  having regard to Rule 99(1), first and third subparagraphs, Rule 99(2), Rule 108(7) and Rule 50(1) of its Rules of Procedure,

–  having regard to the recommendation of the Committee on Industry, Research and Energy (A8-0181/2015),

1.  Gives its consent to conclusion of the agreement;

2.  Instructs its President to forward its position to the Council, the Commission and the governments and parliaments of the Member States and of the Swiss Confederation.


Guidelines for the employment policies of the Member States *
PDF 508kWORD 173k
European Parliament legislative resolution of 8 July 2015 on the proposal for a Council decision on guidelines for the employment policies of the Member States (COM(2015)0098 – C8-0075/2015 – 2015/0051(NLE))
P8_TA(2015)0261A8-0205/2015

(Consultation)

The European Parliament,

–  having regard to the Commission proposal to the Council (COM(2015)0098),

–  having regard to Article 148(2) of the Treaty on the Functioning of the European Union, pursuant to which the Council consulted Parliament (C8‑0075/2015),

–  having regard to Rule 59 of its Rules of Procedure,

–  having regard to the report of the Committee on Employment and Social Affairs (A8-0205/2015),

1.  Approves the Commission proposal as amended;

2.  Calls on the Commission to alter its proposal accordingly, in accordance with Article 293(2) of the Treaty on the Functioning of the European Union;

3.  Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament;

4.  Asks the Council to consult Parliament again if it intends to substantially amend the Commission proposal;

5.  Instructs its President to forward its position to the Council and the Commission.

Text proposed by the Commission   Amendment
Amendment 1
Proposal for a decision
Recital 1
(1)  Member States and the Union should work towards developing a coordinated strategy for employment and particularly for promoting a skilled, trained and adaptable workforce and labour markets responsive to economic change and with a view to achieving the full employment and social progress objectives set out in Article 3 of the Treaty on European Union. Member States, having regard to national practices related to the responsibilities of management and labour, are to regard promoting employment as a matter of common concern and coordinate their action in this respect within the Council.
(1)  Member States and the Union should work towards developing an effective and coordinated strategy for employment, designed to counter the serious effects of unemployment, for promoting a skilled, trained workforce and labour markets responsive to economic, social and environmental change, notably through the targeted promotion of training in the science, technology, engineering and mathematics sectors and through the adaptation of the education systems, with a view to achieving the full employment and social progress objectives set out in Article 3 of the Treaty on European Union. Particular efforts should be made to increase the employment of workers with very low levels of schooling or skills and of those who are unable to acquire training or skills rapidly, and to reduce ever increasing large-scale and long-term unemployment, with particular focus on regions which are lagging behind. Member States, having regard to national practices related to the responsibilities of management and labour, are to regard promoting employment as a priority and a matter of common concern and coordinate their action in this respect within the Council. The Union should accompany those efforts with policy proposals to achieve the Treaty objectives and to ensure an inclusive, integrated labour market as well as decent working conditions across the Union, including adequate wages, also achieved by way of collective bargaining.
Amendment 2
Proposal for a decision
Recital 1 a (new)
(1a)  According to Eurostat estimates, there were 23 815 000 unemployed people in the Union in January 2015, 18 059 000 of whom were in the euro area.
Amendment 3
Proposal for a decision
Recital 1 b (new)
(1b)  It is now essential to establish reliable indicators for the condition of poverty in which many Union citizens find themselves, with respect to the previous figures contained in Council Decision 2010/707/EU1a which identified the need to lift at least 20 million people out of the risk of poverty and exclusion.
____________
1a Council Decision 2010/707/EU of 21 October 2010 on guidelines for the employment policies of the Member States (OJ L 308, 24.11.2010, p.46).
Amendment 4
Proposal for a decision
Recital 2
(2)  The Union must combat social exclusion and discrimination, ensure equal access to fundamental rights, and promote social justice and protection. In defining and implementing its policies and activities, the Union should take into account requirements linked to the guarantee of adequate social protection and the fight against social exclusion and a high level of education and training.
(2)  The Union must combat social exclusion, all forms of poverty as well as discrimination, ensure equal access to fundamental rights, and promote social justice and protection. This overall objective should not be endangered by side effects of other legislation or policies. In defining and implementing its policies and activities, the Union should take into account requirements linked to the guarantee of adequate social protection, the fight against social exclusion, and a high level of education and training.
Amendment 6
Proposal for a decision
Recital 4
(4)  Member States should regard their economic policies as a matter of common concern and coordinate them within the Council. Employment guidelines and broad economic policy guidelines should be adopted by the Council to guide Member States’ and Union policies.
(4)  Member States should regard their economic policies, together with their social policies, as a matter of common concern and coordinate them within the Council. Employment guidelines and broad economic policy guidelines should be adopted by the Council to guide Member States’ and Union policies.
Amendment 7
Proposal for a decision
Recital 4 a (new)
(4a)  To ensure a more democratic decision-making on the integrated guidelines, which affect the citizens and labour markets across the Union, it is important that both the employment guidelines and the broad economic guidelines are decided upon by the European Parliament and the Council. The integrated guidelines must allow Member States, as a priority, to adopt sustainable and integrated economic models at Union, national and local level.
Amendment 8
Proposal for a decision
Recital 5
(5)  In accordance with the Treaty provisions, the Union has developed and implemented policy coordination instruments for fiscal policy and macro-structural policies. The European Semester combines the different instruments in an overarching framework for integrated multilateral economic and budgetary surveillance. The streamlining and strengthening of the European Semester as set out in the Commission's 2015 Annual Growth Survey will further improve its functioning.
(5)  In accordance with the Treaty, the Union has developed and implemented policy coordination instruments for fiscal policy and macro-structural policies which have a strong impact on the social and employment situation in the Union. Those policies may result in a trend of stagnation and deflation in some parts of the Union, which could discourage growth and employment. In that regard, it is vital to take into consideration the new social indicators and the asymmetric shocks that certain Member States have experienced as a result of the financial and economic crisis. The European Semester combines the different instruments in an overarching framework for integrated multilateral surveillance of economic, budgetary, employment and social policies, and should be better geared to delivering the EU2020 targets. The streamlining and strengthening of the European Semester as set out in the Commission's 2015 Annual Growth Survey may further improve its functioning, but that instrument has not yet improved the economic situation in the Member States worst affected by the crisis.
Amendment 9
Proposal for a decision
Recital 5 a (new)
(5a)  According to the European Social Observatory, 26 Member States already have income support and social protection schemes.1a The Commissioner for Employment, Social Affairs, Skills and Labour Mobility, Marianne Thyssen, stated that “if [she] could decide what happens in all Member States in Europe, then there would be a minimum income in all countries in Europe”.
____________
1a http://www.eesc.europa.eu/resources/docs/revenu-minimum_-etude-ose_-vfinale_en--2.pdf
Amendment 10
Proposal for a decision
Recital 5 b (new)
(5b)  There is no regulatory competence at Union level for the creation of a regulatory framework for a Union minimum wage.
Amendment 47
Proposal for a decision
Recital 6
(6)  The financial and economic crisis revealed and emphasised important weaknesses in the economy of the Union and its Member States. It has also underscored the close interdependence of the Member States' economies and labour markets. Moving the Union to a state of strong, sustainable and inclusive growth and job creation is the key challenge faced today. This requires coordinated and ambitious policy action both on Union and national level, in line with the provisions of the Treaty and the Union economic governance. Combining supply and demand side measures, these actions should encompass a boost to investment, a renewed commitment to structural reforms and exercising fiscal responsibility.
(6)  The financial and economic crisis revealed and emphasised serious weaknesses in the economies of the Member States and in the Union's coordination mechanisms. It has also underscored the close interdependence of the Member States' economies and labour markets. Moving the Union to a state of strong, sustainable and inclusive growth and job creation, which involves putting a stop to the large pockets of unemployment that have arisen in certain parts of its territory, is the key challenge faced today. This requires firm, coordinated, ambitious, but, above all, effective policy action both on Union and national level, in line with the provisions of the Treaty and the Union economic governance. Combining supply and demand side measures, these actions should encompass a boost to investment, particularly investment aiming to develop small and medium-sized enterprises, microenterprises, innovative start-ups and businesses promoting green employment and renewed commitment to structural reforms and exercising fiscal responsibility. Those actions should also encompass the creation of a more inclusive rights-based labour market, flanked by adequate social protection. They should also include social protection measures, such as guaranteed minimum income, to be introduced in accordance with national practices, with the goal of fighting extreme poverty and social exclusion.
Amendment 12
Proposal for a decision
Recital 7
(7)  Member States and the Union should also address the social impact of the crisis and aim at building a cohesive society in which people are empowered to anticipate and manage change, and can actively participate in society and the economy. Access and opportunities for all should be ensured and poverty and social exclusion reduced, in particular by ensuring an effective functioning of labour markets and social welfare systems and removing barriers to labour market participation. Member States should also make sure that the benefits of economic growth reach all citizens and all regions.
(7)  Member States and the Union should also address the social impact of the crisis by providing more reliable figures on extreme poverty, and aim to build an inclusive and more just society in which people are empowered to anticipate and manage change, and can actively participate in society and the economy. Non-discriminatory access and opportunities for all should be ensured and poverty and social exclusion reduced substantially, in particular by ensuring an effective functioning of labour markets and adequate social welfare systems and removing unnecessary administrative barriers and barriers to labour market participation, in particular those affecting people with disabilities. Member States should also make sure that the benefits of economic growth reach all citizens and all regional and local entities. The scoreboard of key employment and social indicators within the Joint Employment Report is a particularly useful tool in this respect by helping to detect key employment and social problems and divergences in a timely way and identify areas where policy response is most needed. However, further editions of the scoreboard should include also gender disaggregated data.
Amendment 13
Proposal for a decision
Recital 7 a (new)
(7a)  The European Court of Auditors has identified three risks to the successful implementation of the Youth Guarantee initiative: the adequacy of total funding, the definition of a 'good quality offer', and the way the Commission monitors and reports on the results of the scheme.
Amendment 14
Proposal for a decision
Recital 7 b (new)
(7b)  Council Decision 2010/707/EU set out the following goals: to raise the employment rate for women and men aged 20 to 64 to 75 % by 2020; to reduce the drop-out rates to less than 10 %; to increase the share of 30 to 34-year-olds completing tertiary or equivalent education to at least 40 %; and to promote social inclusion, in particular through the reduction of poverty by aiming to lift at least 20 million people out of the risk of poverty and exclusion. The realisation of the Europe 2020 strategy in the employment and social area remains a key objective of Member States’ employment policy.
________________
1a Council Decision 2010/707/EU of 21 October 2010 on guidelines for the employment policies of the Member States (OJ L 308, 24.11.2010, p. 46).
Amendment 15
Proposal for a decision
Recital 8
(8)  Action in line with the guidelines is an important contribution to reaching the goals of the Europe 2020 strategy. The guidelines constitute an integrated set of European and national policies, which Member States and the Union should implement in order to achieve the positive spill-over effects of coordinated structural reforms, an appropriate overall economic policy mix and a more consistent contribution from European policies to the Europe 2020 strategy’s objectives.
(8)  Action in line with the guidelines is an important contribution to reaching the goals of the Europe 2020 strategy which have not yet been achieved. The outcome of the 2014 public consultation on the Europe 2020 strategy clearly showed that the employment, poverty, social exclusion and education targets of the strategy are still highly relevant, and are equally important, interdependent and mutually reinforcing. The guidelines constitute an integrated set of European and national policies, which Member States and the Union should implement in order to achieve the positive spill-over effects of coordinated reforms aiming to reduce inequalities and increasing the well-being of citizens, an appropriate overall economic policy mix and a more consistent contribution from European policies to the Europe 2020 strategy’s objectives.
Amendment 16
Proposal for a decision
Recital 9
(9)  While these guidelines are addressed to Member States and the Union, they should be implemented in partnership with all national, regional and local authorities, closely associating parliaments, as well as social partners and representatives of civil society.
(9)  When designing and implementing national policies, Member States should ensure effective governance. While these guidelines are addressed to Member States and the Union, they should be implemented, monitored and evaluated in partnership with all national, regional and local authorities, parliaments, as well as social partners and representatives of civil society.
Amendment 17
Proposal for a decision
Recital 10
(10)  The broad guidelines for economic policies give guidance to the Member States on implementing reforms, reflecting interdependence. They are in line with the Stability and Growth Pact. The guidelines should form the basis for country-specific recommendations that the Council may address to the Member States.
(10)  The broad guidelines for economic policies and the employment guidelines give guidance to the Member States on implementing reforms and should form the basis for country-specific recommendations that the Council may address to the Member States. Given the close interdependence of Member States' economies and labour markets, when adopting country-specific recommendations the Council should take into consideration the state of affairs in the neighbouring countries as well as in countries with which the respective Member State has clear connections following a trend in migration by workers or any other relevant indicator. In that respect, the Commission should have accurate and updated statistics and data available in case the country-specific recommendations need to be adjusted.
Amendment 18
Proposal for a decision
Annex – Guideline 5 – paragraph 1
Member States should facilitate job creation, reduce barriers for business to hire people, promote entrepreneurship and in particular support the creation and growth of small enterprises in order to increase the employment rate of women and men. Member States should also actively promote the social economy and foster social innovation.
Member States, in cooperation with regional and local authorities, should effectively and promptly tackle the serious issue of unemployment, and facilitate and invest in sustainable and quality job creation, address accessibility for at-risk groups and reduce barriers for business to hire people across skill levels and labour market sectors, including by cutting red tape, whilst respecting labour and social standards, promote youth entrepreneurship and in particular support the creation and growth of micro, small and medium enterprises in order to increase the employment rate of women and men. Member States should actively promote, inter alia, green, white and blue-sector jobs and the social economy and foster social innovation.
Amendment 19
Proposal for a decision
Annex – Guideline 5 – paragraph 2
The tax burden should be shifted away from labour to other sources of taxation that are less detrimental to employment and growth while protecting revenue for adequate social protection and growth enhancing expenditures. Reductions in labour taxation should be aimed at the relevant components of the tax burden and at removing barriers and disincentives to labour market participation, in particular for those furthest away from the labour market.
The tax burden should be shifted away from labour to other sources of taxation that are less detrimental to employment and growth while protecting revenue for adequate social protection and expenditures directed towards public investment, innovation and job creation. Reductions in labour taxation should be aimed at the relevant components of the tax burden, at tackling discrimination and at removing barriers and disincentives to labour market participation, in particular for people with disabilities and those furthest away from the labour market, while respecting existing labour standards.
Amendment 20
Proposal for a decision
Annex – Guideline 5 – paragraph 3
Member States should, together with the social partners, encourage wage-setting mechanisms allowing for a responsiveness of wages to productivity developments. In this respect, differences in skills and local labour market conditions as well as divergences in economic performance across regions, sectors and companies should be taken into account. When setting minimum wages, Member States and social partners should consider their impact on in-work poverty, job creation and competitiveness.
Policies to ensure that wages allow an adequate living income remain important to create employment and decrease poverty in the Union. Member States should therefore, together with the social partners, respect and encourage wage-setting mechanisms allowing for a responsiveness of real wages to productivity developments helping to correct past divergence without fuelling deflationary pressure. Those mechanisms should ensure sufficient resources to satisfy basic needs, taking account poverty indicators specific to each Member State. In this respect, differences in skills and local labour market conditions should be properly evaluated with the aim of ensuring a decent living wage across the Union. When setting minimum wages in accordance with national legislation and practices, Member States and social partners should ensure their adequacy as well as consider their impact on in-work poverty, household income, aggregate demand, job creation and competitiveness.
Amendment 21
Proposal for a decision
Annex – Guideline 5 – paragraph 3 a (new)
Member States should cut red tape in order to ease the burden on small and medium-sized enterprises, as they contribute significantly to job creation.
Amendment 22
Proposal for a decision
Annex – Guideline 6 – paragraph 1
Member States should promote productivity and employability through an appropriate supply of relevant knowledge and skills. Member States should make the necessary investments in education and vocational training systems while improving their effectiveness and efficiency to raise the skill level of the workforce, allowing it to better anticipate and meet the rapidly changing needs of dynamic labour markets in an increasingly digital economy. Member States should step up efforts to improve access to quality adult learning for all and implement active ageing strategies to enable longer working lives.
Member States should promote sustainable productivity and quality employability through an appropriate supply of relevant knowledge and skills made available and accessible to all. There should be particular focus on health care, social services and transport services which are facing or will face staff shortages in the medium term. Member States should make effective investments in high-quality and inclusive education from an early age and vocational training systems while improving their effectiveness and efficiency to raise the knowhow and skill level of the workforce, while increasing the diversity of skills, allowing it to better anticipate and meet the rapidly changing needs of dynamic labour markets in an increasingly digital economy. To that end, the fact that "soft skills" such as communication are becoming more important for a large number of occupations should be taken into account.
Amendment 23
Proposal for a decision
Annex – Guideline 6 – paragraph 1 a (new)
Member States should promote entrepreneurship among young people inter alia by introducing optional entrepreneurship courses and encouraging the creation of student enterprises in high schools and colleges. Member States, in cooperation with local and regional authorities, should step up efforts to prevent young people from dropping out of school and to ensure a smoother transition from education and training to professional life, to improve access and remove barriers to high-quality adult learning for all with particular focus on high-risk groups and their needs, by offering retraining of skills when job losses and changes in the labour market necessitate active reintegration. Simultaneously Member States should implement active ageing strategies to enable healthy working up to the real retirement age.
Amendment 24
Proposal for a decision
Annex – Guideline 6 – paragraph 1 b (new)
While ensuring the necessary skills level requested by a continuously changing labour market and supporting education and training alongside programmes for adult learning, Member States should take into account that low-skills jobs are also needed and that employment opportunities are better for the high-skilled than for the medium- and low-skilled. 
Amendment 25
Proposal for a decision
Annex – Guideline 6 – paragraph 1 c (new)
Access to affordable, high-quality, early childhood education and care should be a priority for comprehensive policies and investment coupled with family and parenting support and reconciliation measures helping parents to balance work and family life, as a contribution to preventing early school-leaving and increasing young people's chances on the labour market.
Amendment 26
Proposal for a decision
Annex – Guideline 6 – paragraph 2
High unemployment should be tackled and long-term unemployment prevented. The number of long-term unemployed should be significantly reduced by means of comprehensive and mutually reinforcing strategies, including the provision of specific active support to long-term unemployed to return to the labour market. The youth unemployment needs to be comprehensively addressed, including by equipping the relevant institutions with the necessary means to fully and consistently implement their national Youth Guarantee Implementation Plans.
The issue of unemployment, in particular long-term unemployment and regional high unemployment should be resolved effectively and promptly, as well as prevented through a mix of demand and supply-side measures. The number of long-term unemployed and the problem of skills mismatch and skill obsolescence should be addressed by means of comprehensive and mutually reinforcing strategies, including the provision of personalised needs-based active support and appropriate social protection schemes to long-term unemployed to return to the labour market in an informed and responsible manner. The youth unemployment needs to be comprehensively addressed, through an overall youth employment strategy. This includes investing in sectors that can create quality jobs for young people and by equipping the relevant actors such as youth support services, education and training providers, youth organisations and public employment services with the necessary means to fully and consistently implement their national Youth Guarantee Implementation Plans, but also by the rapid take-up of resources by Member States. Access to funding for those who choose to start a business should be facilitated by means of a wider availability of information, a reduction in excessive bureaucracy and possibilities to convert several months' unemployment benefits into an upfront start-up grant after presentation of a business plan and in compliance with national legislation.
Amendment 27
Proposal for a decision
Annex – Guideline 6 – paragraph 2 a (new)
Member States should take into consideration local and regional disparities in drawing up and carrying out measures against unemployment and should work together with local employment services.
Amendment 28
Proposal for a decision
Annex – Guideline 6 – paragraph 3
Structural weaknesses in education and training systems should be addressed to ensure quality learning outcomes and prevent and tackle early school leaving. Member States should increase educational attainment and consider dual learning systems and upgrading professional training while at the same time increase opportunities for recognising skills acquired outside the formal education system.
Structural weaknesses in education and training systems should be addressed to ensure high-quality learning outcomes and prevent and tackle early school leaving, and promote an all-embracing, high-quality education from the most basic level onwards. This requires flexible educational systems with a focus on practice. Member States, in cooperation with local and regional authorities, should increase the quality of educational attainment by making it accessible to all, set up and improve dual learning systems, adapted to their needs, by upgrading professional training and existing frameworks such as europass, while ensuring, where necessary, appropriate retraining of skills and recognition of those acquired outside of the formal education system. Links between education and labour market should be strengthened, while ensuring that education is sufficiently broad to provide people with a solid basis for life-long employability.
Amendment 29
Proposal for a decision
Annex – Guideline 6 – paragraph 3 a (new)
Member States should gear their training systems more closely to the labour market with a view to better transition from training to employment. In particular in the context of digitisation, and in terms of new technologies, green jobs and health care are essential.
Amendment 30
Proposal for a decision
Annex – Guideline 6 – paragraph 4
Barriers to labour market participation should be reduced, especially for women, older workers, young people, the disabled and legal migrants. Gender equality including equal pay must be ensured in the labour market as well as access to affordable quality early childhood education and care.
Discrimination on the labour market as well as with regard to access to the labour market need to be further reduced, especially for groups that face discrimination or exclusion, such as women, older workers, young people, people with disabilities and legal migrants. Gender equality including equal pay must be ensured in the labour market as well as access to affordable, high-quality early childhood education and care as well as the flexibility necessary to prevent the exclusion of those with breaks in their careers due to family responsibilities such as family carers. In this sense, the Women on Board Directive should be unblocked by the Member States.
Amendment 31
Proposal for a decision
Annex – Guideline 6 – paragraph 4 a (new)
In this respect, Member States should take into account the fact that the rates of young persons not in employment, education or training (NEET) are higher for women than for men and that the NEET phenomenon is primarily due to an increase in youth unemployment but also to non-education linked inactivity. 
Amendment 32
Proposal for a decision
Annex – Guideline 6 – paragraph 5
Member States should make a full use of European Social Fund and other Union funds support in order to improve employment, social inclusion, education and public administration.
Member States should make a full, effective and efficient use of European Social Fund and other Union funds support in order to combat poverty, improve quality employment, social inclusion, education, public administration and public services. The European Fund for Strategic Investments and its investment platforms should also be mobilised to ensure that quality jobs are created and workers are equipped with skills needed for the Union's transition towards a sustainable growth model.
Amendment 33
Proposal for a decision
Annex – Guideline 7 – paragraph 1
Member States should reduce labour market segmentation. Employment protection rules and institutions should provide a suitable environment for recruitment while offering adequate levels of protection to those in employment and those seeking employment or employed on temporary contracts or independent work contracts. Quality employment should be ensured in terms of socio-economic security, education and training opportunities, working conditions (including health and safety) and work-life balance.
Member States should reduce labour market segmentation by tackling precarious employment, underemployment, undeclared labour and zero-hour contracts. Employment protection rules and institutions should provide a suitable environment for recruitment while offering adequate levels of protection to those in employment and those seeking employment or employed on temporary, part-time, atypical contracts or independent work contracts, by actively involving the social partners and by promoting collective bargaining. Quality employment should be ensured for all in terms of socio-economic security, durability, adequate wages, rights at work, decent workplace conditions (including health and safety), social security protection, gender equality, education and training opportunities. Therefore it is necessary to promote the entry of young people into the labour market, the reintegration of long-term unemployed and work-life balance, providing affordable care and modernising work organisation. Upward convergence in working conditions should be promoted across the Union.
Amendment 34
Proposal for a decision
Annex – Guideline 7 – paragraph 1 a (new)
Access to the labour market should facilitate entrepreneurship, sustainable job creation in all sectors, including green employment, and social care and innovation, in order to make the best use of people's skills, foster their lifelong development and encourage employee-driven innovation.
Amendment 35
Proposal for a decision
Annex – Guideline 7 – paragraph 2
Member States should closely involve National Parliaments and social partners in the design and implementation of relevant reforms and policies, in line with national practices, while supporting the improvement of the functioning and effectiveness of social dialogue at national level.
Member States should closely involve national parliaments, social partners, civil society organisations, regional and local authorities in the design and implementation of relevant reforms and policies, in line with the partnership principle and national practices, while supporting the improvement of the functioning and effectiveness of social dialogue at national level, especially in those countries with major problems of wage devaluation caused by recent deregulation of labour markets and weakness of collective bargaining.
Amendment 36
Proposal for a decision
Annex – Guideline 7 – paragraph 3
Member States should strengthen active labour market policies by increasing their targeting, outreach, coverage and interplay with passive measures. These policies should aim at improving labour market matching and support sustainable transitions on the labour market, with public employment services delivering individualised support and implementing performance measurement systems. Member States should also ensure that their social protection systems effectively activate and enable those who can participate in the labour market, protect those (temporarily) excluded from the labour markets and/or unable to participate in it, and prepare individuals for potential risks, by investing in human capital. Member States should promote inclusive labour markets open to all and also put in place effective anti-discrimination measures.
Member States should ensure basic standards of quality of active labour market policies by improving their targeting, outreach, coverage and interplay with supporting measures such as social security. These policies should aim at improving labour market access, strengthening collective bargaining and social dialogue and support sustainable transitions on the labour market, with highly qualified public employment services delivering individualised support and implementing performance measurement systems. Member States should also ensure that their social protection systems effectively activate and enable those who can participate in the labour market, protect those (temporarily) excluded from the labour markets and/or unable to participate in it, and prepare individuals for potential risks and changing economic and social conditions, by investing in human capital. Member States should introduce, as one of the possible measures to reduce poverty and in accordance with national practice, a minimum income proportionate to their specific socio-economic situation. Member States should promote inclusive labour markets open to all and also put in place effective anti-discrimination measures.
Amendment 37
Proposal for a decision
Annex – Guideline 7 – paragraph 4
Mobility of workers should be ensured with an aim of exploiting the full potential of the European labour market, including by enhancing the portability of pensions and the recognition of qualifications. Member States should at the same time guard against abuses of the existing rules.
Mobility of workers should be ensured as a fundamental right and as a matter of free choice, with an aim of exploiting the full potential of the European labour market, including by enhancing the portability of pensions and the effective recognition of qualifications and skills and the elimination of red tape and other existing barriers. Member States should at the same time tackle the language barriers, improving training systems in this matter. Member States should also make an appropriate use of the EURES network in order to encourage worker mobility. Investment in regions experiencing labour outflows should be promoted to mitigate brain drain and encourage mobile workers to return.
Amendment 38
Proposal for a decision
Annex – Guideline 7 a (new) – title
Improving the quality and performance of education and training systems at all levels
Amendment 39
Proposal for a decision
Annex – Guideline 7 a (new)
Member States should make access to care and to affordable quality early childhood education a priority as both are important support measures for labour market actors and contribute to increasing the overall employment rate while supporting the individuals in their responsibilities. Member States should set up the comprehensive policies and investment needed to improve family and parenting support and reconciliation measures helping parents to balance work and family life, as a contribution to preventing early school leaving and increasing young people's chances on the labour market.
Amendment 40
Proposal for a decision
Annex – Guideline 8 – title
Ensuring fairness, combatting poverty and promoting equal opportunities
Ensuring social justice, combatting poverty and promoting equal opportunities
Amendment 41
Proposal for a decision
Annex – Guideline 8 – paragraph 1
Member States should modernise their social protection systems to provide effective, efficient, and adequate protection throughout all stages of an individual’s life, ensuring fairness and addressing inequalities. There is a need for simplified and better targeted social policies complemented by affordable quality childcare and education, training and job assistance, housing support and accessible health care, access to basic services such as bank account and Internet and for action to prevent early school leaving and fight social exclusion.
Member States, in cooperation with local and regional authorities, should improve their social protection systems by ensuring basic standards to provide effective, efficient and sustainable protection throughout all stages of an individual’s life, ensuring life in dignity, solidarity, access to social protection, full respect of social rights, fairness and addressing inequalities as well as ensuring inclusion in order to eliminate poverty, in particular for people excluded from the labour market and for the more vulnerable groups. There is a need for simplified, better targeted and more ambitious social policies including by affordable, high-quality childcare and education, effective training and job assistance, housing support and high-quality health care accessible to all, access to basic services such as bank accounts and the Internet and for action to prevent early school leaving and fight extreme poverty, social exclusion, and more generally all forms of poverty. Child poverty in particular must be decisively tackled.
Amendment 42
Proposal for a decision
Annex – Guideline 8 – paragraph 2
For that purpose a variety of instruments should be used in a complementary manner, including labour activation enabling services and income support, targeted at individual needs. Social protection systems should be designed in a way that facilitate take up of all persons entitled, support investment in human capital, and help prevent, reduce and protect against poverty.
For that purpose a variety of instruments should be used in a complementary manner, including labour activation enabling services and income support, targeted at individual needs. In this respect, it is up to each Member State to set levels of minimum income in accordance with national practice and proportionate to the specific socio-economic situation in the Member State in question. Social protection systems should be designed in a way that facilitate access and take up of all persons in a non-discriminatory way, support investment in human capital, and help prevent, reduce and protect against poverty and social exclusion as well as against other risks such as loss of health or employment. There should be a particular focus on children in poverty due to their parents' long-term unemployment.
Amendment 43
Proposal for a decision
Annex – Guideline 8 – paragraph 3
The pension systems should be reformed in order to secure their sustainability and adequacy for women and men in a context of increasing longevity and demographic change, including by linking statutory retirement ages to life expectancy, by increasing effective retirement ages, and by developing complementary retirement savings.
The pension systems should be structured in a way that their sustainability, safety and adequacy for women and men is ensured by strengthening retirement schemes, aiming at a decent retirement income at least above the poverty level. The pension systems should provide for consolidation, further development and improvement of the three pillars of retirement saving systems. Linking retirement age to life expectancy is not the only instrument by means of which to tackle the challenge of aging. Reforms of pension systems should also, inter alia, reflect labour market trends, birth rate, demographic situation, health and wealth situation, working conditions and the economic dependency ratio. The best way to tackle the challenge of ageing is to increase the overall employment rate, building, inter alia, on social investments in active ageing.
Amendment 44
Proposal for a decision
Annex – Guideline 8 – paragraph 4
Member States should improve the accessibility, efficiency and effectiveness of healthcare and long term care systems, while safeguarding fiscal sustainability.
Member States should improve the quality, affordability, accessibility, efficiency and effectiveness of healthcare and long term care systems and welfare services as well as decent working conditions in the related sectors, while safeguarding the financial sustainability of these systems by improving the solidarity-based financing.
Amendment 45
Proposal for a decision
Annex – Guideline 8 – paragraph 4 a (new)
Member States should make a full use of European Social Fund and other Union funds support in order to fight poverty, social exclusion and discrimination, improve accessibility for people with disabilities to promote equality between women and men and improve public administration.
Amendment 46
Proposal for a decision
Annex – Guideline 8 – paragraph 4 b (new)
The Europe 2020 headline targets, on the basis of which Member States set their national targets, taking into account their relative starting positions and national circumstances, aims to raise the employment rate for women and men aged 20 to 64 to 75% by 2020; to reduce the drop-out rate to less than 10 %; to increase the share of 30 to 34-year-olds completing tertiary or equivalent education to at least 40 %; and to promote social inclusion, in particular through the reduction of poverty by aiming to lift at least 20 million people out of the risk of poverty and exclusion1a.
__________________
1a Population is defined as the number of people who are at risk of poverty and exclusion according to three indicators (at risk of poverty; material deprivation; jobless household), leaving Member States free to set their national targets on the basis of the most appropriate indicators, taking into account their national circumstances and priorities.

