European Parliament legislative resolution of 16 December 2020 on the proposal for a regulation of the European Parliament and of the Council laying down certain transitional provisions for the support by the European Agricultural Fund for Rural Development (EAFRD) and by the European Agricultural Guarantee Fund (EAGF) in the year 2021 and amending Regulations (EU) No 228/2013, (EU) No 229/2013 and (EU) No 1308/2013 as regards resources and their distribution in respect of the year 2021 and amending Regulations (EU) No 1305/2013, (EU) No 1306/2013 and (EU) No 1307/2013 as regards their resources and application in the year 2021 (COM(2019)0581 – C9-0162/2019 – 2019/0254(COD))

P9_TA(2020)0354 A9-0101/2020

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2019)0581),

–  having regard to Article 294(2) and Article 43(2) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C9‑0162/2019),

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

–  having regard to the opinion of the Court of Auditors of 26 February 2020(1),

–  having regard to the opinion of the European Economic and Social Committee of 7 May 2020(2),

–  after consulting the Committee of the Regions,

–  having regard to the provisional agreement approved by the committee responsible under Rule 74(4) of its Rules of Procedure, and the information from the Council on approval of 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 opinion of the Committee on Regional Development,

–  having regard to the letter from the Committee on Budgets,

–  having regard to the report of the Committee on Agriculture and Rural Development (A9-0101/2020),

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

2.  Approves its statements annexed to this resolution;

3.  Approves the joint statements by Parliament and the Council annexed to this resolution;

4.  Takes note of the statements by the Commission annexed to this resolution;

5.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

6.  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 16 December 2020 with a view to the adoption of Regulation (EU) 2020/… of the European Parliament and of the Council laying down certain transitional provisions for support from the European Agricultural Fund for Rural Development (EAFRD) and from the European Agricultural Guarantee Fund (EAGF) in the years 2021 and 2022 and amending Regulations (EU) No 1305/2013, (EU) No 1306/2013 and (EU) No 1307/2013 as regards resources and application in the years 2021 and 2022 and Regulation (EU) No 1308/2013 as regards resources and the distribution of such support in respect of the years 2021 and 2022

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Regulation (EU) 2020/2220.)

ANNEX TO THE LEGISLATIVE RESOLUTION

Statement by the European Parliament on CAP transitional arrangements and the Multiannual Financial Framework

Crisis reserve fund

Since its establishment in 2014, the reserve for crises in the agricultural sector has never been activated due to the mechanism of financial discipline provided for in Article 25 of Regulation (EU) No 1306/2013 of the European Parliament and of the Council, according to which funding for that reserve is drawn at the beginning of each year from the total amount of direct payments. Unused money is returned to direct payments at the end of the year. As a result, the reserve has never been used in order to avoid withholding resources from farmers.

Established to assist farmers with price or market instability, the fact that the reserve has never been activated is testament to the limitation of its financial structure and operation.  The increasing frequency of economic, as well as adverse climate and sanitary, conditions resulting in significant market disruption, demonstrates the urgent need for a fully-functioning crisis reserve fund, which can be activated and made available in a responsive and efficient manner.

The European Parliament stresses that a fully-financed crisis reserve fund, initially established at EUR 400 million in addition to the EAGF and EAFRD budgets, which is cumulative, with unused funds carried over and added to the following year across the programming period, would function more effectively and with greater impact to provide timely crisis assistance and the funding of targeted measures for the sectors affected.

POSEI and Aegean islands

Due to their geographical situation, in particular their remoteness, insularity, small size, difficult topography and climate, the outermost regions, as referred to in Article 349 of the Treaty on the Functioning of the European Union, are faced with specific socio-economic problems related to the supply of food and agricultural products essential for consumption or agricultural production. Specific measures in the agricultural sector to remedy the difficulties caused by that specific situation, as provided for in that Article, were established in Regulation (EU) No 228/2013 of the European Parliament and of the Council. Furthermore the scheme for specific measures for agriculture in favour of the smaller Aegean islands provided for under Regulation (EU) No 229/2013 of the European Parliament and of the Council also tackles the same issues but in a different geographical location.

The importance of specific measures and opportunities in those regions and islands justifies the level of special support which is crucial for the successful implementation of those measures. Therefore, taking into account the public commitments previously given by the Commission to those regions and islands, the European Parliament calls for the undisturbed continuation of the very successful programmes run under Regulations (EU) No 228/2013 and (EU) No 229/2013 and the maintenance of at least the current level of support for those regions and islands. In that way, the Union would show its solidarity and commitment to those regions and islands facing specific disadvantages.

Statement by the European Parliament on interbranch organisations in the outermost regions

Given their very small size and their insularity, local markets in the outermost regions are particularly vulnerable to price fluctuations linked to import flows from the rest of the Union or from third countries. Article 349 of the Treaty on the Functioning of the European Union (TFEU) recognises the special needs of the outermost regions and sets out the basis for a legislative framework to help them tackle their particular situations. This is further addressed in Regulation (EU) No 228/2013 of the European Parliament and of the Council. In particular, since the use of interbranch organisations has shown potential for addressing the specific needs of the agricultural production sectors in the outermost regions, flexibility in the implementation of the relevant provisions of Regulation (EU) No 1308/2013 of the European Parliament and of the Council in those regions should already be allowed in order to fully harness the resources allocated by this Transitional Regulation to those regions.

Therefore, the interbranch organisations which are recognised under Article 157 of Regulation (EU) No 1308/2013 and are deemed representative should have the possibility to take the necessary collective measures designed to ensure that local production remains competitive on the local markets in question and sustainable.

To that end, notwithstanding Articles 28, 29 and 110 TFEU and Article 165 of Regulation (EU) No 1308/2013, and without prejudice to Article 164 of that Regulation and based on Article 349 TFEU as interpreted by the Court of Justice of the European Union in its judgment in joined cases C-132/14 to C-136/14, the European Parliament emphasises the importance of exploring all appropriate instruments in order to allow the Member States concerned, in the context of extended interbranch agreements and after consultation with the stakeholders concerned, to make individual operators or groups of economic operators who are not members of the interbranch organisation concerned but which operate on the local market in question, irrespective of their origin, pay that organisation all or part of the financial contributions paid by its members, including in cases where the proceeds of those contributions fund measures to maintain only local production or where the contributions are levied at a different stage in the marketing process.

Joint statement by the European Parliament and the Council on the outermost regions and smaller Aegean islands

The European Parliament and the Council recall:

—  the importance of specific measures for the outermost regions, in accordance with Article 349 of the Treaty on the Functioning of the European Union and Regulation (EU) No 228/2013 of the European Parliament and of the Council, to take account of the special characteristics of those regions;

—  the importance of specific measures for agriculture in favour of the smaller Aegean islands established under Regulation (EU) No 229/2013 of the European Parliament and of the Council; and

—  that the above issues justify special support for those regions and islands, in order to implement appropriate measures.

Joint statement by the European Parliament and the Council on EU funding arrangements for POSEI and the smaller Aegean islands

The European Parliament and the Council underline that the EU funding arrangements for POSEI and the smaller Aegean islands included in this Transitional Regulation for 2021 and 2022 are exceptional, reflecting the particularity of the circumstances, and do not constitute a precedent for future CAP financing, neither for the outermost regions and the smaller Aegean islands, nor for direct payments.

Statement by the Commission on the marketing rules on olive oil

The Commission takes note of the political agreement between Parliament and Council on the Parliament’s amendment 106, inserting a new Article 167a into the CMO Regulation regarding the olive oil sector. The Commission notes that this amendment agreed by Parliament and Council is not in line with the principle of continuity of current rules that governs the Transitional Regulation, is substantive in nature and has been included by the co-legislators without an impact assessment as required by point 15 of the Inter-Institutional Agreement on Better Law-Making. The Commission recalls its commitment to maintain effective competition in the agricultural sector and to give full effect to the objectives of the CAP laid down in Article 39 of the Treaty on the Functioning of the European Union.

Statement by the Commission on ANC payments

The Commission takes note of the agreement between the co-legislators that the EURI funds, when integrated into the EAFRD, may be used to finance payments for areas facing natural or other specific constraints (ANC payments).

The Commission has already stated its concerns about the limited contribution of ANC payments to environmental and climate objectives, considering that farmers do not have to carry out any specific practices to receive the payment. For this reason, the inclusion of ANC payments under the part of the EURI funds dedicated to contribute to environmental and climate objectives should not be considered as a precedent during the negotiations on the future CAP.

(1) OJ C 109, 1.4.2020, p. 1. (2) OJ C 232, 14.7.2020, p. 29.

European Parliament legislative resolution of 16 December 2020 on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) No 1303/2013 as regards exceptional additional resources and implementing arrangements under the Investment for growth and jobs goal to provide assistance for fostering crisis repair in the context of the COVID-19 pandemic and preparing a green, digital and resilient recovery of the economy (REACT-EU) (COM(2020)0451 – C9-0149/2020 – 2020/0101(COD))

P9_TA(2020)0355 A9-0150/2020

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2020)0451),

–  having regard to Article 294(2) and Articles 177 and 322(1)(a) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C9‑0149/2020),

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

–  having regard to the opinion of the Court of Auditors of 13 July 2020(1),

–  after consulting the European Economic and Social Committee,

–  having regard to the opinion of the Committee of the Regions of 14 October 2020(2),

–  having regard to the provisional agreement approved by the committee responsible under Rule 74(4) of its Rules of Procedure and the information from the Council on approval of 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 opinions of the Committee on Employment and Social Affairs and the Committee on Budgets,

–  having regard to the report of the Committee on Regional Development (A9-0150/2020),

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

2.  Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

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 16 December 2020 with a view to the adoption of Regulation (EU) 2020/… of the European Parliament and of the Council amending Regulation (EU) No 1303/2013 as regards additional resources and implementing arrangements to provide assistance for fostering crisis repair in the context of the COVID-19 pandemic and its social consequences and for preparing a green, digital and resilient recovery of the economy (REACT-EU)

(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Regulation (EU) 2020/2221.)

(1) OJ C 272, 17.8.2020, p. 1. (2) Not yet published in the Official Journal.

European Parliament legislative resolution of 16 December 2020 on the Council position at first reading with a view to the adoption of a regulation of the European Parliament and of the Council on a general regime of conditionality for the protection of the Union budget (09980/1/2020 – C9-0407/2020 – 2018/0136(COD))	P9_TA(2020)0356 A9-0262/2020
CORRIGENDA COR01

(Ordinary legislative procedure: second reading)

The European Parliament,

–  having regard to the Council position at first reading (09980/1/2020 – C9‑0407/2020),

–  having regard to the opinion of the Court of Auditors of 17 August 2018(1),

–  having regard to the opinion of the Commission (COM(2020)0843),

–  having regard to its position at first reading(2) on the Commission proposal to Parliament and the Council (COM(2018)0324),

–  having regard to Article 294(7) of the Treaty on the Functioning of the European Union,

–  having regard to the provisional agreement approved by the committees responsible under Rule 74(4) of its Rules of Procedure,

–  having regard to Rule 67 of its Rules of Procedure,

–  having regard to the recommendation for second reading of the Committee on Budgets and the Committee on Budgetary Control (A9-0262/2020),

1.  Approves the Council position at first reading;

2.  Approves the joint statement by Parliament, the Council and the Commission annexed to this resolution;

3.  Takes note of the Commission statement annexed to this resolution;

4.  Notes that the act is adopted in accordance with the Council position;

5.  Instructs its President to sign the act with the President of the Council, in accordance with Article 297(1) of the Treaty on the Functioning of the European Union;

6.  Instructs its Secretary-General to sign the act, once it has been verified that all the procedures have been duly completed, and, in agreement with the Secretary-General of the Council, to arrange for its publication in the Official Journal of the European Union;

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

ANNEX TO THE LEGISLATIVE RESOLUTION

Joint statement by Parliament, the Council and the Commission

Without prejudice to the Commission's right of initiative, the European Parliament, the Council and Commission agree to consider including the content of this Regulation into Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 (the "Financial Regulation") upon its next revision.

Commission statement

The Commission agrees to consider accompanying the report to the European Parliament and the Council on the application of this Regulation by appropriate proposals where necessary.

(1) OJ C 291, 17.8.2018, p. 1. (2) Texts adopted of 4.4.2019, P8_TA(2019)0349.

European Parliament legislative resolution of 16 December 2020 on the draft Council regulation laying down the multiannual financial framework for the years 2021 to 2027 (09970/2020 – C9-0409/2020 – 2018/0166(APP))

P9_TA(2020)0357 A9-0260/2020

(Special legislative procedure – consent)

The European Parliament,

–  having regard to the draft Council regulation (09970/2020),

–  having regard to the request for consent submitted by the Council in accordance with Article 312 of the Treaty on the Functioning of the European Union (TFEU) and Article 106a of the Treaty establishing the European Atomic Energy Community (C9‑0409/2020),

–  having regard to its resolution of 14 November 2018 on the multiannual financial framework 2021-2027 – Parliament’s position with a view to an agreement(1),

–  having regard to its resolution of 10 October 2019 on the 2021-2027 multiannual financial framework and own resources: time to meet citizens' expectations(2),

–  having regard to its resolution of 23 July 2020 on the conclusions of the extraordinary European Council meeting of 17-21 July 2020(3),

–  having regard to Rules 92 and 105(1) and (4) of its Rules of Procedure,

–  having regard to the letters from the Committee on the Environment, Public Health and Food Safety and the Committee on Constitutional Affairs,

–  having regard to the recommendation of the Committee on Budgets (A9-0260/2020),

1.  Gives its consent to the draft Council regulation laying down the multiannual financial framework for the years 2021 to 2027 as set out in annex to this resolution;

2.  Approves the joint declarations by Parliament, the Council and the Commission annexed to this resolution;

3.  Approves its declaration annexed to this resolution;

4.  Takes note of the Commission declarations annexed to this resolution;

5.  Instructs its President to sign, together with the President of the Council and the President of the Commission, the joint declaration of the European Parliament, the Council and the Commission on budgetary scrutiny of new proposals based on Article 122 TFEU with potential appreciable implications for the Union budget;

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

ANNEX 1: DRAFT COUNCIL REGULATION LAYING DOWN THE MULTIANNUAL FINANCIAL FRAMEWORK FOR THE YEARS 2021-2027

COUNCIL REGULATION (EU, Euratom) 2020/…

of …

laying down the multiannual financial framework for the years 2021 to 2027

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 312 thereof,

Having regard to the Treaty establishing the European Atomic Energy Community, and in particular Article 106a thereof,

Having regard to the proposal from the European Commission,

Having regard to the consent of the European Parliament(4),

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

After consulting the European Economic and Social Committee,

After consulting the Committee of the Regions,

Acting in accordance with a special legislative procedure,

Whereas:

(1)  Taking into account the need for an adequate level of predictability for preparing and implementing medium-term investments, the duration of the multiannual financial framework (MFF) should be set at seven years starting on 1 January 2021.

(2)  The economic impact of the COVID-19 crisis requires the Union to provide a long-term financial framework paving the way to a fair and inclusive transition to a green and digital future, supporting the Union's longer-term strategic autonomy and making it resilient to shocks in the future.

(3)  The annual ceilings for commitment appropriations by category of expenditure and the annual ceilings for payment appropriations established by this Regulation are to respect the applicable ceilings for commitments and own resources, which are set in accordance with the Council decision on the system of own resources of the European Union in force that has been adopted in accordance with the third paragraph of Article 311 of the Treaty on the Functioning of the European Union (TFEU) (the 'Own Resources Decision').

(4)  Where it is necessary to mobilise the guarantees given under the general budget of the Union for financial assistance to Member States authorised in accordance with Article 220(1) of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council(5) (the 'Financial Regulation'), the necessary amount should be mobilised over and above the ceilings for commitment and payment appropriations of the MFF, while respecting the own resources ceiling.

(5)  The MFF should not take account of budget items financed by assigned revenue within the meaning of the Financial Regulation.

(6)  The MFF should be laid down in 2018 prices. The rules for annual technical adjustments to the MFF to recalculate the ceilings and margins available should also be laid down.

(7)  Rules should be laid down for other situations that might require the MFF to be adjusted. Such adjustments might be related to the delayed adoption of new rules or programmes under shared management, to measures linked to sound economic governance or to measures adopted under the Regulation of the European Parliament and of the Council on a general regime of conditionality for the protection of the Union budget. Rules should also be laid down for a mechanism for programme specific adjustment.

(8)  Specific and maximum possible flexibility should be implemented to allow the Union to fulfil its obligations in compliance with Article 323 TFEU.

(9)  The following thematic special instruments are necessary to allow the Union to react to specified unforeseen circumstances or consequences and thereby allow the budgetary procedure to run smoothly: the European Globalisation Adjustment Fund, the Solidarity and Emergency Aid Reserve and the Brexit Adjustment Reserve. The Solidarity and Emergency Aid Reserve is not aimed at addressing the consequences of market related crises affecting the agricultural production or distribution.

(10)  The following non-thematic special instruments are necessary to further enhance flexibility: the Single Margin Instrument and the Flexibility Instrument. The Single Margin Instrument should enable shifting margins available below the ceilings for commitment and payment appropriationsrespectively between financial years and, for commitment appropriations, between MFF headings, without exceeding the total amounts of the MFF ceilings for commitment and payment appropriations for the entire period of the MFF. The Flexibility Instrument should allow the financing of specific unforeseen expenditure for a given financial year.

(11)  Specific provision should be made for the possibility to enter commitment and corresponding payment appropriations into the budget over and above the ceilings set out in the MFF where it is necessary to use special instruments.

(12)  It is necessary to provide for a revision of the MFF in the event of revision of the Treaties with budgetary implications, of the reunification of Cyprus or of the enlargement of the Union, as well as in the light of the implementation of the budget.

