Important legal notice

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E2000C0308

2000/308/: EFTA Surveillance Authority Decision No 308/2000/COL of 30 October 2001 introducing new Guidelines on the application of the EEA State aid provisions to State aid and risk capital, and amending for the 29th time the Procedural and Substantive Rules in the Field of State Aid

Official Journal L 140 , 30/05/2002 P. 0027 - 0037

EFTA Surveillance Authority DecisionNo 308/2000/COLof 30 October 2001introducing new Guidelines on the application of the EEA State aid provisions to State aid and risk capital, and amending for the 29th time the Procedural and Substantive Rules in the Field of State AidTHE EFTA SURVEILLANCE AUTHORITY,Having regard to the Agreement on the European Economic Area(1), in particular to Articles 61 to 63 thereof,Having regard to the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice(2), in particular to Article 24 and Article 1 of Protocol 3 thereof,Whereas under Article 24 of the Surveillance and Court Agreement, the EFTA Surveillance Authority shall give effect to the provisions of the EEA Agreement concerning State aid.Whereas under Article 5(2)(b) of the Surveillance and Court Agreement, the EFTA Surveillance Authority shall issue notices or guidelines on matters dealt with in the EEA Agreement, if that Agreement or the Surveillance and Court Agreement expressly so provides or if the EFTA Surveillance Authority considers it necessary.Recalling the Procedural and Substantive Rules in the Field of State Aid(3) adopted on 19 January 1994 by the EFTA Surveillance Authority (OJ L 231, 3.9.1994, EEA Supplement No 32).Whereas on 23 May 2001, the European Commission adopted a Communication on State aid and risk capital (OJ C 235, 21.8.2001, p. 3).Whereas this Communication is also of relevance for the European Economic Area.Whereas a uniform application of the EEA State aid rules is to be ensured throughout the European Economic Area.Whereas, according to point II under the heading "GENERAL" at the end of Annex XV to the EEA Agreement, the EFTA Surveillance Authority is to adopt, after consultation with the Commission, acts corresponding to those adopted by the EC Commission, in order to maintain equal conditions of competition.Having consulted the European Commission.Recalling that the EFTA Surveillance Authority has consulted the EFTA States in a multilateral meeting on the subject,HAS ADOPTED THIS DECISION:1. The State Aid Guidelines shall be amended by adding a new Chapter 10A, State aid and risk capital, contained in Annex I to this Decision.2. The Decision, including Annex I, shall be published in the EEA Section of and the EEA Supplement to the Official Journal of the European Communities.3. The EFTA States shall be informed by means of a copy of the Decision, including Annex I.4. The European Commission shall be informed, in accordance with point (d) of Protocol 27 of the EEA Agreement, by means of a copy of this Decision, including Annex I.5. The Decision shall be authentic in the English language.Done at Brussels, 30 October 2001.For the EFTA Surveillance AuthorityThe PresidentKnut Almestad(1) Hereinafter referred to as the EEA Agreement.(2) Hereinafter referred to as the Surveillance and Court Agreement.(3) Hereinafter referred to as the State Aid Guidelines.ANNEX I"10A. STATE AID AND RISK CAPITAL(1)10A.1. Introduction(1) In the Communication on State aid and risk capital(2) the European Commission sets out how it will apply the State aid rules to measures designed to promote risk capital. The Commission has previously expressed a general policy in favour of promoting risk capital(3) in the Community. It has, for example, expressed concern about the risk of Community enterprises being overdependent on debt finance(4), and emphasised the potential for growth and job creation which an increase in risk capital markets would have(5). The Commission believes that certain types of enterprises, or enterprises at certain stages of their existence, may be better served by equity or near-equity finance than by loan finance alone, given the costs of servicing debt and the risk-averse nature of many lending institutions.(2) In the view of the Commission an equity gap, implying that there is a persistent capital market imperfection preventing supply from meeting demand at a price acceptable to both sides, affects negatively European small and medium-sized enterprises (SMEs) compared with similar companies in North America. The gap concerns, on one hand, high-tech innovative and mostly young firms with high growth potential and, on the other hand, a wide range of firms of different ages and sectors with smaller growth potential that cannot find financing for their expansion projects without external risk capital.(3) The Commission also point out that risk capital provision is essentially a commercial activity involving commercial decisions. Economic and budgetary conditions are such that public funds on their own will not be able, and should not attempt, to provide the whole of the increase in risk capital activity. The key challenge is to provide the conditions under which the large reserves of private capital which exist in Europe will be used for such investment. This challenge concerns as much the development of the demand for capital by entrepreneurs as the supply of capital by investors. In addition the Commission has recognised a role for public funding of risk capital measures limited to addressing identified market failures(6).(4) The Authority concurs with the view expressed by the Commission. Public funding of risk capital measures will, however, inevitably raise the question of the compatibility with the State aid rules of the EEA Agreement.10A.2. Aim and scope of these Guidelines and relation to other guidelines(1) These Guidelines have two principal aims:- to set out how the Authority will apply the State aid definition in Article 61(1) of the EEA Agreement to measures designed to provide or promote risk capital (risk capital measures),- to provide new criteria under which the Authority may authorise such measures which do constitute State aid, even if they are not compatible with the other guidelines of the Authority's State Aid Guidelines.(2) In addition these Guidelines aim to explain why State aid control in this area is necessary, to explain the difficulties in applying current guidelines to such measures, and to justify why the Authority considers that the new compatibility criteria are both necessary and appropriate.(3) Nothing in these Guidelines should be taken to call into question the compatibility of State aid measures, which meet the criteria of any other guidelines of the present State Aid Guidelines.(4) This document in no way derogates from the provisions of the present State Aid Guidelines on State aid for rescuing and restructuring firms in difficulty.(5) The Authority will pay particular attention to the need to prevent the use of these guidelines to circumvent the principles laid down in existing Chapters of the present State Aid Guidelines.10A.3. Reasons for controlling public funding to risk capital measures(1) Aside from the fact that the EEA Agreement and the Surveillance and Court Agreement impose on the Authority the requirement to control State aid within the EFTA States, and in common with other forms of public intervention, national authorities, when deciding whether to commit or to authorise public funds for measures designed to promote risk capital, should reduce as far as possible the following three distinct though connected categories of risk:- the risk that advantages to the beneficiaries (whether investors or enterprises) create an undue distortion of competition relative to their competitors in the European Economic Area,- the risk of 'deadweight', or lack of incentive effect. Some enterprises funded through publicly supported measures may have obtained finance on the same terms in any case. There is evidence of this happening though this is inevitably anecdotal. In that event public resources are being used unnecessarily,- the risk of 'crowding out'. The presence of publicly supported measures may actually discourage other potential investors from providing capital.(2) Not all public measures carried out in favour of risk capital schemes fall within the definition of State aid in Article 61(1) of the EEA Agreement and therefore under the Authority's State aid control. The next section of these Guidelines therefore provides guidance as to how the Authority interprets the definition of State aid as it concerns risk capital measures.10A.4. Applicability of Article 61(1) to risk capital measures(1) In the case of a measure in the form of a grant or loan, it is normally obvious which enterprise is potentially the beneficiary for the purpose of assessing whether State aid is involved. However, certain constructions devised to promote risk capital are more complex because the public authorities create incentives for one set of economic operators (investors) in order to provide finance to another set (for example, smaller enterprises). Depending on the design of the measure, and even if the intention of the public authorities may be only to provide benefits to the latter group(7), enterprises at either or both 'levels' may be beneficiaries of State aid. Moreover, in some cases the measure provides for the creation of a fund or other investment vehicle which has an existence separate from investors and the enterprises invested in. In such cases it is also necessary to consider whether the fund or vehicle can be considered to be an enterprise benefiting from State aid.(2) When assessing risk capital measures the Authority will therefore have to consider the possibility that the measure may confer aid on at least three different levels:- aid to investors,- aid to any fund or other vehicle through which the measure operates (in the case of a 'fund of funds' there may be more than one such level),- aid to the companies invested in.(3) In order for a measure to fall within the scope of Article 61(1) of the EEA Agreement, four cumulative criteria must be met:- the measure must involve the use of State resources; in the case of the direct financial participation of public authorities in risk capital measures, or tax incentives for investors, this is usually self-evident,- the measure must distort competition by conferring an advantage on the beneficiary; in accordance with case law of the Court of Justice of the European Communities, the Authority must assume that State aid is likely to be present whenever State resources are contributed in a manner which would not be acceptable to a private investor operating under normal market economy conditions. Where by contrast the public authorities invest on terms that would be acceptable to such an investor, no advantage is conferred and there is therefore no State aid(8). It follows that where State resources are made available on the same terms as those applying to private investors (pari passu) it will normally be possible to conclude that the measure does not confer an advantage. However, if the State resources are made available on more favourable terms, then an advantage will normally be present,- that advantage must be selective, in that it is limited to certain undertakings; if a measure applies without limitation or sectoral or geographical distinction to all enterprises throughout the territory of a EFTA State, then it is not selective(9). However, any measure which, because of its nature, can only apply to a limited number of enterprises, is selective. Likewise, a measure is selective if it provides for investments to be made only in certain enterprises, for example limited by sector or by region. It should be noted that a measure which is general as regards investors (that is, it is available to all investors) may nonetheless be selective at the level of companies invested in(10),- the measure must affect trade between Contracting Parties to the EEA Agreement. Since investment of capital is an activity which is the subject of very large trade between the Contracting Parties to the EEA Agreement, and since any measure providing an advantage to investors has the declared aim of affecting their investment decisions, the Authority will normally consider that this criterion is met by risk capital measures in favour of investors. In assessing any effect on trade, the Authority needs to consider the effects across capital markets more generally, not merely on investors who may or may not have been previously operating in the market for providing equity capital to the enterprises targeted by the measure. Similarly, unless it can be shown that all investments will be made in enterprises engaged in activities which are not the subject of trade between the Contracting Parties to the EEA Agreement, the Authority will regard this criterion as met at all the levels for which the other criteria are fulfilled(11).(4) There are also other Chapters of the present State Aid Guidelines which provide interpretation on whether individual measures fall within the definition of State aid and which may be relevant to risk capital measures. These include the chapters on Public authorities' holdings, on the application of the State aid rules to measures relating to direct business taxation and on State guarantees(12). The Authority will continue to apply these texts when assessing whether risk capital measures constitute State aid.(5) In accordance with the principles set out above, the Authority will take the following factors into account in determining whether State aid is present at each of the different levels.(I) Aid to investorsWhere a measure allows investors to participate in the equity of a company or set of companies on terms more favourable than public investors, or than if they had undertaken such investments in the absence of the measure, then those investors receive an advantage(13). This remains the case even if the investor is persuaded by the measure to confer an advantage on the company or companies concerned. The fact that owing to the existence of a market failure no investors would otherwise make such investments, is not of itself sufficient to rebut the presumption of advantage. In effect, the investors are being offered more advantageous terms to compensate them for the factors which cause market failure, and the Authority considers that such compensation must be considered as an advantage, which will constitute aid if the investors are enterprises and if the other conditions described above, notably selectivity, are met. Provided, however, that the advantage is limited to the amount necessary to overcome the factors which cause market failure, it may be considered compatible with the EEA Agreement, where it meets the principles described in section 10A.8. because of its limited effect.