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Brussels, 28th July, 2000

Summary of the Commission’s activities

The following document summarises the results of the Commission’s activities sector by sector since it took office last September. It is not exhaustive. It picks out the main areas where the Commission has enforced existing EU policies, proposed legislation or discussion papers, and promoted debate or secured agreements in the Council and international bodies. It also attempts to signal those areas where the Commission’s work this year should bear fruit at a later date.

President Prodi said:

‘My Commission has worked hard and well. We are fulfilling the promises we made on taking office. Europe has a busy agenda and great challenges before it. I am proud of my team and what it has accomplished so far’.

Administrative Reform

Early changes

Significant steps were taken at the outset of the Prodi Commission:

  • Complete shake-up of Commissioners’ portfolios
  • New Codes of Conduct for Commissioners.
  • Cutting departments from 42 to 33 while creating two new DGs
  • The biggest ever shake-up in senior staff.
  • Removal of unofficial quotas for top jobs. 40-year national monopoly over key posts ended.

White Paper on Commission Reform

The Commission has adopted the most comprehensive modernisation ever. With an action plan of almost 100 measures, each tied to a firm timetable, the strategy has three key themes:

Transforming the way the Commission manages money

  • New Independent Audit Service created.
  • Responsibility for spending decisions is being decentralised to DGs.
  • These measures are in line with the recommendations of the Committee of Independent Experts and the European Court of Auditors.

Bringing in modern methods of management

  • Over500 staff have been reallocated to priority areas.
  • A new system of concertation with trade unions has been established.
  • A new management system will match priorities with resources.
  • Creation of external implementing agencies is being studied.

Getting the best out of our people

Personnel policy is being reformed from recruitment to retirement:

  • New “Whistleblowing” provisions for staff are being prepared
  • New Code of Administrative Conduct for staff has been adopted
  • Changes to recruitment, training, assessment, promotion, management and discipline are under way.
  • A 1m euro training programme for managers has begun.

A Reform Task force, a new Deputy Secretary-General and the Vice-President for Reform are ensuring the implementation of measures on schedule.

A stock-taking of resources

On July 26 the Commission announced a major shake-up of staffing to bridge the widening gap between tasks and resources. Following a thorough review, the ‘Peer Group’ chaired by President Prodi adopted a 2-year strategy. There will be an overall net increase of 375, with 600 older staff being offered early retirement and 1000 new faces being recruited. 1200 staff will be concentrated on key priority areaslike financial control, tackling the backlog of external aid payments, competition policy, environment, and fighting crime and drugs.

Health and Consumer Protection

Food Safety

  • The Prodi Commission has produced a White Paper on Food Safety as promised. A major programme of legislative reform was proposed to achieve the highest standards in the EU. A new European Food Authority has been proposed. Progress since January includes:

-Proposal to reinforce epidemio-surveillance of BSE in cattle by introducing a post-mortem monitoring programme from 1 January 2001.

-Proposed Directive on Food Supplements setting out rules for the sale of vitamins and minerals as dietary supplements.

-Backing of most EU countries for removal of animal tissues likely to be infected by BSE out of food and fed chain.

-The most radical shake-up for 25 years of the Community's food safety hygiene rules. Four new Regulations will merge, harmonise and simplify over 17 detailed and complex Directives.

Public Health

  • Health strategy: Commission proposed a new EU public health strategy with a proposed budget of €300 million over six years.
  • Tobacco: Mr Byrne persuaded Health Ministers to back a Directive harmonising the manufacture, presentation and sale of tobacco products in the EU. This opens the door for early adoption of new rules on tobacco labelling, making health warnings clearer, reducing tar content in cigarettes and introducing new limits on nicotine and carbon monoxide. Misleading terms such as "light" or "mild" will be prohibited.
  • Hormones: Commission proposed to amend existing legislation on the use of hormones as growth promoters in meat production to base it on the latest scientific information available.
  • Phthalates: Commission introduced and extended a ban on use of certain phthalates in toys and childcare products intended to be placed in the mouth by young children.

Consumers

  • Product safety: Commission proposed clearer rules to ensure only safe products are put on the market.
  • Consumer disputes: Commission launched the European extra-judicial network (the EEJ-net) for settling consumer disputes out of court.
  • GMOs: Commissioners Wallström and Byrne won college backing for a strategy to resume authorisation of GMOs whilst addressing public concerns.

Justice and Home Affairs

The Prodi Commission began by spearheading the political preparation of the Tampere Summit and helped to secure a successful outcome.

The Commission has since devised a ‘scoreboard’ to track implementation of measures to create an EU-wide freedom, security and justice area. This has been approved by the Council. It indicates who is responsible for which task in the implementation of the Amsterdam Treaty, the Vienna and the Tampere conclusions.

Many individual measures listed in the scoreboard have now been launched, as follows:

  • A proposed directive on family reunification,allowing third country legal residents to bring in their family to foster their integration on host societies;
  • A proposal to create a refugee fund to ensure a degree of burdensharing for the cost of national refugee policies.
  • A proposed directive on temporary protection to secure joint action and common rules to handle the mass displacement of people, as happened in Kosovo.
  • A proposed list of third-country nationals needing or not needing a visa to visit the EU.