(13)  This Regulation might also need to be revised in relation to unforeseen circumstances that cannot be dealt with within the limits set out in the MFF. It is therefore necessary to provide for the revision of the MFF in such cases.

(14)  Specific rules are also necessary for dealing with large-scale projects the lifetime of which extends well beyond the period set for the MFF. It is necessary to establish maximum amounts for the contributions from the general budget of the Union to those projects, thereby ensuring that they do not have any impact on other projects financed from that budget.

(15)  It is necessary to lay down general rules on interinstitutional cooperation in the budgetary procedure, while respecting the budgetary powers of the European Parliament, the Council and the Commission (the 'Institutions') as laid down in the Treaties as well as transparency requirements.

(16)  The Commission should present a proposal for a new multiannual financial framework before 1 July 2025, to enable the institutions to adopt it sufficiently in advance of the start of the subsequent multiannual financial framework. In accordance with Article 312(4) TFEU, the ceilings corresponding to the last year of the MFF set out in this Regulation are to continue to apply in the event that a new multiannual financial framework is not adopted before the end of the term of the MFF laid down in this Regulation,

HAS ADOPTED THIS REGULATION:

Chapter 1

General provisions

Article 1

Multiannual financial framework

This Regulation lays down the multiannual financial framework for the years 2021 to 2027 (MFF).

Article 2

Compliance with the ceilings of the MFF

1.  The European Parliament, the Council and the Commission (the 'Institutions') shall, during each budgetary procedure and when implementing the budget for the year concerned, comply with the annual expenditure ceilings set out in Annex I (the 'MFF ceilings').

The sub-ceiling for heading 3 as set out in Annex I is established without prejudice to the flexibility between the two pillars of the Common Agricultural Policy (CAP). The adjusted ceiling to be applied to pillar I of the CAP following the transfers between the European Agricultural Fund for Rural Development and direct payments shall be laid down in the relevant legal act and the MFF shall be adjusted accordingly under the technical adjustment provided for in Article 4 of this Regulation.

2.  Where it is necessary to use the resources from the special instruments provided for in Articles 8, 9, 10 and 12, commitment and corresponding payment appropriations shall be entered in the budget over and above the relevant MFF ceilings.

Where it is necessary to use the resources from the Single Margin Instrument as laid down in Article 11, commitment and corresponding payment appropriations shall be entered in the budget over and above the relevant MFF ceilings for a given year.

3.  Where it is necessary to mobilise a guarantee for financial assistance to Member States authorised in accordance with Article 220(1) of the Financial Regulation, the necessary amount shall be mobilised over and above the MFF ceilings.

Article 3

Respect of own resources ceiling

1.  For each of the years covered by the MFF, the total appropriations for payments required, after annual adjustment and taking account of any other adjustments and revisions as well as the application of Article 2(2) and (3), shall not be such as to produce a call-in rate for own resources that exceeds the own resources ceiling set out in the Council decision on the system of own resources of the European Union in force that has been adopted in accordance with the third paragraph of Article 311 TFEU (the 'Own Resources Decision').

2.  Where necessary, the MFF ceilings shall be lowered in order to ensure compliance with the own resources ceiling set out in the Own Resources Decision.

Chapter 2

Adjustments to the MFF

Article 4

Technical adjustments

1.  Each year the Commission, acting ahead of the budgetary procedure for year n+1, shall make the following technical adjustments to the MFF:

(a)  a revaluation, at year n+1 prices, of the ceilings and of the overall figures for appropriations for commitments and appropriations for payments;

(b)  a calculation of the margin available under the own resources ceiling set out in the Own Resources Decision;

(c)  a calculation of the amount of commitment appropriations available under the Single Margin Instrument as referred to in point (a) of the first subparagraph of Article 11(1), as well as of the total maximum amount referred to in point (a);

(d)  a calculation of the adjustment of the ceiling for payment appropriations under the Single Margin Instrument as referred to in point (b) of the first subparagraph of Article 11(1), as well as of the maximum amount referred to in point (b) of the first subparagraph of Article 11(2);

(e)  a calculation of the additional allocations for specific programmes referred to in Article 5(1) and the result of the annual adjustment referred to in Article 5(2).

2.  The Commission shall make the technical adjustments referred to in paragraph 1 on the basis of a fixed deflator of 2 % per year.

3.  The Commission shall communicate the results of the technical adjustments referred to in paragraph 1 and the underlying economic forecasts to the European Parliament and to the Council.

4.  Without prejudice to Articles 6 and 7, no further technical adjustments shall be made in respect of the year concerned, either during the year or as ex post corrections during subsequent years.

Article 5

Programme specific adjustment

1.  An amount equivalent to the revenue from fines imposed under Council Regulations (EC) No 1/2003(6) and (EC) No 139/2004(7) by Union institutions, which is entered in the budget of the year n-1 in accordance with Article 107 of the Financial Regulation, after deduction of the amount for the year n-1 referred to in Article 141(1) of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community(8), shall be available for an additional allocation of:

(a)  commitment appropriations for year n+1, starting for the year 2022 and ending in 2027, to the programmes listed in Annex II, in accordance with percentages set out for those programmes in the column 'Distribution key' of the table in Annex II; and

(b)  payment appropriations for year n+1, starting for the year 2022 and ending in 2027.

The total amount of additional allocations for the period 2022 to 2027 for commitment and payment appropriations respectively shall be EUR 11 000 million (in 2018 prices). For each of the years 2022 to 2026, the annual amount of additional allocations for commitment and payment appropriations respectively shall be at least EUR 1 500 million (in 2018 prices) and shall not exceed EUR 2 000 million (in 2018 prices).

The total amount of additional allocations for commitment appropriations for the programmes in the period 2022 to 2027 is set out in the column 'Total additional allocation of commitment appropriations under Article 5' of the table in Annex II.

2.  The ceilings for commitment appropriations of the relevant headings for year n+1, starting for the year 2022 and ending in 2027, shall be adjusted upwards with the amounts corresponding to the additional allocations set out in paragraph 1, in accordance with the percentages set out for those headings in the column 'Distribution key' of the table in Annex II. The ceiling for payment appropriations for year n+1, starting for the year 2022 and ending in 2027, shall be automatically adjusted upwards with the amounts corresponding to the additional allocations set out in paragraph 1.

Article 6

Adjustments related to measures linked to sound economic governance or to a general regime of conditionality for the protection of the Union budget

1.  In the case of the lifting of a suspension of budgetary commitments concerning Union funds in accordance with the relevant basic acts in the context of measures linked to sound economic governance or to measures adopted under the Regulation of the European Parliament and of the Council on a general regime of conditionality for the protection of the Union budget, the amounts corresponding to the suspended commitments shall be transferred to the following years and the corresponding MFF ceilings shall be adjusted accordingly.

2.  The Commission shall communicate the result of any adjustments under paragraph 1 to the European Parliament and to the Council.

3.  Suspended commitments of year n may not be entered in the general budget of the Union beyond year n+2.

Article 7

Adjustment following new rules or programmes under shared management

1.  In the event of the adoption after 1 January 2021 of new rules or programmes under shared management for the Structural Funds, the Cohesion Fund, the Just Transition Fund, the European Agricultural Fund for Rural Development, the European Maritime and Fisheries Fund, the Asylum and Migration Fund, the Internal Security Fund and the Border Management and Visa Instrument under the Integrated Border Management Fund, the amounts corresponding to the allocations not used in 2021 shall be transferred in equal proportions to each of the years 2022 to 2025, and the corresponding MFF ceilings shall be adjusted accordingly.

2.  The Commission shall communicate the result of any adjustments under paragraph 1 to the European Parliament and to the Council.

Chapter 3

Special instruments

Section 1

Thematic special instruments

Article 8

European Globalisation Adjustment Fund

1.  The European Globalisation Adjustment Fund, the objectives and scope of which are set out in Regulation of the European Parliament and of the Council on the European Globalisation Adjustment Fund, shall not exceed a maximum annual amount of EUR 186 million (in 2018 prices).

2.  The appropriations for the European Globalisation Adjustment Fund shall be entered in the general budget of the Union as a provision.

Article 9

Solidarity and Emergency Aid Reserve

1.  The Solidarity and Emergency Aid Reserve may be used to finance:

(a)  assistance to respond to emergency situations resulting from major disasters that are covered by the European Union Solidarity Fund, the objectives and scope of which are set out in Council Regulation (EC) No 2012/2002(9); and

(b)  rapid responses to specific emergency needs within the Union or in third countries following events which could not be foreseen when the budget was established, in particular for emergency responses and support operations following natural disasters not covered by point (a), man-made disasters, humanitarian crises in cases of large‑scale public health, veterinary or phytosanitary threats, as well as in situations of particular pressure at the Union's external borders resulting from migratory flows, where circumstances so require.

2.  The Solidarity and Emergency Aid Reserve shall not exceed a maximum annual amount of EUR 1 200 million (in 2018 prices). Any portion of the annual amount not used in year n may be used up to year n+1. The portion of the annual amount stemming from the previous year shall be drawn on first. Any portion of the annual amount from year n which is not used in year n+1 shall lapse.

3.  The appropriations for the Solidarity and Emergency Aid Reserve shall be entered in the general budget of the Union as a provision.

4.  On 1 October of each year, at least one quarter of the annual amount referred to in paragraph 2 shall remain available in order to cover needs arising until the end of that year.

Without prejudice to the first subparagraph, the following maximum percentages of the overall amount available until 1 September of each year may be mobilised:

—  50 % for assistance under point (a) of paragraph 1; the amount resulting from that calculation shall be reduced by any amount mobilised in the previous year in application of paragraph 5;

—  35 % for assistance to third countries under point (b) of paragraph 1;

—  15 % for assistance within the Union under point (b) of paragraph 1.

Without prejudice to the first subparagraph, as of 1 September of each year, the remaining part of the amount available may be used for any assistance referred to in the second subparagraph to cover needs arising until the end of that year.

5.  In exceptional cases and if the remaining financial resources available in the Solidarity and Emergency Aid Reserve are not sufficient to cover the amounts considered necessary for assistance under point (a) of paragraph 1 in the year of occurrence of a disaster as referred to in that point, the Commission may propose that the difference be financed through the annual amounts available for the Solidarity and Emergency Aid Reserve in the following year, up to a maximum amount of EUR 400 million (in 2018 prices).

Article 10

Brexit Adjustment Reserve

1.  A Brexit Adjustment Reserve shall provide assistance to counter unforeseen and adverse consequences in Member States and sectors that are worst affected by the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, subject to and in accordance with the conditions set out in the relevant instrument.

2.  The Brexit Adjustment Reserve shall not exceed an amount of EUR 5 000 million (in 2018 prices).

3.  The appropriations for the Brexit Adjustment Reserve shall be entered into the general budget of the Union as a provision.

Section 2

Non-thematic special instruments

Article 11

Single Margin Instrument

1.  The Single Margin Instrument shall comprise:

(a)  as of 2022, amounts corresponding to margins left available below the MFF ceilings for commitment appropriations of year n-1 to be made available over and above the MFF ceilings for commitment appropriations for the years 2022 to 2027;

(b)  as of 2022, amounts equivalent to the difference between the executed payments and the MFF payment ceiling of year n-1 to adjust upwards the payment ceiling for the years 2022 to 2027; and

(c)  additional amounts which may be made available over and above the MFF ceilings in a given year for commitment or payment appropriations, or both, as the case may be, provided that they are fully offset against the margins in one or more MFF headings for the current or future financial years as regards commitment appropriations and are fully offset against the margins under the payment ceiling for future financial years as regards payment appropriations.

Amounts may only be mobilised under point (c) of the first subparagraph if the amounts available pursuant to points (a) and (b) of that subparagraph, as applicable, are insufficient, and in any case as a last resort to react to unforeseen circumstances.

Recourse to point (c) of the first subparagraph shall not result in exceeding the total amounts of the MFF ceilings for commitment and payment appropriations for the current financial year and future financial years. Any amounts offset in accordance with that point shall therefore not be further mobilised in the context of the MFF.

2.  Recourse to the Single Margin Instrument under points (a) and (c) of the first subparagraph of paragraph 1 shall not exceed, in any given year, a total of:

(a)  0,04 % of the gross national income of the Union in commitment appropriations, as calculated in the annual technical adjustment of the MFF referred to in Article 4;

(b)  0,03 % of the gross national income of the Union in payment appropriations, as calculated in the annual technical adjustment of the MFF referred to in Article 4.

Recourse to the Single Margin Instrument in any given year shall be consistent with the own resources ceilings set out in the Own Resources Decision.

3.  The annual adjustments referred to in point (b) of the first subparagraph of paragraph 1 shall not exceed the following maximum amounts (in 2018 prices) for the years 2025 to 2027 as compared to the original payment ceiling of the relevant years:

—  2025 - EUR 8 000 million;

—  2026 - EUR 13 000 million;

—  2027 - EUR 15 000 million.

Amounts referred to in the second subparagraph of Article 5(2) shall be in addition to the maximum amounts referred to in the first subparagraph of this paragraph.

Any upward adjustment shall be fully offset by a corresponding reduction of the payment ceiling for year n-1.

4.  Amounts referred to in points (a) and (c) of the first subparagraph of paragraph 1 of this Article may be mobilised by the European Parliament and the Council in the framework of the budgetary procedure provided for in Article 314 TFEU to allow the financing of expenditure which could not be financed within the limits of the relevant MFF ceilings available in a given year.

The upward adjustment referred to in point (b) of the first subparagraph of paragraph 1 of this Article shall be carried out by the Commission, starting in 2022, as part of the technical adjustment referred to in Article 4.

Article 12

Flexibility Instrument

1.  The Flexibility Instrument may be used for the financing, for a given financial year, of specific unforeseen expenditure in commitment appropriations and corresponding payment appropriations that cannot be financed within the limits of the ceilings available for one or more other headings. The ceiling for the annual amount available for the Flexibility Instrument shall be EUR 915 million (in 2018 prices).

2.  The unused portion of the annual amount of the Flexibility Instrument may be used up to year n+2. Any portion of the annual amount stemming from previous years shall be used first, in order of age. Any portion of the annual amount from year n which is not used by year n+2 shall lapse.

Chapter 4

Revision of the MFF

Article 13

Revision of the MFF

1.  Without prejudice to Article 3(2) and Articles 14 to 17, in the event of unforeseen circumstances, the MFF may be revised in compliance with the own resources ceiling set out in the Own Resources Decision.

2.  As a general rule, any proposal for a revision of the MFF in accordance with paragraph 1 shall be presented and adopted before the start of the budgetary procedure for the year or the first of the years concerned.

3.  Any proposal for a revision of the MFF in accordance with paragraph 1 shall examine the scope for reallocating expenditure between the programmes covered by the heading concerned by the revision, with particular reference to any expected underutilisation of appropriations.

4.  Any revision of the MFF in accordance with paragraph 1 shall take into account the scope for offsetting any raising of the ceiling for one heading by the lowering of the ceiling for another heading.

5.  Any revision of the MFF in accordance with paragraph 1 shall maintain an appropriate relationship between commitment and payment appropriations.

Article 14

Revision related to implementation

When notifying the European Parliament and the Council of the results of the technical adjustments to the MFF, the Commission shall, where appropriate, submit any proposal to revise the total appropriations for payments which it considers necessary, in the light of implementation, to ensure a sound management of the yearly payment ceilings, and in particular their orderly progression in relation to the appropriations for commitments.

Article 15

Revision in the event of a revision of the Treaties

In the event of a revision of the Treaties with budgetary implications, the MFF shall be revised accordingly.

Article 16

Revision in the event of enlargement of the Union

In the event of an accession or accessions to the Union, the MFF shall be revised to take account of the expenditure requirements resulting therefrom.

Article 17

Revision in the event of the reunification of Cyprus

In the event of the reunification of Cyprus, the MFF shall be revised to take account of the comprehensive settlement of the Cyprus problem and the additional financial needs resulting from the reunification.

Chapter 5

Contribution to the financing of large-scale projects

Article 18

Contribution to the financing of large-scale projects

1.  A maximum amount of EUR 13 202 million (in 2018 prices) shall be available from the general budget of the Union for the period 2021 to 2027 for large-scale projects under the Regulation of the European Parliament and of the Council establishing the space programme of the Union and the European Union Agency for the Space Programme.

2.  A maximum amount of EUR 5 000 million (in 2018 prices) shall be available from the general budget of the Union for the period 2021 to 2027 for the International Thermonuclear Experimental Reactor project (ITER).

Chapter 6

Interinstitutional cooperation in the budgetary procedure

Article 19

Interinstitutional cooperation in the budgetary procedure

1.  The Institutions shall take measures to facilitate the annual budgetary procedure.

2.  The Institutions shall cooperate in good faith throughout the procedure with a view to reconciling their positions. The Institutions shall, at all stages of the procedure, cooperate through appropriate interinstitutional contacts in order to monitor the progress of the work and analyse the degree of convergence.

3.  The Institutions shall ensure that their respective calendars of work are coordinated as far as possible, in order to enable proceedings to be conducted in a coherent and convergent way, leading to the final adoption of the general budget of the Union.

4.  Trilogues may be held at all stages of the procedure and at different levels of representation, depending on the nature of the expected discussions. Each institution, in accordance with its own rules of procedure, shall designate its participants for each meeting, set out its mandate for the negotiations and inform the other institutions in good time of the arrangements for the meetings.

Article 20

Unity of the budget

All expenditure and revenue of the Union and the European Atomic Energy Community shall be included in the general budget of the Union in accordance with Article 7 of the Financial Regulation, including expenditure resulting from any relevant decision taken unanimously by the Council after consulting the European Parliament, in the framework of Article 332 TFEU.