(II) Aid to an intermediary vehicle or fundIn general, the Authority would tend to the view that a fund is a vehicle for the transfer of aid to investors and/or enterprises invested in, rather than being an aid beneficiary itself. However, in certain cases, notably measures involving transfers in favour of existing funds with numerous and diverse investors, the fund may have the character of an independent enterprise. In that case aid will usually be present unless the investment is made on terms which would be acceptable to a normal economic operator in a market economy and therefore provides no advantage to the beneficiary.(III) Aid to the enterprises invested inOnce again the main test is whether the enterprise has received the investment on terms which would be acceptable to a private investor in a market economy. This test can, as an example, be met when the investment made through the risk capital measures is made pari passu with such an investor or investors. Where this is not the case, the fact that investment decisions are being taken by commercial managers of risk capital funds, or by representatives of investors, with an interest to ensure a maximum return for the fund is an important indicator, but it is not of itself conclusive. The Authority must also take into account the possibility that any advantages accorded to investors in the funds are passed on to the enterprises invested in, when the investments are not made by the fund pari passu with a private investor in a market economy. If a risk capital measure has reduced the risks and/or increased the rewards which investors will obtain from making a particular investment, then they may be said no longer to be operating as a normal economic operator(14).(6) Whether a measure provides aid, and at what level, will depend on its design. Some measures might for example be general measures at the level of investors but provides State aid at the level of individual enterprises(15), other measures could provide State aid to investors but not to the enterprises invested in, through application of the pari passu principle described above(16), and some measures could provide State aid at more than one level(17).(7) Where all aid provided to beneficiaries is de minimis in the sense of the de minimis rule and its application, then it is deemed not to meet all the criteria of Article 61(1) of the EEA Agreement. In risk capital measures the application of the de minimis rule is handicapped by difficulties of calculation (see also section 10A.5) and also by the fact that measures may provide aid not only to the target enterprises but also to other investors. Where these difficulties can be overcome, however, it remains applicable. If a scheme provides public capital of EUR 100000 or less to each enterprise over a three year period then it is certain that any aid to these enterprises is within the limits set by the de minimis provisions of the Guidelines.10A.5. Assessment of the compatibility of risk capital measures under the State aid rules: application of existing texts(1) Where measures constitute State aid, the Authority is called to assess whether they can be found compatible with the functioning of the EEA Agreement under Article 61(2) and (3). Most risk capital measures could be found to be compatible only under paragraph 3(a) (for measures applying solely in regions eligible for the derogation in that paragraph), or paragraph 3(c).(2) The immediate objectives of risk capital measures are likely to include the promotion of SMEs, in particular new or innovative firms, or firms with high growth potential, and/or the promotion of the development of a particular region. The Authority has already adopted texts under which State aid with such objectives can be authorised under paragraphs 61(3)(a) or (c)(18). The public authority devising the measure may also have the objective of encouraging more investors to become involved in the provision of this type of finance. No text on State aid in this area exists, and indeed it has not been explicitly recognised up to now as an objective capable in itself of justifying State aid. However, this does not in any way preclude the compatibility of a measure which meets the terms of other frameworks or guidelines.(3) One characteristic of existing guidelines authorising State aid under paragraphs 61(3)(a) or (c) is that aid is authorised up to a level representing a 'grant equivalent' of a fixed percentage of certain of the beneficiary enterprise's costs. These 'eligible costs' are principally fixed investments in land, buildings, new productive equipment and intangible assets (patents, know-how etc) labour costs linked to fixed asset investment, and the costs of consultancy services. Experience has shown, however, that risk capital measures can frequently not be found compatible under these rules, for some or all of the following reasons:- the difficulty of establishing a 'grant equivalent' of equity capital. While the Authority has established rules for determining such equivalents for loans and guarantees(19), it has no such formula for equity capital. Against that, the Authority believes that a technical difficulty of calculation cannot of itself suffice to make a measure incompatible with the functioning of the EEA Agreement. It is examining the options for a possible methodology in this respect, and in the meantime will be open to proposed calculation methods accompanying notifications of risk capital measures(20),- the difficulty of establishing a link with eligible costs, in particular under measures which provide incentives to investors, and notably under measures in the form of funds. Such a link is not easily reconcilable with the commercial fund management which will be required by investors participating in funds and may raise verification and enforcement difficulties,- for measures providing aid at the level of investors, the fact that no current text provides any basis for authorising such aid.(4) The Authority believes that in general there are good reasons for the 'eligible costs' approach. The approach provides certainty, predictability and a basis for limiting aid and for ensuring equal treatment between regions and EEA States. It has served well in the past and is likely to be the basis of most State aid control in the future. The Authority believes that good reasons are needed for departing from it.(5) In particular, the risk of departing from the principle is that State aid may be authorised which is merely 'operating aid', that is, aid to cover normal current expenses of a business. The Authority believes that such aid, which may isolate the beneficiary from the effects of commercial non-viability, is among the most distortive types of State aid and is authorised only in limited circumstances.(6) However, the Authority also believes that the fact that risk capital measures cannot be found compatible on the basis of existing guidelines, and in particular the difficulties listed above, are not in themselves a justification for finding the measures incompatible with the common market. With regard to the difficulties listed in the paragraphs above the Authority has noted that:- the costs regarded as eligible under existing frameworks are of less importance to many young or innovative enterprises. In any case, such costs will more often be capable of being financed by loan capital; the need for equity capital is generally linked not only to assets but also to the need for working capital during an enterprise's start-up or expansion phase,- the lack of a link to eligible costs as defined in current texts is not necessarily evidence of operating aid, understood as aid which defrays an enterprise's normal operating expenses, and has no effect other than to keep it running. Aid with a clear incentive effect to an enterprise's start-up or expansion cannot be held to constitute operating aid in this sense, and could therefore be accepted under certain circumstances,- as regards aid to investors, a measure cannot be considered incompatible solely because, by involving private sector or market investors, it constitutes a State aid to them as well as to the enterprises invested in. In general, where a transfer made by the State would be compatible with the State aid rules, the Authority believes that a measure which provides a minimum incentive to other economic operators to make that same transfer should also be authorised, even if technically an aid to those operators is involved.10A.6. Basis for authorising risk capital measures under Article 61(3)(a) and (c) of the EEA Agreement(1) The principal basis on which the Authority may authorise risk capital measures even though they fall outside the scope of existing rules is that one of the main handicaps suffered by SMEs, and in particular small enterprises and start-ups, is the difficulty in obtaining capital and credit. The chief causes of this are imperfect information, the risk-averse nature of investors and lending institutions and the limited guarantees that SMEs are in a position to offer(21). A particular obstacle to the provision of equity capital can be the high transaction and 'due diligence' costs relative to the amount of capital being provided.(2) The Authority recognise a role for public funding of risk capital measures limited to addressing identifiable market failures. A market failure can be defined as a situation in which economic efficiency is not achieved owing to imperfections in the market mechanism. A market failure may manifest itself either in the inability of the system to produce goods which are wanted (in this case a risk capital market), or by a misallocation of resources, which could be improved in such a way that some consumers would be better off and none worse off. The externalities involved in training and research and development activity result in a market failure which justifies State aid in those areas.(3) As economic theory predicts that markets will usually fail in some sense except under conditions of perfect competition, the term market failure is reserved for cases where it is believed that a serious misallocation of resources has occurred. There are two main sources of market failure relevant to risk capital markets which particularly affect access to capital by SMEs and companies at the early stages of their development and which may justify public intervention:- imperfect or asymmetric information: potential investors face more difficulties in gathering reliable information on the business prospects of an SME or a new company. Particularly if these are involved in highly innovative projects or risky projects, imperfect information will aggravate problems related to difficulties in the assessment of risk,- transaction costs: small deals are less attractive to investment funds due to relatively high costs for investment appraisal and other transaction costs.(4) The Authority believes that these factors can cause a market failure which would justify State aid. However, caution is needed. The fact that requests for finance, both debt and equity, have been turned down is not in itself an indication of market failure. Indeed, the Authority believes that there is no general risk capital market failure in the European Economic Area. It does, however, accept that there are market gaps for some types of investments, at certain stages of enterprises' lives. It also recognises that there are particular difficulties in regions qualifying for assistance under Articles 61(3)(a) and (c) ('assisted areas'). These gaps and difficulties are to some extent already recognised in existing State aid frameworks, and where these can be applied to risk capital measures the Authority will be prepared to continue to do so.(5) The Authority will therefore require provision of evidence of market failure before being prepared to authorise risk capital measures which fall outside the scope of existing rules. It may however be prepared to accept this is the case where each tranche of finance for an enterprise from risk capital measures which are in turn wholly or partially financed through State aid will contain a maximum of EUR 500000, or EUR 750000 in regions qualifying for assistance under Article 61(3)(c) or EUR 1 million in regions qualifying for assistance under Article 61(3)(a)(22). This is because for small transactions the argument that market failure exists through high transaction costs is more persuasive. The fact that a market failure is recognised does not however alter the aid character of a particular measure, nor the need to assess its compatibility, in particular under the provisions of section 10A.8.(6) Where it is recognised that there is a market failure, the Authority will examine whether any State aid measure is proportionate to the presumed market failure it is devised to meet, and will seek to ensure that any distortion is minimised. It believes that this can best be achieved by measures which are just sufficient to ensure that market investors provide capital and which result in investment decisions being taken on a commercial basis and on terms as close as possible to those which would prevail in the normal economy.(7) The diversity of possible models for risk capital measures, and the relative novelty of some of the constructions being devised by EFTA States, mean that the Authority is not in a position to define rigid criteria by which to determine whether to authorise such measures. It has, however, identified certain elements which it will regard as positive, and others which it will regard as negative, in their assessment. These are set out in section 10A.8. The fact that the criteria are devised in this way reinforces the importance of all risk capital measures which constitute or which may constitute State aid being notified to the Authority under Article 1(3) of Protocol 3 to the Surveillance and Court Agreement before being put into effect, unless they are exempted from notification through an exemption like that cited at 10A.4(7). Where the Authority is in possession of a complete notification which shows that a measure contains numerous positive elements, and no negative elements, the Authority will aim to make a rapid assessment of it within the deadlines laid down in the procedural part of the present State Aid Guidelines.10A.7. Form of aid measure(1) The Authority believes that the choice of form of an aid measure lies in general with the EFTA State. This applies equally to risk capital measures. However, and as further explained at section 10A.8, the Authority's assessment of such measures will include whether they encourage market investors to provide risk capital to the 'target enterprises' and are likely to result in decisions to invest being taken on a commercial (that is, a profit-maximising) basis. The Authority believes that forms of incentives to such investors capable of producing this result, and therefore of being viewed positively under the criteria set out in section 10A.8. where they constitute State aid, include the following:- constitution of investment funds ('venture capital funds') in which the State is a partner, investor or participant, even if on less advantageous terms than other investors,- grants to venture capital funds to cover part of their administrative and management costs,- other financial instruments in favour of risk capital investors or of venture capital funds to provide extra capital for investment,- guarantees to risk capital investors or to venture capital funds against a proportion of investment losses, or guarantees given in respect of loans to investors/funds for investment in risk capital(23),- fiscal incentives to investors to undertake risk capital investment.