Some of the measures listed in the scoreboard have already been finally adopted by the Council, such as:

  • A regulation on the transmission of judicial acts;
  • A regulation on the mutual recognition of court decisions on matrimonial and parental matters;
  • A green paper on legal aid, helping citizens gain access to justice. 50 contributions have since arrived.

In the international sphere, Commission mandates have been obtained:

  • For the negotiation of readmission (expulsion of illegal immigrants) agreements with Sri Lanka, Pakistan, Russia and Morocco;
  • For the negotiation of parts of a UN convention on transnational organized crime.

Trade

1.MULTILATERAL TRADE

The Prodi Commission has continued to push for a new Round, working hard with the Americans to narrow the gap that existed at Seattle, and working closely with the Japanese. President Prodi secured good language on the Round at Okinawa. We have broadened our contacts to stress developing countries, and have developed close relationships with the relevant Ministers in South Africa, Egypt, Mexico, Brazil and others, although India remains difficult. We have persuaded the WTO to launch a mini-package of measures aimed at developing countries, and will continue to press the other Quad countries (and EU member states) to offer better market access, unilaterally, to the least developed countries.

The Commission successfully concluded the EU’s bilateral market access negotiations on China’s WTO accession. Although some of the “headline” commitments we sought (such as the right to enter joint ventures at 50% in mobile telecoms) were too difficult politically for the Chinese, we successfully negotiated “compensation” in the form of other commitments. As a result, we have a much broader, more extensive package which has been universally acclaimed by Member States and industry. China’s multilateral negotiation continues in Geneva. There is a real chance of accession before the end of the year. Thereafter, we will work hard with them on implementation.

2.BILATERAL TRADE

The Commission has completed negotiations for a free trade area with Mexico, which effectively gives the EU a backdoor into NAFTA and puts us on the same footing as the US and Canada in the Mexican market. The deal was ratified by Member States and entered into force on schedule on 1 July.

We have successfully launched bilateral trade negotiations with Mercosur and Chile.

We have reached a shipbuilding agreement with Korea which will enable European shipbuilders to compete on an equal basis with their Korean counterparts.

We have continued to develop a trade policy to appeal to more than the traditional business constituency. For example, we have helped to move trade and health (especially access to medicines) to the forefront. We have developed new networks in the NGO community. And we have also stressed the importance of harnessing globalisation as a key objective of trade policy.

3.TRADE DISPUTES

The Prodi Commission has an excellent win-loss record at the WTO, including a major victory on the important Foreign Sales Corporation (FSC) case. We still have to come into WTO conformity on bananas and hormones, although the Commission has taken some important steps towards that in the last few weeks. Overall, we have succeeded in lowering the temperature in disputes with the US, although the next few months promise to be difficult: we will have to manage both the outcome of the FSC case, where it currently looks unlikely that the US will implement satisfactorily by the 1 October deadline, and the unacceptable (“megaphone not telephone”) US carousel, whereby a further round of sanctions on bananas and hormones will arrive any day.

Environment

-Biosafety Protocol: Negotiations were concluded in Montreal in January 2000 thanks to strong and coherent action by the EU delegation, lead by Commissioner Wallström and 10 EU Ministers. The Biosafety Protocol was subsequently signed by the Community and an overwhelming majority of Member States in May. This confirmed the Commission’s commitment to working towards a coherent global system addressing the safe handling, development, transfer and use of GMOs that reinforces a high level of protection for the environment and human health. The Commission has now begun drawing up proposals on ratification and implementation of the Protocol.

-Precautionary Principle: In response to demands for transparency and dialogue on this issue from the public and other stakeholders, the Commission adopted a Communication on the precautionary principle in early February. This aims at a common understanding of the factors leading to the use of the principle and its place in decision-making, and sets out guidelines for its application.

-White Paper on Environmental Liability: The Commission adopted this important policy document in February, and expects it to pave the way for a framework Directive next year. The White Paper substantially advances the implementation of the “polluter pays principle”.

-Climate Change: Following up the international commitments that the EU has entered into under the Kyoto Protocol, (i.e. to reduce its emissions of greenhouse gases by 8% between 2008 – 2012 as compared to 1990), the Commission established the European Climate Change Programme (ECCP) in March. The Commission also launched a debate on an intra-EU emissions trading scheme by publishing a Green Paper on the subject.

-Water Framework Directive: negotiations were concluded on this Directive which puts in place a modern river basin management approach in this area and creates a sound legal basis for co-ordination of Member State water protection policies and measures

-End of Life Vehicles Directive: Final agreement was reached on this Directive, which sets out European rules on the prevention of waste from vehicles as well as on their collection, treatment, and recovery. It is the first piece of Community legislation based on producer responsibility. It promotes sustainability of production and consumption of goods.

-Transparency of environmental information: an important step was taken in this direction with the Commission’s adoption of a proposal on public access to environmental information on 29 June 2000. This is fundamental to permit participation of all concerned citizens in environmental decision making.