Chapter 7

Final provisions

Article 21

Transition towards the next multiannual financial framework

Before 1 July 2025, the Commission shall present a proposal for a new multiannual financial framework.

Article 22

Entry into force

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

It shall apply from 1 January 2021.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President

ANNEX I

MULTIANNUAL FINANCIAL FRAMEWORK (EU-27)

(EUR million - 2018 prices)

ANNEX II

PROGRAMME-SPECIFIC ADJUSTMENT – LIST OF PROGRAMMES, DISTRIBUTION KEY

AND TOTAL ADDITIONAL ALLOCATION OF COMMITMENT APPROPRIATIONS

ANNEX 2: DECLARATIONS

1.  Envelopes of priority programmes, costs of NGEU and flexibility

Joint declaration by the European Parliament, Council and Commission on the reinforcement of specific programmes and adaptation of basic acts

Without prejudice to the powers of the legislative and budgetary authority, the European Parliament, the Council and the Commission agree to increase by 2,5 billion Euros in 2018 prices the financial envelopes in the basic acts or the financial programming, as appropriate, of those programmes that are identified by the European Parliament. This will be achieved through a corresponding reduction of the margins available under the MFF ceilings, without prejudice to the possible use of the Flexibility instrument in 2021.

Without prejudice to the legislative powers of the institutions, the European Parliament, the Council and the Commission agree to insert in the basic acts of programmes listed in Annex II of the MFF Regulation a provision on the increase of the financial envelopes by the amounts specified therein. For programmes establishing budgetary guarantees, the additional amount will be reflected in the additional level of the guarantees provided.

Declaration by the European Parliament on the reinforcement of specific programmes from unallocated margins

The amount of 2,5 billion Euros in 2018 prices referred to in the joint declaration by the European Parliament, Council and Commission on the reinforcement of specific programmes and adaptation of basic acts will be allocated as follows:

—  Horizon Europe: +0,5 billion Euros

—  Erasmus+: +0,5 billion Euros, of which 165 million Euros in 2021

—  EU4Health: +0,5 billion Euros, of which 70 million Euros in 2021

—  European Border and Coast Guard Agency: +0,5 billion Euros

—  Humanitarian Aid: +0,5 billion Euros

Joint declaration by the European Parliament, Council and Commission on the use of reflows from the ACP Investment Facility to the benefit of the Neighbourhood, Development and International Cooperation Instrument

The Council agrees that an amount of up to EUR 1 billion (in 2018 prices) stemming from the reflows under the ACP Investment Facility for operations under the 9th, 10th, and 11th European Development Funds will be used for the benefit of the Neighbourhood, Development and International Cooperation Instrument in the period of 2021-2027. The three Institutions agree that the Neighbourhood, Development and International Cooperation Instrument should allow for the reception of those funds.

Joint declaration by the European Parliament, the Council and the Commission on the re-use of decommitted funds in relation to the research programme

Without prejudice to their institutional prerogatives, the European Parliament, the Council and the Commission agree to make available again to the benefit of the research programme commitment appropriations, corresponding to the amount up to EUR 0.5 billion (in 2018 prices) in the period 2021-2027 of decommitments, which results from total or partial non-implementation of projects belonging to that programme or its predecessor as provided for in Article 15(3) of the Financial Regulation.

Joint declaration by the European Parliament, Council and Commission on the treatment of NGEU interest costs and repayments in the 2021-2027 MFF

The three Institutions agree that expenditures covering the financing costs of Next Generation EU shall aim at not reducing EU programmes and funds.

The three Institutions agree that the treatment of NGEU interest costs and repayments in the 2021-2027 MFF, currently forecast at EUR 12.9 billion for the seven years, is without prejudice to how this matter will be addressed in future MFFs from 2028 onwards.

The three Institutions agree to work towards introducing sufficient new own resources with a view to covering an amount corresponding to the expected expenditure related to repayment and interest costs.

2.  Own resources

Commission Declaration on establishing an Own Resource based on a digital levy

Taking into account the developments at international level, the Commission will speed up its work on the submission of the necessary proposals for the establishment of a digital levy within the Union and will make a proposal for a basic act as soon as possible and at latest by June 2021. It will on this basis propose that revenues stemming from the digital levy will become an own resource by January 2023.

Commission Declaration on establishing a Financial Transaction Tax based Own Resource

Discussions on the Financial Transaction Tax under enhanced cooperation are ongoing with a view of their finalisation by the end of 2022. Should there be an agreement on this Financial Transaction Tax, the Commission will make a proposal in order to transfer revenues from this Financial Transaction Tax to the EU budget as an own resource.

If there is no agreement by end of 2022, the Commission will, based on impact assessments, propose a new own resource, based on a new Financial Transaction Tax. The Commission shall endeavour to make these proposals by June 2024 in view of its introduction by 1 January 2026.

3.  Role of the budgetary authority

Joint declaration of the European Parliament, the Council and the Commission on budgetary scrutiny of new proposals based on Article 122 TFEU with potential appreciable implications for the Union budget

Whereas:

(1)  The European Parliament, the Council and the Commission (“the three Institutions”) acknowledge that Article 122 TFEU constitutes a legal basis for adopting measures to address specific crisis situations that may entail potential budgetary implications, which are capable of impacting the development of Union expenditure within the limits of its own resources.

(2)  In the light of their budgetary powers under the Treaties, it is appropriate that the two branches of the budgetary authority deliberate on the budgetary implications of such envisaged acts where those implications are likely to be appreciable. To this effect, the Commission should provide all relevant information necessary to assist the European Parliament and the Council in their deliberations.

HAVE AGREED AS FOLLOWS:

1.  This declaration sets out arrangements for a procedure of budgetary scrutiny (hereafter “the procedure”) between the European Parliament and the Council with the active assistance of the Commission.

2.  This procedure may be followed in respect of a Commission proposal for a Council act based on Article 122 TFEU with potential appreciable implications for the Union budget.

3.  The Commission will accompany any such proposal by an assessment of the budgetary implications of the proposed legal act and will indicate whether the act in question may, in its view, have appreciable implications for the Union budget. On that basis, the European Parliament and the Council may request that the procedure be initiated.

4.  The procedure will take place in a Joint Committee consisting of representatives of the European Parliament and of the Council at the appropriate level. The Commission will participate in the work of the Joint Committee.

5.  Without prejudice to the powers of the Council under Article 122 TFEU, the European Parliament and the Council will engage in a constructive dialogue with a view to seeking a joint understanding of the budgetary implications of the envisaged legal act having due regard to the urgency of the matter.

6.  The procedure should take place during a period not exceeding two months, unless the act in question has to be adopted before a specific date or, if the urgency of the matter so requires, within a shorter time limit fixed by the Council.

Joint declaration of the European Parliament, the Council and the Commission on reassessing the external assigned revenue and borrowing and lending provisions in the Financial Regulation

Against the background of the NGEU, the European Parliament, the Council and the Commission agree that in the framework of the next revision of the Financial Regulation, the following issues will be assessed and as appropriate revised:

—  the provisions on the external assigned revenue , in particular as referred to in Article 21(5) of the Financial Regulation;

—  the provisions on reporting on borrowing and lending operations.

The three institutions acknowledge that the existing rules on audits and discharge procedure apply to assigned revenue.

4.  Horizontal issues – Climate, biodiversity, equality between men and women and sustainable development goals

Commission declaration on the climate tracking methodology and the involvement of the European Parliament and Council

The Commission will ensure that the climate tracking methodology is accessible, transparent, and publicly available. The Commission will exchange views on the climate tracking methodology with the European Parliament and Council. Transparency and exchange of information with Parliament and Council on the progress towards reaching the climate objectives will be a key principle of the climate tracking.

Commission declaration regarding climate contributions per programme

Without prejudice to the legislative powers of the European Parliament and the Council in relation to the relevant sectoral basic acts, the climate contributions for 2021-2027 in view of achieving an overall target of at least 30% of the total amount of Union budget and NGEU expenditures, are indicated for relevant programmes and Funds as follows:

The Commission will use these climate contributions as a reference point to assess deviations and to propose measures in case of insufficient progress.

Commission declaration on the biodiversity tracking methodology and the involvement of the European Parliament and Council

The Commission will ensure that the biodiversity tracking methodology is accessible, transparent, and publicly available.  After the completion of a study on the methodology recently launched by the Commission, the Commission will exchange views on the methodology with the European Parliament and Council. Transparency and exchange of information with Parliament and Council on the progress towards reaching the biodiversity related objectives will be key for tracking.

5.  Other declarations

Commission declaration on a mid-term review / revision

By 1 January 2024, the Commission will present a review of the functioning of the MFF.

The review may, as appropriate, be accompanied by relevant proposals for the revision of the MFF Regulation in accordance with the procedures set out in the TFEU.

(1) OJ C 363, 28.10.2020, p. 179. (2) Texts adopted, P9_TA(2019)0032. (3) Texts adopted, P9_TA(2020)0206. (4) Consent of… (not yet published in the Official Journal). (5) Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1). (6) Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ L 1, 4.1.2003, p. 1). (7) Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation) (OJ L 24, 29.1.2004, p. 1). (8) OJ L 29, 31.1.2020, p. 7. (9) Council Regulation (EC) No 2012/2002 of 11 November 2002 establishing the European Union Solidarity Fund (OJ L 311, 14.11.2002, p. 3).

European Parliament decision of 16 December 2020 on the conclusion of an Interinstitutional Agreement between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources (2018/2070(ACI))

P9_TA(2020)0358 A9-0261/2020

The European Parliament,

–  having regard to the Commission proposal of 2 May 2018 for an Interinstitutional Agreement between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management (COM(2018)0323) and the amended proposal (COM(2020)0444),

–  having regard to the draft interinstitutional agreement between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap for the introduction of new own resources,

–  having regard to Articles 295, 310, 311, 312, 323 and 324 of the Treaty on the Functioning of the European Union (TFEU),

–  having regard to the Paris Agreement adopted at the twenty-first session of the Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change, held in Paris, in December 2015,

–  having regard to its resolution of 14 November 2018 on the Multiannual Financial Framework 2021-2027 – Parliament’s position with a view to an agreement(1),

–  having regard to its resolution of 10 October 2019 on the 2021-2027 multiannual financial framework and own resources: time to meet citizens’ expectations(2),

–  having regard to its resolution of 17 April 2020 on EU coordinated action to combat the COVID-19 pandemic and its consequences(3),

–  having regard to its resolution of 15 May 2020 on the new multiannual financial framework, own resources and the recovery plan(4),

–  having regard to the conclusions of the European Council adopted on 21 July 2020,

–  having regard to its resolution of 23 July 2020 on the conclusions of the extraordinary European Council meeting of 17-21 July 2020(5),

–  having regard to its legislative resolution of 16 September 2020 on the draft Council decision on the system of own resources of the European Union(6),

–  having regard to Rule 148(1) of its Rules of Procedure,

–  having regard to the letter from the Committee on Budgets,

–  having regard to the report of the Committee on Constitutional Affairs (A9-0261/2020),

A.  Whereas it is appropriate to adopt, in the context of the multiannual financial framework (MFF), an interinstitutional agreement setting out provisions for its implementation;

B.  Whereas an overall political agreement was reached on 10 November 2020 between representatives of the European Parliament, the Council and the Commission on the MFF for 2021-2027, on own resources and on the European Recovery Instrument (Next Generation EU(NGEU));

C.  Whereas such political agreement includes a renewed Interinstitutional Agreement on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources (“the IIA”);

D.  Whereas, furthermore, a political agreement was reached on 5 November 2020 on the proposal for a regulation of the European Parliament and of the Council on the protection of the Union’s budget in case of generalised deficiencies as regards the rule of law in the Member States;

E.  Whereas this new agreement will replace 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(7);

F.  Whereas the implementation of the budgetary discipline and cooperation between the institutions on budgetary matters and sound financial management requires the Council to share necessary information with Parliament in the framework of the discharge procedure concerning the European Council and the Council, so as to ensure that Parliament has the necessary information on how the Council is implementing its budget, either directly or via the Commission;

G.  Whereas the new agreement contains important new elements in particular a roadmap for the introduction of new own resources during the next seven years, provisions on enhanced budgetary scrutiny of the spending of NGEU funding and arrangements to monitor spending on climate and biodiversity objectives and on gender equality and mainstreaming;

H.  Whereas the IIA contains for the first time provisions on the own resources of the European Union, namely a new Annex setting out a roadmap towards the introduction of new own resources over the MFF period 2021-2027 that will be sufficient to cover the interests and repayment costs of the European Union Recovery Instrument (NGEU); whereas the roadmap adds credibility and sustainability to the amendment to the Own Resources decision ensuring that the own resources ceilings are sufficiently high to be able to cover the Union's liability, in accordance with the principle of budgetary discipline within the meaning of Article 310(4) TFEU; whereas revenue from own resources in excess of the needs for repayment will continue to fund the Union budget as general revenue in line with the principle of universality; whereas the roadmap does not preclude further proposals for new own resources during the financial period 2021-2027;

I.  Whereas the IIA contains a new part on cooperation as regards the European Union Recovery Instrument (NGEU) that aims to ensure appropriate involvement of the budgetary authority in the governance of external assigned revenue under NGEU; whereas that part refers to a new Joint declaration on budgetary scrutiny of new proposals based on Article 122 TFEU with potential appreciable implications for the Union budget;

J.  Whereas the agreement provides for the monitoring of spending across Union programmes on climate and biodiversity objectives, gender equality and the United Nations Sustainable Development Goals; whereas the IIA contains significant improvements concerning the design and implementation of methodologies for tracking the climate spending target of 30 % of the overall Union budget and the European Union Recovery Instrument expenditures, for developing a new MFF biodiversity annual spending target of 7,5 % from 2024 and 10 % in 2026 and 2027, and for measuring gender expenditure, including the promotion of gender mainstreaming;

K.  Whereas the IIA contains a new part on the quality and comparability of data on beneficiaries that aims to introduce standardised measures for the collection, comparison and aggregation of information and figures on the final beneficiaries of Union funding;

L.  Whereas the IIA is understood to be horizontal in application and does not preclude the co-legislators from agreeing, within the scope of a specific regulation, to additional measures to improve the quality and comparability of data, particularly as regards direct management programmes, or to further improve the involvement of the budgetary authority in the governance of external assigned revenue;

M.  Whereas the IIA includes for the first time provisions relating to cooperation and dialogue on the part of the institutions during the negotiations on the MFF, with the aim of operationalising the treaty requirements according to which the institutions are to take any measure necessary to facilitate the adoption of an MFF and to promote consultation and the reconciliation of their positions on budgetary matters;

N.  Whereas the IIA safeguards existing provisions and includes new arrangements on the mobilisation of special instruments, namely the European Globalisation Adjustment Fund, the Solidarity and Emergency Aid Reserve, the Brexit Adjustment Reserve, the Single Margin Instrument and the Flexibility Instrument;

O.  Whereas the IIA provides for further targeted adjustments on the transparency of programming and forecasts;

P.  Whereas the European Union Recovery Instrument includes a new Recovery and Resilience Facility; whereas it is appropriate, in the context of the political agreement reached on the European Union Recovery Instrument and the involvement of the budgetary authority in the governance of external assigned revenue under this instrument, to recall the need for an objective, fair and transparent legal framework for the selection of the projects that will be funded under the Recovery and Resilience Facility, as well as to highlight the role of regional and local authorities in helping to achieve a recovery that is symmetrical not only between Member States but also between regions.

1.  Approves the conclusion of the agreement annexed hereto;

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

3.  Instructs its President to forward this decision, including its annex, to the Council and the Commission for information.

ANNEX

INTERINSTITUTIONAL AGREEMENT BETWEEN THE EUROPEAN PARLIAMENT, THE COUNCIL OF THE EUROPEAN UNION AND THE EUROPEAN COMMISSION ON BUDGETARY DISCIPLINE, ON COOPERATION IN BUDGETARY MATTERS AND ON SOUND FINANCIAL MANAGEMENT, AS WELL AS ON NEW OWN RESOURCES, INCLUDING A ROADMAP TOWARDS THE INTRODUCTION OF NEW OWN RESOURCES

THE EUROPEAN PARLIAMENT, THE COUNCIL OF THE EUROPEAN UNION AND THE EUROPEAN COMMISSION,

hereinafter referred to as the "Institutions",

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 295 thereof,

HAVE AGREED AS FOLLOWS:

1.  The purpose of this Agreement is to implement budgetary discipline, to improve the functioning of the annual budgetary procedure and cooperation between the Institutions on budgetary matters as well as to ensure sound financial management, and to implement a cooperation and establish a roadmap towards the introduction, over the period of the multiannual financial framework 2021‑2027 ("MFF 2021‑2027"), of new own resources that are sufficient to cover the repayment of the European Union Recovery Instrument established under Council Regulation (EU) 2020/…(8)(9) (the "EURI Regulation").

2.  Budgetary discipline as referred to in this Agreement covers all expenditure. This Agreement is binding on the Institutions for as long as it is in force. The Annexes to this Agreement form an integral part thereof.

3.  This Agreement does not alter the respective budgetary and legislative powers of the Institutions as laid down in the Treaties, in Council Regulation (EU, Euratom) 2020/…(10)(11) (the "MFF Regulation"), in Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council(12) (the "Financial Regulation") and in Council Decision (EU, Euratom) 2020/…(13)(14) (the "Own Resources Decision"), and is without prejudice to the powers of national parliaments in respect of own resources.

4.  Any amendment of this Agreement requires the common agreement of the Institutions.

5.  This Agreement is in four parts:

—  Part I contains provisions related to the multiannual financial framework (MFF) and to the thematic and non-thematic special instruments;

—  Part II relates to interinstitutional cooperation in budgetary matters;

—  Part III contains provisions related to the sound financial management of Union funds;

—  Part IV contains provisions related to the quality and comparability of data on beneficiaries in the context of the protection of the Union budget.