(2) The Authority does not intend to use the criteria in the following section to authorise measures which may provide capital to an enterprise solely in the form of loans (including subordinated loans and 'equity loans') or other instruments which provide the investor/lender with a fixed minimum return, whether through funds or through other means. Such capital provision is not 'risk capital' in the sense of the definition in footnote 3, and the Authority regards existing rules, covering notably the calculation of any aid element and the link to eligible costs, as adequate to assess such measures.(3) The Authority does not intend to use the criteria in the following section to authorise an ad-hoc measure providing capital to an individual enterprise.10A.8. Criteria for assessing compatibility(1) As already explained in section 10A.6, the criteria are expressed in the form of 'positive and negative elements'. Not all the elements have equal weight, and in the following list the most important elements are listed first. No single element is essential, nor can any set of them be regarded as sufficient on its own to ensure compatibility. In some cases their applicability, and the weight attached to them, may depend on the form of the measure. The Authority's assessment will take account of the regional specificity of any measure and will be subject to an overall test of proportionality.Measures will be assessed at each level. In cases where the provision of risk capital to an enterprise is linked to costs which are eligible for aid under an existing guideline, that guideline may be applied as an alternative to the principles below for assessing the aid to that enterprise, in line with paragraphs 10A.2(3) and 10A.5(2). Where the measure concerned also provides aid at the level of investors, however, such aid will still need to be assessed in accordance with the principles below.(2) Where the ceilings for transaction sizes set out in 10A.6(5) are met, and when only investors (or an investment vehicle) are beneficiaries of State aid under the measure, such State aid is compatible to the extent that it is proportional to the cost disadvantages addressed, such as the higher relative costs of analysis and management of small investments. The provisions of 10A.8(3) below will be used to assess whether this is so.The Authority will require provision of evidence of market failure where the ceilings for transaction sizes set out in paragraph 10A.6(5) are exceeded.(3) Once market failure has been established, the Authority will examine the following elements in the assessment of a risk capital measure under the State aid provisions of the EEA Agreement:Restriction of investments, or failing that of a majority of funds invested:- to small(24) or even 'micro' enterprises, and/or- to medium-sized enterprises in their start-up or other early stages(25) or in assisted areas;will be regarded as a positive element. Access to finance for medium-sized enterprises beyond their start-up or early stages should be subject to a limit per enterprise on total funding through the measure. Restriction to smaller transaction sizes (that is to say, below EUR 500000 or EUR 750000 in regions qualifying for assistance under Article 61(3)(c) or EUR 1 million in regions qualifying for assistance under Article 61(3)(a)) or to a given level of demonstrated market failure will also be regarded as a positive element.Measures should be focused on risk capital market failure. If a measure provides for the delivery of the finance to enterprises principally in the form of equity or quasi-equity then this will be regarded positively. Where measures provide significant amounts of finance in other forms, or appear not to have a significant incentive effect (that is, where it will support risk capital investments which would have happened even in the absence of the measure) this will be regarded negatively. This could be the case of measures providing further finance to an enterprise which has already received one aided injection of capital.Decisions to invest should be profit-driven. A link between investment performance and the remuneration of those responsible for investment decisions will be a positive element. This would be assumed to be met:- by measures under which all the capital invested in the target enterprises is provided by market economy investors, who also make the investment decision, with the aid being solely an incentive for them to do so, and- by other measures with significant involvement of market economy investors' capital, being invested on a commercial basis (that is, only for profit) directly or indirectly(26) in the equity of the 'target enterprises'.In the case of funds, and while each measure will be regarded on its merits and other aspects will have a bearing on the Authority's assessment, provision of at least 50 % of the funds capital would be taken to constitute 'significant involvement', or 30 % in the case of measures operating in assisted areas. Further positive elements would be:- an agreement between a professional fund manager and participants in the fund, providing that the manager's remuneration is linked to performance and setting out the objectives of the fund and proposed timing of investments,- the representation of market investors in decision-making, and- the application of best practice and regulatory supervision in the management of funds.Where no such element is present to indicate that investment decisions will be commercially driven, then this will be regarded negatively. This will be taken to be the case of measures which are so small in size as to be focussed on only a few projects, and which are not economically viable, or of measures set up solely or principally to provide finance to a particular enterprise known in advance.The level of distortion of competition between investors and between investment funds should be minimised. The Authority will regard positively a call for tender for the establishment of any 'preferential terms' given to investors, or the availability of any such terms to other investors. This availability might take the form of a public invitation to investors at the launch of an investment fund, or might take the form of a scheme (such as a guarantee scheme) which remained open to new entrants over an extended period. The means by which this positive element could be achieved will necessarily depend on the form of the measure in question. However the absence of any such check against overcompensation to investors, or a measure where the risk of losses is borne entirely by the public sector and/or where the benefits flow entirely to the other investors will be considered as a negative element.Sectoral focus. To the extent that many private sector funds focus on specific innovative technologies or even sectors (such as health, information technology, culture) the Authority can accept a sectoral focus where this has a commercial as well as a public policy logic. In line, however, with the Authority's consistently less favourable view of sectoral State aid measures, in particular in sensitive sectors suffering from overcapacity, measures should specifically exclude the provision of aid to enterprises in the shipbuilding and ECSC sectors.Investment on the basis of business plans. The existence for each investment of a business plan containing details of product, sales and profitability development and establishing the ex ante viability of the project is standard commercial practice in professional fund management and will be positively regarded. Measures providing no 'exit mechanism' for the State's direct or indirect involvement in individual enterprises would be regarded negatively.Avoidance of cumulation of aid measures to a single enterprise. If a measure provides aid to the enterprises invested in, then the Authority may request commitments from an EFTA State to assess and set limits to other forms of State aid to enterprises funded by the risk capital measure, including under authorised schemes. For such measures, and unless the EFTA State undertakes that these enterprises will receive no other State aid than de minimis aid, the EFTA State should propose to the Authority for examination and approval a reasonable evaluation of the aid element of the measure which will be used for applying the cumulation rules. Where capital provided to an enterprise under such a risk capital measure is used to finance initial investment, research and development costs or other costs eligible for aid under other frameworks, the EFTA State should include the aid element in the risk capital measure in applying the relevant aid ceilings.10A.9. Final observationsThe Authority intends to apply the terms of these Guidelines for five years. However, given that the approach of these Guidelines represents a departure from previous methods of State aid control, and that it deals with an area of rapid development in the economy of the European Economic Area, it reserves the right to adjust its approach in the light of experience. Where this would be helpful it may also provide further clarifications of its approach to particular issues."(1) This chapter corresponds in substance to the Commission Communication on State aid and risk capital (OJ C 235, 21.8.2001, p. 3). The Commission had taken a number of decisions on State aid and risk capital before its adoption of the Communication on State aid and risk capital. The Authority refers, in these Guidelines, to the same decisions as in the Commission Communication.(2) OJ C 235, 21.8.2001, p. 3.(3) In its paper 'Risk capital: a key to job creation in the European Union' (SEC(1998) 552 final, 31 March 1998) the European Commission defined risk capital as equity financing to companies in their start-up and development phases, and the phrase is used with that sense in the present guideline. The term 'venture capital' refers essentially to risk capital provided by investment fund (venture capital funds) established for that purpose. Such funds provide a mix of equity, mezzanine and subordinated loan finance and the term 'venture capital' refers to the totality of this finance.(4) 'Economic reform: report on the functioning of Community product and capital markets', COM (1999) 10, 20 January 1999.(5) 'Risk capital, a key to job creation in the European Union', SEC(1998) 552 final, 31 March 1998.(6) Progress report on the risk capital action plan, COM(2000) 658 final, 18 October 2000, section 3.4.(7) The Court of Justice of the European Communities has held that Article 87 of the EC Treaty does not distinguish between the measure of State intervention concerned by reference to their causes or aims but defines them in relation to their effects (Case 173/73 Italy v. Commission [1974] ECR 709).(8) See Commission Decision of 4 October 2000 in Case N 172/2000 (Ireland) Seed and Venture Capital Found Scheme (OJ C 37, 3.2.2001, p. 48).(9) This could be the case, for example, of a tax measure promoting investment in a certain class of financial instrument.(10) See for example the judgment by the Court of Justice of the European Communities in Case C-156/98 Germany v. Commission [2000] ECR I-6857.(11) In this connection the Court of Justice of the European Communities has held that: 'In the case of an aid programme the Commission may confine itself to examining the characteristics of the programme in question in order to determine whether, by reasons of the high amounts or percentages of aid, the nature of investments for which aid is granted or other terms of the programme, it gives an appreciable advantage to recipients in relation to their competitors and is likely to benefit undertakings engaged in trade between Member States' Case 248/84 Germany v. Commission [1987] ECR 4013, at paragraph 18 (emphasis added).(12) It should, however, be noted that guarantees granted by the State in favour of investment in risk capital are more likely to include an element of aid to the investor than is the case with traditional loan guarantees, which are normally considered to constitute aid to the borrower rather than to the lender.(13) This may be the case of measures providing finance to investors for investment in such participations, where this provision is made on conditions more favourable than market terms.(14) See, for example, Commission decision 98/476/EC (OJ L 212, 30.7.1998, p. 50). This case was the subject of the judgment in Case C-156/98 referred to in footnote 10.(15) See footnote 14.(16) See, for example, Commission decision in case N 705/99, United Kingdom High Technology Fund.(17) See Commission Decision 2001/406/EC in Case C 46/2000 Viridian Growth Fund (Northern Ireland) (OJ L 144, 30.5.2001, p. 23).(18) See the present State Aid Guidelines on Aid to Small and Medium-sized Enterprises and on National Regional Aid.(19) For example the present State Aid Guidelines on de minimis, on State Guarantees and on National Regional Aid.(20) This might include a methodology based on the cost of providing a particular guarantee. See Commission decision of 28 February 2001 in Case N 551/2000 (Germany): BTU - Beteiligungskapital für kleine Technologieunternehmen (OJ C 117, 21.4.2001, p. 17).(21) See the chapter of the present State Aid Guidelines on Aid to Small and Medium-sized Enterprises (SMEs).(22) Separate injection of capital within six months of each other would be considered to be part of the same tranche, as would different injections, even over a longer period, to which a commitment is made as part of a single transaction.(23) The second alternative is one means of intervention of the US Small Business Administration in favour of small business investment companies.(24) Following the Authority's definition set out in the chapter on Aid to Small and Medium-sized Enterprises (SMEs) of the present State Aid Guidelines.(25) The European Venture Capital Association defines start-up financing as 'financing provided to companies for product development and initial marketing. Companies may be in the process of being set up or may have been in business for a short time, but have not sold their products commercially', and other early-stage as 'financing to companies still in the stages of research and product development or that have completed the product development stage and require further funds to initiate commercial manufacturing and sales. They will not yet be generating a profit'.(26) 'Indirectly' should be taken to mean investment via funds or other investment vehicles.


