The European Parliament,

–   having regard to Article 272 of the EC Treaty, Article 177 of the Euratom Treaty and Article 78 of the ECSC Treaty;

–   having regard to the Interinstitutional Agreement of 6 May 1999 between the European Parliament, the Council and the Commission on budgetary discipline and improvement of the budgetary procedure(1) and in particular Annex III thereof;

–   having regard to the preliminary draft budget of the Commission for 2003;

–   having regard to its resolution of 12 March 2002 on the guidelines for the 2003 budget procedure - Section III - Commission(2);

–   having regard to the report of the Committee on Budgets and the opinions of the Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy, the Committee on Agriculture and Rural Development and the Committee on Fisheries (A5-0247/2002),

A.   whereas the Commission has presented a preliminary draft budget (PDB) for 2003 which provides for an increase of 1.4% in commitment appropriations compared to the 2002 budget,

B.   whereas the increase in total payment appropriations is 2.7% in budget 2002, compared to the average growth rate of the Member States' budgets (3.4%) which represents 1.03% of Community GNP, the lowest level over the last years, while the 2002 budget represented 1.05% of Community GNP and whereas the ceiling of the financial perspective for 2003 is 1.08% of Community GNP,

C.   whereas the level of commitment and payment appropriations leaves a margin of EUR 2.308 billion and EUR 4.720 billion respectively, below the ceiling set by the financial perspective 2000-2006,

D.   whereas the maximum rate of increase (MRI) for non-compulsory expenditure, established on the basis of Article 272(9) of the EC Treaty, is 3.8%, which represents a total of EUR 59 517 million in commitment appropriations and EUR 56 352 m in payment appropriations, i.e. EUR 1 244 m in commitments and EUR 65 m in payments more than is permitted by the financial perspective,

E.   whereas the objective of the first reading conciliation between Parliament and Council is to evaluate the needs assessed by the Commission in the PDB and to secure an agreement on the appropriate level of expenditure in particular for agriculture, international fisheries agreements and the common foreign and security policy but is also an opportunity to prepare an agreement on other expenditure,

F.   whereas Parliament's priorities set out in the guidelines for the 2003 budget aimed at optimising the preparation of enlargement, focusing on internal security, stressing the need for reform of administration as well as CAP, and strengthening the role of the Union's external responsibilities;

Financial Framework

1.  Recalls that the current financial framework 2000-2006 which was adopted by Parliament and the Council in the Interinstitutional Agreement (IIA) of 6 May 1999, includes an Annex II which, on an indicative basis, allocates appropriations to a heading 8 from 2002 onwards; points out that an adjustment to the financial perspective is needed in order to adapt it to the situation of a Community enlarged by up to ten candidate countries; repeats its call for the pre-accession appropriations for Cyprus and Malta to be transferred to heading 7 following a technical adjustment to the financial perspective;

2.  Notes that the PDB calls for the use of the flexibility instrument foreseen by paragraph 24 of the IIA for a total amount of EUR 93 million shared between heading 2 (EUR 27 million for the restructuring of the Community fleet which used to fish under the EU-Morrocco agreement) and heading 5 (EUR 66 million to cover the cost of enlargement preparations); notes that the cost of the CFP reform for 2003-06 could represent a global amount of EUR 272 million of which the Commission will propose that EUR 240 million will have to be reprogrammed within heading 2 if Member States agree; also notes that the Commission proposes to cover part of these measures (more than EUR 30 million) by way of the flexibility instrument;

3.  Is worried about the limited margin left under heading 4 in respect of the needs appeared over the past years for financing external actions, considering that EUR 400 million have been added to the initial ceiling through the flexibility instrument; considers that most of the margin left under heading 3 could be consumed only to finance the pilot projects and preparatory actions allowed by paragraph 37 of the IIA, leaving no margin for increasing other programmes;

4.  Recalls that the financial programming which accompanies the PDB is only an indicative reference and that according to the joint declaration of 20 July 2000, the launching of new programmes in the PDB should not entail a reduction of the current policies;

Payments

5.  Stresses that EUR 4.7 billion is left under the overall ceiling of the Financial Perspective; is concerned that the margins left for payments will not allow the improvement of the implementation of common policies nor or a reduction of the RAL; deplores that the Commission seems to link the problem of RAL with the lowest level of payments after having declared in March 2002 that the PDB for 2003 could exceed the payments ceilings;

6.  Recalls that due to poor implementation, the balance recovered by the Member States has amounted to EUR 14 billion for the 2001 financial year representing a considerable unspent amount of payments which is becoming a significant political problem especially in regions affected by insufficient payments from structural funds;

7.  Insists that the volume of payment appropriations for the financial year 2003 should be realistically assessed in the light of the level of outstanding commitments, so as to redefine an appropriate schedule of payments that will ensure a significant reduction in outstanding commitments and payments in the current year; also questions the reduced margin for manoeuvre so as to ensure that, in 2003, payment appropriations do not exceed the ceiling laid down by the financial perspective; will assess payment requirements on the basis of the report called for from the Commission, under Supplementary and Amending Budget (SAB) 2/2002, by 30 September 2002;