6.  This Agreement enters into force on …(15) and replaces 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(16).

PART I

MFF AND SPECIAL INSTRUMENTS

A.  PROVISIONS RELATED TO THE MFF

7.  The Institutions shall, for the purposes of sound financial management, ensure as far as possible during the budgetary procedure and at the time the general budget of the Union is adopted that sufficient margins are left available beneath the ceilings for the various headings of the MFF, except for the sub-heading "Economic, social and territorial cohesion".

Updating of forecasts for payment appropriations

8.  Every year, the Commission shall update the forecasts for payment appropriations for the period at least until 2027. That update shall take into account all relevant information, including the real implementation of budget appropriations for commitments and budget appropriations for payments, as well as the implementation forecasts. It shall also consider the rules designed to ensure that payment appropriations develop in an orderly manner compared to commitment appropriations and to the growth forecasts of the Union's gross national income (GNI).

B.  PROVISIONS RELATED TO THE THEMATIC AND NON‑THEMATIC SPECIAL INSTRUMENTS

European Globalisation Adjustment Fund

9.  Where the conditions for mobilising the European Globalisation Adjustment Fund set out in the relevant basic act are met, the Commission shall submit a proposal to mobilise it, and the decision to mobilise the European Globalisation Adjustment Fund shall be taken jointly by the European Parliament and by the Council.

At the same time as it presents its proposal for a decision to mobilise the European Globalisation Adjustment Fund, the Commission shall present a proposal to the European Parliament and to the Council for a transfer to the relevant budget lines.

Transfers related to the European Globalisation Adjustment Fund shall be made in accordance with the Financial Regulation.

Solidarity and Emergency Aid Reserve

10.  Where the Commission considers that the conditions for mobilising the Solidarity and Emergency Aid Reserve are met, it shall submit a proposal to the European Parliament and to the Council for a transfer from that Reserve to the corresponding budget lines in accordance with the Financial Regulation.

The decision to mobilise amounts under point (a) of Article 9(1) of the MFF Regulation shall be taken jointly by the European Parliament and by the Council on a proposal from the Commission in accordance with the relevant basic act.

Before making any proposal for a transfer from the Solidarity and Emergency Aid Reserve for assistance under point (b) of Article 9(1) of the MFF Regulation, the Commission shall examine the scope for reallocating appropriations.

Brexit Adjustment Reserve

11.  Where the conditions for mobilising the Brexit Adjustment Reserve set out in the relevant instrument are met, the Commission shall submit a proposal to the European Parliament and to the Council for a transfer to the relevant budget lines.

Transfers related to the Brexit Adjustment Reserve shall be made in accordance with the Financial Regulation.

Single Margin Instrument

12.  The Commission may propose to mobilise the amounts corresponding to all or a part of the margins referred to in points (a) and (c) of the first subparagraph of Article 11(1) of the MFF Regulation, in relation to a draft budget or a draft amending budget. The mobilisation of any amounts referred to in point (c) of the first subparagraph of Article 11(1) of that Regulation shall be proposed by the Commission after a thorough analysis of all other financial possibilities.

Those amounts may be mobilised by the European Parliament and by the Council in the framework of the budgetary procedure set out in Article 314 of the Treaty on the Functioning of the European Union (TFEU).

Flexibility Instrument

13.  The Commission shall submit a proposal for the mobilisation of the Flexibility Instrument after it has examined all possibilities for reallocating appropriations under the heading requiring additional expenditure.

That proposal shall identify the needs to be covered and the amount. Such a proposal may be made in relation to a draft budget or a draft amending budget.

The Flexibility Instrument may be mobilised by the European Parliament and by the Council in the framework of the budgetary procedure set out in Article 314 TFEU.

PART II

IMPROVEMENT OF INTERINSTITUTIONAL COOPERATION IN BUDGETARY MATTERS

A.  INTERINSTITUTIONAL COOPERATION PROCEDURE

14.  The details of interinstitutional cooperation during the budgetary procedure are set out in Annex I.

15.  In line with Article 312(5) TFEU, the Institutions shall take any measure necessary to facilitate the adoption of a new MFF or a revision thereof, in accordance with the special legislative procedure referred to in Article 312(2) of the TFEU. Such measures will include regular meetings and exchange of information between the European Parliament and the Council and, on the initiative of the Commission, meetings of the Presidents of the Institutions as set out in Article 324 TFEU in order to promote consultation and the reconciliation of the positions of the Institutions. Where a proposal for a new MFF or for a substantial revision has been presented, the Institutions will seek to determine specific arrangements for cooperation and dialogue between them throughout the procedure leading to its adoption.

Budgetary transparency

16.  The Commission shall prepare an annual report to accompany the general budget of the Union, bringing together available non-confidential information relating to:

(a)  the assets and liabilities of the Union, including those arising from borrowing and lending operations carried out by the Union in accordance with its powers under the Treaties;

(b)  the revenue, expenditure, assets and liabilities of the European Development Fund(17), the European Financial Stability Facility, the European Stability Mechanism, and other possible future mechanisms;

(c)  the expenditure incurred by Member States in the framework of enhanced cooperation, to the extent that it is not included in the general budget of the Union;

(d)  climate expenditure, on the basis of an effective methodology set out by the Commission and, where relevant, in accordance with sectoral legislation, for monitoring climate spending and its performance with a view to achieving an overall target of at least 30 % of the total amount of the Union budget and the European Union Recovery Instrument expenditures supporting climate objectives, taking into consideration the effects of the phasing out of the funding under the European Union Recovery Instrument and differentiating between climate change mitigation and adaptation, where feasible.

Where there is insufficient progress towards the climate spending target in one or more of the relevant programmes, the Institutions, in accordance with their responsibilities and the relevant legislation, will consult each other on appropriate measures to be taken to ensure that Union spending on climate objectives over the entire MFF 2021‑2027 corresponds to at least 30 % of the total amount of the Union budget and the European Union Recovery Instrument expenditures;

(e)  expenditure contributing to halting and reversing the decline of biodiversity, on the basis of an effective, transparent and comprehensive methodology set out by the Commission, in cooperation with the European Parliament and with the Council, and, where relevant, in accordance with sectoral legislation, with a view to working towards the ambition of providing 7,5 % in 2024 and 10 % in 2026 and in 2027 of annual spending under the MFF to biodiversity objectives, while considering the existing overlaps between climate and biodiversity goals;

(f)  the promotion of equality between women and men as well as rights and equal opportunities for all throughout the implementation and monitoring of the relevant programmes, and the mainstreaming of those objectives as well as gender mainstreaming, including by strengthening the assessment of gender impact in impact assessments and evaluations under the Better Law-Making framework. The Commission will examine how to develop a methodology to measure the relevant expenditure at programme level in the MFF 2021-2027. The Commission will use that methodology as soon as it is available. No later than 1 January 2023, the Commission will implement that methodology for certain centrally managed programmes to test its feasibility. At mid-term, it will be explored whether the methodology can be extended to other programmes for the remainder of the MFF 2021-2027;

(g)  the implementation of the United Nations Sustainable Development Goals in all relevant Union programmes of the MFF 2021‑2027.

The effective methodologies referred to in points (d) and (e) of the first paragraph will, as far as possible include a reference to the contribution of the Union budget to the European Green Deal, which includes the "do no harm" principle.

The effective methodology referred to in point (d) of the first paragraph will be transparent, comprehensive, result-oriented and performance-based, will include annual consultation by the Commission of the European Parliament and of the Council, and will identify relevant measures to be taken in case of insufficient progress towards achieving applicable targets.

None of the methodologies referred to in this point should lead to an excessive administrative burden on project holders or on beneficiaries.

17.  The Commission shall prepare an annual report on the implementation of the European Union Recovery Instrument. That annual report shall bring together available non-confidential information relating to:

—  assets and liabilities arising from borrowing and lending operations carried out under Article 5 of the Own Resources Decision;

—  the aggregate amount of proceeds assigned to Union programmes in implementation of the European Union Recovery Instrument in the previous year, broken down by programme and budget line;

—  the contribution of the borrowed funds to the achievements of the objectives of the European Union Recovery Instrument and the specific Union programmes.

B.  INCORPORATION OF FINANCIAL PROVISIONS IN LEGISLATIVE ACTS

18.  Each legislative act, concerning a multiannual programme, adopted in accordance with the ordinary legislative procedure shall contain a provision in which the legislator lays down the financial envelope for the programme.

That amount shall constitute the prime reference amount for the European Parliament and for the Council during the annual budgetary procedure.

For programmes referred to in Annex II to the MFF Regulation, the prime reference amount is automatically increased by the additional allocations referred to in Article 5(1) of the MFF Regulation.

The European Parliament and the Council, and the Commission when it draws up the draft budget, undertake not to depart by more than 15 % from that amount for the entire duration of the programme concerned, unless new, objective, long-term circumstances arise for which explicit and precise reasons are given, with account being taken of the results obtained from implementing the programme, in particular on the basis of assessments. Any increase resulting from such variation shall remain beneath the existing ceiling for the heading concerned, without prejudice to the use of instruments referred to in the MFF Regulation and in this Agreement.

The fourth paragraph does not apply to the additional allocations referred to in the third paragraph.

This point does not apply to appropriations for cohesion adopted in accordance with the ordinary legislative procedure and pre-allocated per Member State which contain a financial envelope for the entire duration of the programme or to the large-scale projects referred to in Article 18 of the MFF Regulation.

19.  Legally binding Union acts concerning multiannual programmes that are not adopted in accordance with the ordinary legislative procedure shall not contain an "amount deemed necessary".

Should the Council wish to include a financial reference amount, that amount shall be taken as illustrating the will of the legislator and shall not affect the budgetary powers of the European Parliament and of the Council as set out in the TFEU. A provision to that effect shall be included in all legally binding Union acts which contain such a financial reference amount.

C.  EXPENDITURE RELATING TO FISHERIES AGREEMENTS

20.  Expenditure on fisheries agreements shall be subject to the following specific rules.

The Commission undertakes to keep the European Parliament regularly informed about the preparation and conduct of the negotiations on fisheries agreements, including the budgetary implications of those agreements.

In the course of the legislative procedure relating to fisheries agreements, the Institutions undertake to make every effort to ensure that all procedures are carried out as quickly as possible.

Amounts provided for in the budget for new fisheries agreements or for the renewal of fisheries agreements which enter into force after 1 January of the financial year concerned shall be put in reserve.

If appropriations relating to fisheries agreements, including the reserve, prove insufficient, the Commission shall provide the European Parliament and the Council with the necessary information on the causes of the situation and on measures which might be adopted under established procedures. Where necessary, the Commission shall propose appropriate measures.

Each quarter, the Commission shall present to the European Parliament and to the Council detailed information about the implementation of fisheries agreements in force and a financial forecast for the remainder of the year.

21.  Without prejudice to the relevant procedure governing the negotiation of fisheries agreements, the European Parliament and the Council commit themselves, in the framework of budgetary cooperation, to arrive at a timely agreement on the adequate financing of fisheries agreements.

D.  FINANCING OF THE COMMON FOREIGN AND SECURITY POLICY (CFSP)

22.  The total amount of CFSP operating expenditure shall be entered entirely in one budget chapter, entitled CFSP. That amount shall cover the real predictable needs, assessed in the framework of the establishment of the draft budget, on the basis of forecasts drawn up annually by the High Representative of the Union for Foreign Affairs and Security Policy (the "High Representative"). A reasonable margin shall be allowed to cover unforeseen actions. No funds may be entered in a reserve.

23.  As regards CFSP expenditure which is charged to the Union budget in accordance with Article 41 of the Treaty on European Union, the Institutions shall endeavour, in the Conciliation Committee as referred to in Article 314(5) TFEU, and on the basis of the draft budget established by the Commission, to secure agreement each year on the amount of the operating expenditure, and on the distribution of that amount between the articles of the CFSP budget chapter. In the absence of agreement, it is understood that the European Parliament and the Council shall enter in the budget the amount contained in the previous budget or the amount proposed in the draft budget, whichever is the lower.

The total amount of CFSP operating expenditure shall be distributed between the articles of the CFSP budget chapter as suggested in the third paragraph. Each article shall cover actions already adopted, actions which are foreseen but not yet adopted and amounts for future  that is unforeseen  actions to be adopted by the Council during the financial year concerned.

Within the CFSP budget chapter, the articles into which the CFSP actions are to be entered could read along the following lines:

—  single major missions as referred to in point (g) of Article 52(1) of the Financial Regulation;

—  other missions (for crisis management operations, conflict prevention, resolution and stabilisation, and monitoring and implementation of peace and security processes);

—  non-proliferation and disarmament;

—  emergency measures;

—  preparatory and follow-up measures;

—  European Union Special Representatives.

Since, under the Financial Regulation, the Commission has the authority to transfer appropriations autonomously between articles within the CFSP budget chapter, the flexibility deemed necessary for speedy implementation of CFSP actions shall accordingly be assured. In the event of the amount of the CFSP budget chapter during the financial year being insufficient to cover the necessary expenses, the European Parliament and the Council shall seek a solution as a matter of urgency, on a proposal from the Commission.

24.  Each year, the High Representative shall consult the European Parliament on a forward‑looking document, which shall be transmitted by 15 June of the year in question, setting out the main aspects and basic choices of the CFSP, including the financial implications for the Union budget, an evaluation of the measures launched in year n-1 and an assessment of the coordination and complementarity of CFSP with the Union's other external financial instruments. Furthermore, the High Representative shall keep the European Parliament regularly informed by holding joint consultation meetings at least five times a year, in the framework of the regular political dialogue on the CFSP, to be agreed at the latest on 30 November each year. Participation in those meetings shall be determined by the European Parliament and by the Council respectively, bearing in mind the objective, and the nature of the information exchanged in those meetings.

The Commission shall be invited to participate in those meetings.

If the Council adopts a decision in the field of the CFSP entailing expenditure, the High Representative shall immediately, and in any event no later than five working days thereafter, send the European Parliament an estimate of the costs envisaged (a "financial statement"), in particular those costs regarding time-frame, staff employed, use of premises and other infrastructure, transport facilities, training requirements and security arrangements.

Once a quarter, the Commission shall inform the European Parliament and the Council about the implementation of CFSP actions and the financial forecasts for the remainder of the financial year.

E.  INVOLVEMENT OF THE INSTITUTIONS

AS REGARDS DEVELOPMENT POLICY ISSUES

25.  The Commission shall establish an informal dialogue with the European Parliament on development policy issues.

PART III

SOUND FINANCIAL MANAGEMENT OF UNION FUNDS

A.  FINANCIAL PROGRAMMING

26.  The Commission shall submit twice a year, the first time together with the documents accompanying the draft budget and the second time after the adoption of the general budget of the Union, a complete financial programming for headings 1, 2 (except for the sub-heading "Economic, social and territorial cohesion"), 3 (for "Environment and climate action" and "Maritime policy and fisheries"), 4, 5 and 6 of the MFF. That programming, structured by heading, policy area and budget line, should identify:

(a)  the legislation in force, with a distinction being drawn between multiannual programmes and annual actions:

(i)  for multiannual programmes, the Commission should indicate the procedure under which they were adopted (ordinary or special legislative procedure), their duration, the total financial envelope and the share allocated to administrative expenditure;

(ii)  for multiannual programmes referred to in Annex II to the MFF Regulation, the Commission should indicate transparently the additional allocations under Article 5 of the MFF Regulation;

(iii)  for annual actions (relating to pilot projects, preparatory actions and agencies) and actions financed under the prerogatives of the Commission, the Commission should provide multiannual estimates;

(b)  pending legislative proposals: ongoing Commission proposals, with the latest update.

The Commission should consider ways of cross-referencing the financial programming with its legislative programming to provide more precise and reliable forecasts. For each legislative proposal, the Commission should indicate whether it is included in the programming communicated at the time of the presentation of the draft budget or after the final adoption of the budget. The Commission should inform the European Parliament and the Council in particular of:

(a)  all new legislative acts adopted and all pending proposals presented but not included in programming communicated at the time of the draft budget or after the final adoption of the budget (with the corresponding amounts);

(b)  legislation foreseen in the Commission's annual legislative work programme, with an indication of whether the actions are likely to have a financial impact.

Whenever necessary, the Commission should indicate the reprogramming entailed by new legislative proposals.

B.  AGENCIES AND EUROPEAN SCHOOLS

27.  Before presenting a proposal for the creation of a new agency, the Commission should produce a sound, complete and objective impact assessment, taking into account, inter alia, the critical mass of staff and competencies, cost-benefit aspects, subsidiarity and proportionality, the impact on national and Union activities, and the budgetary implications for the expenditure heading concerned. On the basis of that information and without prejudice to the legislative procedures governing the setting up of the agency, the European Parliament and the Council commit themselves, in the framework of budgetary cooperation, to arrive at a timely agreement on the financing of the proposed agency.

The following procedural steps shall be applied:

—  firstly, the Commission shall systematically present any proposal for setting up a new agency to the first trilogue following the adoption of its proposal, and shall present the financial statement accompanying the legislative proposal for the creation of the agency and shall illustrate the consequences thereof for the remaining period of the financial programming;

—  secondly, during the legislative process, the Commission shall assist the legislator in assessing the financial consequences of the amendments proposed. Those financial consequences should be considered during the relevant legislative trilogues;

—  thirdly, before the conclusion of the legislative process, the Commission shall present an updated financial statement taking into account potential amendments by the legislator; that final financial statement shall be placed on the agenda of the final legislative trilogue and formally endorsed by the legislator. It shall also be placed on the agenda of a subsequent budgetary trilogue (in urgent cases, in simplified form), in view of reaching an agreement on the financing;

—  fourthly, the agreement reached during a trilogue, taking into account the Commission's budgetary assessment with regard to the content of the legislative process, shall be confirmed in a joint declaration. That agreement shall be subject to approval by the European Parliament and by the Council, each in accordance with its own rules of procedure.