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32002D0084

2002/84/EC: Council Decision of 28 January 2002 on the principles, priorities, intermediate objectives and conditions contained in the Accession Partnership with Cyprus

Official Journal L 044 , 14/02/2002 P. 0012 - 0019

Council Decisionof 28 January 2002on the principles, priorities, intermediate objectives and conditions contained in the Accession Partnership with Cyprus(2002/84/EC)THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty establishing the European Community,Having regard to Council Regulation (EC) No 555/2000 of 13 March 2000 on the implementation of operations in the framework of the pre-accession strategy for the Republic of Cyprus and the Republic of Malta(1),Having regard to the proposal from the Commission,Whereas:(1) The Luxembourg European Council stated that the Accession Partnership is a new instrument and the key feature of the enhanced pre-accession strategy.(2) Regulation (EC) No 555/2000 complements Regulation (EC) No 622/98(2) which sets out that the Council is to decide, by a qualified majority and following a proposal from the Commission, on the principles, priorities, intermediate objectives and conditions contained in the individual Accession Partnerships, as they are submitted to each applicant State, as well as on subsequent significant adjustments applicable to them.(3) Community assistance is conditional on the fulfilment of essential elements, and in particular on the respect of the commitments contained in the Association Agreement and on progress towards fulfilment of the Copenhagen criteria. Where an essential element is lacking, the Council, acting by a qualified majority on a proposal from the Commission, may take appropriate steps with regard to any pre-accession assistance.(4) The 2001 Commission's regular report presents an objective analysis on Cyprus's preparations for membership and identifies a number of priority areas for further work.(5) In order to prepare for membership, Cyprus should continue to update its national programme for the adoption of the acquis. This programme should set out a timetable for achieving the priorities and intermediate objectives established in the Accession Partnership.(6) Cyprus needs to ensure that the appropriate legal and administrative structures needed for the programming, coordination, management, control and evaluation of Community pre-accession funds are in place.(7) The European Council at Helsinki underlined that a political settlement will facilitate the accession of Cyprus to the European Union. If no settlement has been reached by the completion of accession negotiations, the Council's Decision on accession will be made without the above being a precondition. In this the Council will take into account all relevant factors,HAS DECIDED AS FOLLOWS:Article 1In accordance with Article 1(2) of Regulation (EC) No 555/2000, the principles, priorities, intermediate objectives and conditions in the Accession Partnership for Cyprus are set out in the Annex hereto, which forms an integral part of this Decision.Article 2The implementation of the Accession Partnership shall be examined in the Association Agreement bodies, and by the appropriate Council bodies to which the Commission shall report regularly.Article 3This Decision shall take effect on the third day following that of its publication in the Official Journal of the European Communities.Done at Brussels, 28 January 2002.For the CouncilThe PresidentJ. Piqué i Camps(1) OJ L 68, 16.3.2000, p. 3.(2) Council Regulation (EC) No 622/98 of 16 March 1998 on assistance to the applicant States in the framework of the pre-accession strategy, and in particular on the establishment of the Accession Partnerships (OJ L 85, 20.3.1998, p. 1).ANNEX1. IntroductionAt its meeting in Luxembourg in December 1997, the European Council decided that the Accession Partnership would be the key feature of the enhanced pre-accession strategy, mobilising all forms of assistance to the candidate countries within a single framework. In this manner, the Community targets its assistance towards the specific needs of each candidate so as to provide support for overcoming particular problems with a view to accession.The first Accession Partnership for Cyprus was decided in March 2000. The present revision is based on a proposal by the Commission following consultation with Cyprus, and draws on the analysis of the Commission's 2001 regular report on progress made by Cyprus towards accession.2. ObjectivesThe purpose of the Accession Partnership is to set out in a single framework the priority areas for further work identified in the Commission's 2001 regular reports on the progress made by Cyprus towards membership of the Union, the financial means available to help Cyprus implement these priorities and the conditions which will apply to that assistance. This Accession Partnership provides the basis for a number of policy instruments which will be used to help the candidate States in their preparations for membership. These include, inter alia, the updated national programme for the adoption of the acquis prepared by Cyprus, the pre-accession fiscal surveillance procedure, the pre-accession economic programme, the pre-accession pact on organised crime, a national employment strategy in line with the european employment strategy, and sectoral plans necessary for the participation in the Structural Funds after membership. Each of these instruments is different in nature and is prepared and implemented according to specific procedures and may be supported by pre-accession aid. They are not an integral part of this Partnership but the priorities they contain will be compatible with it.3. PrinciplesThe main priority areas identified for each candidate State relate to their ability to take on the obligations of meeting the Copenhagen criteria which state that membership requires:- that the candidate State has achieved stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities,- the existence of a functioning market economy, as well as the capacity to cope with competitive pressure and market forces within the Union,- the ability to take on the obligations of membership, including adherence to the aims of political, economic and monetary union.At its meeting in Madrid in 1995, the European Council stressed the need for the candidate States to adjust their administrative structures to ensure harmonious operation of Community policies after accession and at Luxembourg, in 1997, it stressed that incorporation of the acquis into legislation is necessary, but not in itself sufficient; it is necessary to ensure that it is actually applied. The Feira and Gothenburg European Councils in 2000 and 2001 respectively confirmed the vital importance of the applicant countries' capacity to implement and enforce the acquis, and added that this required important efforts by the applicants in strengthening and reforming their administrative and judicial structures.4. Priorities and intermediate objectivesThe Commission's regular reports have highlighted, besides the progress already made, the extent of the efforts which still have to be made in certain areas by candidate States to prepare for accession. This situation requires the definition of intermediate stages in terms of priorities, each to be accompanied by precise objectives to be set in collaboration with the States concerned, the achievement of which will condition the degree of assistance granted and the progress of the negotiations under way with Cyprus. The priorities listed in the revised Accession Partnership have been selected on the basis that it is realistic to expect that Cyprus can complete or take them substantially forward over the next two years (2002 to 2003). Within this list, issues that require particularly urgent action have been highlighted as such. The progress made in meeting the priorities of the 2000 Accession Partnership is assessed in the 2001 regular report. This assessment has been used in formulating the priorities for the current Partnership.Cyprus submitted an updated version of its national programme for the adoption of the acquis (NPAA) in September 2000. The NPAA sets out a timetable for achieving priorities and intermediate objectives, based on the 2000 Accession Partnership, as well as necessary administrative structures and financial resources.The Accession Partnership indicates the priority areas for Cyprus' membership preparations. Cyprus will nevertheless have to address all issues identified in the 2001 regular report. It is also important that Cyprus fulfils the commitments of legislative approximation and the implementation of the acquis in accordance with the commitments made under the Association Agreement, and in the context of the negotiation process. It should be recalled that incorporation of the acquis into legislation is not in itself sufficient; it will also be necessary to ensure that it is actually applied to the same standards as those which apply within the Union. In all of the areas listed below there is a need for credible and effective implementation and enforcement of the acquis.Drawing on the analysis of the Commission's 2001 regular report, the following priorities and intermediate objectives have been identified for Cyprus. These priorities are presented in accordance with the structure of the regular report(1).Efforts for a political settlement- continue efforts to support a settlement under the auspices of the UN.Economic criteria- accelerate liberalisation of a number of protected sectors of the economy, including telecommunications, air transport, and energy,- improve conditions for enterprise and development, with particular attention to sectoral diversification and small and medium-sized enterprises (SMEs).Ability to assume the obligations of membershipFree movement of goods- in need of particularly urgent action: adopt framework legislation for the implementation of the new and global approach principles,- pursue implementation of "New approach" Directives on the basis of this framework legislation; pursue alignment of remaining traditional sectoral legislation, in particular in the field of pharmaceuticals for veterinary use, cosmetics and foodstuffs,- reinforce horizontal administrative infrastructure and implementing capacity in the sectors covered by product specific legislation,- develop and implement a market surveillance strategy,- align legislation on public procurement with the acquis concerning coverage and the review system,- proceed with screening of legislation in the non-harmonised area to ensure that it is in compliance with Articles 28 to 30 of the Treaty and complete administrative arrangements for the future monitoring in this area.Free movement of persons- complete alignment of mutual recognition of professional qualifications and diplomas and further develop required administrative structures, education and training programmes,- with respect to professional qualifications obtained before harmonisation, Cyprus should give priority to introducing measures to ensure that all its professionals can, from accession, meet the requirements laid down by the directives,- reinforce the administrative structures for the coordination of social security.Freedom to provide services- in need of particularly urgent action: reinforce supervision of financial services,- proceed with bringing the cooperative and credit societies sector in line with the acquis.Free movement of capital- continue to align rules on medium and long-term capital operations and prepare the way for subsequent liberalisation of short-term operations,- liberalise foreign participation in financial services and tourism,- ensure compliance with the recommendations of the financial action task force,- complete alignment of legislation with second Directive against money laundering.Company law- align and enforce trade mark, copyright and neighbouring rights legislation; reinforce administrative capacity especially by strengthening border controls. Maintain sustained efforts on enforcement of intellectual property rights in particular on the fight against piracy and counterfeiting. Improve cooperation among enforcement bodies; intensify training for enforcement bodies including judges and prosecutors.Competition- in need of particularly urgent action: complete the legislative framework; bring State aid to international business enterprises (offshore) in line with the acquis; further reinforce the administrative capacity (both with respect to antitrust and State aid control); ensure enforcement of the rules in antitrust and State aid; maintain a comprehensive State aid inventory and annual report; bring the existing aid schemes in line with the acquis well before accession; increase