Mobilisation of the European Globalisation Adjustment Fund: application EGF/2015/001 FI/Broadcom
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Resolution
Annex
European Parliament resolution of 8 July 2015 on the proposal for a decision of the European Parliament and of the Council on the mobilisation of the European Globalisation Adjustment Fund, in accordance with point 13 of the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management (application EGF/2015/001 FI/Broadcom, from Finland) (COM(2015)0232 – C8-0135/2015 – 2015/2125(BUD))
P8_TA(2015)0262A8-0210/2015

The European Parliament,

–  having regard to the Commission proposal to the European Parliament and the Council (COM(2015)0232 – C8‑0135/2015),

–  having regard to Regulation (EU) No 1309/2013 of the European Parliament and of the Council of 17 December 2013 on the European Globalisation Adjustment Fund (2014-2020) and repealing Regulation (EC) No 1927/2006(1) (EGF Regulation),

–  having regard to Council Regulation (EU, Euratom) No 1311/2013 of 2 December 2013 laying down the multiannual financial framework for the years 2014-2020(2), and in particular Article 12 thereof,

–  having regard to the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management(3) (IIA of 2 December 2013), and in particular point 13 thereof,

–  having regard to the trilogue procedure provided for in point 13 of the IIA of 2 December 2013,

–  having regard to the letter of the Committee on Employment and Social Affairs,

–  having regard to the letter of the Committee on Regional Development,

–  having regard to the report of the Committee on Budgets (A8-0210/2015),

A.  whereas the Union has set up legislative and budgetary instruments to provide additional support to workers who are suffering from the consequences of major structural changes in world trade patterns or of the global financial and economic crisis and to assist their reintegration into the labour market;

B.  whereas the Union’s financial assistance to workers made redundant should be dynamic and made available as quickly and efficiently as possible, in accordance with the Joint Declaration of the European Parliament, the Council and the Commission adopted during the conciliation meeting on 17 July 2008, and having due regard to the IIA of 2 December 2013 in respect of the adoption of decisions to mobilise the European Globalisation Adjustment Fund (EGF);

C.  whereas the adoption of the EGF Regulation reflects the agreement reached between the Parliament and the Council to reintroduce the crisis mobilisation criterion, to increase the Union financial contribution to 60 % of the total estimated cost of proposed measures, to increase efficiency for the treatment of EGF applications in the Commission and by the Parliament and the Council by shortening the time for assessment and approval, to widen eligible actions and beneficiaries by introducing self-employed persons and young people and to finance incentives for setting up own businesses;

D.  whereas Finland submitted application EGF/2015/001 FI/Broadcom for a financial contribution from the EGF following 568 redundancies in Broadcom Communications Finland, operating in the NACE Rev. 2 division 46 ('Wholesale trade, except of vehicles and motorcycles')(4), and 2 suppliers or downstream producers;

E.  whereas the application fulfils the eligibility criteria set up by the EGF Regulation;

1.  Agrees with the Commission that the conditions set out in Article 4(1)(a) of the EGF Regulation are met and that, therefore, Finland is entitled to a financial contribution of EUR 1 365 000 under that Regulation;

2.  Notes that the Finnish authorities submitted the application for an EGF financial contribution on 30 January 2015, and that its assessment was made available by the Commission on 2 June 2015; welcomes the speedy evaluation of less than five months;

3.  Recalls that, during the 2000s, personnel numbers in Finnish subsidiaries on all continents increased, until Asia emerged as the greatest employer in the electronics and electrical industry in 2004 and personnel numbers in Europe started declining; considers that the redundancies in Broadcom are partly linked to the trend that affects the entire Finnish electronics industry and that culminated in Nokia's announcement of large-scale redundancies in 2011; concludes however that those events are substantially linked to major structural changes in world trade patterns due to globalisation;

4.  Notes that these redundancies will further aggravate the unemployment situation particularly in the region of Northern Ostrobothnia (part of the NUTS(5) level 2 region FI1A), where 424 of the 568 redundancies occurred; notes that in that region the unemployment rate is consistently a couple of percentage points higher than the national average; notes that in August 2014, while the national unemployment rate was 12,2 %, in Northern Ostrobothnia it was 14,1 % and in the most affected city, Oulu, it was 16,1 % and that the same region was strongly affected by the large-scale Nokia redundancies from 2011 onwards;

5.  Considers that the enterprise surveys and visits are actions which may benefit not only dismissed workers covered by this application, but may also contribute to building knowledge about employment issues within this sector for future redundancies; notes that these specific actions are already a continuation of a similar measure carried out during an earlier EGF case in Finland (EGF/2013/001 FI/Nokia);

6.  Notes that, to-date, the 'Wholesale trade, except of vehicles and motorcycles' sector has been the subject of one other EGF application (EGF/2010/012 NL/Noord Holland ICT) which was also based on the globalisation criterion;

7.  Notes with satisfaction that, in order to provide workers with speedy assistance, the Finnish authorities decided to initiate the implementation of the personalised services to the affected workers on 11 August 2014, well ahead of the decision and even the application on the granting the EGF support for the proposed coordinated package;

8.  Notes that Finland is planning three types of measures for the redundant workers covered by this application: (i) helping them to transfer to a new job, (ii) helping them to start their own business, and (iii) providing training or education;

9.  Notes that the authorities plan to use 17,46 % of all costs on allowances and incentives in the form of pay subsidies (as part of the salary for each employment relationship established for a targeted worker) and allowances for travel, overnight and removal costs, which amounts to half of the maximum allowed 35 % of all costs for such measures;

10.  Welcomes the procedures that the Finnish authorities have followed to consult the targeted beneficiaries or their representatives or the social partners as well as local and regional authorities;

11.  Recalls the importance of improving the employability of all workers by means of adapted training and the recognition of skills and competences gained throughout a worker's professional career; expects the training on offer in the coordinated package to be adapted not only to the needs of the dismissed workers but also to the actual business environment;

12.  Recalls that, in line with Article 7 of the EGF Regulation, the design of the coordinated package of personalised services should anticipate future labour market perspectives and required skills and should be compatible with the shift towards a resource-efficient and sustainable economy;

13.  Welcomes the complementarity of the proposed EGF interventions with other actions funded by national or Union funds;

14.  Notes that the information provided on the coordinated package of personalised services to be funded from the EGF includes information on complementarity with actions funded by the Structural Funds; stresses that the Finnish authorities confirm that the eligible actions do not receive assistance from other Union financial instruments; reiterates its call to the Commission to present a comparative evaluation of those data in its annual reports in order to ensure full respect of the existing regulations and that no duplication of Union-funded services can occur;

15.  Appreciates the improved procedure put in place by the Commission following the Parliament's request for the accelerated release of grants; notes the time pressure that the new timetable implies and the potential impact on the effectiveness of case instruction;

16.  Approves the decision annexed to this resolution;

17.  Instructs its President to sign the decision with the President of the Council and arrange for its publication in the Official Journal of the European Union;

18.  Instructs its President to forward this resolution, including its annex, to the Council and the Commission.

ANNEX

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on the mobilisation of the European Globalisation Adjustment Fund (application from Finland - EGF/2015/001 FI/Broadcom)

(The text of this annex is not reproduced here since it corresponds to the final act, Decision (EU) 2015/1477.)

(1) OJ L 347, 20.12.2013, p. 855.
(2) OJ L 347, 20.12.2013, p. 884.
(3) OJ C 373, 20.12.2013, p. 1.
(4) Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No 3037/90 as well as certain EC regulations on specific statistical domains (OJ L 393, 30.12.2006, p. 1).
(5) Commission Regulation (EU) No 1046/2012 of 8 November 2012 implementing Regulation (EC) No 1059/2003 of the European Parliament and of the Council on the establishment of a common classification of territorial units for statistics (NUTS) as regards the transmission of the time series for the new regional breakdown (OJ L 310, 9.11.2012, p. 34).


2016 Budget - Mandate for the trilogue
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Resolution
Annex
Annex
Annex
European Parliament resolution of 8 July 2015 on the mandate for the trilogue on the 2016 draft budget (2015/2074(BUD))
P8_TA(2015)0263A8-0217/2015

The European Parliament,

–  having regard to Articles 312 and 314 of the Treaty on the Functioning of the European Union,

–  having regard to Article 106a of the Treaty establishing the European Atomic Energy Community,

–  having regard to the draft general budget of the European Union for the financial year 2016, which the Commission adopted on 24 June 2015 (COM(2015)0300),

–  having regard to Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002(1),

–  having regard to Council Regulation (EU, Euratom) No 1311/2013 of 2 December 2013 laying down the multiannual financial framework for the years 2014-2020(2),

–  having regard to the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management(3),

–  having regard to its resolution of 11 March 2015 on general guidelines for the preparation of the 2016 budget, Section III – Commission(4),

–  having regard to the Council conclusions of 17 February 2015 on the 2016 budget guidelines,

–  having regard to Title II, Chapter 8 of its Rules of Procedure,

–  having regard to the letters from the Committee on Foreign Affairs, the Committee on International Trade, the Committee on Civil Liberties, Justice and Home Affairs and the Committee on Constitutional Affairs,

–  having regard to the report of the Committee on Budgets and the opinions of the other committees concerned (A8-0217/2015),

Draft Budget 2016: respecting the commitments and financing priorities

1.  Recalls that, in its above-mentioned resolution of 11 March 2015, Parliament placed the creation of decent and quality employment and the development of enterprises and entrepreneurship for smart, sustainable and inclusive growth across the Union (the ‘three Es’), together with internal and external solidarity within a secure Europe, at the centre of its priorities for the 2016 budget; reiterates Parliament's attachment to respecting legal as well as political commitments and its call on the institutions to deliver on their promises;

2.  Underlines the fact, in that context, that the Multiannual Financial Framework (MFF) 2014-2020 set ceilings for all headings but also provided for specific and maximum possible flexibility to allow the Union to fulfil its legal obligations, and for special instruments to allow the Union to react to specified unforeseen circumstances or to finance clearly identified expenditure over and above the ceilings;

3.  Welcomes the fact that the Commission’s Draft General Budget of the European Union for the financial year 2016 reinforces the above-mentioned priorities and proposes to step up EU support for investment, knowledge, jobs and growth-orientated programmes, and in particular for an emblematic mobility programme such as Erasmus+; believes that the Draft Budget for 2016 is a welcome step towards helping Member States tackle structural challenges, especially the loss of competitiveness; is satisfied that, in addition to duly expected increases throughout Heading 3 (Security and Citizenship) and Heading 4 (Global Europe), the Commission is taking up the challenge of responding to new developments such as the crises in Ukraine, Syria and the Mediterranean by responding to the EU's and Member States' needs in the area of security and migration and by demonstrating strong political will in the field of external action and budgetary commitment towards countries of origin and transit;

4.  Welcomes the inclusion of the European Fund for Strategic Investment (EFSI) in the Draft Budget for 2016 and, in particular, the mobilisation of the Global Margin for Commitments to cover part of the expenditure needed to finance the EUR 8 billion EFSI Guarantee Fund, instead of relying only on the cuts to Horizon 2020 and the Connecting Europe Facility (CEF); stresses that Parliament aimed at minimising to the maximum extent the impact on these two programmes and that the deal struck by the co-legislators further reduced those cuts by EUR 1 billion overall, sparing inter alia fundamental research; expects the final EFSI agreement to be reflected as soon as possible in the 2016 budget on the basis of an amending letter;

5.  Recalls, however, that the decision on the annual appropriations to be authorised for the constitution of the EFSI guarantee fund will only be taken by the budgetary authority, in the course of the annual budgetary procedure; commits, in this framework, to further offsetting the cuts affecting Horizon 2020 and the CEF, which still remain significant, in order to allow those programmes to fully accomplish the objectives agreed only two years ago as a result of the negotiations on their respective legal bases; intends also to closely examine whether those cuts should be concentrated in the years 2016-2018, as proposed by the Commission, or further spread over the years 2019-2020, as a means of minimising the impact on those programmes;

6.  Regrets the fact that the programme for the competitiveness of enterprises and small and medium-sized enterprises (COSME) is undergoing a nominal cut in commitment appropriations from 2015 to 2016; highlights the very negative signal such a decrease would give at a time when SMEs' potential as innovators and job creators is badly needed in order to stimulate EU recovery, reduce investment gaps and contribute to the Union’s future prosperity; recalls that promoting entrepreneurship, improving the competitiveness and access to markets of Union enterprises, including social enterprises, and improving access to finance for SMEs that contribute significantly to Europe’s economy and competitiveness, are priorities clearly shared by all the institutions, which have been the justification for frontloading and reinforcing COSME appropriations over the past two years, taking into account the programme's high rate of implementation; intends, therefore, to ensure that this programme evolves positively in 2016;

7.  Reiterates its concerns about the funding of the Youth Employment Initiative (YEI) as a key tool for the fight against youth unemployment in the Union, which is a top priority for all European decision-makers; notes the frontloading of the YEI top-up allocation in 2014 and 2015; regrets that no new commitments are proposed in 2016; recalls that the MFF has provided for a global margin for commitments to be made available over and above the ceilings as of 2016 for policy objectives related to growth and employment, in particular youth employment; recalls that, consequently, the Regulation on the European Social Fund has provided that the resources for the YEI may be revised upwards for the years 2016 to 2020 in the framework of the budgetary procedure; calls, therefore, for the Youth Employment Initiative to be continued by making use of any flexibility provision contained in the MFF, and intends to ensure that the budget 2016 foresees the necessary amounts;

8.  Notes that, thanks to a timely agreement on the reprogramming of commitments under shared management within the MFF 2014-2020 by reason of the late adoption of the relevant rules and programmes, the Commission has included in its Draft Budget 2016 (Headings 2 and 3) EUR 4,5 billion in commitment appropriations which could not be used in 2014; recalls that amending budget No 1/2015 has already allowed for a transfer of EUR 16,5 billion from 2014 to 2015 under Headings 1b, 2 and 3; stresses that these are, however, pure transfers from already agreed 2014 appropriations and should therefore, for comparison purposes, be deducted from any assessment of the evolution of the 2016 budget vis-à-vis the 2015 budget; points out, therefore, that the programmes concerned are in fact benefiting from enhanced commitment appropriations in the Draft Budget 2016;

9.  Is concerned at the slower-than-planned take-off of new programmes under the 2014-2020 MFF period owing to the late approval of the legal bases and of the operational programmes, as well as to the shortages of payment appropriations in 2014; undertakes to examine whether the requested commitment and payment appropriations will in fact enable those new programmes to reach cruising speed; urges the Commission and the Member States to take all necessary measures in order to make good the delays in their implementation;

10.  Notes that the EU Draft Budget for 2016 amounts to EUR 153,5 billion in commitment appropriations (including EUR 4,5 billion reprogrammed from 2014) and EUR 143,5 billion in payment appropriations; points out that, disregarding the effect of the reprogramming in 2015 and 2016, this corresponds to an increase of +2,4 % in commitments and +1,6 % in payments as compared to the 2015 budget; stresses that these overall moderate increases, following the path set by the MFF and accounting for inflation, represent almost no increase in real terms, which emphasises the importance of the efficiency and effectiveness of the spending;