The same procedure would be applied to any amendment to a legal act concerning an agency which would have an impact on the resources of the agency in question.

Should the tasks of an agency be altered substantially without an amendment to the legal act setting up the agency in question, the Commission shall inform the European Parliament and the Council by means of a revised financial statement, so as to allow the European Parliament and the Council to arrive at a timely agreement on the financing of the agency.

28.  Relevant provisions from the Common Approach annexed to the Joint Statement of the European Parliament, the Council of the European Union and the European Commission on decentralised agencies signed on 19 July 2012 should be duly taken into account in the budgetary procedure.

29.  When the creation of a new European school is envisaged by the Board of Governors, a similar procedure is to be applied, mutatis mutandis, for its budgetary implications on the Union budget.

PART IV

PROTECTION OF THE UNION BUDGET: QUALITY AND COMPARABILITY OF DATA ON BENEFICIARIES

30.  In line with the requests of the European Parliament and in response to point 24 of the European Council conclusions of 17 to 21 July 2020, in order to enhance the protection of the Union budget and the European Union Recovery Instrument against fraud and irregularities, the Institutions agree on the introduction of standardised measures to collect, compare and aggregate information and figures on the final recipients and beneficiaries of Union funding, for the purposes of control and audit.

31.  To ensure effective controls and audits, it is necessary to collect data on those ultimately benefitting, directly or indirectly, from Union funding under shared management and from projects and reforms supported under Regulation of the European Parliament and of the Council establishing a Recovery and Resilience Facility, including data on beneficial owners of the recipients of the funding. The rules related to the collection and processing of such data will have to comply with applicable data protection rules.

32.  To enhance the protection of the Union budget, the Commission will make available an integrated and interoperable information and monitoring system, including a single data-mining and risk-scoring tool, to access and analyse the data referred to in point 31 with a view to a generalised application by Member States. That system would ensure efficient checks on conflicts of interests, irregularities, issues of double funding, and any misuse of the funds. The Commission, the European Anti-Fraud Office (OLAF) and other Union investigative and control bodies should have the necessary access to that data in order to exercise their supervisory functions in relation to the controls and audits that are to be carried out by the Member States in the first place to detect irregularities and conduct administrative investigations into the misuse of the Union funding concerned, and to get a precise overview of its distribution.

33.  Without prejudice to the prerogatives of the Institutions under the Treaties, in the course of the legislative procedure relating to the relevant basic acts, the Institutions undertake to sincerely cooperate to ensure the follow-up to the European Council conclusions of 17 to 21 July 2020, in line with the approach described in this Part.

Done at Brussels,

For the European Parliament For the Council For the Commission

The President The President The President

ANNEX I

INTERINSTITUTIONAL COOPERATION DURING THE BUDGETARY PROCEDURE

Part A. Calendar of the budgetary procedure

1.  The Institutions shall agree a pragmatic calendar each year in due time before the start of the budgetary procedure on the basis of present practice.

2.  In order to ensure that the European Parliament and the Council are able to exercise their budgetary prerogatives in an effective manner, budgetary positions, transfers or other notifications entailing the activation of deadlines shall be submitted taking due account of any recess periods, the dates of which those institutions have informed each other in due time through their respective services.

Part B. Priorities for the budgetary procedure

3.  In due time before the Commission adopts the draft budget, a trilogue shall be convened to discuss the possible priorities for the budget of the coming financial year and any questions arising from the implementation of the budget of the current financial year, on the basis of the information provided by the Commission in accordance with point 37.

Part C. Establishment of the draft budget and updating of estimates

4.  The institutions, other than the Commission, are invited to adopt their statement of estimates before the end of March.

5.  The Commission shall, each year, present a draft budget showing the Union's actual financing requirements.

It shall take into account:

(a)  forecasts provided by the Member States in relation to the Structural Funds;

(b)  the capacity for utilising appropriations, while endeavouring to maintain a strict relationship between appropriations for commitments and appropriations for payments;

(c)  possibilities for starting up new policies through pilot projects, new preparatory actions or both, or for continuing multiannual actions which are coming to an end, after assessing whether it is possible to secure a basic act, within the meaning of the Financial Regulation (definition of a basic act, necessity of a basic act for implementation and exceptions);

(d)  the need to ensure that any change in expenditure in relation to the previous year is in accordance with the constraints of budgetary discipline.

6.  The Institutions shall, as far as possible, avoid entering items in the budget involving insignificant amounts of expenditure on operations.

7.  The European Parliament and the Council also undertake to bear in mind the assessment of the possibilities for implementing the budget made by the Commission in its drafts and in connection with the implementation of the budget for the current financial year.

8.  In the interests of sound financial management and owing to the effect of major changes in the titles and chapters of the budget nomenclature on the management reporting responsibilities of Commission departments, the European Parliament and the Council undertake to discuss any major changes with the Commission during the conciliation.

9.  In the interest of loyal and sound institutional cooperation, the European Parliament and the Council commit to maintaining regular and active contacts at all levels, through their respective negotiators, throughout the whole budgetary procedure and, in particular, during the whole conciliation period with a view to reaching an agreement. The European Parliament and the Council undertake to ensure the timely and constant mutual exchange of relevant information and documents at both formal and informal levels, as well as to hold technical or informal meetings as needed, during the conciliation period, in cooperation with the Commission. The Commission shall ensure timely and equal access to information and documents for the European Parliament and for the Council.

10.  Until such time as the Conciliation Committee is convened, the Commission may, if necessary, submit letters of amendment to the draft budget in accordance with Article 314(2) TFEU, including a letter of amendment updating, in particular expenditure estimates for agriculture. The Commission shall submit information on updates to the European Parliament and to the Council for their consideration as soon as it is available. It shall supply the European Parliament and the Council with all the duly justified reasons they may require.

Part D. Budgetary procedure before the conciliation procedure

11.  A trilogue shall be convened in due time before the Council's reading, to allow the Institutions to exchange their views on the draft budget.

12.  In order for the Commission to be able to assess in due time the executability of amendments, envisaged by the European Parliament and by the Council, which create new preparatory actions or pilot projects or which prolong existing ones, the European Parliament and the Council shall inform the Commission of their intentions in that regard, so that a first discussion may already take place at that trilogue.

13.  A trilogue may be convened before the votes in plenary of the European Parliament.

Part E. Conciliation procedure

14.  If the European Parliament adopts amendments to the Council's position, the President of the Council shall, during the same plenary sitting, take note of the differences in the position of the two institutions and give his/her agreement for the President of the European Parliament to convene the Conciliation Committee immediately. The letter convening the Conciliation Committee shall be sent at the latest on the first working day of the week following the end of the parliamentary part-session during which the plenary vote was delivered, and the conciliation period shall start on the following day. The 21-day period shall be calculated in accordance with Regulation (EEC, Euratom) No 1182/71 of the Council(18).

15.  If the Council cannot agree on all the amendments adopted by the European Parliament, it should confirm its position by letter sent before the first meeting foreseen during the conciliation period. In such case, the Conciliation Committee shall proceed in accordance with the conditions laid down in the following points.

16.  The Conciliation Committee shall be chaired jointly by representatives of the European Parliament and of the Council. Meetings of the Conciliation Committee shall be chaired by the co-chair from the institution hosting the meeting. Each institution, in accordance with its own rules of procedure, shall designate its participants for each meeting and set out its mandate for the negotiations. The European Parliament and the Council shall be represented at an appropriate level in the Conciliation Committee, such that each delegation can commit politically its respective institution, and that actual progress towards the final agreement may be made.

17.  In accordance with the second subparagraph of Article 314(5) TFEU, the Commission shall take part in the Conciliation Committee's proceedings and shall take all the necessary initiatives with a view to reconciling the positions of the European Parliament and of the Council.

18.  Trilogues shall take place throughout the conciliation procedure, at different levels of representation, with the aim of resolving outstanding issues and preparing the ground for an agreement to be reached in the Conciliation Committee.

19.  Meetings of the Conciliation Committee and trilogues shall be held alternately at the premises of the European Parliament and of the Council, with a view to an equal sharing of facilities, including interpretation facilities.

20.  The dates of the meetings of the Conciliation Committee and the trilogues shall be set in advance by agreement of the Institutions.

21.  A common set of documents ("input documents") comparing the various steps of the budgetary procedure shall be made available to the Conciliation Committee(19). Those documents shall include "line by line" figures, totals by MFF headings and a consolidated document with figures and remarks for all budget lines deemed technically "open". Without prejudice to the final decision of the Conciliation Committee, a specific document shall list all budget lines deemed technically closed(20). Those documents shall be classified by budgetary nomenclature.

Other documents shall also be attached to the input documents for the Conciliation Committee, including a letter of executability from the Commission on the Council's position and the European Parliament's amendments, and any letters from other institutions concerning the Council's position or the European Parliament's amendments.

22.  With a view to reaching agreement by the end of the conciliation period, trilogues shall:

(a)  define the scope of the negotiations on the budgetary issues to be addressed;

(b)  endorse the list of the budget lines deemed technically closed, subject to the final agreement on the entire budget of the financial year;

(c)  discuss issues identified under point (a) with a view to reaching possible agreements to be endorsed by the Conciliation Committee;

(d)  address thematic issues, including by headings of the MFF.

Tentative conclusions shall be drawn jointly during or immediately after each trilogue, and, simultaneously, the agenda of the following meeting shall be agreed. Those conclusions shall be registered by the institution hosting the trilogue and shall be deemed provisionally approved after 24 hours, without prejudice to the final decision of the Conciliation Committee.

23.  The conclusions of trilogues and a document for possible endorsement shall be available to the Conciliation Committee at its meetings, together with the budget lines in respect of which an agreement has been tentatively reached during the trilogues.

24.  The joint text provided for in Article 314(5) TFEU shall be established by the secretariats of the European Parliament and of the Council with the assistance of the Commission. It shall consist of a letter of transmission addressed by the chairs of the two delegations to the Presidents of the European Parliament and of the Council, containing the date of the agreement at the Conciliation Committee, and annexes which shall include:

(a)  line by line figures for all budget items and summary figures by MFF headings;

(b)  a consolidated document, indicating the figures and final text of all lines that have been amended during the conciliation procedure;

(c)  the list of the lines not amended with regard to the draft budget or the Council's position on it.

The Conciliation Committee may also approve conclusions and possible joint statements in relation to the budget.

25.  The joint text shall be translated into the official languages of the institutions of the Union (by the services of the European Parliament) and shall be submitted for approval of the European Parliament and of the Council within a period of 14 days from the date of the agreement on the joint text referred to point 24.

The budget shall be subject to legal-linguistic revision after the adoption of the joint text by integrating the annexes of the joint text with the budget lines not amended during the conciliation procedure.

26.  The institution hosting the meeting (trilogue or conciliation) shall provide interpretation facilities with a full linguistic regime applicable to the Conciliation Committee meetings and an ad hoc linguistic regime for the trilogues.

The institution hosting the meeting shall provide for the copying and distribution of room documents.

The services of the Institutions shall cooperate in the encoding of the results of the negotiations in order to finalise the joint text.

Part F. Amending budgets

General principles

27.  Bearing in mind that amending budgets are frequently focused on specific and sometimes urgent issues, the Institutions agree on the following principles to ensure appropriate interinstitutional cooperation for a smooth and swift decision-making process for amending budgets while avoiding, insofar as possible, having to convene a conciliation meeting for amending budgets.

28.  As far as possible, the Institutions shall endeavour to limit the number of amending budgets.

Calendar

29.  The Commission shall inform the European Parliament and the Council in advance of the possible dates of adoption of draft amending budgets, without prejudice to the final date of adoption.

30.  The European Parliament and the Council, each in accordance with its internal rules of procedure, shall endeavour to examine the draft amending budget proposed by the Commission at an early opportunity after its adoption by the Commission.

31.  In order to speed up the procedure, the European Parliament and the Council shall ensure that their respective calendars of work are coordinated as far as possible in order to enable proceedings to be conducted in a coherent and convergent way. They shall therefore seek as soon as possible to establish an indicative timetable for the various stages leading to the final adoption of the amending budget.

The European Parliament and the Council shall take into account the relative urgency of the amending budget and the need to approve it in due time to be effective during the financial year concerned.

Cooperation during the readings

32.  The Institutions shall cooperate in good faith throughout the procedure, clearing the way, as far as possible, for the adoption of amending budgets at an early stage of the procedure.

Where appropriate, and when there is a potential divergence, the European Parliament or the Council, before each takes its final position on the amending budget, or the Commission at any time, may propose that a specific trilogue be convened to discuss the divergences and to try to reach a compromise.

33.  All draft amending budgets proposed by the Commission and not yet finally approved shall be entered systematically on the agenda of trilogues planned for the annual budgetary procedure. The Commission shall present the draft amending budgets and the European Parliament and the Council shall, as far as possible, make known their respective positions ahead of the trilogue.

34.  If a compromise is reached during a trilogue, the European Parliament and the Council undertake to consider the results of the trilogue when deliberating on the amending budget in accordance with the TFEU and their rules of procedure.

Cooperation after the readings

35.  If the European Parliament approves the position of the Council without amendments, the amending budget shall be adopted in accordance with the TFEU.

36.  If the European Parliament adopts amendments by a majority of its component members, point (c) of Article 314(4) TFEU shall apply. However, before the Conciliation Committee meets, a trilogue shall be called:

(a)  if an agreement is reached during that trilogue and subject to the agreement of the European Parliament and of the Council on the results of the trilogue, the conciliation shall be closed by an exchange of letters without a meeting of the Conciliation Committee;

(b)  if no agreement is reached during that trilogue, the Conciliation Committee shall meet and organise its work in accordance with the circumstances, with a view to completing the decision-making process as much as possible before the 21-day deadline laid down in Article 314(5) TFEU. The Conciliation Committee may conclude by an exchange of letters.

Part G. Budget implementation, payments and reste à liquider (RAL)

37.  Given the need to ensure an orderly progression of the total appropriations for payments in relation to the appropriations for commitments so as to avoid any abnormal shift of RAL from one year to another, the Institutions agree to monitor closely the payment forecasts and the level of the RAL so as to mitigate the risk of hampering the implementation of Union programmes because of a lack of payment appropriations at the end of the MFF.

In order to ensure a manageable level and profile for the payments in all headings, de‑commitment rules shall be applied strictly in all headings, in particular the rules for automatic de-commitments.

In the course of the budgetary procedure, the Institutions shall meet regularly with a view to jointly assessing the state of play and the outlook for budgetary implementation in the current and future financial years. That assessment shall take the form of dedicated interinstitutional meetings at the appropriate level, before which the Commission shall provide the detailed state of play, broken down by fund and Member State, on payment implementation, on transfers, on reimbursement claims received and revised forecasts, including long‑term forecasts, where applicable. In particular, in order to ensure that the Union can fulfil all its financial obligations stemming from existing and future commitments in the period 2021‑2027 in accordance with Article 323 TFEU, the European Parliament and the Council shall analyse and discuss the Commission's estimates as to the required level of payment appropriations.

Part H. Cooperation as regards the European Union Recovery Instrument(21)(22)

38.  For the sole purpose of addressing the consequences of the COVID-19 crisis, the Commission will be empowered to borrow funds on capital markets on behalf of the Union up to EUR 750 000 million in 2018 prices, of which up to EUR 390 000 million in 2018 prices may be used for expenditure and up to EUR 360 000 million in 2018 prices may be used for providing loans in accordance with Article 5(1) of the Own Resources Decision. As provided for in the EURI Regulation, the amount to be used for expenditure constitutes external assigned revenue for the purposes of Article 21(5) of the Financial Regulation.

39.  The Institutions agree that the role of the European Parliament and of the Council, where acting in their capacity of budgetary authority, needs to be enhanced in relation to the external assigned revenue under the European Union Recovery Instrument, with a view to ensuring a proper oversight of and involvement in the use of such revenue, within the limits set out in the EURI Regulation and, as appropriate, in the relevant sectoral legislation. The Institutions also agree on the need to ensure full transparency and visibility of all funds under the European Union Recovery Instrument.

External assigned revenue under the European Union Recovery Instrument

40.  Given the need to ensure an appropriate involvement of the European Parliament and of the Council in the governance of external assigned revenue under the European Union Recovery Instrument, the Institutions agree on the procedure set out in points 41 to 46.

41.  The Commission will provide detailed information with its draft estimates in the context of the budgetary procedure. Such information shall include detailed estimates of commitment appropriations and payment appropriations as well as of legal commitments, broken down by heading and by programme that receives assigned revenue under the EURI Regulation. The Commission will provide any additional relevant information requested by the European Parliament or by the Council. The Commission will attach to the draft budget a document compiling all relevant information concerning the European Union Recovery Instrument, including summary tables aggregating budget appropriations and assigned revenue under the European Union Recovery Instrument. That document will be part of the annex to the general budget of the Union on external assigned revenue provided for in point 44.

42.  The Commission will present regular updates of the information referred to in point 41 throughout the financial year and at least ahead of each dedicated meeting as referred to in point 45. The Commission will make the relevant information available to the European Parliament and to the Council in time to allow meaningful discussions and deliberations on corresponding planning documents, including before the Commission adopts relevant decisions.

43.  The Institutions will meet regularly in the context of the budgetary procedure with a view to jointly assessing the implementation of external assigned revenue under the European Union Recovery Instrument, in particular the state of play and outlook and to discuss the annual estimates provided with the respective draft budgets and their distribution, with due regard to the limitations and conditions set out in the EURI Regulation and, as appropriate, in relevant sectoral legislation.