awareness of the rules among all market participants and aid grantors; intensify the training of the judiciary in the specific fields of antitrust and State aid.Agriculture- set up the administrative structures needed for the design, implementation, management, monitoring, control and evaluation of Community funded rural development programmes,- complete preparations for the enforcement and practical application of the management mechanisms of the common agricultural policy, in particular the integrated administration and control system and the Paying Agency, as well as for the implementation and enforcement of veterinary and phytosanitary and food safety legislation; bring the status and operation of the current monopolies in line with the acquis,- continue alignment of veterinary and phytosanitary legislation and upgrade inspection arrangements,- complete transposition of legislation on transmissible spongiform encephalopathies, plant passports, maximum residue levels, animal nutrition and ensure implementation and enforcement, including testing of animal diseases, in particular transmissible spongiform encephalopathies, in accordance with the acquis.Fisheries- complete the establishment of adequate administrative structures and equipment at central and regional level that can ensure the implementation of the common fisheries policy, including the market policy, structural programmes co-financed by the Financial Instrument for Fisheries Guidance, and a fishing vessel register,- reduce the number of fishing vessels operating outside the Mediterranean Sea in accordance with agreed objectives and timetable.Transport policy- in need of particularly urgent action: complete alignment and implementation of maritime transport legislation, taking into account its latest developments, in particular enforce maritime safety standards and further strengthen the administrative capacity of the Department of Merchant Shipping, in accordance with the Department's 2000 to 2002 action plan in order to improve the flag State performance of the Cypriot fleet,- continue alignment and strengthen administrative capacity in road transport, in particular transport of dangerous goods, and in aviation (particularly air safety).Taxation- ensure due alignment of the tax acquis, with particular attention to alignment of the VAT and excise duty regimes, including the transitional VAT regime. In need of particular urgent action: proceed with alignment of VAT and excise duty rates to that of the Community acquis and elimination of discriminatory measures against imports from the Community,- ensure that existing and future tax legislation complies with the principles of the code of conduct for business taxation,- strengthen administrative capacity including control and enforcement procedures, and administrative cooperation and mutual assistance,- in need of particularly urgent action: develop IT systems so as to allow for the exchange of electronic data with the Community and its Member States.Statistics- further improve quality and coverage of statistics; ensure adequate resources are available to further strengthen statistical capacities.Social policy and employment- continue to support social partners' capacity building efforts, in particular with a view to their future role in the development and implementation of Community employment and social policy, including the European Social Fund, notably through autonomous social dialogue. Strengthen administrative capacity in the fields of labour law and equal opportunities,- complete alignment and ensure proper implementation of Community legislation in particular in the field of equal treatment for women and men. Strengthen the related administrative and enforcement structures, including the labour inspectorates and establish an independent guarantee fund for employees in the case of employer's insolvency. Adopt legislation against discrimination and develop a timetable for its implementation,- complete alignment and implement Community legislation on public health, and adapt the national structures for surveillance and control of communicable diseases and health monitoring and information,- prepare a national strategy, including data collection, with a view to future participation in the European strategy on social inclusion.Energy- continue alignment of oil stocks requirements; make progress in ensuring the actual constitution of the stocks, including the necessary investments in storage capacity, towards the level of 90 days; develop the administrative structure,- prepare for participation in the international energy market, notably concerning the electricity Directive; eliminate remaining price distortions; establish a regulator and a common system operator for both transmission and distribution,- improve energy efficiency: enhance the use of renewable energy, and strengthen the relevant institutions in this area,- implement the recommendations contained in the Council report on nuclear safety in the context of enlargement with due regard to the priorities assigned in the report.Telecommunications and information technologies- adopt new law on telecommunications and postal services and introduce a comprehensive regulatory framework, in particular in the fields of licensing, interconnection, universal service, numbering and data protection; terminate monopoly for mobile voice telephony.Regional policy and coordination of structural instruments- in need of particularly urgent action: establish a territorial organisation allowing for the effective implementation of the Structural Funds Regulations,- prepare a coherent development plan as required by the Structural Funds Regulations; define the implementation structures of the final plan; define the managing and paying authorities; improve the administrative capacity, in particular in terms of recruitment and training,- set up the required monitoring and evaluation systems for Structural Funds, in particular for ex-ante evaluation and for the collection and processing of the relevant statistical information and indicators,- align with the specific financial management and control procedures for future Structural and Cohesion Funds under the relevant Community Regulations,- develop the technical preparation of projects eligible for Structural and Cohesion Funds assistance (project pipeline).Environment- complete transposition of the acquis, with special emphasis on waste management,- continue implementation of the acquis, with special emphasis on urban waste water treatment and packaging waste; develop an implementation plan for the water framework Directive,- continue strengthening the administrative and enforcement capacity, with special emphasis on nature protection legislation,- continue integration of environmental protection requirements into the definition and implementation of all other sectoral policies with a view to promoting sustainable development.Cooperation in the field of Justice and Home Affairs- continue efforts aiming at a fair and effective application of the law on asylum, in particular the provision for manifestly unfounded claims. Ensure that an independent authority examines the asylum applications in appeal; ensure that implementing rules and regulations are drafted in accordance with international and European standards; enhance administrative capacities in the domain and improve overall conditions in reception centres; establish a system for the integration of refugees,- complete alignment with common visa policy,- ensure due implementation of the Schengen action plan, and continue preparation for future participation in the Schengen information system by developing national databases and registers,- ensure due implementation of immigration legislation, in particular the proper application of immigration procedures,- review the readmission agreements with neighbouring countries and their implementation in conformity with the principle of "non-refoulement". Continue efforts to reinforce the technical equipment for border control,- maintain sustained efforts in the fight against money laundering, ensuring sufficient human resources and qualified staff as well as training. Implement the national drugs strategy and improve the fight against drug trafficking,- continue efforts to implement the data protection legislation,- improve the internal cooperation within the police and with other law enforcement agencies and with the judiciary in particular to strengthen capacities to fight organised crime,- take the necessary steps in order to ensure the implementation of the Community instruments in the area of judicial cooperation in civil matters,- ensure that the prerequirements to the conclusion of a cooperation agreement with Europol are met,- take the necessary steps to align the legislation with the Convention on the Protection of the Communities' Financial Interests and its Protocols.Customs union- accelerate legislative harmonisation including as regards the introduction of all customs regimes with economic impact and simplified procedures; strengthen the institutional and administrative capacity. Implement the reform and modernisation programme of the customs department,- in need of particularly urgent action: continue the implementation of the IT strategy of the Cypriot customs administration. Develop IT systems so as to allow for the exchange of computerised data between the Community and Cyprus.External relations- take the necessary measures to ensure that any international treaty or agreement incompatible with the acquis is renegotiated or terminated by accession.Financial control- further develop functional independence for internal controllers/auditors at both central and decentralised levels; complete work on an audit manual and on developing audit trails for the control of Community funds,- strengthen public financial control functions through the provision of adequate staff, training and equipment,- confirm a suitable contact point for OLAF for the protection of the Communities' financial interests, and start cooperation with OLAF through this contact point,- strengthen the fight against fraud,- continue efforts to ensure the correct use, control, monitoring and evaluation of EC pre-accession funding as a key indicator of Cyprus' ability to implement the financial control acquis.5. ProgrammingAfter the expiry on 31 December 1999 of the fourth Financial Protocol concluded with Cyprus, Council Regulation (EC) No 555/2000 replaced the financial protocols from 2000 onwards for a period of five years. The total budget allocated to Cyprus for the period 2000 to 2004 adds up to EUR 57 million, of which one third of each annual allocation is to be used for financing the "bi-communal" projects. The programming exercise for each year has to be submitted for opinion to the PHARE Management Committee.Activities financed under this new Regulation will focus assistance on priority operations to prepare for accession as defined within this and the previous accession partnership with Cyprus, as well as the participation in certain Community programmes and agencies including research and technological development framework programmes.The 2000 budget (EUR 9 million) has been programmed to support activities in the following sectors: internal market (taxation and customs); Justice and Home Affairs; administrative cooperation; participation in Community programmes in the sector of education (Leonardo, Socrates, Youth); and bi-communal activities (Nicosia master plan).Cyprus is still participating in the multicountry activities of the MEDA programme, and also receives EIB support.6. ConditionalityCommunity assistance for financing projects is conditional on respect by Cyprus of its commitments under the Association Agreement, further steps towards satisfying the Copenhagen criteria and in particular progress in meeting the specific priorities of this revised Accession Partnership. Failure to respect these general conditions could lead to a decision by the Council on the suspension of financial assistance on the basis of Article 4 of Regulation (EC) No 622/98.7. MonitoringThe implementation of the Accession Partnership is monitored in the framework of the Association Agreement and in particular in the Association Committee.Council Regulation (EC) No 555/2000 stipulates that "the Commission shall be assisted by the Committee provided for in Article 9(1) of Council Regulation (EEC) No 3906/89". This means that the Management Committee that shall supervise the pre-accession programmes with Cyprus is the same as for the PHARE programme.The Accession Partnership will continue to be amended as necessary in accordance with Article 2 of Regulation (EC) No 622/98.(1) The order of presentation is that used as from the 2000 regular reports.