-Ongoing preparation of a Sixth Environmental Action Plan, a new Chemical Strategy and the 6th Conference of the Parties to the UN Framework Convention on Climate Change (COP6) in November 2000 should ensure that the second year of the Prodi Commission sees as much progress on the protection of the environment as the first. As during the first year of the Prodi Commission, Commissioner Wallström will also continue to give priority to implementation by Member States of existing environmental legislation.

Internal Market, Tax and Customs

Internal Market and Financial Services

The conclusions of the Lisbon and Feira European Councils cemented the work on structural reform being undertaken by the Prodi Commission across areas that include public procurement (notably the legislative package), intellectual property (the proposal on the Community Patent, common positions on the artist’s resale rights Directive, the copyright in the information society Directive), and financial services.

Among the key achievements are:

-adoption of the Electronic Commerce Directive, without amendment in the European Parliament; negotiations on data protection have also been concluded with the US;

-the review of the Internal Market Strategy has been endorsed by the Council, prioritising Community action across the range of EU internal market policies;

-the draft directive on liberalisation of postal services;

-for financial services, the deadline of 2005 was set for completion of the Action Plan. Three common positions have already been achieved in Council on long-standing proposals (winding-up of credit institutions; winding-up of insurance undertakings; takeover bids). Two other proposals linked to electronic money have also been agreed. The Commission’s new accounting strategy has also been endorsed by ECOFIN: it has, as its principal objectives, the introduction of high levels of comparability of EU listed companies’ accounts, notably to secure deeper and more liquid EU capital markets;

-The Lamfalussy Group has also been established, with the aim of providing expert guidance beyond 2001 on issues relating to the regulation and development of EU securities markets.

Taxation and customs

-Le maintien du Momentum concernant le “Paquet fiscal” après le Conseil européen d’Helsinki et de Feira;

-La contribution active des services à la finalisation du rapport sur le “Code de conduite” en matière de fiscalité des entreprises;

-La finalisation pour une prochaine décision du Conseil, du paquet de réforme du Code des Douanes, notamment en matière de simplification et de “bonne foi” des opérateurs;

-La proposition en matière de taxation du e-commerce.

Competition

Antitrust

The Prodi Commission is substantially modernising EU antitrust rules in order to simplify the legal framework while increasing transparency and predictability for companies and consumers. It has already:

-Adopted a new policy on distribution agreements

-Proposed regulations and guidelines on co-operation agreements (horizontal agreements), to be finally adopted before the end of the year.

-Launched a sector-specific policy review on car distribution, as the Commission will have to adopt new rules for this sector in 2001.

It has finished preparing a reform of its current antitrust enforcement system, for which it has already secured the broad support of Member States and European business. The new rules will strengthen the involvement of Member States in enforcement. The Commission will focus on those infringements that must be handled at EU level to protect competition in the single market. A “network” of European competition authorities will be created. The Commission will adopt a legislative proposal on this matter before the end of September.

This Commission has taken firm action against secret cartels between companies. Fines totalling over € 215 million were imposed in four cases (seamless steel tubes, aminoacids, liner shipping and the Dutch wholesale market for electrotechnical equipment). Additional proceedings were launched in several other cases (such as vitamins). The Commission opened formal proceedings against banks in Belgium, Ireland, Portugal and Finland suspected of collusion in the fixing of Euro-zone exchange charges. Procedures against banks in other countries will follow. Proceedings have also been launched, or are imminent, against a number of companies for possible abuse of dominant positions (such as Deutsche Post).

Mergers

The Commission is assessing some 300 large corporate mergers per year, imposing conditions on those that could affect competition. For instance, this Commission obliged the merging oil companies Exxon and Mobil or Total Fina and Elf to sell off a significant number of petrol stations and other infrastructure in order to protect consumers from rising retail petrol prices.

This Commission has so far prohibited three mergers which would otherwise have led to market dominance (there have been 13 prohibitions in total since EU merger rules came into force in 1990). They are WorldCom/MCI, Airtours/First Choice and Volvo/Scania. The merger of Alcan/Pechiney was also withdrawn when faced with the prospect of prohibition by the Commission.

State Aid

The main actions this year are as follows:

-An amended Directive on the transparency of financial relations between Member States and public undertakings;

-The adoption of a Notice on the application of Articles 87 and 88 to state aid in the form of state guarantees;

-The adoption of the new maps for regional aid granted by the Member States;

-The adoption of new guidelines for State aid in the outermost regions of the Union;

-Preparation of three block exemption regulations for State aid to training, SMEs and de minimis aid. These will soon be adopted by the Commission.

As for enforcement, the Commission has blocked aid and sought its repayment whenever incompatible aid has been granted, such as with System Microelectronic Innovation GmbH. The Commission will go to the European Court of Justice whenever Member States do not use all remedies available to recover incompatible aid from the beneficiary, such as in the recent Commission decisions to bring Spain to Court due to its non-implementation of a decision to recover incompatible aid granted to Spanish shipyards, or Germany in the case of West LB.

The Commission has continued its favourable approach towards aid promoting Community objectives without causing undue distortion of competition, such as in the fields of environment and employment.