11.  Underlines that the Commission is leaving margins of EUR 2,2 billion in commitment appropriations (of which EUR 1,2 billion are in Heading 2) and EUR 1,6 billion in payment appropriations under the MFF ceilings; recalls that available margins in commitments and payments as well as unexecuted payments feed into the global margins to be used in subsequent years when the need arises; notes that the Global Margin for Commitments is being made available for the first time, and that part of it will be used for EFSI; welcomes in principle the proposed use of the Flexibility Instrument for clearly identified expenditure, as part of new EU initiatives in the areas of asylum and migration which cannot be financed within the limits of Heading 3; intends to make use of part of the remaining margins and of the relevant flexibility provisions provided by the MFF to reinforce crucial priorities;

Payments: restoring trust

12.  Recalls that payment shortages, largely due to insufficient payment ceilings and under-budgeting, reached unprecedented heights in 2014 and remain acute in 2015; fears that this will continue to jeopardise the proper implementation of the new 2014-2020 MFF programmes, and to penalise the beneficiaries, especially local, regional and national authorities, who are facing economic and social constraints; while supporting active management of payments by the Commission, is concerned at the postponement of calls for proposals, at the reduction of pre-financing and at late payments, which might prove detrimental to the attainment of the objectives of economic, social and territorial cohesion; reiterates its concern over the ad hoc cuts in payments introduced by the Council in its reading of the annual budgets, including in programmes for competitiveness for growth and jobs under heading 1a; calls on the Commission to prepare a report regarding the impact on beneficiaries to whom the Union payments in 2013-2015 have been delayed, as well as the impact on the implementation of programmes, by 31 March 2016 at the latest;

13.  Welcomes the fact that the EU Draft Budget reflects the joint statement on a payment plan 2015-2016 agreed between Parliament, the Council and the Commission following the shared diagnosis and commitment entered into by the three institutions to reduce this backlog; recalls that according to Article 310 TFEU, the revenue and expenditure shown in the EU budget shall be in balance; notes that according to the Commission's estimates, the payment appropriations requested in the Draft Budget would bring the backlog of unpaid bills down to a sustainable level of approximately EUR 2 billion; undertakes, consequently, to fully support the Commission proposal, and expects the Council to respect its commitments in this regard;

14.  Underlines that Parliament, the Council and the Commission have committed to avoiding the future build-up of an unsustainable backlog of outstanding payment claims at year's end, while fully respecting and implementing the agreements reached as part of the multiannual financial framework and of the annual budgetary procedures; reiterates the need, in this regard, to closely and actively monitor the development of this backlog; reiterates its concern that the specificities of the payment cycles put additional pressure on the level of payment appropriations, especially at the end of the MFF; reminds the Commission of its commitment, in the joint statement on a payment plan, to develop its medium- and long-term forecasting tools and to set up an early warning system, with the aim of presenting these first payment forecasts in July, so that the budgetary authority can take duly informed decisions in the future;

15.  Welcomes the fact that the balance within the overall payment appropriations is finally shifting significantly from the completion of the past 2007-2013 programmes to the execution of the new 2014-2020 programmes; underlines, however, that the level of payments in the Draft Budget 2016, notably for Heading 1b, is low compared to the level of commitments, which entails the risk of a similar backlog of outstanding payments at the end of the current MFF; questions, therefore, to what extent this is in line with the long-term perspective of the payment plan;

Subheading 1a – Competitiveness for growth and jobs

16.  Notes that in comparison with 2015, the Commission proposal for 2016 corresponds to an increase in commitments under subheading 1a of +6,1 % to EUR 18,6 billion; points out that the increase in commitments is largely due to the integration of EFSI, to increases for Erasmus+ and the Connecting Europe Facility (CEF), and, to a lesser extent, to increases for Customs, Fiscalis and Anti-Fraud as well as Employment and Social Innovation; will pay particular attention to reducing inequalities between apprenticeships and higher education in Europe, notably through ensuring equal access to mobility;

17.  Regrets, however, the reductions in appropriations for large infrastructure projects, Horizon 2020 and COSME, as well as the slower progression of CEF Transport owing to the redeployment to EFSI; recalls that the Commission’s initial proposal on EFSI would have resulted in a cut of EUR 170 million for Horizon 2020 in 2016 as compared to 2015, thus giving a contradictory signal on a programme widely recognised as a flagship priority under the current MFF; deplores the knock-on effects on research funding, including in the areas of Energy, SMEs, Climate and Environment, Social Sciences and Science in Society; commits to seeking to further compensate for the proposed decreases in these programmes by means of reinforcements during the budgetary procedure through the use of the EUR 200 million margin still available below the ceiling for heading 1a; stresses that funding for investment, research, development and innovation should be focused on areas in which the greatest added value can be achieved, such as improving energy efficiency, ICT, grants for basic research, and low-carbon and renewable energy technologies;

18.  Reiterates its support for the ITER programme and is committed to ensuring the appropriate financing; is concerned, however, that the presentation of a revised schedule and financial planning for ITER foreseen for November 2015 will not allow the budgetary authority to take the new information into account in the annual budget procedure for 2016; urges, moreover, ITER and its Joint Undertaking for the European Union – Fusion for Energy to submit without any delay the requested reports concerning their 2013 discharge, and to follow up on the relevant recommendations of Parliament;

19.  Underlines that past under-budgeting of payment appropriations has widened the gap between commitments and payments in several programmes under Heading 1a, thereby contributing to the sharp increase in the RALs as compared to the other headings; is concerned that the Commission has had to lower the amount of pre-financing and, more worryingly, to postpone new calls for proposals and delay the signing of contracts; notes for instance that under Horizon 2020 the Commission estimates that ‘in a normal implementation scenario without limits on payment appropriations, by the end of 2014, around 1 billion more would have been spent’; while welcoming the Commission’s efforts to keep the payments situation under control, reiterates that it will under no circumstances tolerate a slowing-down of the 2014-2020 programmes being seen as a way to deal with the payment shortages;

20.  Welcomes, therefore, the increase in payment appropriations by +11,4 % up to EUR 17,5 billion as compared to 2015, and the increase in the payments/commitments ratio for 2016; notes, in particular, that for several programmes (Copernicus, Erasmus+, Horizon 2020, CEF Transport, nuclear safety and decommissioning) payment appropriations exceed the level of commitment appropriations;

Subheading 1b – Economic, social and territorial cohesion

21.  Takes note of the proposed EUR 50,8 billion in commitments (+3,2 % compared to 2015, with the impact of the reprogramming neutralised) and EUR 49,1 billion in payments (-4 %) for subheading 1b, leaving a small margin of EUR 15,3 million under the ceiling for commitments; recalls that cohesion policy represents the EU’s main investment policy aimed at reducing disparities between European regions by strengthening economic, social and territorial cohesion; underlines that instruments such as the ESF, the ERDF, the Cohesion Fund or the Youth Employment Initiative are instrumental in fostering convergence, narrowing the development gap and supporting the creation of quality and sustainable jobs; underlines the key role of EU cohesion policy in achieving the objectives of the Europe 2020 strategy;

22.  Highlights the fact that 44 % of the proposed 2016 payment appropriations cover outstanding payment claims for previous programming periods, leaving only EUR 26,8 billion in payments for the start-up of the new 2014-2020 cohesion programmes; considers the proposed payment appropriations, therefore, to be the bare minimum needed in this subheading;

23.  Recalls that an amount of EUR 21,6 billion is needed in the 2016 budget to bring down the level of outstanding payment claims for the 2007-2013 cohesion programmes from EUR 24,7 billion at the end of 2014 and EUR 20 billion at the end of 2015 to around EUR 2 billion by the end of 2016, as described in the Commission's assessment annexed to the joint statement on a payment plan 2015-2016; urges avoiding a similar ‘abnormal' build-up of unpaid bills in the future, in order not to jeopardise the EU’s credibility;

24.  Stresses, in addition to its call for a continuation of the Youth Employment Initiative, that an efficient and effective acceleration of its implementation in the Member States is crucial; encourages the Member States and the Commission to take all necessary measures to put the national Youth Guarantee schemes into operation as a matter of priority, taking account where appropriate of the European Court of Auditors’ recommendations as set out in its Special Report No 3/2015; reiterates that the recently approved increase in the pre-financing rate to 30 %, strongly supported by Parliament, is dependent on the speedy submission of interim payment claims by the Member States within one year, which should materialise in 2016; insists that the increased YEI pre-financing should not negatively affect the implementation of other components of the ESF;

Heading 2 – Sustainable growth: natural resources

25.  Takes note of the proposed EUR 63,1 billion in commitments (-0,1 % compared to 2015, with the impact of the reprogramming neutralised) and EUR 55,9 billion in payments (-0,2 %) for Heading 2, leaving a margin of 1,2 billion under the ceiling for commitments and a margin of 1,1 billion under the sub-ceiling for the European Agricultural Guarantee Fund (EAGF); points out that the financial discipline mechanism is applied only in order to establish the reserve for crises in the agricultural sector; awaits the Commission’s Letter of Amendment, expected in October 2015, which should be based on updated information on the EAGF funding; emphasises that transfers between the two pillars of the CAP result in an overall increase in the amount available for rural development;

26.  Stresses that the 2016 Draft Budget shows a decrease in needs for interventions in the agricultural markets compared with the 2015 budget, mainly owing to the impact in 2015 of emergency measures related to the Russian embargo on imports of certain agricultural products from the EU; notes that, according to the Commission, no further measures are needed under the 2016 budget; highlights the objectives of increasing the competitiveness and sustainability of European agriculture, and asks for resources to be made available to meet those objectives;

27.  Underlines the fact that the reformed Common Fisheries Policy provides an ambitious legal framework with which to meet the challenges of responsible fishing, including through the collection of data, and is pleased that the European Maritime and Fisheries Fund benefited from a transfer of unused 2014 appropriations to 2015, whereas, with the impact of this reprogramming neutralised, commitment appropriations for that Fund are further progressing in 2016; notes, however, that in payments the phasing-out of the past programme is only partly offset by the uptake of the new one, resulting in lower appropriations in 2016;

28.  Welcomes the increased appropriations provided for the LIFE Programme for the Environment and Climate Change, in both commitments and payments; welcomes the first steps of the greening of the EU Budget, and points out the need to further accelerate its pace;

Heading 3 – Security and Citizenship

29.  Welcomes the fact that the Draft Budget 2016 steps up its support across all programmes in Heading 3, reaching EUR 2,5 billion in commitment appropriations (+12,6 % compared with the 2015 budget with the reprogramming neutralised) and EUR 2,3 billion in payment appropriations (+9,7 %); points out that this does not leave any margin for further reinforcements or pilot projects and preparatory actions under Heading 3; is of the opinion that, in the current geopolitical situation, notably owing to the increasing pressure of migration flows, the level of the ceilings set for what is by far the smallest heading of the MFF might be outdated and should be addressed in the context of the post-electoral MFF revision;

30.  Welcomes the Commission’s European Agenda on Migration and reiterates its backing for the enhancement of the EU’s means and the development of a culture of fair burden-sharing and solidarity in the areas of asylum, migration and the management of external borders; praises, therefore, the increases in commitment appropriations for the Internal Security Fund and the Asylum, Migration and Integration Fund, comprising the development of the Common European Asylum System (CEAS); welcomes the Commission proposal to mobilise the Flexibility Instrument with EUR 124 million in order to respond to the current migration trends in the Mediterranean; queries if the proposed funding will be sufficient; underlines the need for strict control of the destination of these funds;

31.  Stresses that, given the large number of arrivals on the Union’s southern shores and the increasing role EASO has to play in the management of asylum, the proposal to increase EASO staff by only 6 is clearly insufficient; therefore requests an appropriate EASO staffing level and budget for 2016, in order to allow that agency to effectively perform its tasks and operations;

32.  Believes that the budgetary impact and the additional tasks of the measures presented as part of the EU Agenda on Migration and the EU Agenda on Security with regard to Europol should be assessed in detail by the Commission, in order to allow the budgetary authority to properly adjust the agency's budgetary and staff needs; stresses the role of Europol in cross-border support for Member States and in information exchange; underlines the need to ensure an appropriate budget and level of staffing for the agency for 2016, in order to allow it to effectively perform its tasks and operations;

33.  Considers that the relevant agencies should not be subject to reduction or redeployment of staff, and that they must allocate their staff appropriately with the aim of meeting their increasing responsibilities;

34.  Recalls also the strong support consistently given by Parliament to adequate funding for culture and media programmes; welcomes, therefore, the increase for the Creative Europe Programme, including multimedia actions, compared with the 2015 budget, while expressing reservations regarding the administrative division between its Culture and Media strands; also supports the proposed increase for ‘Europe for Citizens’, as this programme is vital to civic participation in the democratic process in Europe; takes the view that the European Citizens’ Initiative (ECI) is a central instrument for participatory democracy in the EU, and calls for its visibility and accessibility to be improved; highlights the positive role of pan-European networks made up of local and national media such as EuranetPlus;

35.  Stresses that food and feed safety, consumer protection and health are areas of key concern to EU citizens; appreciates, therefore, the increases in commitment appropriations for the Food and Feed programme, the Health programme and the Consumer programme compared with the 2015 budget;

Heading 4 – Global Europe

36.  Welcomes the overall increased financing for Heading 4, reaching EUR 8,9 billion in commitment appropriations (+5,6 % compared with the 2015 budget), while leaving a margin of EUR 261,3 million below the ceiling; notes that this demonstrates a high level of solidarity with third countries; believes that the EU budget is instrumental in reaching out to people in need and in promoting fundamental European values; is satisfied that the economic and social difficulties encountered by the EU over the past years have not detracted from the attention paid to the rest of the world; believes, however, that further reinforcements of certain priority areas, such as the European Neighbourhood Instrument, including the assistance for the Middle East Peace Process, Palestine and to UNRWA, will most probably be required owing to the ongoing humanitarian and political crisis in the neighbourhood area and beyond;

37.  Welcomes the increase in payment appropriations requested by the Commission across all programmes under Heading 4 (+28,5 % up to EUR 9,5 billion), whereby payments exceed commitments, especially in the areas of development, humanitarian aid and EU assistance to Palestine and to UNRWA; believes that such increases are fully justified by the need to redress the effects of the dramatic payment shortages encountered in that heading in 2014 and 2015, which have led the Commission to decrease pre-financings and postpone legal commitments; recalls that EUR 1,7 million in interest for late payments had to be paid in 2015 under Heading 4; expects the gap between commitments and payments to be progressively reduced and the backlog of unpaid bills to be brought back to a normal level; stresses that such a move is indispensable for the financial sustainability of the vulnerable beneficiaries and for the EU to act as a reliable partner vis-à-vis international organisations;

38.  Believes that external financing instruments provide tools to address, in a multifaceted manner and alongside their respective objectives, the root causes of those internal security and migration challenges which are at the core of next year's budget, with particular reference to the southern and eastern borders of the Union and more generally to conflict-stricken areas; points, in particular, to the Development Cooperation Instrument and the European Neighbourhood Instrument, but also to policies undergoing more moderate increases such as humanitarian aid, the Instrument contributing to Stability and Peace, Common Foreign and Security Policy, and the European Instrument for Democracy and Human Rights; calls on the Commission to clearly identify areas which can help in coping with those topical challenges and where potential reinforcements can be efficiently absorbed; in this respect, recalls the importance of providing assistance in reducing and eventually eradicating poverty, and of the need to keep human rights, gender equality, social cohesion and the fight against inequalities at the core of the EU’s external aid activities;

39.  Underlines the noticeable increase in the amount to be provisioned in the 2016 budget to the Guarantee Fund for external actions managed by the European Investment Bank, and notes that this is due, among other factors, to the launch of macrofinancial assistance loans to Ukraine;

40.  Calls on the Commission and the EEAS to ensure that a joined-up approach is applied in strategic countries benefiting from a relatively large amount of funding from multiple EU sources, such as Ukraine and Tunisia; takes the view that a stronger political and economic impact on the part of the EU can be achieved by ensuring more coherence and coordination among the main players in the EU and on the ground, by simplifying and shortening procedures and by offering a clearer picture of the EU’s action;

Heading 5 – Administration

41.  Notes that Heading 5 expenditure is increased by 2,9 % compared with Budget 2015, to EUR 8 908,7 million, that figure accounting globally for the administrative expenditure of the institutions (+2,2 %) and for Pensions and European Schools (+5,4 %); notes that a margin of EUR 574,3 million is left under the ceiling; underlines that Heading 5’s share of the EU budget remains stable at 5,8 %; recalls, however, that this figure does not take into account technical assistance accounted for as operational expenditure;

Special instruments

42.  Reaffirms that special instruments are crucial to full respect for and implementation of the MFF, and should, by their very nature, be counted over and above the ceilings both in commitments and payments, notably for the purpose of calculating the global margin for payments; welcomes the proposed parity between commitments and payments for the Emergency Aid Reserve; notes that the amounts set aside for the Emergency Aid Reserve (EAR), the European Globalisation Adjustment Fund (EGF) and the EU Solidarity Fund (EUSF) in the 2016 Draft Budget are broadly stable or slightly increased;

Pilot projects – preparatory actions

43.  Stresses the importance of Pilot Projects (PPs) and Preparatory Actions (PAs) as tools for the formulation of political priorities and the introduction of new initiatives that might turn into standing EU activities and programmes, including initiatives aimed at reflecting and accompanying the economic, ecological and social changes within the EU; notes with concern that the Commission has not foreseen appropriations for the continuation of highly successful PP-PAs, especially in Heading 3; intends to proceed to the identification of a balanced package of PP-PAs; notes that in the current proposal the margin in some headings is quite limited, or even non-existent, and intends to explore ways to make room for possible PP-PAs;

Decentralised agencies

44.  Underlines the crucial role that decentralised agencies play in EU policymaking, and is determined to evaluate the budgetary and staffing needs of all the agencies on a case-by-case basis, in order to ensure adequate appropriations and staff for all the agencies, and particularly for those that have recently been assigned new tasks or face a higher workload for political priority-setting or other reasons; is particularly determined to provide the agencies in the area of justice and home affairs with the necessary resources to tackle the current migratory challenges; highlights once more its opposition to the redeployment pool, and expects to find a solution during the budgetary procedure to stop the additional staff cuts in decentralised agencies; reiterates, furthermore, its intention to use the Interinstitutional Working Group on decentralised agencies to find common ground between the institutions on the treatment of agencies in budgetary terms, also with a view to the conciliation on the 2016 budget;

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45.  Calls for a sustained effort to be made through the budget to provide for appropriate training and reskilling in sectors with labour shortages and in key sectors with high job-creation potential, such as the green economy, the circular economy, and the healthcare and ICT sectors; emphasises that the 2016 budget should provide adequate support for the promotion of social inclusion and for actions aimed at eradicating poverty and empowering people experiencing poverty and social exclusion; recalls that the issue of gender equality should be incorporated into EU policies and addressed in the budgetary process; urges that financial support be provided for all programmes supporting job creation and social inclusion for those with multiple disadvantages, such as the long-term unemployed, people with disabilities, people from minority backgrounds, and inactive and discouraged people;

46.  Recalls that, with programmes expected to reach full swing, with the integration of new major initiatives in the areas of investment and migration, with the opportunity to settle issues of the past such as payments and special instruments, and with the first activation of new MFF provisions such as the global margin for commitments, the 2016 budgetary procedure will be a test case for the Council's approach to the payment plan, as well as for the assessment of the current MFF; reminds the Commission of its legal obligation to present a review of the functioning of the MFF by the end of 2016 and to accompany that budgetary review with a legislative proposal for the revision of Regulation (EU, Euratom) No 1311/2013 laying down the MFF 2014-2020; recalls that, in parallel to this process, the Commission should also assess new Own Resources initiatives, on the basis of the results of the High Level Working Group on Own Resources which are due to be presented in 2016;

47.  Acknowledges the broad consensus which has driven the consideration of the 2015 draft amending budgets as well as the negotiation of the payment plan so far, thus demonstrating a shared will to respect the MFF, to implement the carefully negotiated legal bases, and to ensure the financing of the new programmes; calls for the continuation of a cooperative spirit between the Commission and the two arms of the EU budgetary authority, and hopes that this will ultimately lead to tackling the causes of the backlog escalation that are embedded in the budgeting procedure; expects the same spirit to prevail in the negotiation of the 2016 budget and in finding means to cope with emerging and unforeseen future challenges;

48.  Instructs its President to forward this resolution to the Council and the Commission.

ANNEX I: JOINT STATEMENT ON THE DATES FOR THE BUDGETARY PROCEDURE AND MODALITIES FOR THE FUNCTIONING OF THE CONCILIATION COMMITTEE IN 2015

A.  In accordance with Part A of the Annex to the Interinstitutional Agreement between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, the European Parliament, the Council and the Commission agree on the following key dates for the 2016 budgetary procedure:

1.  A trilogue will be called on 14 July before the adoption of the Council’s position;

2.  The Council will endeavour to adopt its position and transmit it to the European Parliament by week 38 (third week of September), in order to facilitate a timely agreement with the European Parliament;

3.  The European Parliament’s Committee on Budgets will endeavour to vote on amendments to the Council’s position by the end of week 42 (mid-October) at the latest;

4.  A trilogue will be called on 19 October before the reading of the European Parliament;

5.  The European Parliament’s Plenary will vote on its reading in week 44 (Plenary session of 26-29 October);

6.  The Conciliation period will start on 29 October. In agreement with the provisions of point c of Article 314(4) TFEU, the time available for conciliation will expire on 18 November 2015;

7.  The Conciliation Committee will meet on 9 November hosted by the European Parliament and on 13 November hosted by the Council and may resume as appropriate; the sessions of the Conciliation Committee will be prepared by trilogue(s). A trilogue is scheduled on 11 November. Additional trilogue(s) may be called during the 21-day conciliation period.

B.  The modalities for the functioning of the Conciliation Committee are set out in Part E of the annex to the above-mentioned interinstitutional agreement.

ANNEX II: JOINT STATEMENT ON A PAYMENT PLAN 2015-2016

Building on the joint statement on a payment plan agreed in December 2014 as part of the agreement reached on the 2014 and 2015 budgets, the three institutions have commonly assessed the state of play and outlook for payments in the EU budget on the basis of the document transmitted by the Commission on 23 March 2015.

The European Parliament, the Council and the Commission agree on the following:

1.  State of play

The European Parliament and the Council take note of the Commission’s thorough assessment provided in the ‘Elements for a payment plan to bring the EU budget back onto a sustainable track’ (in annex) as an analytical basis for identifying the main drivers behind the grown level of outstanding payment claims at year-end, and for attaining the objective of reducing the level of unpaid bills, with a particular focus on the implementation of the 2007-2013 cohesion policy programmes.

a)  The constraint on the payment appropriations authorised in the past budgets combined with the implementation cycle of the cohesion programmes have led to the progressive building up of an unsustainable backlog of outstanding payment claims at year-end, reaching an unprecedented level of EUR 24.7 billion at the end of 2014. However, the institutions recognise that the difficult decisions made with regards to the 2014 and 2015 budgets have largely stabilised the backlog.

b)  Moreover, the shortage of payments has translated into a slowing down in the implementation of the 2014-2020 programmes in other headings, notably in view of meeting contractual obligations stemming from past commitments and thus avoiding the risk of interests on late payment, at a time when key programmes are expected to contribute to growth and jobs in Europe and to secure the Union’s role on the international stage.