( UNOFFICIAL ENGLISH TRANSLATION ) DECISION NO. 5 OF 24 APRIL 1959 CONCERNING THE SITUATION WITH REGARD TO SICKNESS INSURANCE OF RETIRED BELGIAN AND FRENCH FRONTIER WORKERS


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31997D0448

Council Decision of 16 July 1997 extending the application of Joint Action 96/250/CFSP adopted by the Council on the basis of Article J.3 of the Treaty on European Union, in relation of the nomination of a Special Envoy for the African Great Lakes Region

Official Journal L 197 , 24/07/1997 P. 0001 - 0001

COUNCIL DECISION of 16 July 1997 extending the application of Joint Action 96/250/CFSP adopted by the Council on the basis of Article J.3 of the Treaty on European Union, in relation of the nomination of a Special Envoy for the African Great Lakes Region (97/448/CFSP)THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty on European Union and, in particular, Articles J.3 and J.11 thereof,Whereas Joint Action 96/250/CFSP of 25 March 1996 adopted by the Council on the basis of Article J.3 of the Treaty on European Union, in relation to the nomination of a Special Envoy for the African Great Lakes Region (1), the application of which was extended by Decision 96/441/CFSP (2), comes to an end on 31 July 1997;Whereas the Council decided, by Decision 96/589/CFSP (3), to charge an additional sum of ECU 1 300 000 to the general budget of the European Communities for 1996,HAS DECIDED AS FOLLOWS:Article 1The application of Joint Action 96/250/CFSP is hereby extended to 31 July 1998. The Joint Action shall be reviewed six months after the date on which this Decision is adopted.Article 2In order to cover the costs related to the mission of the Special Envoy for the African Great Lakes Region, an additional sum of ECU 1 415 000 shall be charged to the general budget of the European Communities for 1997.Article 3This Decision shall enter into force on the date of its adoption. It shall be published in the Official Journal.Done at Brussels, 16 July 1997.For the CouncilThe PresidentJ. POOS(1) OJ No L 87, 4. 4. 1996, p. 1.(2) OJ No L 185, 24. 7. 1996, p. 1.(3) OJ No L 260, 12. 10. 1996, p. 5.