8.  Urges that the use of new instruments be expanded (performance reserve, activity-based budgeting, assessment of the economic and social impact of projects) and that the application, authorisation and payment procedures be reviewed for unnecessary rigidity, preferably by an external group of management experts and parties concerned, since the present situation is not the result of temporary malfunctioning of the system, but is most definitely a structural problem; points up the political dimension of this question, given the economic and social importance of structural operations; points out that they represent 34% of the Community budget;

Agriculture

9.  Takes note of the favourable situation observed for agricultural markets and the stability of the USD-EUR exchange rate which minimises the risks of increase and therefore should strictly limit the use of the available margin to unforeseen events; therefore asks the Commission to provide justification for the level of expenditure foreseen for sub-heading 1a) in relation with a context of stable trend; asks the Commission to improve its forecasting methods in order to be able to fix the necessary appropriations in May on the basis of realistic elements instead of postponing important decisions to the Autumn Letter of Amendment;

10.  Recalls, however, that the monetary reserve will cease to exist on 31 December 2002, whereby a sufficient margin has to be made available under heading 1 to counter unexpected changes in the USD/EUR exchange rate and that past experience has shown that outbreaks of animal disease can have disastrous consequences which require major financial and technical interventions by the Community;

11.  Expresses its support for the comprehensive further development of the CAP and calls for a fair, just and sustainable agricultural policy both for the Member States and for the candidate countries; reiterates its support in this context for the Commission's efforts to revise the Common Agricultural Policy so as to shift the balance of agricultural funding by gradually strengthening rural development; urges the Commission to come forward with a proposal to significantly increase funding for rural development and to reduce direct payments respectively; is aware that these needs imply an adjustment within heading 1;

12.  Considers courageous action on sustainable rural development to be necessary in the budget also, and calls for it to be made easier for the Member States to use appropriations released through cross-compliance and modulation;

13.  Expects that the mid-term review will place increased emphasis on multifunctional practices, while enhancing food safety, afforestation, animal welfare, small-scale family farming, and the production of non-intensive quality goods and local products and all measures which help to create new jobs without adversely affecting the rural environment; considers that in the future direct payments should be linked with tight environmental criteria;

14.  Calls on the Commission, against the background of the enlargement negotiations and bearing in mind international competition conditions, to take account, as far as possible, of the initial results of the mid-term review of Agenda 2000 in the agricultural sector when it submits the letter of amendment in October;

15.  Reiterates that adequate funds need to be allocated to heading B1-332 (Emergency fund for veterinary complaints and other diseases of animal contaminations which are a risk to public health) to counter new outbreaks of animal disease; considers that the Commission's proposal to reduce funding for veterinary measures by 90% is contrary to the Parliament's guidelines; notes that the Commission is proposing an increase of EUR 274 million to the beef and veal sector despite the fact that the market situation has improved remarkably since late 2001; urges the Commission to continue the development of marker vaccines and testing methods for Foot and Mouth Disease and Classical Swine Fever; furthermore, asks the Commission, on the basis of the study requested by the budgetary authority in 2002, to consider proposals for insurance schemes for the costs of the eradication of animal diseases;

16.  Notes the increase of EUR 1242 million in the sheepmeat and goatmeat sector deriving from the agreement reached within the Council of Ministers for Agriculture to switch from a price support system to a system of income as stated by the Commission; recalls Regulation (EC) No 2529/2001 should entail only a minor increase in funding; considers that the market situation in the sheep and goat sector is improving after the latest FMD crisis; therefore asks the Commission to provide further information on the reasons for such a discrepancy in funding and, if necessary, to adjust the market organisation accordingly; expresses its concern about the amounts proposed by the Commission for budget lines B1-401 (setting-up of young farmers), B1-404 (Less-favoured regions), B1-4050 (Agri-environment - new system) and B1-4072 (Afforestation); calls for the budget 2002 amounts to be entered in budget lines B1-330 (Animal disease eradication and monitoring programmes and monitoring of the physical conditions of animals that could pose a public-health risk linked to an external factor) and B1-382 (Enhancing public awareness of the common agricultural policy) of budget 2002;

Fisheries

17.  Takes note of the new Commission proposal on a global restructuring of the Community fleet to solve the problems of over-capacity of which the total cost amounts to EUR 272 million; notes that the appropriations entered in the PDB for the International Fisheries Agreements are maintained at the level of the 2002 budget and include a reserve of EUR 38 million; more detailed information is needed to be able to decide whether this amount is realistic to cover the possible conclusion of new agreements;

18.  Considers it necessary to have quick and substantial information on the Fisheries reform costs in view of evaluating, at the July conciliation, the possible consequences for the 2003 budget including for the international Fisheries agreements;