2.  Outlook

c)  The European Parliament and the Council take note of the outlook for 2015 and 2016 presented by the Commission: the analysis indicates that it could be possible to reduce the year-end backlog of outstanding payment claims for the 2007-2013 cohesion programmes to a level of around EUR 2 billion by the end of 2016, taking into account in particular that the cohesion programmes are approaching the closure stage, and provided that sufficient payment appropriations are authorised in the 2016 budget. This should help avoid negative repercussions and unnecessary delays for the implementation of the 2014-2020 programmes.

d)  The European Parliament and the Council underline their commitment to phasing out the unsustainable backlog of outstanding payment claims for the 2007-2013 cohesion programmes. They undertake to cooperate fully in view of authorising a level of payment appropriations in the 2016 budget, which allows reaching such a goal. Their deliberations will take into account the current outlook, to be reflected and further refined by the Commission in its estimates for the 2016 draft budget.

e)  The Commission will continue to closely monitor the development of the backlog and, if necessary, will propose appropriate measures to ensure an orderly progression of payment appropriations consistent with the authorised commitment appropriations.

f)  The three institutions recall their commitment to actively monitor the state of implementation of payments throughout 2015. As part of their regular exchange of views, they confirm their willingness to organise dedicated inter-institutional meetings on 26 May, 14 July and 19 October, with a view to ensuring a sustainable budgeting process. In this regard, those interinstitutional meetings should also address the longer-term forecasts on the expected evolution of payments until the end of the current MFF for which the Commission is requested to present, if appropriate, alternative scenarios.

g)  To facilitate the process of monitoring on the state of play for the 2007-2013 programmes, in July and October the Commission will provide reports on the implementation of the budget, both as compared to monthly forecasts for the year and to the previous year to date, as well as on the evolution of the backlog of outstanding payment claims in subheading 1b.

h)  Being committed to avoid a similar build-up of backlog in the future, the European Parliament and the Council call on the Commission to closely scrutinize the implementation of the 2014-2020 programmes and set-up an early warning system. To achieve this result, the Commission undertakes to develop appropriate tools to provide, in the course of the budgetary procedure, rolling forecasts of payments by (sub)heading for (sub)headings 1b, 2 and 5 and by programmes for (sub)headings 1a, 3 and 4 focused on the years N and N+1, including the evolution of unpaid bills and of outstanding commitments (RALs); these forecasts will be regularly updated on the basis of budgetary decisions and of any relevant development having an impact on the payment profiles of the programmes; payments forecasts will be presented in July, in the framework of the inter-institutional meetings on payments foreseen in point 36§3 of the Annex of the IIA;

i)  This should allow the budgetary authority to take the necessary decisions, in due time, in order to avoid the future building up of an unsustainable backlog of outstanding payment claims at year-end, while fully respecting and implementing the agreements reached as part of the multiannual financial framework and of the annual budgetary procedures.

ANNEX TO THE ANNEX II: ELEMENTS FOR A PAYMENT PLAN TO BRING THE EU BUDGET BACK ONTO A SUSTAINABLE TRACK

Table of Contents

Executive summary

1.  Background

2.  State of play at the end of 2014

2.1.  Implementation at the end of 2014

2.2.  Mitigating measures taken in 2014

3.  Terminology

3.1.  Project cycle

3.2.  Outstanding commitments (RAL)

3.3.  Cash flow constraints vs. shortage of payment appropriations

3.4.  Backlog of outstanding payment claims at year-end

4.  Heading 1b: evolution of backlog and outlook

4.1.  Implementing the structural funds 2007-2013

4.2.  Payment claims profile for the 2007-2013 programming period

4.3.  Components and types of backlog

4.4.  Outlook for 2007-2013 payments (claims) in 2015 and 2016

4.5.  Payment claims expected for 2016

4.6.  Summary of information used to calculate the payment claims and the backlogs

4.7.  Payment at closure

5.  Other headings: outlook for the 2007-2013 programmes

5.1.  Overview

5.2.  Shared management programmes in heading 2 and 3

5.2.1.  Heading 2

5.2.2.  Heading 3

5.3.  Direct management programmes in heading 1a and 4

5.3.1.  Heading 1a

5.3.2.  Heading 4

6.  Outlook for 2014-2020 programmes

7.  Conclusions

Annex 1: information sent by the Commission on 15 December 2014

Annex 2: Heading 1b: latest forecasts from Member States

Executive summary

The increasing gap between the authorised payment appropriations and the past commitments taken by the European Institutions has been one of the main developments regarding the implementation of the EU budget, in particular since 2012. This payments gap has led to a number of negative consequences in the different areas of expenditure and most notably to a growing backlog of outstanding payment claims for the 2007-2013 Cohesion policy programmes (heading 1b), which reached an unprecedented peak at the end of 2014.

This growing backlog of outstanding payment claims is due to the intersection of the peak in the 2007-2013 programme cycle with the drop in 2014 in the payment ceiling of the multiannual financial framework (MFF), in a general environment of public finance consolidation at national level. Two different factors are therefore key to understand this evolution.

Firstly, the cyclical increase of payment claims driven by the sustained implementation of the 2007-2013 Cohesion policy programmes, to be paid in the first years of the 2014-2020 MFF. After a slow start of the programmes in 2007-2009, resulting (inter alia) from the effects of the financial crisis and counter measures taken, implementation has accelerated since 2012, with payment claims increasing yearly to a historic record of EUR 61 billion in 2013 in the field of Cohesion policy, driven by deadlines for implementation and the automatic decommitment rules set out in the Cohesion policy legislation(5).

It has been difficult to accommodate such a steep increase in payment claims for the 2007-2013 Cohesion policy in the EU budget, with other programmes at cruising speed, a lower ceiling for payments in 2014, and against the backdrop of ongoing fiscal consolidation in Member States.

Indeed, the second key factor to explain this development is the significant reduction in the payment ceilings in the new MFF, which is particularly sharp (EUR 8 billion lower) in 2014. The resulting shortage of payment appropriations affects not only Cohesion (heading 1b), but also other areas of expenditure and in particular the policy areas of Growth and Jobs (heading 1a), Global Europe (heading 4) and Security (heading 3).

In order to face this challenge, the Commission put in place measures to ensure an active management of the scarce payment appropriations, namely: speeding up action to recover any undue amounts; limiting idle amounts on fiduciary accounts; reducing pre-financing percentages; making best use of maximum payment deadlines allowed; postponing calls for proposals/tenders and related contracting and giving higher priorities to countries under financial assistance.

Moreover, the budgetary authority was timely informed of the different challenges and developments and different amending budgets were proposed to increase the authorised payment appropriations.

Despite the reinforcements in payment appropriations through amending budgets authorised by Parliament and Council(6), and despite the active management of available payment appropriations by the Commission, the backlog of outstanding payment claims has kept growing: for the 2007-2013 Cohesion policy alone it reached EUR 24.7 billion at the end of 2014(7).

Thanks to the mitigating measures undertaken by the Commission, the build-up of a backlog was to a large extent contained in the other policy areas managed directly by the Commission. Most of the payment appropriations available in 2014 were used to honour contractual obligations stemming from the previous programming period and thus minimise penalties for late payments, which nonetheless showed a fivefold annual increase (to EUR 3 million)(8). While these actions avoided larger negative financial impact for the EU budget, they entailed shifting a number of payments due-dates to 2015, with an impact on legitimate expectations from stakeholders who may have had to postpone the start of their project and/or to temporarily co-finance it to a higher degree.

The closure stage of the 2007-2013 Cohesion programmes is approaching. In 2014, the total level of payment claims received decreased to EUR 53 billion (from EUR 61 billion in 2013). In their latest forecasts (January 2015), Member States expect to submit payment claims of around EUR 48 billion in 2015 and EUR 18 billion in 2016. However, these figures cannot be taken at face value, since in 2015-2016 there will be a capping of payable claims at 95% of the whole financial envelope of the programme as established by the relevant legislation(9). The resulting payable claims for 2015 are estimated by the Commission at some EUR 35 billion and up to EUR 3.5 billion for 2016.

The 2015 budget authorises almost EUR 40 billion in payment appropriations for the 2007-2013 Cohesion policy. This budget will cover both backlog payments (EUR 24.7 billion consuming 62% of the 2007-13 Cohesion policy budget) and new claims arrived in due time to be paid (estimated at EUR 35 billion). As a result, the backlog at the end of 2015 is estimated to decrease to a level of EUR 20 billion.

At this stage, the Commission estimates that up to EUR 23.5 billion will be needed to cover the remaining payment claims before the closure and to phase out the backlog. In its Draft Budget 2016, the Commission will fine-tune the payment appropriations for heading 1b, in order to ensure that this is achieved together with a proper implementation of the 2014-2020 programmes.

Budget year 2015 for the Cohesion policy (EUR billion)

Payment appropriations available in Budget 2015

(1)

39.5

—  Of which end-2014 backlog

(2)

24.7

—  Of which forecasts 2015 capped at 95% threshold

(3)

~35

Expected backlog end-2015

(4)=(1)-(2)-(3)

~20

Budget year 2016 for the Cohesion policy (EUR billion)

Expected backlog end-2015

(1)

~20

Maximum remaining payment claims expected to be received in 2016 before closure

(2)

~3.5

Maximum payment claims to be covered in the 2016 budget

(3)=(1)+(2)

~23.5

Likewise, the level of payment appropriations to be proposed for the other policy areas in the 2016 budget should allow to meet obligations stemming from past commitments and minimise the risk of late interest payments, but also to ensure an adequate level of implementation and contracting for the 2014-2020 programmes.

The multi-annual character of a significant share of the EU budget explains the existence of a time gap between the moment when the commitment is recorded and the actual payment against this commitment. The build-up of a structural volume of outstanding commitments (known as "RAL", the French acronym of "reste à liquider") is therefore normal and expected. Given the legal deadline for the payment of claims by the Commission(10), the year-end concentration of claims linked to the requirement to avoid decommitment and possible interruptions, a certain amount of outstanding payment claims at year-end is considered as 'normal'. However, the growing size of the backlog over the last few years has reached 'abnormal' levels(11), which pre-empt a significant and growing share of the budget of the following year and are not sustainable in terms of sound financial management.

The Commission estimates that about half of the backlog of outstanding payment claims in Cohesion policy at the end of 2013 and 2014 was 'abnormal', this means linked to the shortage of payment appropriations authorised in the budget, creating a 'snowball effect'. With the closure stage approaching, lower payment levels will be needed in 2015 and 2016 and the backlog will automatically decrease. The level of interruptions and suspensions is also foreseen to decrease as the programmes are reaching the closure. With payment appropriations of some EUR 21.5 billion for the 2007-2013 programmes in 2016, the backlog is forecasted to be around EUR 2 billion at the end of 2016.

Cohesion policy programmes 2007-2013: evolution of the backlog of outstanding payment claims at year-end 2007-2016

20150708-P8_TA(2015)0263_EN-p0000002.png

The need for phasing out the 'abnormal' backlog which has built up has been acknowledged by the two arms of the budgetary authority, the Council and the European Parliament, which jointly agreed during the negotiations on the 2015 budget to "reduce the level of unpaid bills, with a particular focus on cohesion policy, at year-end down to its structural level in the course of the current MFF" and "engage to implement, as of 2015, a plan to reduce the level of unpaid bills corresponding to the implementation of the 2007-2013 programmes to the commonly agreed level by the mid-term review of the current multiannual financial framework" .

This document provides a solid basis for a common understanding by the two arms of the Budgetary Authority, which are expected to endeavour to take decisions that allow the phasing out of the 'abnormal' backlog of unpaid bills for 2007-2013 programmes by the end of 2016.

This payment plan also provides the opportunity to draw some lessons on the budget management for the future:

1.  The agreement on amending budget 2/2014(12) at the end of 2014 was very important to largely stabilise the backlog of outstanding payment claims at a level which can be phased out over two years. The institutions have taken their responsibility in the face of a very difficult fiscal situation in many Member States.

2.  Measures of active budget management taken by the Commission have proven indispensable to deal with a shortage of payment appropriations in many policy areas. These measures will need to be maintained as long as necessary in order to avoid disproportionate disruptions for beneficiaries and/or the payment of penalty interest.

3.  Although there is a recurrent cycle in the implementation of Cohesion policy programmes, the size of peaks and troughs can be smoothened by implementing programmes as quickly as possible at an early stage in the programming period. This is especially desirable in the current economic conditions when investment is badly needed to stimulate economic recovery and competitiveness.

4.  Regular submission of claims is needed. Member States should avoid unnecessary administrative delays in sending their payment claims throughout the year. Regular submission of claims improves budgetary management and helps minimising the backlog at year-end.

5.  On the other hand, sufficient budgeting of payment appropriations is a necessary condition to properly implement the budget and avoid the accumulation of an unsustainable level of outstanding payment claims at year-end. In addition to this, the "specific and maximum flexibility", mentioned in the European Council conclusions and the statement of President Barroso in February 2013, will need to be applied in order to comply with Union's legal obligations. Furthermore, decisions of the budgetary authority should, as much as possible, allow for a smooth payment profile over the duration of the MFF.

6.  Forecasting capacity has to be reinforced. In addition to the various analyses already provided(13), the Commission will further improve its medium and long-term forecasts in order to identify at an early stage, to the extent possible, likely problems. In particular it will inform the two arms of the budgetary authority as soon as it identifies any developments in the implementation of the 2014-2020 programmes which present a risk for a smooth payment profile.

1.  Background

Since 2011, the Commission has been confronted with a growing level of outstanding payment claims at the end of the year, despite the full use of the payment ceilings in 2013 and 2014 and the recourse to the contingency margin for payments in 2014. While virtually all the payment appropriations authorised in the annual budgets have been used up, the backlog of outstanding payment claims at the end of the year for the Cohesion policy (heading 1b) and specific programmes in other headings (such as heading 4 "global Europe") has increased steadily.

The Commission has followed up on the invitation from Parliament and Council to monitor the situation throughout the year and ad-hoc inter-institutional meetings have taken place over the last years to share the assessment on the state of play. Since 2011, the Commission had to present draft amending budgets (DAB) aimed at increasing significantly the level of payment appropriations to address payment shortages. Initial lower levels of authorised payment appropriations have led to recurrent DABs, which have made more complex the decision-making process on the draft budget, which should be the main subject for Conciliation. Amending budgets were voted late, increasing the difficulty to manage the payment process.

Against the backdrop of consistently higher levels of commitment appropriations, the graph below illustrates the increasingly tight annual payment budgets and ceilings and the progressive reduction of the gap between payment ceiling and the voted appropriations, culminating in the need to use the contingency margin in 2014.

20150708-P8_TA(2015)0263_EN-p0000003.png

In December 2014, in the framework of the agreement reached on the 2014 and 2015 budgets, the European Parliament and the Council agreed the following joint statement:

The institutions agree to the objective to reduce the level of unpaid bills, with a particular focus on cohesion policy, at year-end down to its structural level in the course of the current MFF.

In order to reach this objective:

—  the Commission agrees to present, along with the joint conclusions on Budget 2015, a most up to date forecast of the level of unpaid bills by end 2014; the Commission will update these figures and provide alternative scenarios in March 2015 when a global picture of the level of unpaid bills at the end of 2014, for the main policy areas, will be available;

—  on this basis, the three institutions will endeavour to agree on a maximum target level of unpaid bills at year-end which can be considered as sustainable;

—  on this basis and while respecting the MFF Regulation, the agreed financial envelopes of the programmes as well as any other binding agreement, the three institutions will engage to implement, as of 2015, a plan to reduce the level of unpaid bills corresponding to the implementation of the 2007-2013 programmes to the commonly agreed level by the mid-term review of the current multiannual financial framework. Such a plan will be agreed by the three institutions in due time before the presentation of the draft budget 2016. Given the exceptionally high level of unpaid bills, the three institutions agree to consider any possible means to reduce the level of those bills.

—  Every year, the Commission agrees to accompany its draft budget by a document evaluating the level of unpaid bills and explaining how the draft budget will allow for the reduction of this level and by how much. This annual document will take stock of the progress made so far and propose adjustments to the plan in line with updated figures.

As an immediate follow-up to the joint statement, on 15 December 2014 the Commission presented an updated forecast of the level of outstanding payment claims by end 2014, which is set out in Annex 1.

The present document provides an overview of the state of implementation at the end of 2014, focussing on the backlog of the 2007-2013 programmes of the Cohesion policy, in view of reducing it to an agreed level by the mid-term review of the current multiannual financial framework in 2016. The document also addresses the evolution of the backlog of the other headings, although the problem of backlog is much less acute in terms of absolute size than in heading 1b: the backlog of outstanding payment claims in other headings at the end of 2014 stood at some EUR 1.8 billion.

2.  State of play at the end of 2014

2.1.  Implementation at the end of 2014

At the end of 2014, the implementation of payment appropriations (before carryovers) amounted to EUR 134.6 billion (99% of the final authorised appropriations in the 2014 budget). The under-implementation of payments (after carryovers) is the lowest ever recorded at amounted to EUR 32 million, as compared to EUR 107 million in 2013 and EUR 66 million in 2012. Such a high level of implementation, despite the late adoption of draft amending budget 3/2014, is a confirmation of the tight constraints imposed on payment appropriations, particularly for the completion of the 2007-2013 programmes. In many cases, the corresponding budget lines were also reinforced with appropriations initially foreseen for paying the pre-financing of newly adopted 2014-2020 programmes.

During 2014, the payment appropriations for the 2007-2013 Cohesion programmes were reinforced by EUR 4.6 billion, of which EUR 2.5 billion through draft amending budget 3/2014, EUR 0.6 billion through the end-of-year transfer(14) and EUR 1.5 billion through internal transfers from the 2014-2020 programmes. These reinforcements contributed to stabilising the backlog of the 2007-2013 Cohesion programmes at the end of 2014.

A large amount of unused commitment appropriations were carried over or reprogrammed to 2015, not only for the Cohesion policy but also for the programmes under rural development (heading 2) and the migration and security funds (heading 3). As a consequence, the amount of outstanding commitments (RAL) decreased to EUR 189 billion at the end of 2014, a reduction of EUR 32 billion in comparison with the RAL at the end of 2013. However, this decrease is somewhat artificial as it results mostly from the under-implementation of the commitment appropriations for 2014-2020 programmes carried over and reprogrammed to 2015 and later years, when it will "reappear". Had all appropriations for the new programmes been committed in 2014, the RAL would have remained much closer to the 2013 level (EUR 224 billion).

The graph below shows the evolution of the level of RAL over the period 2007-2014 and the projection for the level of RAL at the end of 2015, for the budget as a whole, as well as for programmes under shared management in headings 1b, 2 and 3 and the other programmes/headings. As shown in the graph, the overall level of RAL at the end of 2015 is expected to return to a level comparable to that at the end of 2013. However, the graph also shows the distinction between the programmes under shared management in headings 1b, 2 and 3, for which the RAL at the end of 2015 is expected to go down compared to 2013, and the other programmes/headings, for which the RAL at the end of 2015 is expected to go up.

20150708-P8_TA(2015)0263_EN-p0000004.png

2.2.  Mitigating measures taken in 2014

On 28 May 2014, the Commission presented its draft amending budget 3/2014, requesting additional payment appropriations for 2014. After a lengthy adoption process, DAB 3/2014 was finally approved on 17 December 2014. Awaiting the adoption of the amending budget, during the year 2014 the Commission has put in place a series of mitigating measures in order to honour legal obligations stemming from past commitments while launching the new generation of programmes, within an exceptionally tight budgetary framework.

So as to implement the agreed policies with the appropriations authorised in the budget, the Commission followed an approach of actively managing the budget, bearing in mind three main principles:

—  Minimise the financial impact for the EU budget of interests for late payments and potential liabilities;

—  Maximise the implementation of programmes;

—  Minimise the potentially negative impact of decisions on third parties and the economy as a whole.

Accordingly, the measures to ensure an active management of the scarce payment appropriations included the following: pro-actively recovering any undue amounts; limiting idle amounts on fiduciary accounts; reducing pre-financing percentages; making best use of maximum payment deadlines allowed; postponing calls for proposals/tenders and related contracting.

These mitigating measures helped the Commission to protect its status as a first-class investor and its reputation as a reliable and secure partner. The Commission managed to minimise, as far as possible, the negative effects of payment shortages, for instance in terms of limiting the amount of interests on late payments. Despite an almost fivefold increase compared to 2013, the amount of interests paid at the end of 2014 still remains limited (EUR 3 million). The relative sharper increase for heading 1a (Competitiveness for Growth and Jobs) and heading 4 (Global Europe), as shown in the table below, illustrates the pressure on payment appropriations.

Interests paid on late payments (in EUR)

2008

2009

2010

2011

2012

2013

2014

Heading 1a

294 855

157 950

173 748

329 615

137 906

243 748

1 047 488

Heading 1b

1 440

5 324

6 220

11 255

31 726

71 620

103 960

Heading 2

27 819

1 807

9 576

15 713

61 879

30 991

61 985

Heading 3

13 417

59 852

48 673

50 397

29 375

13 060

7 252

Heading 4

250 204

178 468

257 818

1 266 425

335 820

247 786

1 797 825

Heading 5

43 915

442 678

237 367

60 825

142 254

46 187

8 614

Total

631 651

846 079

733 403

1 734 230

738 960

653 392

3 027 124

Interest for late payments in Cohesion policy (heading 1B) is not significant as shared management represents the major part of this heading and shared management does not lead to late interest. However, in terms of credibility, the non-respect of the regulatory deadlines for shared management policies is highly prejudicial.

3.  Terminology

This section explains a number of definitions used in this document.

3.1.  Project cycle

Before approving an operational programme or a project, the Commission reserves the appropriations by creating a commitment on a budget line for a defined amount. This transaction consumes part of the authorised commitment appropriations.

Very often, the signature of the contract for the project or the approval of the operational programme leads to a certain level of pre-financing, which allows the beneficiary to start the project without borrowing. Reaching defined milestones allows the beneficiary to submit interim payment claims and to be reimbursed for expenditure incurred linked to the programme.

However, in the case of major programmes such as research (Horizon 2020), the structural funds, the European Fisheries Fund and rural development, once a certain stage of implementation is reached, interim payment claims no longer lead to payments as they are covered by the pre-financing. Furthermore, a percentage of the total funds committed for the project or the programme is only paid at the closure when the Commission has verified that all the work has been carried out in accordance with the initial agreement. If that is not the case, the funds are partly decommitted. In certain cases, the Commission may also issue recovery orders to recover payments which were not justified.

3.2.  Outstanding commitments (RAL)

Outstanding commitments are usually referred to as 'RAL' from the French acronym for "Reste à Liquider". It is the part of a commitment that has not been consumed by any payment at a given point in time. In multiannual projects, commitments are made at the start of the project with a limited pre-financing while interim payments are made at a later stage, when the project is being implemented and the final payment is made at closure.

A large part of the EU budget concerns investments, whose implementation is spread over a number of years. The difference between commitment and payment appropriations authorised in the annual budget determines the change in the overall level of RAL. In turn, the speed at which commitments grow and the pace of programme implementation determine the normal evolution of RAL. However, the RAL further increases when insufficient payment appropriations are budgeted, regardless of the pace of implementation. In this latter case, the effect is to increase the level of outstanding payment claims at the end of the year.

The ratio between RAL and the commitments of the year is a good indicator to compare the size of the RAL of specific programmes with their financial envelope. For example, programmes and actions with an annual character, such as Erasmus or Humanitarian Aid, have a RAL/commitments ratio below one, which indicates that most commitments are paid within a year. Cohesion programmes, on the other hand, typically have a RAL/commitments ratio between 2½ and 3, which reflects the impact of the automatic decommitment rules set out in the legislation (the so-called "N+2" / "N+3" rules, see section 4.1 below). Certain programmes under heading 4 have a higher ratio, due to the complex cycle of negotiations linked to implementation. In its payment requests, the Commission takes these indicators into account.