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41994D0680

94/680/ECSC: DECISION OF THE REPRESENTATIVES OF THE GOVERNMENTS OF THE MEMBER STATES, MEETING WITHIN THE COUNCIL of 19 October 1994 repealing Decision 94/314/ECSC introducing the discontinuation of certain economic and financial relations with Haiti

Official Journal L 271 , 21/10/1994 P. 0002 - 0002

DECISION OF THE REPRESENTATIVES OF THE GOVERNMENTS OF THE MEMBER STATES, MEETING WITHIN THE COUNCIL of 19 October 1994 repealing Decision 94/314/ECSC introducing the discontinuation of certain economic and financial relations with Haiti  (94/680/ECSC)THE REPRESENTATIVES OF THE GOVERNMENTS OF THE MEMBER STATES OF THE EUROPEAN COAL AND STEEL COMMUNITY, MEETING WITHIN THE COUNCIL,  Having regard to Council Decision 94/681/CFSP of 14 October 1994 concerning the common position defined on the basis of Article J.2 of the Treaty on European Union regarding the termination of the reduction of economic relations with Haiti (1),  Whereas the United Nations Security Council, in view of developments in Haiti and acting on the basis of Chapter VII of the United Nations Charter, has decided to bring to an end at 00.01 hours (Eastern Standard Time) on the day following that of  President Jean-Bertrand Aristide's return to Haiti the measures concerning Haiti contained in Resolutions 841 (1993), 873 (1993) and 917 (1994);  Whereas under these circumstances, Decision 94/314/ECSC of the Representatives of the Governments of the Member States, meeting within the Council of 30 May 1994 introducing a discontinuation of certain economic and financial relations with Haiti (2)  should be repealed;  In agreement with the Commission,  HAVE DECIDED AS FOLLOWS:   Article 1  Decision 94/314/ECSC is hereby repealed.   Article 2  This Decision shall be published in the Official Journal of the European Communities.   Article 3  This Decision shall enter into force on the day of its publication.  It shall apply with effect from 16 October 1994.  Done at Brussels, 19 October 1994.  The President Th. WAIGEL  (1) See page 3 of this Official Journal.(2) OJ No L 139, 2. 6. 1994, p. 8.


title: 2010/444/CFSP: Council Decision 2010/444/CFSP of 11 August 2010 extending the mandate of the European Union Special Representative in the former Yugoslav Republic of Macedonia (FYROM)

text:
               12.8.2010

               EN

               Official Journal of the European Union

               L 211/32

         COUNCIL DECISION 2010/444/CFSP
   of 11 August 2010
   extending the mandate of the European Union Special Representative in the former Yugoslav Republic of Macedonia (FYROM)
   THE COUNCIL OF THE EUROPEAN UNION,
   Having regard to the Treaty on European Union, and in particular Articles 28, 31(2) and 33 thereof,
   Having regard to the proposal from the High Representative of the Union for Foreign Affairs and Security Policy,
   Whereas:

               (1)

               On 17 October 2005, the Council adopted Joint Action 2005/724/CFSP (1) appointing Mr Erwan FOUÉRÉ European Union Special Representative (hereinafter the EUSR) in the former Yugoslav Republic of Macedonia (FYROM).

               (2)

               On 16 March 2010, the Council adopted Decision 2010/156/CFSP (2) extending the mandate of the EUSR until 31 August 2010.

               (3)

               The mandate of the EUSR should be extended until 28 February 2011 or until the Council decides, on a proposal by the High Representative of the Union for Foreign Affairs and Security Policy (hereinafter the HR), that appropriate corresponding functions to those under Decision 2010/156/CFSP have been established in the European External Action Service, and terminates the mandate,

         HAS ADOPTED THIS DECISION:
   Article 1
   Decision 2010/156/CFSP is hereby amended as follows:

               1.

               Article 1 is replaced by the following:
               ‘Article 1
               European Union Special Representative
               The mandate of Mr Erwan FOUÉRÉ as the EUSR in the former Yugoslav Republic of Macedonia is hereby extended until 28 February 2011 or until the Council decides, on a proposal by the HR, that appropriate corresponding functions to those under the current Decision have been established in the European External Action Service and terminates the mandate.’;

               2.

               Article 5 is replaced by the following:
               ‘Article 5
               Financing
               1.   The financial reference amount intended to cover the expenditure related to the mandate of the EUSR for the period from 1 April 2010 to 31 August 2010 shall be EUR 340 000.
               2.   The financial reference amount intended to cover the expenditure related to the mandate of the EUSR for the period from 1 September 2010 to 28 February 2011 shall be EUR 310 000.
               3.   The expenditure shall be managed in accordance with the procedures and rules applicable to the general budget of the Union.
               4.   The management of the expenditure shall be subject to a contract between the EUSR and the Commission. The EUSR shall be accountable to the Commission for all expenditure.’.

         Article 2
   Entry into force
   This Decision shall enter into force on the date of its adoption.

      Done at Brussels, 11 August 2010.

            For the Council

            The President

         S. VANACKERE

      (1)  OJ L 272, 18.10.2005, p. 26.

      (2)  OJ L 67, 17.3.2010, p. 6.


title: Decision of 22 March 1973 of the Representatives of the Governments of the Member States of the European Coal and Steel Community meeting within the Council, opening tariff preferences for products covered by that Community and originating in Switzerland

text:
 No L 98 /36                             Official Journal of the European Communities                                12 . 4. 73
                                                            DECISION
                                                        of 22 March 1973
              of the Representatives of the Governments of the Member States of the European Coal
                                        and Steel Community meeting within the Council,
                 opening tariff preferences for products covered by that Community and originating
                                                          in Switzerland
                                                          (73 /66/ECSC)
THE REPRESENTATIVES OF THE GOVERNMENTS                              Coal     and   Steel  Community     and    originating in
OF THE MEMBER STATES OF                                              Switzerland .
THE EUROPEAN COAL AND STEEL COMMUNITY,
                                                                    3 . The basic duties referred to in this Decision shall
                                                                    be the duties actually applied on 1 January 1972 .
Whereas the Member States have concluded among
themselves the Treaty establishing the European Coal                                        Article 2
and Steel Community ;
Whereas the Agreement between the European Econ                    The provisions laying down the rules of origin for
omic Community and the Swiss Confederation ( 1)                     the implementation of the Agreement between the
entered into force on 1 January 1973 ;                              European Economic Community and the Swiss
                                                                     Confederation, which entered into force on 1 January
                                                                     1973 , shall apply to the products to which this
Whereas the Agreement between the Member States                      Decision refers .
of the European Coal and Steel Community and the
Swiss Confederation is subject to the approval of
each Signatory State in accordance with its own                                             Article 3
constitutional rules ;
                                                                     The Member States shall decide by common accord
Anxious to apply autonomously and concomitantly                     on any contingent protective measures suggested by
the tariff reductions laid down in that Agreement ;                 one or more Member States or by the Commission .
In agreement with the Commission ;
                                                                                Article 4
HAVE DECIDED AS FOLLOWS :                                            This Decision shall expire on the entry into force
                                                                    of the Agreement between the Member States of the
                                                                    European Coal and Steel Community and the Swiss
                           Article 1                                 Confederation, and at the latest on 31 December
                                                                      1973 .
1 . With effect from 1 April and until 31 December
1973 , the duties applicable in the Community as                                            Article 5
originally constituted and in Ireland to imports of
products covered by the European Coal and Steel                     Member States shall adopt all the measures necessary
Community and originating in Switzerland shall be                    for the implementation of this Decision .
reduced to 80 °/o of the basic duty, or levied at the
rate of 80 % of the basic duty.
                                                                     Done at Brussels , 22 March 1973 .
2 . During this same period, the United Kingdom and                                                     The President
Denmark shall not introduce any new customs duties
on imports of products covered by the European                                                        W. DE CLERCQ
(') OJ No L 300, 31 . 12 . 1972 , p . 189 .


title: 86/420/EEC: Council Decision of 8 April 1986 concerning the conclusion of the Agreement between the European Economic Community and the Democratic Socialist Republic of Sri Lanka on trade in textile products

text:
No L 245 / 192                          Official Journal of the European Communities                                               29 . 8 . 86
                                                    COUNCIL DECISION
                                                        of 8 April 1986
                 concerning the conclusion of the Agreement between the European Economic Community and
                         the Democratic Socialist Republic of Sri Lanka on trade in textile products
                                                        ( 86 / 420 / EEC )
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,                             Sri Lanka on trade in textile products is hereby approved on
                                                                      behalf of the Community .
Having regard to the Treaty establishing the European
Economic Community , and in particular Article 113
thereof,                                                              The text of the Agreement is attached to this Decision .
Having    regard   to   the   recommendation      from    the
Commission ,
                                                                                Article 2
Whereas the Agreement on trade in textile products
negotiated between the European Economic Community                    The President of the Council shall give the notification
and the Democratic Socialist Republic of Sri Lanka should be          provided for in Article 19 of the Agreement ( 1 ).
approved ,
HAS DECIDED AS FOLLOWS :
                                                                      Done at Luxembourg , 8 April 1986 .
                          Article 1                                                                              For the Council
                                                                                The President
The Agreement between the European Economic
Community and the Democratic Socialist Republic of                                                           G. M. V. van AARDENNE
                                                                      ( 1 ) The date of entry into force of the Agreement will be published in
                                                                            the Official Journal of the European Communities by the
                                                                            General-Secretariat of the Council .


title: Council Decision of 10 July 1975 on the conclusion of the Agreement between the European Community and the Republic of Zambia on the supply of common wheat as food aid

text:
No L 259 / 18                    Official Journal of the European Communities                          7. 10 . 75
                                                         II
                                    (Acts whose publication is not obligatory)
                                                COUNCIL
                                             COUNCIL DECISION
                                                 of 10 July 1975
             on the conclusion of the Agreement between the European Economic Commu
                nity and the Republic of Zambia on the supply of common wheat as food aid
                                                   (75/590/EEC)
THE COUNCIL OF THE EUROPEAN                                 HAS DECIDED AS FOLLOWS :
COMMUNITIES,                                                                      Article 1
                                                            The Agreement between the European Economic
Having regard to the Treaty establishing the European       Community and the Republic of Zambia on the
Economic Community, and in particular Articles 113,         supply of common wheat as food aid is hereby
1 14 and 228 thereof ;                                      concluded on behalf of the Community .
                                                            The text of the Agreement is annexed to this Deci
Having regard to the recommendation from the                sion .
Commission ;
                                                                                Article 2
Whereas the European Economic Community has                 The President of the Council is hereby authorized to
concluded the 1971 f(3od - aid convention ;                 designate the persons empowered to sign the Agree
                                                            ment and to confer on them the necessary powers to
Whereas the Republic of Zambia has requested food           bind the Community. .
aid ;
                                                            Done at Brussels, 10 July 1975.
                                                                                For the Council
Whereas in view of the cereal supply situation in that
country the latter should be accorded, under the                                        The President
Community food-aid programme for 1972/73 , and by
way of gift, 5 000 metric tons of common wheat,                                         E. COLOMBO