19.  Takes the view that international relations should be developed by financing fisheries agreements, which means that adequate funding must be maintained for line B7-8000, bearing in mind the importance of some of the agreements signed over the past year, particularly with Mauritania and Greenland;

Common Foreign and Security Policy

20.  Notes the proposal in the preliminary draft budget to increase appropriations under Sub-Section B8 by 33%; welcomes the post-conflict solution of a Community Police Force in Bosnia as a clear signal of stability and security and is, in principle, prepared to make funds available from the Community budget for this and similar operations; must insist, however, given the responsibility commitments entered into elsewhere in the context of external operations and in the light of new requirements after 11 September 2001, that provision is made for adequate financial resources and appropriate involvement of Parliament in respect of such measures under the common foreign, security and defence policy;

21.  Takes note of the Commission communication to the Council and the European Parliament concerning the need for a specific flexibility instrument to finance civil crisis-management measures within the Community budget; considers that this proposal should rather aim for a wider use of the emergency reserve for structural interventions in external crises under heading 4; underlines the indispensable need to find an agreement to compensate the increase of new policies without reducing EU's traditional priorities; considers it necessary to maintain a political and geographical balance by ensuring global security and poverty reduction through improved effectiveness, before appropriations and acute measures in favour of the Middle East and Afghanistan can be made available; invites the Commission to provide further information and evaluation regarding the implementation of the pledges made for Afghanistan and more background information in order to decide on the future appropriations for the Balkans;

22.  Intends to look for possibilities to create new B7 lines as replacement for parts of or whole B8 lines, with a view to promoting efficiency and reducing the inconveniencies caused by the pillar structure;

Administrative Expenditure

23.  Notes that the level of administrative expenditure increases by 5.2% on budget 2002, including the cost of enlargement and pensions, thus exceeding the ceiling of heading 5 in 2003 by 66 million; considers that the proposal to use the flexibility instrument to cover the deficit runs counter to both the spirit and letter behind its creation and that a more detailed evaluation should be made of all the institutions' needs including all possibilities for frontloading 2003 expenditure and a common approach towards the controlled development of Agencies, in order to ease the pressure on the 2003 budget as this could provide an alternative solution under the ceiling of heading 5; urges the Council with reference to the EP's position to voluntarily to restrict itself to one fifth of heading 5, to revise the rate of increase of its administrative expenditure; calls for an agreement with Council at the July conciliation on the procedure to be followed in view of achieving an agreement before Council's second reading at the latest;

24.  Recalls EP's will expressed in the guidelines to optimise the preparation of enlargement including that at administrative level but recalls also that in the context of the last trialogues on administrative expenditure, EP and Council have agreed to ask all the institutions to define core activities and to propose structural savings and negative priorities without putting in danger the functioning and the independence of the institutions; expects them to make useful proposals in particular concerning interinstitutional co-operation;

25.  Emphasises once again its guidelines on administrative expenditure (heading 5); expects he budgetary and institutional problems posed by incorporating new activities under heading 5 and transferring new activities from heading 5 to different headings and the as yet unconcluded discussion of the scope for interinstitutional cooperation and the financing of expenditure relating to enlargement under heading 5 to be tackled as a whole in the context of conciliation;

26.  Asks the Commission to justify the increase of part A of which the growth rate reaches 4.8% over budget 2002; recalls that over the past two years the budgetary authority has allocated 717 new posts to the Commission in the context of the administrative reform; calls on the Commission to provide detailed information on additional staff requirements in due time before Parliament's first reading;

New programmes

27.  Invites the Council and the Commission, who have similar global priorities for 2003, to make efforts, in the context of the conciliation, to secure agreements on major issues such as economic development, SMEs, especially craft undertakings and micro-enterprises, health and safety, e-learning, justice and home affairs, common immigration and asylum policy and strengthening of control of external borders of EU;

28.  Insists that the border regions programmes should focus on SME-cooperation and facilitate cross-border exchanges so as to consolidate sustainable economic development on both sides of borders; considers it necessary to extend the scope of the border regions programmes in cooperation with countries eligible for support under the TACIS, CARDS and MEDA programmes; in this respect, suggests that more responsive and flexible management methods be used for the coordination of the Interreg and Phare instruments; takes the view that new measures should be set up for the regions at the border of the enlarged Union;

29.  Considers that, a part of the preparations for enlargement and the general debate on the future of the Union, information and communication campaigns aimed at the general public and at businesses should be considerably stepped up, as should all activities involving exchanges between citizens;

30.  Notices that three important multi-annual programmes will be launched in 2003 (Research, Energy and Transport), however reminds the Commission that according to the common declaration of 20 July 2000, new programmes should not jeopardise the financing of existing actions, nor limit the powers of the budgetary authority within the annual procedure, in particular regarding EP's priorities reflected in pilot projects and preparatory actions;

o
o   o

31.  Instructs its President to forward this resolution to the Council, the Commission the Court of Auditors and all the other institutions.

(1) OJ C 172, 18.6.1999, p. 1. (2) P5_TA(2002)0096.