3.3.  Cash flow constraints vs. shortage of payment appropriations

The Commission cash-flow is mostly determined by the amounts called in from Member States on a monthly basis according to the own resources rules. The Commission is not allowed to borrow money to cover cash-flow shortages. Cash-flow constraints may lead to temporary delays in payments to beneficiaries of EU funds despite the fact that sufficient payment appropriations are authorised in the budget for the financial year. This may happen, usually in the first part of the year, because the sum of outstanding payment claims at the end of the previous year and those to be paid in the first months of the current year (for instance for the European Agricultural Guarantee Fund) are larger than the maximum monthly inflow of own resources made available to the Commission. As the backlog from the previous year is phased out and the monthly inflow of resources continues later in the year, the cash-flow constraint is no longer binding in the following months of the year.

Cash flow constraints at the beginning of the year are amplified by the shortage of payment appropriations, since the monthly call for funds is based on the revenue provided for in the authorised budget as it stands, before the adoption of amending budgets increasing the level of payments, which usually takes place towards the end of the year.

Depending on the precise date of adoption (i.e. before or after 16 November of the year in question), the corresponding additional call for own resources to cover the additional payment appropriations authorised in amending budgets adopted at the end of the year might lead to cash availability only in the beginning of the next financial year, leading to possible difficulties in implementing the amending budgets in the same year.

3.4.  Backlog of outstanding payment claims at year-end

At the end of every year, there is a backlog of outstanding payment claims, i.e. claims that have been sent by the beneficiaries of EU funds and need to be paid within a defined delay (in general in less than 2 months) but that have yet not been paid(15). That is because of one of the following three reasons:

a)  Ongoing interruptions/suspensions: Payments were interrupted/suspended for certain beneficiaries/programmes. Interruptions of payments are normally short term formal actions by which the Commission delays the payment waiting for missing information or checks of the management and control system.

b)  Timing: Payment claims not paid because they were transmitted in the very last days of the year, leaving insufficient time for processing before year-end.

c)  Lack of credits: Payment claims unpaid because authorised payment appropriations on the relevant budget line were exhausted.

Part of the backlog is considered “normal” (see points a and b). The growth of the "abnormal" backlog of outstanding payment claims, most of which is in Cohesion policy, is associated with the shortage of payment appropriations (point c), whereas the cash-flow constraints in the beginning of the year (see section 3.3 above) also have an impact. Section 4 further develops the case of the Cohesion policy.

4.  Heading 1b: evolution of backlog and outlook

This chapter looks at the specific case of the Cohesion policy (heading 1b). First, it sets out the main features of the structural funds and it explains how specific events in the past or in relation with the legislation created the present difficult situation. It then explores how a "normal" backlog could be defined and provides a detailed analysis of the situation at the end of 2014.

4.1.  Implementing the structural funds 2007-2013

Structural funds 2007-2013: main features

Projects financed out of heading 1b are organised in operational programmes. These operational programmes are proposed by Member States, and negotiated and adopted by the Commission at the beginning of the period for the whole duration of the period. Each operational programme is implemented in shared management through individual projects. This means that Member States implement the funds. The Commission participates in monitoring committees, where it has an advisory role in the project selection and monitors project implementation through annual implementation reports.

Programmes are co-financed by the EU budget; this means that the Commission does not pay the entire cost of the programme. Member States must find "match-funding" to finance part of the programmes.

Once a programme is adopted, the European Union has contracted a legal obligation for the whole period. The Commission committed automatically the appropriations on an annual basis before the end of April from 2007 to 2013, based on the financial plan of the programme and not on the actual implementation of the projects of the programme. While the EU payments can never exceed the EU budget commitments, expenditure is eligible from the beginning of the period (i.e. even before the adoption of the programme) until the end of the eligibility period.

After the approval of the programme, the Commission pays pre-financing. These payments are made automatically to the Member State and remain at its disposal until its clearing at the closure.

As the implementation of the various projects is ongoing, the Member States submit interim payments through their certifying authority. The interim payment claims are paid by the Commission based on the co-financing rate in force and provided that no interruption or suspension is decided.

This mechanism works as long as the total of pre-financing paid by the Commission and interim payment claims submitted by Member States for the programmes does not reach 95% of the share of the allocation of the programmes. Once this threshold is reached, the Member State may still send its payment claims but they are used to clear any outstanding prefinancing. The remainder will be settled at closure of the programme. Member States need to justify eligible expenditure to cover the amount of pre-financing received at the beginning of the period and the amount retained for closure (5% of the total allocation).

After the end of the eligibility period, a period of 15 months is then foreseen to prepare and submit the closure documents to the Commission and request the final payment to be settled. Before the final payment can be done, the Commission examines the closure package (i.e. closure declaration, Final Implementation Report and final claim). Given that these documents are expected by 31 March 2017, the decision on the closure (and the related final payments) will occur between 2017 and 2019.

Based on the outcome of this exercise, the 5% retained for the closure are used to pay the outstanding payment claims. Otherwise, the Commission does not pay the full amount at the closure. The amount that is not paid will be decommitted. If corrections are higher than 5%, the Commission will recover the amount unduly paid.

The N+2/N+3 rule

The N+2/N+3 rule was first established for the programming period 2000-2006. The rule foresees that a commitment made at year N has to be covered by the same amount of pre-financing and interim payment claims before 31 December N+2 (N+2 rule). For example, a commitment made in 2012 has to be fully covered by payment claims before 31 December 2014. The amount not covered is decommitted, which means that the Member State loses the funding. At present, however, there is no history of significant N+2/N+3 decommitments in the entire history of the structural funds.

The purpose of the rule is to ensure financial discipline in managing the EU funds. As commitments are made automatically once a programme has been approved, the rule obliges the Member States to implement the projects in a dynamic manner and to avoid problems at the very end of the cycle. Its existence also enables having a smoother profile of payments by obliging the Member States to submit payment claims at regular intervals. However, as explained in the next chapter, "softening" of the rule, especially in the wake of the financial crisis of 2008, reduced its regulatory effect.

This rule is at the source of the year-end concentration of payment claims: Member States have to send their payment claims before 31 December midnight, through a specific IT system. Although they are legally required to send their claims regularly throughout the year(16), experience form the past shows that many wait for the last weeks to send large amounts.

4.2.  Payment claims profile for the 2007-2013 programming period

Main drivers of the payment cycle

At the beginning of the period, significant amounts of pre-financing are paid, followed during some years by a relatively low level of interim payments as programmes set up their structures and start implementation of projects. As the N+2/N+3 rule only begins to produce its effects at the earliest at the end of the third year of the programming period, there is no pressure at the start of the framework to submit claims. Moreover, the pre-financing still covers a large part of the commitments made at the beginning of the programming period. About 2-3 years before the end of the programming period, the annual level of interim payments begins to increase as programmes reach maturity and payments claims are at cruising speed. A peak is observed at the end of the period/beginning of the following programming period, followed by a decrease to nearly zero in the following years when programmes reach the 95% threshold. As mentioned above, closure payments are made between one and three years after the end of the eligibility period.

Derogations

Three developments in the legislative framework applicable to the 2007-2013 programming period amplified the cyclical character level of interim payments:

1.  The switch from N+3 to N+2. As part of the global compromise establishing the 2007-2013 MFF, the new Member States as well as Greece and Portugal were submitted to a N+3 rule for the 2007-2010 commitment tranches and then to an N+2 rule until the end of the period. This means that by the end of 2013, these Member States had to cover two commitment tranches: the 2010 tranche and the one of 2011. Of course, Member States did not wait necessarily until the decommitment deadline to implement the programmes and to submit their payment claims, so there was not a doubling of payment claims in 2013. Nevertheless, this rule reinforced strongly the peak of 2013 with a spill-over effect on the following years through the accumulation of a growing backlog.

2.  The Member States were required to carry out a compliance check on their control systems for the funds. The results of the compliance check had to be approved by the Commission. Interim payment claims could be submitted, but only reimbursed by the Commission following approval of the compliance assessment. While most of the programmes were adopted in 2007, the submission of claims (or at least their reimbursements by the Commission) was delayed, with nearly no interim payment made in 2008.

3.  As a response to the financial crisis, there were strong calls from Member States to neutralise the 2007 commitment tranche for the N+2/N+3 rule. This was accepted by the Commission but instead of postponing the decommitment threshold of the 2007 tranche by one year, the N+2/N+3 rules were weakened further through an unanimous vote in Council to spread the obligation related to 2007 tranche in six sixths over the whole period. This so-called "Greek rule" made it possible to submit fewer payment claims in the beginning of the period, balanced by more payment claims at the end of the period.

In addition, also in response to the crisis, the eligibility period of expenditure for the 2000-2006 programmes was extended from late 2008 to 2009 (by modifying the Commission decision approving the programme) and therefore Member States continued to focus on the implementation of the 2000-2006 programmes. As a result, implementation of 2007-2013 programmes and the related submissions of 2007-2013 interim payment claims were delayed.

Comparing the 2000-2006 programmes with the 2007-2013 programmes

Whereas the 2007-2013 programming period switched from N+3 to N+2 at the end of the fourth year, the 2000-2006 programming period only had an N+2 rule, albeit with some adjustments in 2004 because of the accession of 10 Member States.

The chart below compares the cumulated interim payments for the 2000-2006 period which were made over the years 2001-2007 as a percentage of the total envelope, with the cumulated interim payments for the 2007-2013 programmes which were made from 2008 to 2014, again as a percentage of the total envelope.

Chart 1: Annual pattern of cumulative interim payments (with 1-year time-lag): 2000-2006 (EU-15) vs. 2007-2013 period (% of total envelope excluding pre-financing)

20150708-P8_TA(2015)0263_EN-p0000005.png

As shown in the chart, the cumulative payments for the 2007-2013 programmes consistently remained below the level experienced in the 2000-2006 period, albeit with a catching up towards the end of the period. This delayed profile for the 2007-2013 programmes resulted from the combination of factors set out above. It explains the under-execution of payment appropriations and the payment ceiling at the beginning of the period, as the payment profile for the 2000-2006 programmes had been used as reference for establishing the ceilings.

However, when the payment claims started catching up at a later stage, the payments were strongly constrained by the level of authorised payment appropriations and/or by the payment ceiling which led to building up of the backlog.

Evolution of backlog 2007-2014

The following chart(17) shows the evolution of the backlog for the 2007-2013 programmes over the period 2007-2016.

Chart 2: Cohesion policy programmes 2007-2013: evolution of the outstanding payment claims at year-end (in EUR billion)

20150708-P8_TA(2015)0263_EN-p0000006.png

As shown in the chart, the backlog for the 2007-2013 programmes started to increase in 2011, when it reached a level of EUR 11 billion, and arriving at a peak of EUR 24.7 billion in 2014. As explained below, the projections show a still high level of the backlog at the end of 2015, before returning to a "normal" and sustainable backlog at the end of 2016.

4.3.  Components and types of backlog

Over the year, the Commission receives the following payment claims for the structural funds:

a)  Eligible payment claims that are covered by payments in the course of the year.

b)  Payment claims that have already been covered by the pre-financing at the beginning of the programming period and that are consequently not followed by additional payments.

c)  Payment claims which can only be paid after the closure will have to wait until the Commission and the beneficiary reach an agreement on the closure.

d)  Payment claims not paid because they were transmitted in the very last days of the year, too late to be processed before year-end.

e)  Payment claims which are interrupted/suspended for certain beneficiaries. Suspensions or interruptions of payments are normally short term formal actions by which the Commission delays the payment waiting for missing information or checks of the management and control system.

f)  Payment claims unpaid at year-end because authorised payment appropriations on the relevant budget line were exhausted.

g)  The last four categories (from c to f) remain outstanding claims at year-end, but the backlog includes outstanding payment claims according to reasons d, e and f. A certain level of outstanding payment claims at the end of the year is considered 'normal' when they correspond to reason d and e. The "abnormal" backlog only includes outstanding payment claims according to reason f.

The following chart illustrates the flow of payment claims for heading 1b, from the submission by the Member States via the identification of "payable claims" to the "normal" and "abnormal" backlog.

20150708-P8_TA(2015)0263_EN-p0000007.png

Year-end concentration of claims and time to pay

There is a very high concentration of payment claims sent by Member States in the month of December, ranging from 27% to 35% of the annual total over the period 2011-2014. For each payment claim received, the Commission needs to carry out controls before proceeding with the disbursement. The larger the number of claims received in the last weeks of the year, the higher the risk of claims not being reimbursed before the end of the year.

For this reason, the Commission regularly encourages Member States to send their claims more regularly throughout the year.

The following chart shows the monthly evolution of the submission of payment claims for the 2007-2013 programmes between 2011 and 2014.

Chart 3a: Monthly pattern of cumulative interim payment claim submission for 2007-2013 period (in % of total)

20150708-P8_TA(2015)0263_EN-p0000008.png

This chart above shows clearly a recurrent very steep increase of the request of payment claims at the end of the year.

Chart 3b: Concentration of payment claims submission during the last two months of the year (percentage received in November and December) between 2011 and 2014

20150708-P8_TA(2015)0263_EN-p0000009.png

The charts illustrate that more and more claims have arrived late in the year, due to the growing pressure of the N+2 rule. The removal of the N+3 rule in 2013 meant that all Member States had an N+2 rule except Romania, Slovakia and Croatia. It had a major impact on the volume of claims received in that year. The amount of claims arriving too late to be paid in the year depends on the total amount of claims received in the year and on its profile within the year.

Impact of interruptions and suspensions

The Commission uses a number of preventive mechanisms to protect the EU budget before it makes payments to Member States when it is aware of potential deficiencies. These are especially valuable for improving control systems in the Member States and thus reducing the need for future financial corrections by the Commission.

As a consequence, some payment claims are not immediately payable as they have been interrupted or suspended by the Commission pending improvements in the control systems to be made. While most of these claims will ultimately not be rejected, they cannot be paid immediately.

In accordance with the regulation(18), the Commission may:

—  interrupt the payment deadline for a maximum period of 6 months for 2007-13 programmes if there is evidence to suggest a significant deficiency in the functioning of the management and control systems of the Member State concerned; or if the Commission services have to carry out additional verifications following information that expenditure in a certified statement of expenditure is linked to a serious irregularity which has not been corrected.

—  suspend all or part of an interim payment to a Member State for 2007-13 programmes if there is evidence of serious deficiency in the management and control system of the programme and the Member State has not taken the necessary corrective measures; or if expenditure in a certified statement of expenditure is linked to a serious irregularity which has not been corrected; or in case of serious breach by a Member State of its management and control obligations. Where the required measures are not taken by the Member State, the Commission may impose a financial correction.

Estimating the "normal" backlog

As explained before, the "normal" backlog is the total of the claims that are interrupted or suspended and the claims that arrive too late to be paid in the year. Claims arriving during the last ten calendar days of the year can be considered as claims arriving too late to be paid as the Commission must have sufficient insurance that it will be able to fully execute the appropriations available in the budget. However, some of the claims interrupted or suspended are also part of the claims arriving too late to be paid and should not be counted twice.

Accordingly, the "normal" backlog will grow with the total number of claims received over the year and its relative concentration over the last days of the year.

For the 2010-2014 period, the chart below gives an overview of the payment claims received, the backlog at year-end and the claims arriving too late to be paid or suspended.

Chart 4 Heading 1b: Claims, backlog, suspensions 2010-2014

20150708-P8_TA(2015)0263_EN-p0000010.png

Over the last three years (2012-2014), the "normal" backlog (i.e. payment claims received in the last ten days of the year or interrupted or suspended claims even if they have been received before the last ten days) can be estimated at about half the value of the total backlog reached at the end of each year. The other half was linked to the shortage of payment appropriations authorised in the budget, which has created a "snowball effect"(19).

With the declining level of claims expected in 2015 and 2016, the expected reduction of cases interrupted/suspended and the absence of pressure from the N+2 rule at end 2015(20), the "normal" backlog is also expected to decline sharply.

4.4.  Outlook for 2007-2013 payments (claims) in 2015 and 2016

2015 and 2016 estimate based on Member States' forecasts

The Regulation governing the 2007-2013 Funds(21) requires Member States to send the Commission a forecast of their likely interim payment claims for the year N and the year N+1 at the latest by 30 April of year N. During the last years, Member States have agreed to update of this information in September of year N, in order to assess more accurately the growing level of outstanding payment claims (backlog) and the significant concentration of payment claims submitted in the last months of the year.

However, the new Regulation governing the 2014-2020 Funds(22) requires the Member States to send their forecast of interim payment applications for the year N and N+1 by 31 January of year N (with an update by 31 July). This new deadline has been applied on voluntary basis by Member States in 2015 for their 2007-13 programmes on the basis of a request of the Commission, confirmed in December 2014. According to the data received by the Commission as at 3 March 2015, Member States currently estimate to submit around EUR 48 billion of payment claims (both payable and non-payable) in 2015 and around EUR 18 billion in 2016(23).

As previously explained, not all payment claims will directly result in payments because of the need to take into account the "95% ceiling" in payments set by Article 79 of Regulation 1083/2006(24). As more and more programmes reach the "95% ceiling", this correction will become far more significant in 2015 and later years. Consequently, the actual figures of the expected payable claims are lower than those forecasted by Member States, because the claims above the 95% ceiling are considered at closure only. Based on these capped forecasts, the Commission expects to receive a total amount of payable payment claims of around EUR 35 billion in 2015. The corresponding figure for 2016 is currently around EUR 3 billion. This amount for 2016 will become more precise (and could be slightly higher) once Member States submit missing data or revise transmitted data for some operational programmes.

Annex 2 provides more details regarding the Member States' forecasts of payment claims to be submitted in 2015 and 2016 for the 2007-2013 Cohesion programmes.

Commission estimate based on execution

At the end of 2014, the total amount of pre-financing and interim payments made was EUR 266.1 billion. The total envelope for the programmes of the Cohesion policy 2007-2013 is EUR 347.3 billion. Taking into account the decommitments already made so far and the decommitment risk due to the implementation of the N+2/N+3 rule at the end of 2014 but still pending confirmation (a total maximum amount of some EUR 0.9 billion since the beginning of the period), the maximum amount still to be paid is around EUR 80.3 billion. However, 5% of the amounts of each programme have to be paid only at the closure (EUR 17.3 billion).

Consequently, the expected level of interim payment claims still to be paid in 2015 or the following years is around EUR 63 billion or 18% of the total envelope, which includes the backlog at the end of 2014 (EUR 24.7 billion). The maximum level of payable new payment claims to be received in 2015 or in the following years, before the closure, is EUR 38.3 billion. If an amount up to EUR 35 billion of payment claims are to be received in 2015, the remaining amount of up to EUR 3.5 billion would be received in 2016.

Estimated backlog at the end of 2015 based on corrected Member States' forecasts

The level of payment appropriations authorised in the 2015 budget is EUR 39.5 billion. This amount will cover both the pre-2015 backlog (EUR 24.7 billion) and the new claims (estimated at EUR 35 billion). Consequently, the expected backlog at the end of 2015 would amount to EUR 20 billion, of which at least about half of it or about EUR 10 billion would remain as abnormal backlog.

In EUR billion

Backlog end 2014

(adjusted)

Member States' forecasts of 2015 claims corrected by 95% threshold

Payment appropriations authorised in the 2015 budget

Forecasted backlog end 2015

24.7

~35

39.5

~20

4.5.  Payment claims expected for 2016

As set out above, the backlog at the end of 2015 is expected to be around EUR 20 billion, provided Member States' forecasts prove accurate. Furthermore, up to EUR 3.5 billion of payable claims are still expected before the closure of the programmes. Given this relatively limited amount of payment claims and since there will be no N+2 pressure anymore, there is no reason to assume that a large amount of these payment claims will arrive too late to be paid in 2016.

The Commission will fine-tune its request in the 2016 Draft Budget, taking into account the "normal" backlog at the end of 2016. This "normal" backlog – covering the very late submission of claims and the remaining interruptions/suspensions – would however be very low compared to previous years, since the level of new claims to be received in 2016 is also very low and the Commission expects Member States to correct deficiencies and submit "clean" claims. It could be in the order of magnitude of EUR 2 billion. This "normal" backlog at year-end 2016 will therefore have to be covered in the 2017 budget. The amount to be included in the 2016 budget would therefore be around EUR 21.5 billion.

4.6.  Summary of information used to calculate the payment claims and the backlogs

The following table summarizes the information on the envelope of the programme, the expected use of the budget appropriations available in the budget 2015 and the maximum payment claims expected in 2016.

Outstanding interim payments 2015-2017 (EUR billion)

Envelope of the programme

(1)

347.3

—  Of which pre-financing and interim payments made until end-2014

(2)

266.1

—  Of which reserved for closure (5%) and decommitments made

(3)

18.2

Maximum amount of payable interim payments (2015-2017)

(4)=(1)-(2)-(3)

~63.0

—  Of which backlog end-2014 (outstanding payment claims)

(5)

24.7

—  Of which maximum amount of payable interim payments in 2015-2017

(6)=(4)-(5)

38.3

Budget year 2015, EUR billion

Appropriations available Budget 2015

(1)

39.5

—  Of which end-2014 backlog

(2)

24.7

—  Of which forecasts 2015 corrected by 95% threshold

(3)

~35

Expected backlog end-2015

(4)=(1)-(2)-(3)

~20

Budget year 2016, EUR billion

Expected backlog end-2015

(1)

~20

Maximum remaining payment claims expected to be received in 2016 before closure

(2)

~3.5

Maximum payment claims to be covered in the 2016 budget

(3)=(1)+(2)

~23.5

4.7.  Payment at closure

The closure of structural funds has its own payment dynamics. Each Member State sends its closure documents by programme at the latest by 31 March 2017. The Commission informs the Member State of its opinion on the content of the closure declaration within five months of the date of its receipt, provided that all information has been submitted in the initial closure document(25). As a rule, payments for the closure will occur only after 2016. The total amount reserved for the closure (5% of the overall allocation) is EUR 17.3 billion, but the level of payments will be influenced by the quality of implementation of the programme during the whole period. Possible closure decommitments in the Cohesion policy may reduce the needs for payments.

As an indicative estimate, for the period 2000-2006, the percentage of de-commitment at closure was 2.6% of the total envelope for the European Social Fund (ESF) and 0.9% for the European Regional Development Fund (ERDF). However, for ESF there are still some EUR 0.5 billion of RAL that is related to problematic cases with irregularities, and consequently the Commission estimates that the final percentage of decommitments at the closure will be around 3% for that Fund. The Commission does not exclude that decommitments at closure could be higher than in the past period so the above mentioned estimate should be considered as a prudent indication.

Closure requests are not taken into account in the analysis of the reduction of the normal part of the backlog, as most of them are paid in 2017-2019 or subsequent years and will in any event not all lead to payments, since unduly paid amounts will first be cleared before the final payment will be made.