44.  The European Parliament and the Council will attach to the general budget of the Union in the form of an annex a document setting out all the budget lines that receive assigned revenue under the European Union Recovery Instrument. Moreover, they will use the budget structure for accommodating the assigned revenue under the European Union Recovery Instrument, and in particular the budgetary remarks, to exercise due control over the use of that revenue. In accordance with Article 22 of the Financial Regulation, the European Parliament and the Council will include in the statement of expenditure remarks, including general remarks, showing which budget lines may receive the appropriations corresponding to the revenue assigned on the basis of the EURI Regulation and indicating relevant amounts. The Commission, in exercising its responsibility for implementing the assigned revenue, undertakes to take due account of such remarks.

45.  The Institutions agree to organise dedicated interinstitutional meetings at the appropriate level with a view to assessing the state of play and outlook for external assigned revenue under the European Union Recovery Instrument. Those meetings will take place at least three times in a financial year soon before or after the budgetary trilogues. Furthermore, the Institutions shall meet on an ad hoc basis if one institution provides a reasoned request. The European Parliament and the Council may at any time present written observations concerning the implementation of external assigned revenue. The Commission undertakes to take due account of any remarks and suggestions made by the European Parliament and by the Council. Those meetings may address significant deviations in European Union Recovery Instrument expenditure, in line with point 46.

46.  The Commission shall provide detailed information about any deviation from its initial forecasts prior to a dedicated interinstitutional meeting as referred to in point 45 and on an ad hoc basis in case of a significant deviation. A deviation from forecasted European Union Recovery Instrument expenditure is significant if the expenditure deviates from the forecast for a given financial year and for a given programme by more than 10 %. In case of significant deviations from initial forecasts, the Institutions will discuss the matter, if either the European Parliament or the Council requests to do so within two weeks after notice of such a significant deviation. The Institutions will jointly assess the matter with a view to finding common ground within three weeks of the request for a meeting. The Commission will take utmost account of any comments received. The Commission undertakes not to take any decision until the deliberations have been concluded or the period of three weeks has expired. In the latter case, the Commission shall duly justify its decision. In the event of urgency, the Institutions may agree to shorten the deadlines by one week.

Loans provided under the European Union Recovery Instrument

47.  In order to ensure full information as well as transparency and visibility as regards the loan component of the European Union Recovery Instrument, the Commission will provide detailed information about loans provided to Member States under the European Union Recovery Instrument together with its draft estimates, while paying particular attention to sensitive information, which is protected.

48.  Information about loans under the European Union Recovery Instrument will be shown in the budget in accordance with the requirements in point (d) of Article 52(1) of the Financial Regulation and will also include the annex referred to in point (iii) of that point.

ANNEX II

INTERINSTITUTIONAL COOPERATION ON A ROADMAP TOWARDS THE INTRODUCTION OF NEW OWN RESOURCES

Preamble

A.  The Institutions are committed to sincere and transparent cooperation and the work towards the implementation of a roadmap for the introduction of new own resources over the duration of the MFF 2021‑2027.

B.  The Institutions recognise the importance of the context of the European Union Recovery Instrument, in which the new own resources should be introduced.

C.  For the sole purpose of addressing the consequences of the COVID-19 crisis, the Commission will be empowered, under Article 5(1) of the Own Resources Decision, to borrow funds on capital markets on behalf of the Union up to EUR 750 000 million in 2018 prices, of which up to EUR 390 000 million in 2018 prices may be used for expenditure in accordance with point (b) of Article 5(1) of that Decision.

D.  The repayment of the principal of such funds to be used for expenditure under the European Union Recovery Instrument and the related interest due will have to be financed by the general budget of the Union, including by sufficient proceeds from new own resources introduced after 2021. All related liabilities will be fully repaid by 31 December 2058 at the latest as provided for in the second subparagraph of Article 5(2) of the Own Resources Decision. The annual amounts payable will depend on the maturities of the bonds issued and the debt repayment strategy, while respecting the limit for the repayment of the principal of the funds referred to in the third subparagraph of that paragraph set at 7,5 % of the maximum amount to be used for expenditure referred to in point (b) of Article 5(1) of that Decision.

E.  The expenditure from the Union budget related to the repayment of the European Union Recovery Instrument should not lead to an undue reduction in programme expenditure or investment instruments under the MFF. It is also desirable to mitigate the increases in the GNI‑based own resource for the Member States.

F.  Therefore, and in order to enhance the credibility and sustainability of the European Union Recovery Instrument repayment plan, the Institutions will work towards introducing sufficient new own resources with a view to covering an amount corresponding to the expected expenditure related to the repayment. In accordance with the principle of universality, this would not imply an earmarking or assignment of any particular own resource to cover a specific type of expenditure.

G.  The Institutions acknowledge that the introduction of a basket of new own resources should support the adequate financing of Union expenditure in the MFF, while reducing the share of national GNI-based contributions in the financing of the Union's annual budget. The diversification of revenue sources in turn could facilitate the attainment of a better focus of expenditure at Union level on priority areas and on common public goods with high efficiency gains compared to national spending.

H.  Therefore, new own resources should be aligned with Union policy objectives and should support Union priorities such as the European Green Deal and a Europe fit for the Digital Age, and should contribute to fair taxation and the strengthening of the fight against tax fraud and tax evasion.

I.  The Institutions agree that new own resources should preferably be created in a way that allows generating "fresh money". In parallel, they aim at reducing red tape and the burden for companies, especially for small and medium-sized enterprises (SMEs), and for citizens.

J.  New own resources should fulfil the criteria of simplicity, transparency, predictability and fairness. The calculation, transfer and control of the new own resources should not lead to an excessive administrative burden for Union institutions and national administrations.

K.  Considering the heavy procedural requirements for the introduction of new own resources, the Institutions agree that the necessary reform of the own resources system should be achieved with a limited number of revisions of the Own Resources Decision.

L.  The Institutions therefore agree to cooperate during the period 2021-2027 on the basis of the principles set out in this Annex in order to work towards the introduction of new own resources in line with the roadmap set out in Part B and with the dates set out therein.

M.  The Institutions also recognise the importance of the tools for Better Law-Making set out in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making(23), in particular of the impact assessment.

Part A. Principles for the implementation

1.  The Commission will make the necessary legislative proposals for new own resources and for potential other new own resources as referred to in point 10 in accordance with Better Law‑Making principles. It will in that context take due account of suggestions made by the European Parliament and by the Council. Those legislative proposals will be accompanied by the relevant own resources implementing legislation.

2.  The Institutions agree on the following guiding principles for the introduction of a basket of new own resources:

(a)  raising an amount through the new own resources that is sufficient to cover the level of overall expected expenditure for the repayment of the principal and the interest of the funds borrowed to be used for expenditure referred to in point (b) of Article 5(1) of the Own Resources Decision, while respecting the principle of universality. Revenue from own resources in excess of the needs for repayment shall continue to fund the Union budget as general revenue in accordance with the principle of universality;

(b)  expenditure covering the financing costs of the European Union Recovery Instrument shall aim at not reducing expenditure for Union programmes and funds;

(c)  aligning the own resources with the Union priorities, such as the fight against climate change, the circular economy, Europe fit for the Digital Age and contributing to fair taxation and to the strengthening of the fight against tax fraud and tax evasion;

(d)  respecting the criteria of simplicity, transparency, and fairness;

(e)  ensuring stability and predictability of the revenue flow;

(f)  not leading to an excessive administrative burden for Union institutions and national administrations;

(g)  preferably generating additional "fresh" revenues;

(h)  in parallel, aiming at reducing red tape and the burden for companies, especially for SMEs, and for citizens.

3.  The European Parliament and the Council will analyse, discuss and proceed without undue delay with the legislative proposals referred to in point 1 in accordance with their internal procedures with a view to facilitating a swift decision. After the Commission has presented its proposals, members of the European Parliament and representatives of the Council will in the course of their deliberations meet in the presence of the Commission representatives in order to inform each other about the respective state of play. In addition, the Institutions will enter into a regular dialogue to take stock of progress as regards the roadmap.

Part B. Roadmap towards the introduction of new own resources

First step: 2021

4.  As a first step, a new own resource will be introduced to apply as of 1 January 2021 composed of a share of revenues from national contributions calculated on the weight of non‑recycled plastic packaging waste as provided for in the Own Resources Decision. That decision is scheduled to enter into force in January 2021, subject to approval by Member States in accordance with their respective constitutional requirements.

5.  The Commission will accelerate its work and, following impact assessments launched in 2020, put forward proposals on a carbon border adjustment mechanism and on a digital levy as well as an accompanying proposal to introduce new own resources on that basis by June 2021 with a view to their introduction at the latest by 1 January 2023.

6.  The Commission will review the EU Emissions Trading System in spring 2021, including its possible extension to aviation and maritime. It will propose an own resource based on the EU Emissions Trading System by June 2021.

7.  The Institutions agree that the carbon border adjustment mechanism and the EU Emissions Trading System are thematically interlinked and that it would therefore be warranted to discuss them in the same spirit.

Second step: 2022 and 2023

8.  Following the applicable procedures under the Treaties and subject to approval by Member States in accordance with their respective constitutional requirements, these new own resources are envisaged to be introduced by 1 January 2023.

9.  The Council will deliberate on these new own resources by 1 July 2022 at the latest in view of their introduction by 1 January 2023.

Third step: 2024-2026

10.  The Commission will, based on impact assessments, propose additional new own resources, which could include a Financial Transaction Tax and a financial contribution linked to the corporate sector or a new common corporate tax base. The Commission shall endeavour to make a proposal by June 2024.

11.  Following the applicable procedures under the Treaties and subject to approval by Member States in accordance with their respective constitutional requirements, such additional new own resources are envisaged to be introduced by 1 January 2026.

12.  The Council will deliberate on these new own resources by 1 July 2025 at the latest in view of their introduction by 1 January 2026.

(1) OJ C 363, 28.10.2020, p. 179. (2) Texts adopted, P9_TA(2019)0032. (3) Texts adopted, P9_TA(2020)0054. (4) Texts adopted, P9_TA(2020)0124. (5) Texts adopted, P9_TA(2020)0206. (6) Texts adopted, P9_TA(2020)0220. (7) OJ C 373, 20.12.2013, p. 1. (8) Council Regulation (EU) 2020/… of … establishing a European Union Recovery Instrument to support the recovery in the aftermath of the COVID-19 crisis (OJ L …, p. …). (9) + OJ: Please insert in the text the number and in the accompanying footnote the number and date of the Regulation contained in document ST 9971/20 (2020/0111(NLE)) and fill in the OJ reference. (10) Council Regulation (EU, Euratom) 2020/… of … laying down the multiannual financial framework for the years 2021 to 2027 (OJ L …, p. …). (11) + OJ: Please insert in the text the number and in the accompanying footnote the number and date of the Regulation contained in document ST 9970/20 (2018/0166(APP)) and fill in the OJ reference. (12) Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1). (13) Council Decision (EU, Euratom) 2020/… of … on the system of own resources of the European Union and repealing Decision 2014/335/EU, Euratom (OJ L …). (14) ++ OJ: Please insert in the text the number and in the accompanying footnote the number and date of the Regulation contained in document ST 10046/20 (2018/0135(CNS)) and fill in the OJ reference. (15) + OJ: please insert the date of last signature of this Agreement. (16) OJ C 373, 20.12.2013, p. 1. (17) As set out in the Internal Agreement between the Representatives of the Governments of the Member States of the European Union, meeting within the Council, on the financing of European Union aid under the multiannual financial framework for the period 2014 to 2020, in accordance with the ACP-EU Partnership Agreement, and on the allocation of financial assistance for the Overseas Countries and Territories to which Part Four of the Treaty on the Functioning of the European Union applies (OJ L 210, 6.8.2013, p. 1) and the preceding Internal Agreements. (18) Regulation (EEC, Euratom) No 1182/71 of the Council of 3 June 1971 determining the rules applicable to periods, dates and time limits (OJ L 124, 8.6.1971, p. 1). (19) The various steps include: the budget of the current financial year (including adopted amending budgets); the initial draft budget; the Council's position on the draft budget; the European Parliament's amendments to the Council's position and the letters of amendment presented by the Commission (if not yet fully approved by the Institutions). (20) A budget line deemed technically closed is a line for which there is no disagreement between the European Parliament and the Council, and for which no letter of amendment has been presented. (21) Where the Commission submits a proposal for an act of the Council under Article 122 TFEU with potential appreciable budgetary implications, the procedure as set out in the joint declaration of the European Parliament, the Council and the Commission of … on budgetary scrutiny of new proposals based on Article 122 TFEU with potential appreciable implications for the Union budget (OJ …, p. …) is applicable. (22) + OJ: please insert in the footnote the date of the joint declaration contained in document SN 3633/3/20 REV 3 ADD 1 and fill in the OJ reference. (23) Interinstitutional Agreement between the European Parliament, the Council of the European Union and the European Commission of 13 April 2016 on Better Law-Making (OJ L 123, 12.5.2016, p. 1).

European Parliament resolution of 16 December 2020 on a new strategy for European SMEs (2020/2131(INI))

P9_TA(2020)0359 A9-0237/2020

The European Parliament,

–  having regard to Article 3(3) of the Treaty on European Union, which refers to internal market, sustainable development and the social market economy,

–  having regard to the Commission recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises(1),

–  having regard to Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions(2) (Late Payment Directive),

–  having regard to Regulation (EU) No 1287/2013 of the European Parliament and of the Council of 11 December 2013 establishing a Programme for the Competitiveness of Enterprises and small and medium-sized enterprises (COSME) (2014 – 2020) and repealing Decision No 1639/2006/EC(3),

–  having regard to its resolution of 23 October 2012 on Small and Medium Size Enterprises (SMEs): competitiveness and business opportunities(4),

–  having regard to its resolution of 8 September 2015 on family businesses in Europe(5),

–  having regard to its resolution of 17 April 2020 on EU coordinated action to combat the COVID-19 pandemic and its consequences(6),

–  having regard to its resolution of 15 May 2020 on the new multiannual financial framework, own resources and the recovery plan(7),

–  having regard to its resolution of 23 July 2020 on the conclusions of the extraordinary European Council meeting of 17-21 July 2020(8),

–  having regard to the Commission communication of 23 February 2011 entitled ‘Review of the “Small Business Act” for Europe’ (COM(2011)0078), and to Parliament’s resolution thereon of 12 May 2011(9),

–  having regard to the Commission communication of 7 December 2011 entitled ‘An action plan to improve access to finance for SMEs’ (COM(2011)0870),

–  having regard to the Commission communication of 7 March 2013 entitled ‘Smart regulation – Responding to the needs of small and medium-sized enterprises’ (COM(2013)0122),

–  having regard to the Commission communication of 22 November 2016 entitled ‘Europe’s next leaders: the Start-up and Scale-up Initiative’ (COM(2016)0733),

–  having regard to the Commission communication of 11 December 2019 on the European Green Deal (COM(2019)0640),

–  having regard to the Commission communication of 19 February 2020 entitled ‘Shaping Europe’s digital future’ (COM(2020)0067),

–  having regard to the Commission communication of 10 March 2020 entitled ‘An SME Strategy for a sustainable and digital Europe’ (COM(2020)0103),

–  having regard to the Commission communication of 10 March 2020 entitled ‘A New Industrial Strategy for Europe’ (COM(2020)0102),

–  having regard to the Commission communication of 11 March 2020 entitled ‘A new Circular Economy Action Plan. For a cleaner and more competitive Europe’ (COM(2020)0098),

–  having regard to the Commission communication of 27 May 2020 entitled ‘Europe’s moment: Repair and Prepare for the Next Generation’ (COM(2020)0456),

–  having regard to the Commission communication of 27 May 2020 entitled ‘Adjusted Commission Work Programme 2020’ (COM(2020)0440),

–  having regard to the Commission communication of 1 July 2020 entitled ‘European Skills Agenda for sustainable competitiveness, social fairness and resilience’ (COM(2020)0274),

–  having regard to the Annual Report on European SMEs 2018/2019 of November 2019,

–  having regard to the Commission’s 2020 Spring Economic Forecast,

–  having regard to the European Court of Auditors’ Special Report 02/2020 of 22 January 2020, entitled ‘The SME Instrument in action: an effective and innovative programme facing challenges’,

–  having regard to the findings of the Digital Economy and Society Index 2020, published on 11 June 2020,

–  having regard to the World Bank’s Global Economic Prospects report of June 2020,

–  having regard to the OECD report of 10 December 2019 entitled ‘The Missing Entrepreneurs 2019’,

–  having regard to Rule 54 of its Rules of Procedure,

–  having regard to the opinions of the Committee on International Trade, the Committee on Employment and Social Affairs, the Committee on The Internal Market and Consumer Protection, the Committee on Transport and Tourism, the Committee on Agriculture and Rural Development and the Committee on Culture and Education,

–  having regard to the letter from the Committee on Legal Affairs,

–  having regard to the report of the Committee on Industry, Research and Energy (A9-0237/2020),

A.  whereas the Commission communication entitled ‘An SME Strategy for a sustainable and digital Europe’ was published on 10 March 2020, while on 11 March 2020, the WHO issued the COVID-19 pandemic alert(10), impacting significantly the economic, social and political environment in which SMEs operate and making a revision of the strategy necessary, owing to the changes in many economic, social and political conditions; whereas the Commission’s strategy presented in March 2020 still proposes solutions to address the structural economic, social and environmental challenges SMEs were facing prior to the COVID-19 crisis, as well as upcoming challenges related to the digital and green transitions; whereas the Commission should present an updated version of its communication on an SME strategy, reflecting the points raised in this resolution; whereas European competitiveness is lagging behind that of other developed economies, threatening Europe’s potential to generate wealth and prosperity;