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31994D0669

94/669/EC: Council Decision of 11 July 1994 on the conclusion of an Agreement in the form of an exchange of letters between the European Community and the Republic of Poland setting up a tariff quota for imports into the Community of certain industrial products originating in Poland

Official Journal L 264 , 14/10/1994 P. 0028

COUNCIL DECISION of 11 July 1994 on the conclusion of an Agreement in the form of an exchange of letters between the European Community and the Republic of Poland setting up a tariff quota for imports into the Community of certain industrial  products originating in Poland (94/669/EC)THE COUNCIL OF THE EUROPEAN UNION,  Having regard to the Treaty establishing the European Community, and in particular Article 113 in conjunction with Article 228 (2) thereof,  Having regard to the Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Republic of Poland, of the other part,  Having regard to the proposal from the Commission,  Whereas the Agreement in the form of an exchange of letters referred to in this Decision should be approved,  HAS DECIDED AS FOLLOWS:   Article 1  The Agreement in the form of an exchange of letters between the European Community and the Republic of Poland setting up a tariff quota for imports into the Community of certain industrial products originating in Poland is hereby approved on  behalf of the Community.  The text of the Agreement is attached to this Decision.   Article 2  The President of the Council is hereby authorized to sign the Agreement in order to bind the Community.  Done at Brussels, 11 July 1994.  For the Council The President Th. WAIGEL


title: Council Decision of 17 February 1975 on the conclusion of the Agreement between the European Economic Community and the Republic of Niger on the supply of sorghum as food aid

text:
No L 81 / 20                      Official Journal of the European Communities                        1 . 4 . 75
                                              COUNCIL DECISION
                                               of 17 February 1975
             on the conclusion of the Agreement between the European Economic Commu
                  nity and the Republic of Niger on the supply of sorghum as food aid
                                                    (75/ 192/ EEC)
             THE COUNCIL OF THE EUROPEAN COMMUNITIES,
             Having regard to the Treaty establishing the European Economic Community, and in
             particular Articles 113, 114 and 228 thereof ;
             Having regard to the recommendation from the Commission ;
             Whereas the European Economic Community has concluded the 1971 Food Aid Conven
             tion ;
             Whereas by its letter of 14 January 1974, the Republic of Niger has requested food aid ;
             Whereas in view of the cereal supply situation in that country the latter should be
             accorded, under the Community food-aid programme for 1973/74, and by way of gift,
             10 000 metric tons of sorghum,
             HAS DECIDED AS FOLLOWS :
                                                      Article 1
             The Agreement between the European Economic Community and the Republic of Niger
             on the supply of sorghum as food aid is hereby concluded on behalf of the Community.
             The text of the Agreement is annexed to this Decision .
                                                       A rt iciv 2
             The President of the Council is hereby authorized to designate the persons empowered to
             sign the Agreement and to confer on them the powers necessary to bind the Community.
             Done at Brussels, 17 February 1975.
                                                                        For the Council
                                                                         The President
                                                                           R. RYAN


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31999D0493

1999/493/EC, ECSC, Euratom: Council Decision of 9 July 1999 on the composition of the Commission

Official Journal L 192 , 24/07/1999 P. 0053 - 0054

COUNCIL DECISIONof 9 July 1999on the composition of the Commission(1999/493/EC, ECSC, Euratom)THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty establishing the European Community, (EC), and in particular Article 215 thereof,Having regard to the Treaty establishing the European Coal and Steel Community (ECSC), and in particular Article 12 thereof,Having regard to the Treaty establishng the European Atomic Energy Community (EAEC), and in particular Article 128 thereof,Whereas:(1) By letter of 16 March 1999 Mr Jacques Santer, President of the Commission of the European Communities, informed Mr Gerhard Schröder, President of the Conference of the Representatives of the Governments of the Member States of the European Union, of the decision by the Member of the Commission to resign as a body and to refer their appointment back to the Governments of the Member States;(2) In their letter of resignation the President and Members of the Commission declared that pursuant to the fourth paragraph of Article 215 of the Treaty establishing the European Community and the corresponding Articles of the ECSC and EAEC Treaties they would discharge their duties until they had been replaced in accordance with the procedures laid down in the Treaties;(3) In a declaration of 22 March 1999 the Council stated that although it considered that a new Commission should be appointed as rapidly as possible, in compliance with the procedures specified in the Treaty of Amsterdam, it wished the Commission to continue to discharge its duties until then as provided for in the Treaties;(4) By letter of 29 June 1999 Mr Martin Bangemann, Member of the Commission, informed Mr Gerhard Schröder, President of the Conference of the Representatives of the Governments of the Member States of the European Union, that he no longer intended to discharge his duties within the Commission, and expressed his intention of taking up a company appointment;(5) By letters of 6 July 1999 Mr Jacques Santer, President of the Commission, and Ms Emma Bonino, Member of the Commission, informed Mr Paavo Lipponen, President of the Conference of the Representatives of the Governments of the Member States, that they had been elected as members of the European Parliament; membership of the European Parliament being incompatible with membership of the Commission, Mr Santer and Ms Bonino had decided in favour of their parliamentary mandates and wanted the procedure laid down in Article 215 of the EC Treaty to be completed by 19 July 1999, the day before the inaugural session of the European Parliament;(6) Under the third paragraph of Article 215 of the EC Treaty and the corresponding Articles of the ECSC and EAEC Treaties, in the event of resignation the President of the Commission is replaced for the remainder of his term of office, the procedure applicable for his replacement being that laid down in Article 214(2) of the EC Treaty; under the fourth paragraph of Article 215, save in the case of compulsory retirement, Members of the Commission remain in office until they have been replaced; under the second paragraph of Article 215, the Council may, acting unanimously, decide that such a vacancy need not be filled;(7) After the resignation which took place on 16 March 1999, the procedure laid down in Article 214(2) of the EC Treaty for appointing the President and Members of the future Commission was immediately put in hand; the Heads of State or Government of the Member States meeting in Berlin on 24 and 25 march 1999 chose Mr Romano Prodi by common accord as their nominee for President of the Commission; the procedure for appointing the President and Members of Commission to replace the resigning President and Members is under way and should be completed in September 1999;(8) In these circumstances, and in view of the foregoing, note should be taken of the requests by Mr Santer, Mr Bangemann and Ms Bonino to be relieved of their duties at the Commission; it should be decided tha there is no need to replace them pending appointment of the new Commission,HAS DECIDED AS FOLLOWS:Article 1Note is hereby taken of the requests by Mr Jacques Santer, Mr Martin Bangemann and Ms Emma Bonino to be relieved of their duties at the Commission of the European Communities. There will be no need to replace them.Article 2This Decision shall take effect on the date of its adoption with regard to Mr Bangemann and on 19 July 1999 with regard to Mr Santer and Ms Bonino.It shall be communicated to Mr Santer, Mr Bangemann and Ms Bonino and to the Governments of the Member States of the European Union.Article 3This Decision shall be published in the Official Journal of the European Communities.Done at Brussels, 9 July 1999.For the CouncilThe PresidentS. NIINISTÖ


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31989D0444

89/444/EEC, Euratom: Council Decision of 18 July 1989 appointing a member of the Economic and Social Committee

Official Journal L 211 , 22/07/1989 P. 0008 - 0008

*****COUNCIL  DECISION  of 18 July 1989  appointing a member of the Economic and Social Committee  (89/444/EEC, Euratom)  THE COUNCIL OF THE EUROPEAN COMMUNITIES,  Having regard to the Treaty establishing the European Economic Community, and in particular Articles 193 to 195 thereof,  Having regard to the Treaty establishing the European Atomic Energy Community, and in particular Articles 165 to 167 thereof,  Having regard to the Convention on certain institutions common to the European Communities, and in particular Article 5 thereof,  Having regard to the Council Decision of 15 September 1986 appointing the members of the Economic and Social Committee for the period ending on 20 September 1990 (1),  Whereas a seat has become vacant on the Economic and Social Committee following the resignation of Mr Armand Colle, of which the Council was informed on 14 February 1989,  Having regard to the nominations submitted by the Permanent Representation of Belgium on 12 May 1989,  Having obtained the favourable opinion of the Commission of the European Communities,  HAS DECIDED AS FOLLOWS:  Sole Article  Mr Willy Waldack is hereby appointed a member of the Economic and Social Committee in place of Mr Armand Colle for the remainder of the latter's term of office, which runs until 20 September 1990.  Done at Brussels, 18 July 1989.  For the Council  The President  R. DUMAS  (1) OJ No C 244, 30. 9. 1986, p. 2.