5.  Other headings: outlook for the 2007-2013 programmes

5.1.  Overview

Following the detailed analysis of the specific case of the Cohesion policy (heading 1b) as set out in section 4 above, this section looks at the situation in the other headings, which can be summarised as follows:

—  Appropriations for the European Agricultural Guarantee Fund (heading 2) are non-differentiated whereby payments and commitments are budgeted at the same level. Consequently, there is no backlog at year-end;

—  The management of Rural Development, the European Fisheries Fund (heading 2) and the Asylum, Migration, Borders and Security funds (heading 3) is shared with Member States, in a manner similar to Cohesion policy. Whereas Rural Development so far had no backlog, this is not the case for the other funds;

—  Most of the other programmes (headings 1a and 4) are managed by the Commission. In view of payment shortages, many of these programmes have been subject to the mitigating measures which the Commission has put in place during 2014 (and in some case already in 2013), ranging from reduction of pre-financing (with due consideration of the type and financial soundness of implementing partners, recipients and beneficiaries), to postponement of final payments or budget support payments, abstaining from launching new commitments, and delaying contracting. Most of these mitigating measures, however, only postpone the time of disbursement, while commitments still have to be honoured.

The table below provides an overview of the evolution of the backlog for headings 1a and 4. Whereas there is a clear upward trend for the backlog for heading 4, which in 2014 reached its highest level in recent years, the evolution of heading 1a is less clear.

2007

2008

2009

2010

2011

2012

2013

2014

Heading 1a

1 679

507

291

628

604

567

551

541

Heading 4

172

178

284

226

387

367

389

630

5.2.  Shared management programmes in heading 2 and 3

5.2.1.  Heading 2

European Agricultural Guarantee Fund (EAGF)

There is no backlog for the European Agricultural Guarantee Fund (EAGF) as the fund is based on non-differentiated appropriations.

European Agricultural Fund for Rural development (EAFRD)

So far there has been no backlog for Rural Development: the Commission has always been able to pay all payment claims in time. Taking into account the size of the Rural Development programme and the 95% rule which also applies, the maximum level of interim payments which might still be paid before the closure is around EUR 8.7 billion for the 2007-2013 period. The payment appropriations authorised in the 2015 budget for the 2007-2013 programmes amount to EUR 5.9 billion. The remaining amount of EUR 2.8 billion is due to be paid in 2016, following the submission by the Member States of the final quarterly declaration, due in January 2016.

The total amount reserved for the closure is around EUR 4.8 billion. The actual amount to be paid will depend on the decommitments. As an illustration, by applying the 1.5% rate of decommitments experienced during of the previous 2000-2006 closure period, some EUR 1.5 billion would be decommitted. Closure payments are expected to take place between 2016 and 2019.

European Fisheries Fund (EFF)

The EFF management mode is similar to the Cohesion policy (heading 1b). However, since it has no N+3 rule, the EFF did not encounter the specific problem of the transformation of the N+3 rule to the N+2 rule between the commitment tranche 2010 and the commitment tranche 2011. Moreover, it did not have the "Greek rule" either, although the start of the programmes was also slightly delayed by the obligations related to the management and control systems. Nevertheless, in recent years, the EFF backlog has been very important. At the beginning of 2014, the level of the backlog was at the level of the voted payment appropriations for the programmes 2007-2013.

As to the timing of payment claims during the year, throughout 2010-2014 two-thirds of the annual payment claims were received in the months November and December. The following chart shows the level of the backlog from 2011 to 2014 for the programmes 2007-2013 of the EFF together with the initial payment appropriations of the following year.

20150708-P8_TA(2015)0263_EN-p0000011.png

The main reason behind the reduction of the EFF backlog at the end of 2014 has been the redeployment of all available payment appropriations within the budget chapter (including all payment appropriations for the EMFF shared management – due to the delay in the adoption of the new legal basis) and the reinforcements received in the draft amending budget 3/2014 (adopted as amending budget 2/2014) and in the end-of-year transfer.

The higher level of payments authorised in the 2015 budget should allow reducing the backlog to its normal level of around EUR 0.1 billion.

5.2.2.  Heading 3

Asylum, Migration, Borders and Security policies

The common asylum and immigration policies in the 2007-2013 period were mainly implemented through the General Programme “Solidarity and Management of Migration Flows” (SOLID). This General Programme consisted of four instruments: External Borders Fund (EBF), European Return Fund (RF), European Refugee Fund (ERF) and European Fund for the Integration of third-country nationals (EIF).

The following graph shows the growing level of outstanding payment claims at year-end for the programmes in the field of asylum, migration, borders and security.

20150708-P8_TA(2015)0263_EN-p0000012.png

The RAL has increased from EUR 150 million at the beginning of 2007 to EUR 2.6 billion in 2014, despite EUR 300 million decommitted during the period 2007-2014. Some EUR 1.9 billion remains to be paid on the programmes 2007-2013. The payment appropriations authorised for the programmes in the 2015 budget are slightly above EUR 600 million, including the appropriations for the initial and annual pre-financing payments of the new programmes 2014-2020.

Taking into account the amount which will be paid at the closure (estimated at some EUR 1 billion) and the fact that second pre-financings could not be paid in 2013 and 2014 due to lack of payment appropriations, the payment needs to reduce the backlog for the programmes 2007-2013 to a normal level at the end of 2016 are estimated at around EUR 235 million.

5.3.  Direct management programmes in heading 1a and 4

5.3.1.  Heading 1a

This section gives an overview of the payments situation of the programmes under heading 1a at the end of 2014.

Outstanding payment claims at year-end

The chart below shows the evolution of the outstanding payment claims at year-end for the main programmes under heading 1a.

20150708-P8_TA(2015)0263_EN-p0000013.png

The high level of outstanding payment claims at the end of 2007 mainly results from the project cycle of the 6th Framework Programme for Research (FP-6), and the particularly high number of open commitments at that time. In addition, the research contracts stipulated that audit certificates were required before cost claims could finally be paid.

The mitigating measures taken by the Commission in 2014 (see section 2.2 above) to address the shortage of payment appropriations prevented the increase of outstanding payment claims at the end of 2014. Measures included the reduction the level of pre-financing and delaying the signature of new contracts/grant agreements, thus shifting part of the payments to the following year. While containing the level of outstanding payment claims, a resulting side-effect of those measures has been the slowing down of the implementation of the 2014-2020 programmes. In some cases, more drastic measures had to be taken as to give priority to payments addressed to the more vulnerable beneficiaries.

Evolution of outstanding commitments (RAL)

The broadly stable level of outstanding payment claims at year-end for programmes under heading 1a is in sharp contrast with the clear upward trend in the level of outstanding commitments (RAL), as shown in the chart below:

20150708-P8_TA(2015)0263_EN-p0000014.png

To a large extent, the increasing RAL in heading 1a results from the widening gap between the commitment and payment appropriations for research, the largest spending programme in this heading. This is illustrated in the chart below, which shows the declining pattern of the ratio between payments and commitments.

20150708-P8_TA(2015)0263_EN-p0000015.png

As an example of how projects in heading 1a are being implemented, the project cycle for the Research programmes is described below.

Project cycle Research

Research programmes are implemented through multiannual work programmes which include calls for proposals, public procurements, studies, experts groups, participation in international organisations, seminars and workshops, evaluation and monitoring. Around 90% of the research programmes are related with calls for proposals, the remaining 10% with other activities.

The annual work programme for year N is adopted by the Commission in the middle of year N-1. From the second half of year N-1 the calls for proposals are launched. In most cases the submission of proposals usually takes place within three months after the publication of the call for proposals. Global commitments are made after the adoption of the work programme in year N and at the latest before the contract negotiations (usually at the time of the call deadline). The evaluation of proposals (three months) and selection (one-two months) are followed by the contract negotiation (from one to six months) and signature (up to a few months). The Commission / executive agency has eight months between the call deadline and the grant signature (the so-called "time to grant"), of which five months to inform the applicants about the outcome of scientific evaluation and three months for preparation of the grant agreement. Once the individual commitment is made and contract is signed, the pre-financing should be paid within 30 days from the signature of the agreement or from 10 days before the starting date of the action whichever is the latest. Following the structural measures taken by Research DGs in 2014, in many cases, the pre-financing of the year N commitment is now paid in year N+1 instead of year N. Interim payments are based on financial statements and linked to periodic reports, usually every 18 months. The final payment of 10% is paid on acceptance of the final report.

For all other actions foreseen in the work programme, the provisional commitments are made in year N and the advance payments are paid the same year. The rest is paid in year N+1.

Payment shortages Research: practical consequences

In order to manage the shortage of payment appropriations within the Research programmes, in 2014 a total amount of EUR 236.5 million was transferred from "Horizon 2020" 2014-2020 lines to reinforce 2007-2013 completion budget lines for the same programmes, delaying the pre-financing of the Horizon 2020 calls launched in 2014 to 2015. This was not the case in previous years, and results in a delay in the implementation of new programmes.

Research takes time and withholding signature of contracts and funding is not consistent with the objective of enhanced research efforts to support economic growth. The increase in the level of payment appropriations authorised for Horizon 2020 in the 2015 budget is expected to allow a partial catching up of this key programme.

Erasmus+

Erasmus+ provides a good example of an annual programme for which the level of payments closely follows the level of commitments, since the lifecycle of most actions is linked to the academic calendar.

Because of the payments shortage, however, the increase in payment appropriations in 2014 did not match the increase of commitment appropriations which is set to continue over the 2014-2020 period. This shortfall in payments in 2014 can also be seen in the ratio between payments and commitments in the chart below.

20150708-P8_TA(2015)0263_EN-p0000016.png

As a result, in 2014 it was not possible to pay part of the second pre-financing to National Agencies, which are meant to finance mobility actions. While the situation should improve slightly, Erasmus+ is expected to still be confronted with similar constraints in 2015.

Transport and Energy

The chart below shows the growing divergence between the level of commitments and payments for the Transport and Energy policy areas.

20150708-P8_TA(2015)0263_EN-p0000017.png

The payment appropriations authorised in the 2015 budget will suffice to cover the first pre-financing of the 2014-2020 projects and to partially tackle the 2007-2013 RAL, which is estimated at more than EUR 2 billion.

European Economic Recovery Plan (EERP)

Compared to the high level of commitments in 2009 and 2010, the implementation of payments for this programme started slowly since EERP projects mostly consist of large-scale infrastructure projects.

20150708-P8_TA(2015)0263_EN-p0000018.png

In particular in 2014, payment appropriations were not sufficient to cover all the payment claims received during the year, even after the late adoption of draft amending budget 3/2014 which provided additional payment appropriations. At the end of 2014, the RAL still stood at EUR 2 billion, half of the amount initially committed for the EERP. The level of payment appropriations authorised in 2015 amounts to EUR 407 million, which is expected to cover estimated needs for the year.

5.3.2.  Heading 4

The chart below shows the level of outstanding commitments (RAL) for programmes under heading 4 since 2007.

20150708-P8_TA(2015)0263_EN-p0000019.png

Heading 4 comprises short-term crisis-response instruments, longer-term instruments which use multiannual programming, and ad-hoc instruments such as Macro-Financial loan and grant assistance. Three large instruments (the Instrument for Pre-accession Assistance II (IPA), the European Neighbourhood Instrument (ENI) and the Development Cooperation Instrument (DCI)), using multiannual programming, account for 73% of expenditure under this heading. The support to third countries which is funded under these programmes typically has a life-cycle of around 6-8 years. The crisis-response instruments (Humanitarian Aid, Instrument contributing to Stability and Peace, Common Foreign and Security Policy) and the Macro-Financial Assistance, on the other hand, have much shorter payment cycles of 12-18 months.

Since 2013, most instruments in heading 4 experienced serious shortages in payment appropriations, affecting first the humanitarian and crisis-related instruments with fast-disbursing implementation cycles, and thereafter instruments such as the Development Cooperation Instrument and the European Neighbourhood Instrument where the payments are mostly related to existing contracts and commitments. The situation worsened in 2014, due to the overall reduction in the available payments compared to 2013. For some of the programmes, the reinforcement through draft amending budget 3/2014 (and other actions such as transfers)(26) came very late and was insufficient to cover the outstanding backlog.

Measures put in place (see section 2.2 above) could only partly mitigate the effects of the payment shortage by postponing the time of disbursement, while past commitments still have to be honoured.

Outstanding payment claims at year-end

Overall, the outstanding payment claims at year-end 2014 for heading 4 increased considerably. This is mostly due to a sharp increase of claims and the lack of related payment appropriations as in the case of the European Neighbourhood Instrument and the Development Cooperation Instrument, as shown in the chart below.

20150708-P8_TA(2015)0263_EN-p0000020.png

On the other hand, the reinforcements in payment appropriations authorised in the 2013 and 2014 budgets allowed redressing the level of outstanding payment claims for Humanitarian Aid(27):

20150708-P8_TA(2015)0263_EN-p0000021.png

As set out above, the RAL of heading 4 and of the three large long-term instruments in particular, has been steadily rising over the past five years, in line with the commitment levels of the previous MFF. Programmes initially committed in 2010, for example, will have been formalised with the beneficiary third country during 2011, and contracts concluded up to 2014. It follows that many of these larger programmes, committed at a time when commitments were rising steeply, now need to be paid for. The level of payment appropriations authorised in the 2015 budget is expected to reduce the gap, which should help to stabilise the situation but the situation will continue to be tense and both the gap and RAL is still expected to increase for many instruments such as the Development Cooperation Instrument.

6.  outlook for 2014-2020 programmes

The 2016 budget will have to include sufficient payment appropriations not only to phase out the abnormal level of outstanding payment claims stemming from commitments related to 2007-2013 programmes, but also for the 2014-2020 programmes in heading 1a and 4, whose implementation has been hampered by the payment shortages. The 2016 budget must also include the necessary payment appropriations for other funds, such as rural development (heading 2) to avoid the creation of a new backlog which did not exist in the past.

The Commission will assess the 2016 payment needs for the 2014-2020 programmes in the 2016 Draft Budget.

7.  Conclusions

In recent years, and particularly in 2014, the level of payment appropriations was insufficient to cover incoming payment claims. In turn, this led to a growing backlog of outstanding payment claims at year-end, in particular for the 2007-2013 programmes of the Cohesion policy. The Commission took a number of mitigating measures to minimise the negative effects of payment shortages, by meeting, as far as possible, obligations stemming from past commitments. However, as a side-effect, implementation of the 2014-2020 programmes was hampered.

Payment appropriations in the 2015 budget are expected to lead to a reduction in the backlog of outstanding payment claims for the 2007-2013 programmes. The Commission has identified the payment level necessary to phase out the abnormal level of outstanding payment claims for the 2007-2013 programmes by the end of 2016. In its draft budget 2016, the Commission will propose payment appropriations, accordingly.

The Commission considers that, on this basis, the three institutions can engage to implement a plan to reduce the level of unpaid bills corresponding to the implementation of the 2007-2013 programmes to a sustainable level by the end of 2016.

Annex 1: information sent by the Commission on 15 December 2014

On 15 December 2014, the Commission presented the expected backlog for 2007-2013 Cohesion programmes at the end of 2014 and 2015, as follows:

2010

2011

2012

2013

2014 (*)

2015 (*)

Backlog of unpaid bills at year-end

(EUR billion)

6.1

10.8

16.2

23.4

Up to25 (1)

19 (2)

(*) Commission estimates based on adjusted Member States’ forecasts

(1)  Taking account of additional payment appropriations in Draft Amending Budget 3/2014 as finally approved.

(2) Taking account of additional payment appropriations in Draft Amending Budget 3/2014 as finally approved and payment appropriations authorised in the budget 2015.

The Commission also gave a breakdown of the expected backlog for 2007-2013 Cohesion programmes at end-2014. As set out in the table below, the total level of payment claims actually received by year-end 2014 was some EUR 1.5 billion below the forecasts prepared by the Member States, and some EUR 2.5 billion above the upper range forecasted by the Commission.

EXPECTED BACKLOG AT THE END OF 2014

EUR billion

(1)

Payment claims received by end of 2013 and not paid by end-2013 (backlog)

23.4

(2)

Payment claims received by end November 2014

31.4

(3)  = (1) + (2)

Payment claims requested by end-November to be paid in 2014

54.8

(4)

Authorised level of payment appropriations (with Amending Budget 3/2014)

49.4

(5)  = (3) – (4)

Backlog by end of November 2014, requested to be paid by end-2014

5.4

Forecast

Actual realisation

Member States' forecasts of payment claims to be submitted in December 2014

23

21.5

Commission forecasts of payment claims to be submitted in December 2014

18 - 19

21.5

Forecast for backlog of unpaid bills at the end of 2014: up to EUR 25 billion.

Finally, the Commission presented by country the Member States' estimates of payment claims to be submitted for the Cohesion policy in 2014 (EUR 54,33 billion), the payment claims sent up to 31 October 2014 (EUR 31,36 billion) and as a consequence, the payment claims to be submitted in November and December (EUR 22,97 billion).

The Commission added that "Taking into account the average error rates observed in the 'gross' forecasts of Member States over recent years and the 95% ceiling in payments before closure required by Art. 79 of Reg. 1083/2006, the Commission estimates at EUR 18-19 billion the claims to be received in December". This is consistent with the tables set out above.

Annex 2: Heading 1b: latest forecasts from Member States

This annex sets out the latest forecasts from the Member States as regards the submission of payment claims for the 2007-2013 Cohesion programmes in 2015 and 2016, making a distinction between gross forecasts (listed by Member States) and capped forecasts (see explanation in section 4.4).

Member States' forecasts (in EUR billion)

Period

2007-2013

2015*

Gross forecasts

2016

Gross forecast

AT

Austria

0,09

0,00

BE

Belgium

0,24

0,06

BG

Bulgaria

1,35

0,00

CY

Cyprus

0,06

0,00

CZ

Czech Republic

4,01

3,75

DE

Germany

2,43

0,95

DK

Denmark

0,04

0,03

EE

Estonia

0,09

0,00

ES

Spain

4,65

1,74

FI

Finland

0,21

0,02

FR

France

1,92

0,34

GR

Greece

0,75

0,00

HR

Croatia

0,22

0,31

HU

Hungary

3,86

1,24

IE

Ireland

0,03

0,01

IT

Italy

5,07

1,44

LT

Lithuania

0,09

0,00

LU

Luxemburg

0,01

0,00

LV

Latvia

0,54

0,09

MT

Malta

0,14

0,04

NL

Netherlands

0,21

0,10

PL

Poland

8,92

3,99

PT

Portugal

0,52

0,06

RO

Romania

6,64

2,81

SE

Sweden

0,11

0,00

SI

Slovenia

0,38

0,18

SK

Slovakia

2,68

0,64

UK

United Kingdom

1,52

0,25

CB

Territorial Cooperation

1,16

0,25

TOTAL

 

47,93

18,32

TOTAL CAPPED FORECASTS***

34,74

2,95**

* The figures of 2015 forecasts are calculated using - for the Operational Programmes for which Member States have not sent any forecast in January 2015 - the related forecasts sent in September 2014.

** The maximum payable amount in 2016 is EUR 3,5 billion of which EUR 3 billion is already confirmed by Member States at this stage.

*** Capping is the application of the 95% rule which foresees that interim payments may only be paid before the closure as long as the sum of payments is lower than 95% of the allocation of the programmes.

(1) OJ L 298, 26.10.2012, p. 1.
(2) OJ L 347, 20.12.2013, p. 884.
(3) OJ C 373, 20.12.2013, p. 1.
(4) Texts adopted, P8_TA(2015)0061.
(5)This results from the so-called "N+2" / "N+3" rules whereby payments have to be made within two (N+2) or three (N+3) years after the corresponding commitments have been made. At the end of 2013, the two decommitment rules applied at the same time.
(6) The total additional payment appropriations authorised through amending budgets amounted to EUR 6.7 billion in 2012, EUR 11.6 billion in 2013 and EUR 3.5 billion in 2014.
(7) The backlog of outstanding payment claims for the 2007-2013 Cohesion programmes at year-end increased from EUR 11 billion in 2011 to EUR 16 billion in 2012, EUR 23.4 billion in 2013, and EUR 24.7 billion in 2014.
(8) It is to be noted that for shared management policies such as Cohesion policy (where the Commission reimburses Member States’ expenditure), interest for late payments does not apply.
(9) The remaining 5% is to be paid at the programme closure, which will take place in 2017-2019, after the Commission's assessment that the programme has been implemented successfully and that no correction needs to be made.
(10) Cohesion policy legislation provides for a regulatory deadline of 60 days.
(11) Definition of normal and abnormal backlog is in section 3.4 and 4.3.
(12) The amending budget 2/2014 was originally presented as draft amending budget 3/2014.
(13)Monthly reports on interim payments and pending claims, Budget Forecast Alert (twice a year)
(14)DEC 54/2014.
(15)Unpaid amounts resulting from the reduction of pre-financing rates to a rate below the legal/normal minimum are not included in the current definition of "outstanding payment claims": however, for a number of programmes, some reduction of pre-financing rates has been implemented in 2014 (in some case already in 2013) in order to postpone payments to a later date.
(16)Art.87 of CR 1083/2006: " "
(17)Identical to the one included in the executive summary.
(18)Articles 91 and 92 respectively of Regulation 1083/2006 for programming period 2007-2013.
(19) Due to the cash-flow constraints in the first months of the year (see section 3.3 above), part of the backlog might not be paid within the regulatory deadlines at the beginning of the year.
(20) Except for Croatia, Romania, Slovakia
(21) Article 76 of Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 (OJ L 210, 31.7.2006, p. 25).
(22) Article 112 of Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ L 347, 20.12.2013, p. 320).
(23) The forecasts submitted by Member States in January 2015 did not cover all operational programmes. For these cases, the Commission has used the forecasts received last September. Such an extrapolation of missing Member States' forecasts is not possible for 2016, since the forecasts submitted in September 2014 covered 2014 and 2015 only (not yet 2016). This means that the forecast for 2016 includes only the operational programmes for which the Member States transmitted the information and might have to be revised upward when the missing information is transmitted.
(24) Article 79 of Council Regulation (EC) No 1083/2006 lays down that "The cumulative total of pre-financing and interim payments made by the Commission shall not exceed 95% of the seven-year contribution from the Funds to the Operational Programme; the remaining 5% will only be paid at the closure of the Operational Programme."
(25) Article 89 of Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 (OJ L 210, 31.7.2006, p. 25).
(26) + EUR 406 million (net increase in payment appropriations) for Humanitarian Aid, + EUR 30 million for DCI and + EUR 250 million for ENI.
(27)The graph however does not reflect the impact of the reduced level of pre-financing.