B.  whereas the 24 million SMEs in the EU-27 are the backbone of the economy and, before the pandemic, they generated more than half of the EU’s GDP while employing about 100 million workers; whereas 98,9 % of enterprises in the EU’s non-financial business economy are small enterprises with fewer than 49 workers(11); whereas micro-, small- and medium-sized enterprises (MSMEs), both at national and EU level, are very complex and heterogeneous given their size and the great diversity of sectors of activity they cover; whereas SMEs are vital for the development and resilience of European industrial value chains and contribute significantly to local, regional and national economies;

C.  whereas SMEs should be at the centre of the European Green Deal and digital strategy, and be properly supported by tailored financial instruments and an SME-friendly legislative environment in order be enabled to play an important role in the growth of the European economy, as well as in the broader strategic objectives of the Union, including the environmental objectives by 2050; whereas in its resolution on EU coordinated action to combat the COVID-19 pandemic and its consequences, Parliament stressed that the European Green Deal and digital transformation should facilitate the post-COVID recovery and reconstruction strategies; whereas SMEs must be actively involved and supported in the EU’s digital strategy and the European Green Deal in order to improve their competitiveness and unlock their potential for digitalisation, deployment of innovative solutions and tackling pressing environmental and societal concerns; whereas the contribution of SMEs will be crucial to the success of these strategies;

D.  whereas the economic crisis and the grim economic outlook triggered by the pandemic have brought a considerable and indeterminate number of SMEs and start-ups to the verge of insolvency; whereas in 2018 only 40 % of companies were paid on time; whereas the liquidity crunch from which many SMEs are suffering will not only have negative repercussions on their day-to-day operations, but also on their future growth perspectives, preventing them from properly planning long-term investments;

E.  whereas the emergency asset purchases by the European Central Bank (ECB) in response to the economic crisis caused by the pandemic mainly help larger companies, as they rely more on the commercial debt market, but do not improve financial conditions for SMEs; whereas the EU and the Member States should act boldly and swiftly to minimise the economic, social and strategic risks associated with the disappearance of these companies; recognises that bank lending is traditionally the main source of external financing for SMEs in the Union, accounting for more than three quarters of SME financing, which makes SMEs particularly vulnerable to bank lending contractions; whereas SMEs do not have the tools to face a protracted crisis and national measures should not negatively affect the EU internal market;

F.  whereas the impact of the capital shortfall as a consequence of the COVID-19 crisis will differ across sectors, company types and Member States, leading to divergences in the internal market; whereas it is important to maintain a level playing field in order to minimise distortions to competition within the internal market, while the differential in the growth performance between Member States is one of the causes of uneven economic development within the EU; whereas SMEs suffer even more from overwhelming and often deregulated global competition;

G.  whereas the OECD Economic Outlook does not rule out, in the event of another serious wave of COVID-19, that the loss of income by the end of 2021 will exceed that of any previous recession in the last 100 years(12); whereas, following the COVID-19 outbreak, State aid should not lead to distortions of competition on the internal market between SMEs from different countries; whereas the pandemic has shown that the digital transition is of the utmost importance and has highlighted the need for digitalising the economy to ensure better resilience in the future, while environmental challenges persist and need to be addressed; whereas the EU is facing tough competition from global players; whereas innovation represents an effective way for SMEs to build long-term and sustainable growth;

H.  whereas the adoption of environmentally sustainable practices, innovations and technologies is expected to create new jobs and business opportunities for SMEs while improving their competitiveness and reducing their costs, provided that the right administrative, regulatory and technical conditions are in place; whereas many SMEs wish to improve their environmental performance, resource and energy efficiency, use of digital technologies and deployment of innovative solutions, all of which will be crucial for supporting their long-term and sustainable growth and competitiveness, as well as enabling them to play a key role in directly delivering eco-innovations; whereas to this end, better access to funding and technical support should be provided;

I.  whereas, according to the Commission’s Digital Economy and Society Index 2020(13), many SMEs still lack full access to digitalisation and are lagging behind large firms both in terms of digital skills and the digitalisation of their operations, owing in part to unfair competition from multinational companies; whereas the same rules should apply both in the digital and non-digital single markets in order to ensure a level playing field while avoiding negative impacts on labour and social rights; whereas the use of data can lead to a competitive advantage and allow SMEs to reap the benefits of the digital transition, while the focus on digital literacy and skills should go hand in hand with the enhancement of EU investment in digital infrastructure as well as with the improvement of data access for SMEs and fair commercial and regulatory frameworks in all types of market settings, i.e. business to business, business to consumer and business to government;

J.  whereas one of the main challenges in unlocking the potential of digitalisation is to find skilled employees; whereas the Commission, the Member States and local governments should act to improve the business environment in order to ensure the competitiveness of SMEs as well as the sustainable and long-term economic growth of the Union; whereas the Union’s SME strategy represents an opportunity to foster the entrepreneurial culture of under-represented groups and to enable them to fully harness opportunities stemming from the digital and green transitions;

K.  whereas the enhancement of an entrepreneurial culture can enable SMEs to fully contribute to and benefit from the twin transition and increase job creation and thus the impact of SMEs on in the labour market; whereas women make up 52 % of the total EU population but constitute only 34,4 % of the self-employed and 30 % of start-up entrepreneurs in the EU(14); whereas women’s creativity and entrepreneurial potential remain untapped and should be further developed;

L.  whereas regulatory burdens should be reduced, such as the financial and ‘hassle’ costs of compliance created by over-regulation and overly complex administrative procedures, including the challenges related to patent litigation, for example in the field of intellectual property protection but also with reference to funding opportunities; whereas innovation is not associated with regulation, but is propelled by collaborative efforts in which businesses interact to exchange knowledge and information and to combine ideas and financing with partners as part of broader innovation systems; whereas grants are typically more likely than tax credits to reach SMEs or activities in which SMEs are more likely to be involved;

M.  whereas the EU’s definition of SMEs is referred to in over 100 EU legal acts covering a wide range of policies; whereas the Commission will further examine the current definition and report on specific issues raised in the most recent public consultation, such as complex ownership structures or possible ‘lock-in effects’; whereas the Commission still needs to comply with the judgment of the European Court of Justice of 15 September 2016 requiring the clarification on the criteria of ‘independence’ and ‘autonomy’;

N.  whereas micro-enterprises represent a significant proportion of European SMEs and very often have difficulties in accessing finance as well as in gaining knowledge of the opportunities that are available at the European and national levels; whereas this category of businesses has also been hit very hard by the COVID-19 crisis and, without prejudice to the current definition of SMEs, deserves to receive more assistance and be better promoted;

O.  whereas mid-caps contribute significantly to employment and growth, especially in some Member States; whereas the Commission should, as part of the REFIT initiative, assess the need for a separate mid-cap definition in order to enable targeted measures, while ensuring that this does not broaden the existing SME definition nor compromise SME support in any way;

Structural challenges prior to the COVID-19 crisis

1.  Welcomes the Commission’s SME strategy and shares its view that SMEs are essential to the European economy; highlights the need to update the SME strategy in the light of the COVID-19 crisis while keeping the focus on advancing the transition toward a socially, economically and environmentally resilient society and a competitive economy, and calls therefore for the SME strategy to be aligned with the industrial strategy, the European data strategy(15) and the European Green Deal, in order to actively involve and support all SMEs in the twin transition, with the view of achieving better competitiveness, long-term growth and better resilience;

2.  Calls, furthermore, for measures to improve the environment for business creation and to strengthen the entrepreneurial spirit, including through the reduction of administrative burdens on SMEs; calls in this regard for the adoption of an SME action plan with clear objectives, milestones and timeline, accompanied by regular monitoring, reporting and evaluations; stresses in this context the need to enhance the entrepreneurial spirit within the Union and to provide the conditions that will enable new businesses and existing SMEs to thrive and innovate, and thereby contribute to the Union’s economic, social and environmental sustainability and economic competitiveness;

3.  Acknowledges that an excess of administrative and regulatory burdens is hindering the ability of SMEs to thrive as they lack the necessary resources to meet complex bureaucratic requirements;

4.  Welcomes therefore the Commission’s commitment to introduce a ‘one in-one out’ principle, but recalls that this merely maintains the status quo in legislation, which is not a sufficient ambition, and stresses the need for Member States to avoid gold-plating as a first step towards stemming the tide of new regulation; recalls that public administration, both at the European and the national levels, has a key role to play in ensuring the ease of doing business and, for example, in promoting investments aimed at boosting economic competitiveness, while safeguarding the highest standards of transparency, workers’ health, rights and safety and environmental protection;

5.  Calls therefore on the Member States and the Commission to acknowledge the need for better regulation and simplification and to adopt a roadmap with concrete and binding targets and indicators as an important prerequisite for our economy’s ability to recover and innovate, and for the safeguarding of EU companies’ competitiveness; notes that several Member States have set quantitative targets of up to 30 %(16) for the reduction of administrative burden and calls on the Commission to set ambitious and binding quantitative and qualitative targets at EU level for the reduction of administrative burdens, as soon as possible after conducting an impact assessment and in any case no later than June 2021, and in advance of the Commission communication;

6.  Notes that this roadmap should identify the areas where the administrative and regulatory burden for SMEs should be substantially reduced in order to cut compliance costs including red tape, and support Member States in achieving a swift reduction in the number of rules while ensuring workers’ rights, social and health standards and environmental protection; underlines that, in order to monitor the effectiveness of the reduction of red tape, it is also important to assess such measures ex-post, taking into account the SMEs’ perspective and not undermining workers’ rights;

7.  Calls for improved regulatory alignment to be accompanied by smart digitalisation, increased user-friendliness, more streamlined procedures and more secure and private data procedures; demands, in this respect, increased and more targeted national and EU-level technical and administrative assistance, exchange of best practices and training opportunities for SMEs; calls on the Commission to manage a true single digital entry point for all enquiries on EU financing opportunities for SMEs and ensure that EU support schemes, including those addressing the COVID-19 aftermath, contain a strong SME component;

8.  Welcomes the achievements of the application of the Better Regulation principles so far; notes that further progress needs to be reached in particular in the realm of simplification and standardisation of forms and procedures, with the consistent implementation of the ‘once only’ and ‘digital by default’ principles, both at EU and Member State levels, and the reduction of administrative burdens in general;

9.  Calls on the Commission to analyse carefully the economic and social impacts of the COVID-19 crisis on SMEs and to take into account SMEs’ concerns resulting from the COVID-19 crisis when conducting impact assessments ahead of proposing legislation;

10.  Calls, therefore, for a binding test that is able to assess, with regard to SMEs, the costs and benefits of legislative proposals, including their economic impact and their impact on SME employees; expects the results of the SME test to be fully taken into account in all legislative proposals and to clearly demonstrate how simplification would be attained and, where possible, formulate additional recommendations to avoid unnecessary administrative or regulatory burdens for SMEs; recalls that the main focus during the EU’s legislative process should be on the quality of impact assessments rather than on speed at which initiatives are completed; calls on the Member States to collect and promote best practices and develop guidelines for the systematic implementation of SME tests also at national level;

11.  Calls on the Commission to ensure the effectiveness and good functioning of the Regulatory Scrutiny Board (RSB) by ensuring it has a majority of external experts and support from the Joint Research Centre; reiterates that the independence, transparency and objectiveness of the RSB and its work must be ensured and that the members of the Board should not be subjected to any political control, conflict of interest or bias; calls on the Commission to guarantee a balanced representation of large and small companies in all relevant bodies and committees associated with EU policymaking, including on the RSB; considers the current requirement to have only one SME representative on the RSB, representing all SMEs across all sectors, as insufficient, considering the great variety of SMEs in Europe;

12.  Calls for a revived implementation of the small business act (SBA); underlines the need for the consistent application of the ‘think small first’ principle and the strengthening of the principle of being ‘big on big things, small on small things’ in order to ensure proper focus on SMEs in EU and national legislation and as the basis for a new interinstitutional commitment to reducing administrative burdens;

13.  Takes note of the Commission’s plan to appoint a dedicated EU SME envoy to bring more visibility to SMEs’ concerns and furthermore calls on the Commission to place the SME envoy in a central unit under the President of the Commission in order to enable oversight over SME issues in all Directorates-General; calls on the Commission to build on the existing SME performance review process and engage in an annual debate on the ‘State of the SMEs Union’ to be held at a Parliament plenary sitting; underlines the opportunity to strengthen cooperation between the SME envoy network and the national and local organisations representing SMEs;

14.  Considers that the EU objectives in the areas of sustainability and digitisation should be fully matched by financial and other resources to enable Member States to promote SME transition within both areas, this being of particular importance in the less developed regions; stresses that such objectives cannot be contradictory and must, on the contrary, be mutually reinforcing and accompanied by measures to safeguard employment with rights and improved working conditions;

15.  Regrets that SMEs have experienced more difficulties than larger companies in accessing finance, owing among other reasons to various monetary measures and the regulatory framework; suggests in this regard that actions be taken to strengthen access to credit for SMEs, including micro-enterprises and start-ups; recalls that SMEs usually do not have sufficient financial and human resources to participate on an equal footing with other stakeholders, in particular multinational corporations, in the process of accessing financial instruments;

16.  Expresses concern regarding the difficulties in accessing EIB funding lines faced by most SMEs, particularly those with limited capitalisation, and calls for conditions of access to take into account the need for a stronger involvement of SMEs; regrets that many SMEs, including micro-enterprises and start-ups, are unable to access EU funding because they lack awareness of what is available, but also because of the slowness and excessive complexity of the relevant procedures and eligibility criteria; calls on the Commission to remove such barriers by simplifying procedures, ensuring online access to information and further supporting tailored incentives for SMEs and micro-enterprises;

17.  Reminds the Member States and the Commission, in this regard, that there is an immediate need to restore the liquidity of SMEs to ensure their basic functioning and warns that the post-COVID-19 survival of SMEs, in particular of micro-enterprises, given their structural weaknesses in comparison to larger businesses, will depend on swift decision-making, adequate funding and the quick availability of liquidity;

18.  Encourages the Commission and Member States to make the best use of the forthcoming EU instruments under the next multiannual financial framework (MFF) according to the specific needs of the local communities and taking into consideration, whenever possible, existing sectoral and national specificities; recalls that they are expected, among other things, to funnel investments towards SMEs;

19.  Expresses its regret that the Recovery Plan dedicated little focus to SMEs and calls for measures to ensure easy access for SMEs;

20.  Urges the Commission to better customise EU funding to attract more participation from non-digital, high-tech and innovative SMEs and calls, furthermore, for the design of new EU instruments to take into consideration whether funding can reasonably be used by SMEs and is suited to their needs, and to ensure that SMEs are able to benefit as much as all the other partners involved in the value chain, to the benefit of Europe’s global competitiveness; recalls that, in order to help start-ups thrive, it is crucial to ensure a supply of ‘patient capital’ that aims to capture benefits specific to long-term investments and whose providers are able to maintain their investment even in the face of adverse short-term conditions;

21.  Emphasises the need for EU bodies to proactively approach SME networks and organisations at local, regional and national levels in order to provide timely information and guidance for making use of available and planned EU funding possibilities; reminds the Commission to use all means of communication available as well as competitions for students and young entrepreneurs;

22.  Urges Member States to guarantee non-discriminatory access to bank lending for SMEs, including those whose business model focuses on intangible assets; recalls that access to finance is a key enabler of growth, sustainable transformation and innovation and calls for further support for innovative business models; deplores the gap in credit conditions for SMEs located in different EU countries and calls on the Member States to work together with the financial and banking sectors with regard to their obligation to ensure full and fair access to bank loans for SMEs;

23.  Stresses that financing through capital markets alone will not be sufficient to provide appropriate solutions for SMEs and believes that the financial services sector must be stable and offer SMEs, micro-enterprises and self-employed entrepreneurs a wide range of tailor-made financing options in a cost-effective manner; stresses in this regard the importance of traditional banking models, including small regional banks and savings cooperatives; invites the EIB to work more closely with its financial intermediaries in the Member States to disseminate relevant information to SMEs in order to improve their access to finance;

New challenges arising from the COVID-19 pandemic

24.  Recalls that liquidity must be swiftly provided to SMEs, while measures for SME re-capitalisation should also be reinforced; urges Member States and the Commission to address the problem of late payments, which continue to create significant liquidity challenges for SMEs, and urges Member States that still have not done so to implement the Late Payment Directive, in particular with regard to public administrations and to business-to-business relations;

25.  Urges the Commission to strengthen monitoring and enforcement of the Late Payment Directive and assess the need for its revision, so as to ensure that prompt payments are the norm across the internal market both for business-to-business transactions, in particular from bigger to smaller businesses, and for government-to-business transactions; calls on authorities at the European, national, regional and local levels to set the right example by always paying SMEs on time and, in this context, encourages an active use of infringement procedures in cases where the directive is not properly implemented;

26.  Recognises the need for a temporary relaxation of State aid rules and an acknowledgement that they have led to the uneven implementation of measures across the Union; calls on the Commission and the Council to take swift action to ensure a competitive level playing field among Member States;

27.  Notes that any future evaluation and revision of the State aid rules should take into due account the specificities and geographical disadvantages affecting those SMEs located in the most peripheral territories, including islands, outermost regions and mountainous areas, as well as in other areas, including non-peripheral areas, that are affected by unprecedented natural calamities;

28.  Is deeply concerned that sectors such as tourism, hospitality, culture, the creative industries, transport, trade fairs and events, which are largely composed of SMEs, have been hit hardest by the COVID-19 crisis; underlines the importance of continuous, swift measures aimed at restoring and retaining trust among travellers and operators; underlines the need to relieve these sectors from administrative burdens and cost-driving regulation, identify the way forward for the sectors’ recovery and ensure protection for the rights of workers in the affected sectors; recalls the importance of improving access to digital technologies and supporting programmes for SMEs in the cultural and creative sectors, as the COVID-19 crisis has shown their crucial role in our economy and social lives;