Green Employment Initiative
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European Parliament resolution of 8 July 2015 on the Green Employment Initiative: Tapping into the job creation potential of the green economy (2014/2238(INI))
P8_TA(2015)0264A8-0204/2015

The European Parliament,

–  having regard to the Commission communication ‘Green Employment Initiative: Tapping into the job creation potential of the green economy’ (COM(2014)0446),

–  having regard to the Commission communication ‘Green action plan for SMEs’ (COM(2014)0440),

–  having regard to the Commission communication ‘Towards a circular economy: A zero waste programme for Europe’ (COM(2014)0398),

–  having regard to the Commission staff working document ‘Exploiting the employment potential of green growth’ (SWD(2012)0092),

–  having regard to the Council Conclusions of 6 December 2010 on ‘Employment policies for a competitive, low-carbon, resource-efficient and green economy’,

–  having regard to the Council Decision 2010/707/EU of 21 October 2010 on guidelines for the employment policies of the Member States,

–  having regard to the opinion of the Committee of the Regions ‘Green action plan for SMEs and Green Employment Initiative’,

–  having regard to the OECD/European Centre for the Development of Vocational Training study of 2014 on ‘Greener Skills and Jobs, OECD Green Growth Studies’,

–  having regard to the European Employment Observatory Review of April 2013 on ‘Promoting green jobs throughout the crisis: a handbook of best practices in Europe 2013’,

–  having regard to the International Labour Organisation/European Centre for the Development of Vocational Training report of 2011 on ‘Skills for green jobs: a global view: synthesis report based on 21 country studies’,

–  having regard to the European Centre for the Development of Vocational Training report of 2010 on ‘Skills for green jobs – European synthesis report’,

–  having regard to the Eurofound reports on Industrial Relations and Sustainability: the role of social partners in the transition towards a green economy (2011), Greening the European economy: responses and initiatives by Member States and social partners (2009), and Greening of Industries in the EU: anticipating and managing the effects on quantity and quality of jobs (2013),

–  having regard to the OECD, CFE-LEED working document of 8 February 2010 on ‘Green jobs and skills: the local labour market implications of addressing climate change’,

–  having regard to the ILO/UNEP definition of a green job as any decent job that contributes to preserving or restoring the quality of the environment whether it is in agriculture, industry, services or administration,

–  having regard to its resolution of 12 December 2013 on Eco-innovation – jobs and growth through environmental policy(1),

–  having regard to its resolution of 15 March 2012 on a roadmap for moving to a competitive low carbon economy in 2050(2),

–  having regard to its resolution of 7 September 2010 on developing the job potential of a new sustainable economy(3),

–  having regard to Rule 52 of its Rules of Procedure,

–  having regard to the report of the Committee on Employment and Social Affairs and the opinions of the Committee on the Environment, Public Health and Food Safety and the Committee on Women’s Rights and Gender Equality (A8-0204/2015),

A.  whereas global trends such as the inefficient use of resources, the unsustainable pressure on the environment, and climate change are close to the limits beyond which irreversible impacts on our societies and the natural environment cannot be prevented and growing social exclusion and inequalities are a challenge to societies;

B.  whereas in its 2015 report the European Environment Agency has pointed out that current measures are insufficient to achieve aims related to biodiversity conservation, reduction in the use of fossil fuels, and combating climate change and averting its impact on human health and the environment;

C.  whereas the lack of a coherent policy response to tackle these common challenges risks leaving a significant part of the sustainable employment creation potential of a green and socially inclusive transition unused;

D.  whereas in response to these threats we are seeing the development of new sectors, changes within many others and the decline of some sectors such as those which are heavily polluting; whereas there is a need to focus on innovation and on ways to reduce pollution; whereas with regard to some declining sectors special attention needs to be paid to the workforce in terms of retraining and alternative employment; whereas investments in those areas prioritised under the Commission's Green Jobs agenda, including recycling, biodiversity, energy efficiency, air quality and all renewable energy technologies such as offshore renewable energy, have the potential to significantly boost job creation, including in sparsely populated areas;

E.  whereas, according to the European Environment Agency, the green goods and services sector grew by more than 50 % between 2000 and 2011, generating over 1,3 million jobs and whereas, according to the Commission’s calculations, the renewable energy economy will create 20 million new jobs in Europe by 2020; whereas an ambitious and coherent EU policy and investment in renewable energies, forest management, sustainable agriculture and soil protection (to prevent and counteract hydrological instability) have the potential to significantly boost job creation;

F.  whereas the objective of sustainable development is enshrined in the Lisbon Treaty, and enforcement of this implies that environmental issues are treated at the same level as economic and social ones;

G.  whereas the EU2020 strategy to promote smart, sustainable and inclusive economies recognises the pivotal role of a transition towards green and socially fair economies;

H.  whereas labour market rigidities are impeding job creation, while a competitive EU labour market can contribute to achieving the Europe 2020 employment targets;

I.  whereas the EU and its Member States made a commitment, at the United Nations Framework Convention on Climate Change Conference in Cancun in 2010, to ensure ‘a just transition of the workforce that creates decent work and quality jobs’; whereas a just transition for all towards an environmentally sustainable economy needs to be well managed to contribute to the objective of sustainable and long-term employment for all – including, but not limited to, highly skilled jobs –, social inclusion and the eradication of poverty;

J.  whereas the five pillars of a ‘Just transition’ include: consultation/union voice; investment in green and decent jobs; green skills; respect for labour and human rights; and social protection for workers and communities on the frontline of the transition from high to low carbon;

K.  whereas strong participation by workers in the transition is essential with a view to increasing environmental consciousness and an understanding of the need for resource efficiency and decreasing our impact on the environment;

L.  whereas the potential for expansion in green jobs is hampered by a skills deficiency and mismatch caused by a number of factors, including variability of curricula in relation to sustainability, identified shortcomings in particular sectors, the lack of students with the necessary STEM (science, technology, engineering and maths) and IT skills, and gender concentration in some sectors rather than gender balance;

M.  whereas there is evidence that investing in energy and resource efficiency and developing the supply chain through a clear industrial strategy, as well as shifting tax from labour to other sources, has the potential to have a positive impact on job creation;

N.  whereas Europe is engaged in global competition, and affordable energy costs, the completion of the EU’s internal market and an improved investment climate for sustainable growth and the creation of jobs play a decisive role;

O.  whereas certain sectors, such as energy-efficient building renovation, are site-specific and cannot be offshored or relocated;

P.  whereas uncertainty and a lack of coherence in policy direction and an absence of clear goals hinders investment, skills development, R&D and thus frustrates the development of employment opportunities;

Q.  whereas a greater societal awareness of the importance of the need for a green economy would enhance employment possibilities;

R.  whereas clear, fixed, mid- to long-term targets, including the EU energy efficiency and pollution targets, can be important drivers of change, and whereas EU regulation also has an important role to play in this regard; whereas targeted investment, including in the development of supply chains within the EU, leading to job creation should stem from, and be consistent with, a clear policy framework;

S.  whereas the public sector and local and regional authorities can play a pivotal role in facilitating the transitions to a green economy and creating inclusive labour markets;

T.  whereas the Ecolabel, EMAS, GPP and similar schemes help to create green jobs;

U.  whereas micro-, small and medium-sized enterprises are one of the most important generators of employment in the EU, account for considerably more than 80 % of all jobs and have led the way in many ‘green’ sectors, but may face particular difficulties in anticipating the skills needed and in fulfilling the job potential;

V.  whereas the Integrated Guidelines are a key aspect of the coordination of Member States' economic and employment policies and form the basis of country-specific recommendations, and whereas they should underpin the Europe 2020 objectives, notably the employment target, inter alia by promoting quality job creation including through green employment;

W.  whereas women must benefit equally from the creation of suitable green jobs, and the ‘glass ceiling’ must be broken through;

X.  whereas women are disproportionately hit by the crisis and by austerity policies, and whereas green jobs have shown themselves to be more crisis-resistant than others;

Y.  whereas low-carbon sectors tend to have higher labour productivity, and wage shares have fallen less in these sectors than in the top 15 emitting industries;

Z.  whereas Eurobarometer data on green work in SMEs show that energy saving, waste reduction and lowering raw material consumption are measures which have come to be economically advantageous;

Towards a green economy – opportunities for the labour market

1.  Emphasises that a transition towards sustainable societies and economies, including sustainable patterns of consumption and production, can generate the potential both to create new quality jobs and to transform existing employment into green jobs in virtually all sectors and across the entire value chain: from research to production, distribution and servicing, and in new green high-tech sectors such as renewable energies, as well as in traditional industries like manufacturing and construction, or in agriculture and fisheries, or service sectors such as tourism, catering, transport and education; at the same time stresses that, in addition to creating a large number of jobs, investment in renewable energies and energy efficiency contributes to maintaining Europe’s economic and industrial competitiveness and to reducing Europe’s energy dependency;

2.  Stresses that two thirds of the services provided by nature, including fertile land and clean water and air, are in decline, and global warming and biodiversity loss are close to the limits beyond which irreversible impacts on our societies and the natural environment cannot be prevented;

3.  Points out that continuous economic growth is possible only if it takes into account the limitations of the environment; highlights, in this context, the fact that a green and circular economy can provide solutions for the environment as well as for the economy and for society in general;

4.  Highlights the fact that full implementation of environmental legislation, as well as the improvement of environmental integration and policy coherence across different sectorial polices in the EU, are essential for a full deployment of the potential linked to the green economy and therefore for the creation of green jobs;

5.  Notes that in its 2015 report the European Environment Agency points out that current measures are insufficient to achieve aims related to conserving biodiversity, reducing the use of fossil fuels, and combating climate change and averting its impact on human health and the quality of the environment;

6.  Notes that the transition bears significant potential to create local jobs which cannot be relocated, and in areas which cannot be offshored, and in sectors hit by the crisis such as the buildings sector; notes that there is strong evidence that the green transition will, on balance, have a positive impact on employment, reflecting the fact that sustainable economic activities like saving energy or farming organically are more labour-intensive than the activities they replace and could have the potential to enable regions to become more self-sufficient;

7.  Considers that an agreed definition of ‘green jobs’, based on that of the ILO and the International Conference of Statisticians, should be adopted;

Just transition and creation of quality and sustainable jobs

8.  Welcomes the Commission’s statement that restructuring should be handled in a socially responsible way, while at the same time recognising the need for companies to innovate and restructure;

9.  Believes it is crucial, in order to maximise the net job potential of the green economy, that we provide our existing workforce with proper opportunities to acquire the new skills needed for the circular economy;

10.  Calls on the Member States to encourage policies aimed at protecting and upgrading public buildings in order to increase energy efficiency and reduce consumption;

11.  Calls on the Member States, and the Commission where appropriate, to commit to a ‘just transition roadmap’ to pursue ambitious environmental goals with the promotion of the following aspects: adequate social protection and remuneration, long-term jobs and healthy and safe working conditions, government-led investment in education, training and skills programmes, respect for labour rights and the strengthening of worker information, consultation and participation rights regarding matters concerning sustainable development, and effective workforce representation; calls on the Member States to pursue these goals;

12.  Recalls that the revised EU Health and Safety Strategy should take account of specific developments in new sectors where appropriate;

13.  Stresses that anticipating change in employment requires proactive transformation management and improved high-quality data collection on the current and future needs of the labour market, with the involvement of European higher-education institutions, and that long-term planning is essential for ensuring an effective transition and increased employment; stresses the important role played by local and regional authorities in the transition to the greener economy in education, infrastructure, supporting local businesses and creating stable employment with salaries governed by collective agreements or other permitted means in accordance with national legislation; whereas social dialogue is an essential element of transformation management; calls on the Commission, Member States, regional and local governments and social partners to assume their responsibility and tackle this challenge collectively, taking into account the principle of subsidiarity;

14.  Notes that the role of the social partners in the transition to green jobs has been gradually increasing in recent years, but recalls that more needs to be done to build a lasting and sustainable social dialogue that can help to meet the challenges posed by the move to a competitive, low-carbon, resource-efficient economy;

15.  Highlights the importance of national governments in promoting sectorial social dialogue, especially in newly emerging green industries, and also in ensuring the inclusion of SMEs;

16.  Notes that some regions are facing more challenges than others because of the geographical concentration of energy-, resource-intensive and polluting industries, or of higher levels of poverty or unemployment; calls on the Member States and local and regional governments supported by the European Union to collaborate with the social partners and collectively implement just transition roadmaps, including solidarity mechanisms for a socially fair, green transition of the local and regional economies, while supporting communities and workers affected by change and thereby reducing insecurity due to job displacement and ensuring that demands for new job skills are met;

17.  Highlights the fact that local authorities can play a key role in promoting job growth in the green economy and more decent and inclusive jobs by:

   green investment,
   leveraging the power of public procurement, including the use of social and environmental clauses in public procurement,
   creating partnerships, including with training institutions, to improve the job/skills match on local labour markets,
   supporting both green SMEs and greening of SMEs,
   setting up inclusive green employment programmes that ensure that vulnerable groups will also capitalise on green growth;

18.  Points to the evidence that emphasises the importance of management’s engagement with the workforce to ensure substantial participation by them in achieving these changes through social partnership; recommends the involvement of trade union ‘green representatives’ working with employers on strengthening the greening of the economy and increasing sustainability at their workplaces; calls on the Member States to provide targeted support for joint worker/employer initiatives for greening industries;

19.  Considers that pilot projects in support of certain of these objectives should be developed;

20.  Welcomes the Commission’s commitment to using the Targeted Mobility Schemes under the Programme for Employment and Social Innovation (EaSI) to promote labour mobility of jobseekers;

Skills for green employment

21.  Welcomes the tools for skills development and the forecasting of skill needs proposed by the Commission; highlights the fact that skills development should encourage the development of STEM skills, which are widely useful in an economy; stresses, however, that more ambitious action and investment is needed; believes that in order to anticipate future skills needs, all labour market stakeholders must be strongly involved at all levels;

22.  Calls on the Member States to work with the Commission to set up a data bank listing training courses and job offers related to green employment, with the aim of improving the quality of information, advice and guidance available on careers and the skills needed to capitalise on employment opportunities provided by the greening of the economy;

23.  Calls on the Commission to ensure that data collection is carried out in all green sectors, including those that are currently neglected, such as public transport and the retail sector; asks the Commission, while providing support to national statistical offices and Public Employment Services (PES), and while reinforcing the use of quantitative modelling tools, to incorporate a gender equality perspective in data collection on all green employment sectors;

24.  Asks the Commission to include a gender perspective in the development of new data collection, disaggregation and analysis, such as work carried out with the econometrical tool FIDELIO or with stakeholders such as the International Conference of Labour Statisticians;

25.  Stresses the need for a greater emphasis on bridging the skills gap through fostering skills development;

26.  Calls on the Commission to help foster skills development through the updating of qualifications and corresponding education and training curricula at EU level;

27.  Calls on the Commission to emphasise greater use of classification systems such as ESCO which can be used to identify skills gaps;

28.  Emphasises the importance of better synergies between education systems and emerging new green jobs through better coordination between educational institutions and employers' unions and other relevant organisations;

29.  Calls on the Member States, regional governments and local authorities to adopt and implement, together with the social partners and training providers, skill development and anticipation strategies with the objective of improving generic, sectoral and occupation-specific skills; further stresses the importance of partnerships and trust between educational institutions, businesses, the social partners and authorities;

30.  Notes that these strategies should include a thorough assessment of the type and level of green jobs to be created and the required skills and knowledge, leading to the anticipation and identification of skills gaps and targeted vocational and lifelong training programmes focusing on matching skills and jobs with the aim of increasing employment; stresses the need to actively include in the strategies both displaced workers and low-skilled workers at risk of being excluded from the labour market, by ensuring that skills training is targeted, accessible and free for these workers;

31.  Notes that CEDEFOP proposes that adapting curricula and including environmental awareness, with an understanding of sustainable development and business efficiency, is better than proposing new training programmes;

32.  Encourages the Member States and regional and local authorities to integrate sustainable development and environmental competences and skills into training and education systems, in particular by strengthening VET (vocational education and training) systems and by encouraging research centres to develop technologies, projects and patents for green products, in collaboration with new green companies; encourages exchanges of ideas between research centres and networks of companies and professionals; recalls the importance of science, technology, engineering and mathematics (STEM) skills and the need to ensure that more women study STEM subjects;

33.  Calls for an ambitious strategy for creating sustainable jobs, including by addressing the skills mismatch with a particular focus on meeting the skills needs of a greener economy;

34.  Urges the Member States to take advantage of the development of this sector, to create highly skilled apprenticeships to provide young people with specialised knowledge and training, and to help tackle the high levels of youth unemployment;

35.  Calls on the Commission and the Member States to take into account, when making the transition to the green economy, the needs of women and girls for better lifelong learning opportunities, especially in fields which have a high potential for providing a significant number of new green jobs, such as science, research, engineering, digital technology and new technologies, with the aim of strengthening women’s position in society, removing gender stereotypes and providing jobs which correspond fully to the particular needs and skills of women;

36.  Invites the Commission, the Member States the and regional and local authorities systematically to include a gender equality perspective in the definition, implementation and monitoring of green job creation policies at all levels, with a view to ensuring that equal opportunities are guaranteed, taking into account the challenges of green job creation in rural areas; encourages the Member States and regional and local authorities to make further efforts to enable women to participate fully in policy formulation, decision-making and the implementation of a green employment strategy that includes green skills;

37.  Asks the Commission to open a public debate on, and to promote the concept of, ‘education for sustainable development’, with special emphasis on the education of girls and women; calls on the Member States and the Commission to promote policies to encourage higher participation of women in education in STEM subjects and entrepreneurship, and to connect the green jobs agenda to the empowerment of women through education; calls for measures encouraging women’s participation in VET and life-long learning opportunities in green sectors;

38.  Calls on the Commission to adopt a Europe 2015-2020 strategy for gender equality that takes into account the Europe 2020 strategy’s employment rate targets for smart, sustainable and inclusive growth;

39.  Stresses the need for targeted action by public authorities and services to involve all labour market stakeholders, including employers' and employees' organisations, to bridge the skills gap; calls on the Member States and regional and local authorities to have mechanisms in place to train staff in employment authorities and services to mainstream skills for green employment in labour market policies and to develop the means of assessing the impact of such training; stresses the importance of European education institutions aligning their programmes with the needs of the green economy and the labour market in general;

40.  Calls on the Member States to put in place a regulatory environment that encourages innovation in the green economy;

Policy coherence to fully develop the job potential of sustainable economies

41.  Calls on the Commission and the Member States to adopt ambitious, long-term and integrated regulatory, fiscal and financial frameworks for sustainable investment and to encourage innovation, thereby fully unlocking the employment potential of these changes; emphasises that policies should be developed in a framework of long-term horizons that includes targets as well as indicators to measure progress towards their achievement;

42.  Stresses that coordination across the Commission and across relevant ministries at national level is important in order to create a comprehensive, whole-of-government framework for change that is capable of devoting the required attention to the distributional effects of the transition;

43.  Notes that the success or failure of the Green Employment Initiative is dependent on the level of ambition of the Commission's binding targets to renewable energy and energy efficiency, and on investment in renewable energy technology and energy efficiency programmes committed to by the Member States;

44.  Stresses that the Commission and the Member States are responsible for consistent policies that promote renewable energy production and increased energy efficiency with a view to triggering local and regional development and creating quality local jobs; stresses that investment in renewable energy and energy efficiency can become one of the main sources of job creation in Europe in the coming years;

45.  Points out that territorial self-sufficiency in energy remains one of the EU’s long-term economic and energy policy goals; maintains, moreover, that the territorial dimension of investment must, without fail, be taken into account, given that it helps to achieve the EU’s territorial cohesion policy aims to connect cities and the countryside;

46.  Welcomes the Commission's inclusion of decent jobs in the EU negotiating mandate for the COP 21 Paris talks, building on the Cancun agreement of 2010 and subsequent initiatives; calls on the Commission to ensure that the 'just transition' agenda remains part of its negotiating position;

47.  Calls on the EU and the Member States to set mandatory energy-saving and efficiency targets, and to support white certificates as an instrument to facilitate the achievement of EU energy-saving targets; calls on the Member States to implement fully, and to enforce, the Energy Efficiency Directive and to remain committed to achieving, as a minimum, the 2030 energy efficiency targets;

48.  Supports EU commitments to pushing for a just global transition to an inclusive green economy in collaboration with other international partners;

49.  Calls on the Member States to fully respect and implement the new provisions of the revised EU legislation on public procurement, and to consider examining whether the introduction of environmental and social criteria in public procurement policies could boost job creation in the greener economy; stresses that remaining legal uncertainties related to use of the social and environmental clauses in public procurement could be clarified;

50.  Calls on the Commission to help revive the repairs sector, which would lead to the creation of new jobs that are by their very nature environmentally friendly;

51.  Calls on the Member States to support the contribution of public services to the just transition towards a sustainable economy, notably by proactively ensuring that services such as communications, energy, transport, waste and water management are delivered in a sustainable way;

52.  Expresses strong disappointment at the withdrawal of the circular economy legislative package, the provisions of which would have been expected to create up to 180 000 jobs in the EU waste management sector alone; calls on the Commission, therefore, while respecting the responsibilities of the Member States, to honour its commitment to proposing, as soon as possible, ambitious waste legislation to cover upstream reduction, new recycling targets, and redefinition of the criteria for calculating the quantity of material actually recycled;

53.  Calls on the Commission, moreover, to consider introducing criteria to provide incentives for companies which have a virtuous and environmentally sustainable waste disposal cycle;

54.  Recognises that linking sustainable agricultural production with the monitoring and protection of on-farm biodiversity and, subsequently, the use of smart labelling for agricultural products to mark their environmental impact, in order to stimulate consumer demand for biodiversity-friendly produce, represents a significant potential for green employment in EU rural areas;

55.  Notes that sustainable forest management has real potential to create jobs while actively contributing to climate change mitigation and the protection of biodiversity;

56.  Calls on the Commission to use the EU Semester and the review of the Europe 2020 strategy to support green job creation; calls on the Commission to issue country-specific recommendations that can contribute to higher employment and smaller ecological footprints, and calls for detailed independent studies on the costs and benefits of a shift in tax burdens (e.g. from labour to environmental taxation), as well as the phasing-out of subsidies by 2020;

57.  Stresses that such recommendations could include a shift from labour to other sources, and that such a tax shift should aim to change polluting behaviour, but must not have unwanted repercussions on social security systems or impact disproportionately on those on low incomes;

58.  Calls on the Commission and the Member States to phase out direct and indirect environmentally harmful subsidies including, but not limited to, those for fossil fuels; invites the Commission to develop models that can be implemented by Member States for shifting taxation from labour to environmental pollution, and to take into account the environmental impact of goods and services in the spirit of the polluter pays principle; calls on the Commission to issue country-specific recommendations to the Member States that can contribute to efforts to foster green employment and reduce ecological footprints; calls, furthermore, on the Commission to integrate in a proactive manner environmental and climate-related considerations into the European Semester in order to support green jobs creation;

59.  Invites the Member States to introduce targeted subsidies and/or tax exemptions for start-ups, and for micro, small and medium-sized enterprises, that provide goods and services offering high environmental added value, including overall reduced carbon content;

60.  Calls on the Commission and the Member States to show greater coherence and cohesion in their policies and to make more substantial political commitments at the highest level in related areas such as tax on financial transactions and the fight against tax fraud and tax evasion;

61.  Calls on the Commission to renew its commitment to the Europe 2020 strategy and to issue its mid-term review without delay and at the latest by 2015; calls on the Commission to reconfirm the targets in the European Semester, taking into account the scoreboard for macroeconomic imbalances and the review of the Europe 2020 strategy; calls on the Commission to propose more ambitious social and environmental targets for 2030 and 2050; stresses that accurate, methodologically grounded and shared monitoring of green jobs could also help Member States in assessing the effectiveness of their environmental and labour policies, and strengthen the tools developed at European level to track the progress of, and monitor, the Employment Guidelines under Europe 2020;

62.  Stresses the opportunities that the 2030 Climate and Energy package provides in job creation and the future role that environmental legislation will play in achieving the EU’s long-term environmental goals and in creating jobs and green growth;

63.  Calls on the Commission to look upon innovation as the cornerstone of Europe's industry and to develop active strategies to ensure that social transitions are well managed and benefits are spread across all of Europe; calls on the Commission and the Member States to support the emergence of new supply chains and industry networks in resource efficiency, goods and services through a sustainable industrial policy and market transformation incentives;

64.  Underlines the need for the Member States to prepare their economies for a low-carbon, resource- and energy-efficient future, while taking account of the possible risk of job relocation and carbon leakage due to the impact of climate policies;

65.  Calls on the Commission and the Member States to step up international efforts to create a global environmental policy that can limit the damage caused by offshoring of industrial production outside the EU and by carbon leakage;