29.  Urges Member States to acknowledge as top political priorities the protection of employment and the survival of SMEs and start-ups by putting forward concrete measures to support economically viable SMEs and start-ups at risk of insolvency, in particular in light of the cancellation of the Solvency Support Instrument suggested by the European Council; notes the Support to mitigate Unemployment Risks in an Emergency (SURE) initiative aimed at covering the cost of national short-time work schemes; calls on the Commission to actively support Member States in transposing the Directive on restructuring and insolvency(17) to ensure a real second chance to SMEs in difficulty;

30.  Notes that the COVID-19 crisis has pushed SMEs towards innovative technologies, new ways of organising their work and digital business models such as e-commerce, the sharing economy and remote working; points out that many SMEs have struggled to adapt to the new circumstances and calls on the Commission, in this regard, to ensure that research and innovation (R&I) investment is geared towards SME participation while striking a balance between the enforcement of intellectual property rights and the push for innovation; calls furthermore for the respect of workers’ rights throughout this process;

31.  Recalls that innovation in SMEs is a key driver of productivity and sustainable growth, as it can help solve global and societal challenges and offer better working conditions; recalls that technological development and digitalisation are increasing the opportunities for SMEs to innovate and prosper, accelerating the spread of knowledge and the emergence of new business models, and increasing their ability to scale up more quickly;

32.  Stresses that investments in innovation should prioritise ecosystems that are inclusive of SMEs and that strengthen co-creation, maturation and transfer of excellent technology to industry as well as the uptake of new technologies; underlines, therefore, the importance of targeted public policies to support horizontal needs related to the digital transformation processes in micro-enterprises and SMEs, such as the simplification of reporting obligations, and calls on Member States to develop pilot initiatives to accelerate SMEs’ uptake of e-commerce solutions, for example through training and advisory activities, technical assistance, best practices or integration of the knowledge triangle (education, research and innovation), and with the involvement of all relevant stakeholders and local authorities;

33.  Welcomes the inclusion of SMEs in the European Space Programme, including in the development of many downstream services and applications; recognises the key role that SMEs play in defence supply chains in Europe;

34.  Welcomes the Commission’s promise to open fast-track training through digital crash courses to enable the employees of micro-enterprises and SMEs to become proficient in areas such as AI, cybersecurity and distributed ledger technologies; highlights that digital crash courses for SMEs in the framework of the digital Europe programme should be preceded by subsidised programmes to allow SME owners and managers to identify their digital needs and opportunities; points out that a skilled workforce is essential to make SMEs thrive and enable them to successfully cope not only with the environmental and digital transitions, but also with the traditional challenges these enterprises face;

35.  Regrets that only 17 % of SMEs have so far successfully integrated digital technology into their businesses; calls for the action aimed at tackling skills mismatches and shortages to be strengthened and at equipping SMEs with digital literacy and skills, as well as improving skills in relation to public procurement and financial education, in addition to credit and supply chain management skills for rapidly changing labour markets, also in the light of the acceleration induced by the COVID-19 crisis;

36.  Stresses the need to promote investments in further vocational training and apprenticeship programmes in SMEs; calls in this regard for the development of a tailored approach to digital skills for micro-enterprises; stresses the role that the Commission’s skills agenda can play to this end and points out that, in order to bridge the gap in the digital and innovation fields, it is necessary to increase the share of graduates in STEM subjects and to address the gap that women are facing in both fields; welcomes, in this regard, the European skills agenda;

37.  Take note of the Commission’s white paper on artificial intelligence (COM(2020)0065) and its view that each Member State should have at least one digital innovation hub with a high degree of specialisation in AI;

38.  Encourages the Commission to support SMEs’ effort to, inter alia, upgrade obsolete equipment, enhance knowledge transfer and identify the most effective uses of technologies, such as industrial AI, and, upskill the workforce with the immediately necessary skills to allow remote asset control, production monitoring and employee collaboration, as well as environmentally sustainable business models, circular economy approaches, and energy and resource efficiency, where digital know-how is often crucial and allows SMEs to stay competitive; calls on the Commission also to consider the creation of an SME voucher programme to support the above;

39.  Urges action to tackle SME knowledge and skills gaps in relation to environmentally sustainable technologies, practices and business models, particularly for sectors in which EU sustainable energy and environmental objectives require fundamental change;

40.  Recalls the importance of instruments such as the Enterprise Europe Network and European Digital Innovation Hubs, which can foster SMEs’ internationalisation, digitalisation and pursuit of innovation at the local level, including in the environmental field, and help ensure they are fit for purpose; calls on the Commission to perform a thorough mid-term and ex post evaluation of these instruments by consulting SME representatives throughout the evaluation process to ensure that these networks effectively reach SMEs;

41.  Highlights the vital role of non-personal data and transfer of technologies from academia to SMEs, and underlines the importance of establishing European data spaces for non-discriminatory, trusted and secure non-personal data sharing to ramp up data flows between businesses and with governments, using an open data model;

42.  Calls for the adoption of a parallel and stronger policy to improve internet infrastructure and connectivity conditions to the benefit of SMEs in remote areas, as a basic condition to improve digitalisation and embrace an effective transformation; calls on the Commission to consider binding targets for connectivity;

Recovery strategy

43.  Insists that Horizon Europe is a priority and needs robust overall funding; calls for a substantial part of it to be made available for SMEs including for the SME components of the European Innovation Council, and calls on the Commission and the Member States to ensure that, whenever possible, R&I instruments such as the EIC Accelerator offer fast-track opportunities to SMEs and start-ups that are developing innovative technologies;

44.  Calls for pervasive EU research and innovation policies and instruments to be kept as sector-neutral as possible and to provide more support not only to those SMEs and micro-enterprises that are already active in innovation efforts, but also, according to their needs, to those lagging behind, particularly in traditional manufacturing; calls for more European-level R&I financing to be dedicated to non-digital SMEs and SMEs that wish to improve their environmental performance and resource efficiency;

45.  Highlights that collaboration and cooperation are crucial dimensions to improving the performance of SMEs; notes, to this end, that clusters and partnerships with all actors in the knowledge triangle (education, research and innovation), shall be better promoted and encouraged by reducing administrative burdens, simplifying procedures and establishing shared services facilities for SME cluster participation; calls on the Commission furthermore to ensure that Horizon Europe’s partnerships and missions are transparent and inclusive throughout their implementation, in particular as regards SME participation and the setting of their strategic research agenda and annual work programmes; emphasises further the need to ensure fair arrangements on the sharing of findings and final results, in accordance with the principle of being ‘as open as possible, as closed as necessary’;

46.  Underlines further the potential of the European Institute of Innovation and Technology and its Knowledge and Innovation Communities, as they represent an effective way to enhance collaboration between SMEs, research centres and universities with the scope to promote local entrepreneurship and address the most urgent societal challenges of our age;

47.  Calls on the Commission and the Member States to invest, inter alia, in the data economy, artificial intelligence, smart production, the Internet of Things (IoT) and quantum computing and to ensure a strong SME component in these fields; deplores the fact that most SMEs do not have access to the data they create; welcomes in this respect the European data strategy, geared towards creating a genuine market for data, where SMEs will have easy access to and use of data in all types of market settings, i.e. business-to-consumer, business-to-business and business-to-government;

48.  Calls on the Member States to ensure that SMEs have the support to innovation opportunities they need and to maximise synergies with EU programmes in their national innovation strategies; stresses in this regard the role of innovative SMEs specialising in pioneering technologies;

49.  Emphasises the need to increase awareness among SME owners and managers, SME associations and support organisations about financing possibilities for technologies with better environmental performance, about contracting services (e.g. consultancy, coaching and training) related to eco-design and efficient resource usage and management, and about green entrepreneurship and green technologies, products and services;

50.  Emphasises that investments in new as well as environmentally friendly technologies can turn the European Green Deal into a new growth strategy through which SMEs can benefit and enhance their innovation potential;

51.  Acknowledges that, while many SMEs are willing to invest in energy-efficient, circular and environmentally friendly processes, products and services, there are significant barriers, in particular financial ones, preventing them from doing so; calls on the Commission and the Member States while lowering the regulatory burden to remove such barriers by putting in place an enabling regulatory framework and technical and financial support schemes, including through private investment, to allow SMEs to successfully and swiftly take up green practices, products, processes and services; is of the opinion that reinforced targeted technical and financial assistance will be essential in promoting green opportunities among those SMEs, including micro-enterprises; stresses that such assistance should enable SMEs and micro-enterprises to take full advantage of the opportunities arising from the Green Deal, taking into account their structure, business model and, more generally, their needs, since there is no one-size-fits-all approach; stresses in this regard the need to actively involve representatives from SME organisations;

52.  Welcomes the initiatives which offer the greatest employment and competitiveness opportunities to SMEs, such as the implementation of the circular economy action plan, creating local jobs and providing major business and innovation opportunities for SMEs; takes note of the opportunities provided by the initiatives of the so-called ‘renovation wave’ including urban regeneration projects; points out that the right to repair, while beneficial to consumers, can also push SMEs into entering the reparation market segment and that policies aimed at increasing the energy efficiency of buildings not only help SMEs in the construction sector, but all SMEs in promoting energy efficiency, and thus contribute to reducing their operational costs; calls for the development of a more competitive market for energy service companies (ESCOs);

53.  Stresses that public procurement is a strategic tool to boost sustainable production and consumption patterns; believes that this tool, with the right support and assistance, can also provide great opportunities for local, innovative SMEs; notes the similar role of green and circular public procurement and recalls in this regard that its implementation at the national level should be accompanied by training and support for public bodies and SMEs;

54.  Notes that a balanced intellectual property (IP) rights framework has long been known as an important step in improving the functioning of the internal market; calls on the Commission, therefore, to prioritise the announced intellectual property action plan in order to ensure EU-level protection of copyrighted goods and patented inventions and strengthen the ability of European companies, and in particular SMEs, to innovate on the basis of strong and balanced IP regimes, which will benefit the global competitiveness of innovative SMEs as well as minimising the costs and complexities of administrative procedures, while also addressing the challenges related to patent litigation and providing open source and open data models for future innovation;

55.  Recalls the role of vocational training and life-long learning, which are essential for tackling the mismatch between skilled labour demand and supply, encourages the integration of entrepreneurial skills in the early stages of education and the promotion of reskilling and upskilling of unemployed workers to enable their inclusion into the labour market and ensure that SMEs can count on properly trained staff;

56.  Calls on the Commission and the Member States to accelerate and expand initiatives to identify the skills needs and to address the gaps in the labour market through education, professional training strategies and skills development programmes targeted at SMEs, and regrets that the gap in entrepreneurship and access to finance for micro-enterprises and SMEs led by women still persists; calls on Member States to assess the barriers that still prevent women from becoming company founders and managers; underlines that the use of gender-disaggregated data will help make this assessment more thorough and will improve the overall quality of the decision-making process; calls for educational and upskilling initiatives for women to help them improve their entrepreneurial skills and self-confidence; believes, furthermore, that e-government tools and digital skills should be promoted within the public sector in order to make public administration more business- and citizen-friendly and calls on Member States to ensure the exchange of national and regional best practices in the field, also with reference to cooperation between public administration and the private sector, in order to boost economic competitiveness;

57.  Recalls that the SME strategy needs to cover different sizes and types of SMEs, whether they operate in traditional, social to high-tech sectors; considers SMEs involved in traditional handicrafts, tourism, cultural and creative sectors and the social economy to be particularly vulnerable segments of the SME network; acknowledges their historic, cultural, economic and social value and calls on Member States to ensure the sectors’ competitiveness, including by promoting generational transition and self-entrepreneurship, by promoting access to information about innovation opportunities and by supporting the protection and enhancement of these sectors;

58.  Calls on the Commission, in the context of the EU’s SME support programmes, in particular the single market programme, to also pay particular attention to social economy enterprises, as they are locally rooted, provide a wide range of products and services across the EU single market and generate high quality jobs and promote social innovation;

59.  Calls on the Commission to present and commit to a roadmap for the reduction of administrative burdens, including a timeline for actions and mid-term checkpoints, and on the implementation of the SME strategy to be presented at an annual plenary debate on the ‘State of the SMEs Union’; notes that following the WHO’s pandemic alert and the implementation of measures aimed at containing the spread of COVID-19, many European companies were forced to stop or slow down production due to trade restrictions, supply chain disruptions and shortages of raw materials and components from third countries, demonstrating once again the need for European industry to gain strategic autonomy and decrease its dependency on non-EU countries and to ensure that key parts of strategic value chains, including in the manufacturing industry, are better located within its borders; calls on the Commission, furthermore, to ensure that companies supplying medical supplies will not face again the same difficulties that arose within the internal market and to learn from problems that occurred during the early stages of the COVID-19 crisis;

60.  Calls for strengthening competition rules to improve the competitiveness of SMEs and to protect them from unfair practices that could result in social dumping and labour deregulation; calls on the Commission to ensure the effective enforcement of the Union’s competition law, without prejudice to workers’ rights; recalls, in this regard, the importance of promoting social dialogue in designing and implementing SME policies and guaranteeing a level playing field for SMEs to make sure that they benefit from the internal market on a fair basis and are able to harness opportunities to scale up;

61.  Calls on the Commission to ensure that SMEs will thrive in the context of the ecosystems guaranteeing an inclusive approach and bringing together all actors operating in a value chain, in order to promote European leadership in strategic sectors and competitiveness on the global stage;

62.  Considers that the EU strategy for SMEs should, at all times, take full account of their national specificities, thereby ensuring due regard for the broad national autonomy of Member States in a general Union framework;

63.  Regrets the fact that no more than 600 000 SMEs are currently exporting outside the EU; recalls that those SMEs seeking to access the global market will improve their competitiveness only if supported both at the local and international levels by a structured and predictable regulatory and enabling framework, structured networks, solid information resources and access to investment opportunities and a skilled workforce; stresses the importance of increasing SMEs’ awareness of both the internal and the international markets and their rules and tools, also by simplifying the reference framework and improving communication on tailored opportunities; recalls in this regard the role of SME umbrella organisations and networks and chambers of commerce in Member States and internationally, as well as of the EU delegations;

64.  Calls on the Commission, therefore, to introduce tools such as a single digital entry point to easily identify opportunities for SMEs stemming from international trade agreements; welcomes in this respect the launch of the new Commission portal named ‘Access2Markets’ on customs procedures and formalities and urges the Commission to ensure multilingual access to this tool;

65.  Recalls the need to actively involve SMEs in international trade agreements and push for reciprocity to ensure their access to public procurement in third countries; calls therefore for the inclusion in trade agreements of a standalone SME chapter that signposts micro-enterprise and SME-friendly provisions from other chapters and provides a fast means for microenterprise and SME owners to identify relevant and beneficial aspects of the agreement;

66.  Urges the Commission to pursue a level playing field and a regulatory environment in which SMEs can thrive and compete globally and to consider the deployment of trade defence instruments (TDIs) in order to reduce unfair competition resulting from illegal or unfair trade practices of third countries, including trade defence measures unfairly blocking EU businesses from enjoying free access to their markets;

67.  Considers that national and European public administrations should lead by example and facilitate and increase the participation of SMEs and micro-enterprises in public procurement, by simplifying access to information regarding calls for tenders and procedures, while avoiding disproportionate requirements and discriminatory practices such as tendering criteria that set demands or qualifications beyond the fundamental elements of the service or goods purchased, and thereby contribute to the shortening and diversification of supply chains;

68.  Calls for more guidance to be provided to public authorities and SMEs on existing flexibilities and the adaptation of public procurement rules to this end;

69.  Notes that the division of larger contracts into smaller lots could contribute to the shortening and diversification of supply chains, offering better incentives for local SMEs including by facilitating SMEs’ participation in innovation procurements and pre-commercial procurements, which are generally accessible only to larger groups;

70.  Calls for the valuing of ‘Km 0 contracts’ by providing for premium criteria for local businesses, by borrowing in this regard from the European agricultural legislation and shorter supply chains; calls for the possibility for public policy makers to favour contracts with local SMEs to a certain extent;

71.  Underlines the importance of working in partnership with national administrators to create a European public procurement market which is based on moderate-sized tenders that allow SMEs to participate in the procurement process, including through the division of larger contracts into smaller lots, and where real and fair competition between market actors can take place, and highlights the need to make the European single procurement document (ESPD) more accessible to SMEs;

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

(1) OJ L 124, 20.5.2003, p. 36. (2) OJ L 48, 23.2.2011, p. 1. (3) OJ L 347, 20.12.2013, p. 33. (4) OJ C 68 E, 7.3.2014, p. 40. (5) OJ C 316, 22.9.2017, p. 57. (6) Texts adopted, P9_TA(2020)0054. (7) Texts adopted, P9_TA(2020)0124. (8) Texts adopted, P9_TA(2020)0206. (9) OJ C 377 E, 7.12.2012, p. 102. (10) WHO Director General’s opening remarks at the media briefing on COVID-19, 11 March 2020. (11) https://ec.europa.eu/growth/smes_en (12) OECD Economic Outlook, Volume 2020, Issue I. (13) https://ec.europa.eu/digital-single-market/en/news/digital-economy-and-society-index-desi-2020 (14) Report prepared for the European Commission and the European Investment Bank by Innovation Finance Advisory, Funding women entrepreneurs - How to empower growth, June 2020. (15) Commission communication of 19 February 2020 on a European strategy for data (COM(2020)0066). (16) Report for the German Ministry for Economic Affairs and Energy presented by the Centre for European Policy Studies, Feasibility Study: Introducing ‘one-in-one-out’ in the European Commission, 5 December 2019. (17) Directive (EU) 2019/1023 of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132 (OJ L 172, 26.6.2019, p. 18).