66.  Calls on the Commission to present its proposal to reform the EU Emissions Trading System (ETS) as soon as possible, taking into account the need to protect industries exposed to a significant risk of ‘carbon leakage’;

67.  Calls on the Commission to address green employment in the implementation of the Energy Union;

Investing in sustainable job creation

68.  Highlights the fact that there is a need to apply the right mix of supply- and demand-side interventions, which comes from combining job creation with matching active labour-market policies, specific to the needs of different local labour markets;

69.  Calls on the Commission and the Member States to promote, including in the framework of the European Fund for Strategic Investments, quality investments geared towards generating societal and economic benefits such as sustainable quality jobs, gender equality, quality education and innovation to promote the green transition and to fight energy poverty; calls on the Commission and the Member States to focus investment in areas with positive labour market impact with the aims of creating sustainable jobs with full social protection and fighting unemployment; stresses that the projects financed shall contribute to the EU 2020 strategy in a measurable way; points out, in this context, that job creation in the green sectors has remained positive throughout the recession;

70.  Highlights the fact that investing in energy efficiency can promote local job creation and local economic development and reduce energy poverty, and that ensuring energy efficiency in buildings is the most cost-effective way of offering long-term solutions to energy poverty, which affects some 125 million people in Europe, and an important element in ensuring more efficient use of European energy and creating green jobs; reiterates that ensuring the safety of buildings is also crucial in this regard; invites the Commission to present its ‘Smart Financing for Smart Buildings’ initiative as soon as possible;

71.  Recommends that climate, renewable energy and energy efficiency targets should be considered investment targets and key principles for political action;

72.  Warns against supporting activities that carry adverse environmental and social impacts as they undermine the policy coherence necessary to maximise the employment potential of green jobs;

73.  Recommends that quality investment in key public services such as communications, energy, transport, waste and water management are targeted in order to support sustainable public-procurement procedures and the mainstreaming of green skills;

74.  Calls on the Member States to make full use of the possibilities under the legal framework for the European Structural and Investment Funds and other sources of EU funding to promote sustainable projects that foster green employment, and to make EU funding and financial instruments as easily accessible as possible for local authorities, with clear, straightforward rules and reachable minimum funding thresholds;

75.  Encourages the Commission and the Member States to use the 2016 post-electoral revision of the Multiannual Financial Framework (MFF) as an opportunity to promote the greener transition of our economies;

76.  Notes that ESF support is available to help support green economic and employment growth and encourages national governments and the relevant national services to consider using this financing more actively in order to promote the creation of economically justified and economically sustainable green jobs;

77.  Notes that some Member States have made considerable progress in the greening of the economy, and encourages the Union and the Member States to foster the sharing of ideas, knowledge, experience, and best practices in this area so as to ensure a smooth transition;

78.  Urges the Member States and the private sector to use instruments such as Ecodesign, Ecolabel, EMAS and green public procurement (GPP), as they can support the green economy and thus contribute to the creation of green jobs; calls on the Commission to provide guidance tools to create favourable market conditions for the full adoption of these voluntary instruments;

79.  Calls on the Member States to focus greater attention on the implementation of environmental management and eco-auditing systems based on the European standard (ISO 14000);

Small and medium-sized enterprises (SMEs)

80.  Supports the objectives of the Green Action Plan for SMEs and the SME-oriented actions, including the establishment of a European Resource Efficiency Excellence Centre to advise and assist SMEs seeking to improve their resource-efficiency performance, to support green entrepreneurship, to exploit opportunities for greener value chains and to facilitate market access for green SMEs and microenterprises; considers that awareness-raising activities and technical assistance are key to active participation by SMEs in the circular economy;

81.  Recalls that SMEs have enormous potential for creating employment, in particular youth employment, and promoting a dual system of vocational training and apprenticeship schemes;

82.  Recognises that the European Fund for Strategic Investments (EFSI) could help micro-, small and medium-sized enterprises to engage in activities involving a high degree of environmental and social innovation;

83.  Notes that Eurobarometer data on green work in SMEs show that saving energy and reducing waste and the use of raw materials have become economically advantageous;

84.  Calls on the Commission to stimulate new business models, such as cooperative enterprises, for increasing the efficiency of production and distribution processes, adopting innovative solutions to save resources and offering more sustainable products and services;

85.  Points out that SMEs can only create growth and jobs if favourable incentivising opportunities are also available through the green economy;

86.  Calls on the Commission to ensure that green incentives for SMEs have a meaningful impact where they are most needed;

87.  Notes that SMEs and microenterprises are key drivers of job creation in Europe; stresses that SMEs and microenterprises face particular challenges when exploiting the job opportunities of a green transition, in particular regarding access to finance, training and bridging skills gaps; calls on the Commission and the Member States to take ambitious action to provide support to facilitate green job creation in SMEs and microenterprises, including targeted information, awareness raising, technical assistance and access to finance and training measures;

88.  Points out that a greener value chain, which involves re-manufacturing, repair, maintenance, recycling and eco-design, can provide considerable business opportunities for many SMEs;

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89.  Instructs its President to forward this resolution to the Council and the Commission, and to the governments and parliaments of the Member States.

(1) Texts adopted, P7_TA(2013)0584.
(2) OJ C 251 E, 31.8.2013, p. 75.
(3) OJ C 308 E, 20.10.2011, p. 6.


Tax avoidance and tax evasion as challenges in developing countries
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European Parliament resolution of 8 July 2015 on tax avoidance and tax evasion as challenges for governance, social protection and development in developing countries (2015/2058(INI))
P8_TA(2015)0265A8-0184/2015

The European Parliament,

–  having regard to the Declaration of Monterrey (2002), the Conference on Financing for Development in Doha (2008), the Paris Declaration (2005) and the Accra Agenda for Action (2008),

–  having regard to UN General Assembly resolutions 68/204 and 68/279 on the Third International Conference on Financing for Development, to be held in Addis Ababa (Ethiopia) from 13 to 16 July 2015,

–  having regard to the work of the UN Committee of Experts on International Cooperation in Tax Matters(1),

–  having regard to the UN Model Double Taxation Convention between developed and developing countries(2),

–  having regard to the Directive 2005/60/EC of the European Parliament and of the Council on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing(3),

–  having regard to the Commission communication of 21 April 2010 entitled ‘Tax and Development, Cooperating with Developing Countries on Promoting Good Governance in Tax Matters’ (COM(2010)0163),

–  having regard to the Commission communication of 5 February 2015 entitled ‘A Global Partnership for Poverty Eradication and Sustainable Development after 2015’ (COM(2015)0044),

–  having regard to the Commission communication of 18 March 2015 on tax transparency to fight tax evasion and avoidance (COM(2015)0136),

–  having regard to its resolution of 21 May 2013 on the fight against tax fraud, tax evasion and tax havens(4),

–  having regard to its resolution of 8 March 2011 on tax and development – cooperating with developing countries on promoting good governance in tax matters(5),

–  having regard to its resolution of 10 February 2010 on promoting good governance in tax matters(6),

–  having regard to its resolution of 8 October 2013 on corruption in the public and private sectors: the impact on human rights in third countries(7),

–  having regard to its resolution of 26 February 2014 on promoting development through responsible business practices, including the role of extractive industries in developing countries(8),

–  having regard to its resolution of 25 November 2014 on the EU and the global development framework after 2015(9),

–  having regard to its resolution of 13 March 2014 on the EU 2013 Report on Policy Coherence for Development(10),

–  having regard to Article 208 TFEU, which establishes eradication of poverty as the primary objective of EU development policy and the principle of policy coherence for development,

–  having regard to Rule 52 of its Rules of Procedure,

–  having regard to the report of the Committee on Development and the opinion of the Committee on Economic and Monetary Affairs (A8-0184/2015),

A.  whereas illicit financial flows (IFFs), i.e. all unrecorded private financial outflows involving capital that is illegally earned, transferred or utilised, typically originate from tax evasion and avoidance activities, such as abusive transfer pricing, against the principle that taxes should be paid where profits have been generated, and whereas tax evasion and avoidance have been identified as major obstacles to the mobilisation of domestic revenue for development by all major international texts and conferences on financing for development;

B.  whereas, according to the 2014 Global Financial Integrity Report, combined foreign direct investment (FDI) and official development assistance (ODA) between 2003 and 2012 represent slightly less than illicit outflows; whereas IFFs represent roughly ten times the amount of aid money received by developing countries that should be aimed at poverty eradication, welfare and sustainable development, representing an annual illicit capital flight from developing countries of an estimated USD 1 trillion;

C.  whereas the generation of public revenues from the extractive industries is essential to the development strategies of many developing countries, especially LDCs, but the potential offered by extractive industries to boost fiscal revenues is by and large not well exploited, owing to the inadequacy of tax rules or to difficulties in enforcing them, since arrangements between developing countries’ governments and extracting companies are usually ad hoc and negotiated without transparency and clear guidelines;

D.  whereas the existence of large informal sectors in developing countries’ economies makes broad-based taxation next to impossible, and whereas in countries where a large proportion of the population lives in poverty, a considerable share of GDP is not taxable;

E.  whereas fair, well-balanced, efficient and transparent tax regimes provide vital finance to governments to cover citizens’ rights to basic public services, such as healthcare and education for all, and whereas effective redistributive fiscal policies contribute to decreasing the effect of growing inequalities on those who are most in need;

F.  whereas, according to UNCTAD, some 30 % of cross-border corporate investment stocks have been routed through conduit countries before reaching their destination as productive assets;

G.  whereas corporate tax revenues constitute a significant share of developing countries’ national income, making them particularly affected by corporate tax avoidance, and in the past years developing countries have continually lowered corporate tax rates;

H.  whereas tax havens and secrecy jurisdictions that allow banking or financial information to be kept private, combined with ‘zero-tax’ regimes to attract capital and revenues that should have been taxed in other countries generate harmful tax competition, undermine the fairness of the tax system and distort trade and investment, particularly affecting developing countries, with a loss of an estimated USD 189 billion of tax revenue annually;

I.  whereas taxation can be a reliable and sustainable source of revenue in developing countries, and offers the advantage of stability in comparison with traditional development financing mechanisms like concessional loans, only if there is a fair, well-balanced, efficient and transparent taxation regime, an effective and efficient tax administration to promote tax compliance, and an accountable and responsible use of public revenue;

J.  whereas the potential benefits of effective and transparent taxation and fiscal policies go beyond the increase in available resources to foster development, and have a direct positive effect on good governance and state-building by strengthening democratic institutions, the rule of law, and the social contract between government and citizens, in order to create a reciprocal link between taxes, public and social services, and efforts to promote the stability of government budgets, thereby promoting long-term independence from foreign assistance and allowing developing countries to be responsive and accountable to national objectives and to assume ownership of their policy choices;

K.  whereas the need for an increase in domestic revenues has become more pressing in response to the financial and economic crisis;

L.  whereas the amount of resources raised by developing countries through domestic revenue mobilisation has been increasing steadily, and important progress has been made in this field with the aid of international donors;

M.  whereas developing countries face major political, administrative and technical constraints in raising tax revenues as a result of insufficient human and financial resources to collect taxes, weak administrative capacity to deal with the complexity of collecting taxes on transnational companies, lack of tax collection capacities and infrastructure, a drain of skilled personnel away from tax administrations, corruption, lack of legitimacy of the political system, lack of participation in international tax cooperation, and unfair distribution of revenues and poor tax governance;

N.  whereas while the current global context of trade liberalisation and the gradual removal of trade barriers over the past decades has increased the amount of cross-border-traded goods, it has also created difficulties for developing countries that rely heavily on taxes from trade, especially LDCs, in compensating for the decline in trade taxes and in shifting to other types of domestic resources, in particular a well-balanced tax mixture;

O.  whereas in recent years there has been a rise in the number of tax treaties between developed and developing countries that have been used to lower taxation in cross-border financial transfers, minimising developing countries’ domestic resource mobilisation capacities and creating possible routes through which multinational companies may avoid taxation; whereas a recent impact assessment carried out by authorities in the Netherlands concluded that the Dutch tax system facilitated the avoidance of withholding tax, leading to foregone dividends and interest from withholding tax revenues in developing countries in the range EUR 150-550 million per year(11);

P.  whereas, comparatively speaking, developing countries raise substantially less revenue than advanced economies (with a tax-to-GDP ratio range of 10-20 %, as opposed to a range of 30-40 % for OECD economies) and are characterised by extremely narrow tax bases; whereas there is considerable potential for broadening tax bases and increasing the amount of tax revenues in order to provide the necessary means for essential governmental responsibilities;

Q.  whereas developing countries have been trying to attract investment mainly by offering various tax incentives and exemptions that are not transparent and not based on a proper cost-benefit analysis, often failing to attract real and sustainable investments, putting developing economies in competition against each other to offer the most favourable tax treatment, and leading to unsatisfactory outcomes in terms of effective and efficient tax systems and to harmful tax competition;

R.  whereas the Member States have already committed themselves to allocating 0,7 % of their GNI to ODA, and whereas the amount of aid in support of domestic resource mobilisation is still low – accounting for less than one percent of total ODA in 2011– and only an estimated 0,1 percent (USD 118,4 million) of ODA was dedicated to capacity building in tax matters in 2012;

S.  whereas many developing countries cannot attain even the minimum tax level necessary to finance their basic functioning, their public services and their efforts to reduce poverty;

T.  whereas the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and Member States’ development finance institutions support private companies in developing countries directly by providing loans, or indirectly by supporting financial intermediaries such as commercial banks and private equity funds, which then on-lend to, or invest in, enterprises;

U.  whereas developing countries should be better represented in the structures and procedures of international tax cooperation in order to participate on an equal footing in the formulation and reform of global tax policies;

V.  whereas the Committee of Experts on International Cooperation in Tax Matters is a subsidiary body of the Economic and Social Council that pays special attention to developing countries and to countries with economies in transition;

W.  whereas collecting sufficient levels of public finances can serve a decisive role in promoting more equitable societies that reject discrimination between men and women and that provide special support for children and other vulnerable groups;

1.  Calls on the Commission promptly to put forward an ambitious action plan, in the form of a communication, to support developing countries fighting tax evasion and tax avoidance and to help them set up fair, well-balanced, efficient and transparent tax systems, taking into account the work undertaken by the Development Assistance Committee of the OECD in advance of the Financing for Development Conference in Addis Ababa, Ethiopia, to be held on 13-16 July 2015, and the impact of international tax treaties on developing countries;

2.  Insists that effective mobilisation of domestic resources and a strengthening of tax systems will be an indispensable factor in achieving the post-2015 framework that will replace the Millennium Development Goals (MDGs), which represents a viable strategy to overcome foreign aid dependency in the long term, and that efficient and fair tax systems are crucial for poverty eradication, fighting inequalities, good governance and state-building; recalls that certain transnational economic activities have affected the ability of countries to generate domestic government revenues and to choose their taxation structure, while the increased mobility of capital, combined with the use of tax havens, has greatly altered the conditions for taxation; expresses as well concerns about the level of corruption and non-transparent public administration that hinder tax revenues from being invested in state-building, public services or public infrastructure;

3.  Notes that tax resources remain low as a proportion of GDP in most developing countries, making them particularly vulnerable to the tax evasion and avoidance activities of individual taxpayers and companies; stresses that this represents a considerable financial loss for developing countries that encourages corruption and harms EU development policy, and that taking appropriate measures at national, EU and international level against these practices should be a top priority for the EU and its Member States, taking into account the needs and constraints that developing countries face in gaining access to their tax revenues; considers that the EU should be taking a leading role in driving international efforts to combat tax havens, tax fraud and evasion, leading by example, and that it should cooperate with developing countries in counteracting aggressive tax avoidance practices by certain transnational companies, as well as in seeking ways to help them withstand pressures to engage in tax competition;

Action plan to combat tax avoidance and tax evasion in developing countries

4.  Urges the Commission to take concrete and effective measures to support developing countries and regional tax administration frameworks, such as the African Tax Administration Forum and the Inter-American Centre of Tax Administrations, in the fight against tax evasion and tax avoidance, in developing fair, well-balanced, efficient and transparent tax policies, in promoting administrative reforms and in increasing the share, in terms of aid and development, of financial and technical assistance to the national tax administrations of developing countries; argues that this support should be provided to strengthen the judiciary and anti-corruption agencies in these countries; calls for the bringing together of public sector expertise from Member States and beneficiary countries with the aim of enhancing cooperative activities while yielding concrete preliminarily results for beneficiary countries; supports the organisation of workshops, training sessions, expert missions, study visits and counselling;

5.  Asks the Commission to give good governance in tax matters, and fair, well-balanced, efficient and transparent tax collection, a high place on the agenda in its policy dialogue (political, development and trade), and in all development cooperation agreements, with partner countries, enhancing ownership and domestic accountability by fostering an environment in which national parliaments are able to contribute meaningfully to the formulation and oversight of national budgets, including on domestic revenues and tax matters, and supporting the role of civil society in ensuring public scrutiny of tax governance and the monitoring of cases of tax fraud, inter alia by setting up effective systems for protecting whistleblowers and journalistic sources;

6.  Calls urgently for information on beneficial ownership of companies, trusts and other institutions to be made publicly available in open-data formats in order to prevent anonymous shell companies and comparable legal entities from being used to launder money, finance illegal or terrorist activities, conceal the identity of corrupt and criminal individuals, and hide the theft of public funds and profits from illegal traffic and illegal tax evasion; believes, furthermore, that all countries should at minimum adopt and fully implement the Financial Action Task Force’s (FAFT) anti-money laundering recommendations;

7.  Calls on the EU and its Member States to enforce the principle that listed or unlisted multinational companies of all countries and sectors, and especially those companies extracting natural resources, must adopt country-by-country reporting (CBCR) as a standard, requiring them to publish, as part of their annual reporting and on a country-by-country basis for each territory in which they operate, the names of all subsidiaries and their respective financial performance, relevant tax information, assets and number of employees, and to ensure that this information is made publicly available, while minimising administrative burdens by excluding micro-enterprises; calls on the Commission to put forward a legislative proposal to amend the Accounting Directive accordingly; recalls that public transparency is a vital step towards fixing the current tax system and building public trust; calls on the OECD to recommend that its proposed CBCR template should be made public by all multinational corporations (MNCs), to ensure that all tax authorities in all countries are able to access thorough information, allowing them to assess transfer pricing risks and determine the most effective way to deploy audit resources; underlines that tax exemptions and advantages granted to foreign investors through bilateral tax treaties provide MNCs with an unfair competitive advantage relative to domestic firms, especially SMEs;

8.  Calls for the fiscal conditions and regulations under which extractive industries operate to be revised; calls on the EU to increase its assistance to developing countries in support of the aim of taxing adequately the extraction of natural resources, strengthening the bargaining position of host governments to obtain better returns from their natural resources base, and stimulating the diversification of their economy; supports the Extractive Industries Transparency Initiative (EITI) and its extension to producing firms and commodity trading companies;

9.  Welcomes the adoption of an Automatic Exchange of Information mechanism, a fundamental tool for enhancing global transparency and cooperation in the fight against tax avoidance and tax evasion; acknowledges, however, that continuing support in terms of finance, technical expertise and time is needed to allow developing countries to build the required capacity to send and process information; stresses, therefore, the importance of ensuring that the new OECD Global Standard on Automatic Exchange of Information includes a transition period for developing countries, recognising that by making this standard reciprocal, those countries that do not have the resources and capacity to set up the necessary infrastructure to collect, manage and share the required information may effectively be excluded; considers, moreover, that a single standard on confidentiality should be envisaged;

10.  Calls for the establishment, by the end of 2015, of an internationally agreed definition of tax havens, of penalties for operators making use of them and of a blacklist of countries, including those in the EU, that do not combat tax evasion or that accept it; calls on the EU to support the economic reconversion of those developing countries that serve as tax havens; asks those Member States with dependencies and territories that are not part of the Union to work with the administrations of these areas towards the adoption of the principles of tax transparency and to ensure that none serve as tax havens;

11.  Calls on the European Union and its Member States to ensure that, when negotiating tax and investment treaties with developing countries, income or profits resulting from cross-border activities should be taxed in the source country where value is extracted or created; stresses, in this regard, that the UN Model Tax Convention ensures a fair distribution of taxing rights between source and residence countries; stresses than when negotiating tax treaties, the European Union and its Member States should comply with the principle of policy coherence for development established in Article 208 TFEU;

12.  Urges the Commission and all Member States, following the example of some Member States, to conduct impact assessments of European tax policies on developing countries, and to share ‘best practices’, in order to strengthen policy coherence for development and improve current practices, and to take better into account negative spill-overs on developing countries and the special needs of those countries; welcomes, in this context, the Commission’s revised Action Plan on tax evasion and tax avoidance, to be presented in 2015, and urges the Member States to agree swiftly on a Common Consolidated Corporate Tax Base;

13.  Strongly supports the range of existing international initiatives to reform the global system, including the OECD Base Erosion and Profit Shifting (BEPS) initiative, with a focus on the increased participation of developing countries in the structures and procedures of international tax cooperation; urges the EU and the Member States to ensure that the UN taxation committee is transformed into a genuine intergovernmental body, better equipped and with sufficient additional resources, inside the framework of the UN Economic and Social Council, ensuring that all countries can participate on an equal footing in the formulation and reform of global tax policies; stresses that sanctions should be considered both for non-cooperative jurisdictions and for financial institutions that operate within tax havens;

14.  Stresses that sufficient levels of public finance can contribute to rebalancing gender inequality and provide means to support children and vulnerable groups in society in better ways, and recognises that while tax evasion has an impact on the welfare of individuals, it is especially damaging to poor and lower- income households, in many of which women are disproportionately represented;

15.  Notes with concern that many developing countries find themselves in a very weak bargaining position in the face of some foreign direct investors; takes the view that companies should be required to make precise commitments in terms of the positive spillover effect of their investments on the local and/or national socio-economic development of the host country; calls on the Commission and the Council, and on partner governments, to ensure that tax incentives do not constitute additional options for tax avoidance; underlines that incentives should be made more transparent and, ideally, geared towards promoting investment in sustainable development;

16.  Calls on the EIB and the EBRD, and on Member States’ development finance institutions, to monitor and ensure that companies or other legal entities that receive support do not participate in tax evasion and avoidance by interacting with financial intermediaries established in offshore centres and tax havens, or by facilitating illicit capital flows, and to increase their transparency policies by, for example, making all of their reports and investigations publicly available; calls on the EIB to apply ‘due diligence’, requiring annual country-by-country reporting, tracing beneficial ownership and controlling transfer pricing in order to ensure the transparency of investments and prevent tax evasion and tax avoidance;

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o   o

17.  Instructs its President to forward this resolution to the Council, the Commission and the governments and parliaments of the Member States.

(1) http://www.un.org/esa/ffd/tax/
(2) http://www.un.org/esa/ffd/tax/unmodel.htm
(3) OJ L 309, 25.11.2005, p. 15.
(4) Texts adopted, P7_TA(2013)0205.
(5) OJ C 199 E, 7.7.2012, p. 37.
(6) OJ C 341 E, 16.12.2010, p. 29.
(7) Texts adopted, P7_TA(2013)0394.
(8) Texts adopted, P7_TA(2014)0163.
(9) Texts adopted, P8_TA(2014)0059.
(10) Texts adopted, P7_TA(2014)0251.
(11) ‘Evaluation issues in financing for development Analysing effects of Dutch corporate tax policy on developing countries’, Study commissioned by the Policy and Operations Evaluation Department (IOB) of the Ministry of Foreign Affairs of the Netherlands, November 2013.

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