title: COMMUNICATION FROM THE COMMISSION - REVIEW OF THE METHOD FOR ADJUSTING REMUNERATION

eurovoc_concepts:
European civil service
cost of living
purchasing power
regulations for civil servants
wage determination

text: COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 11. 06. 1996 COM(%) 258 final COMMUNICATION FROM THE COMMISSION REVIEW OF THE METHOD FOR ADJUSTING REMUNERATION CONTENTS REVIEW OF THE METHOD 1. INTRODUCTION 1. 1. Terms of reference 1. 2. Background: the need to adjust remuneration 1. 3. Remuneration: the underlying principles 1. 4. The 1991 method 1. 5. Results 2. COMPONENTS OF THE METHOD 2. 1. Changes in the purchasing power of remuneration in the national civil services 2. 2. Change in the cost of living in Brussels 2. 3. Changes in the cost of living in other places in relation to Brussels 3. APPLICATION OF THE METHOD Interim review 3. 1. Annual review 3. 2. Arrangements for recovering overpayments 3. 3. 3. 4. Recruitment requirements 3. 5. Exception clause 3. 6. Results of the application of the 1991 method 4. QUID PRO QUO FOR THE METHOD 4. 1. Temporary contribution 4. 2. Increase in pension contributions 5. CHANGES IN REMUNERATION 1991 TO 1995 5. 1. Changes in remuneration in Brussels and Luxembourg 5. 2. Remuneration in other places of employment in relation to Brussels 5. 3. Change in the purchasing power of remuneration 5. 4. Comparison with the change in purchasing power of national civil servants 6. CONCLUSION 1. INTRODUCTION 1. 1. Terms of reference Article 15(2) of Annex XI to the Staff Regulations provides that the provisions of the Annex «shall be reviewed at the end of the fifth year and revised, if appropriate, on the basis of a report transmitted to the European Parliament and the Council and a proposal from the Commission after consulting the other institutions within the framework of the Staff Regulations». 1. 2. Background: the need to adjust remuneration The need to recruit from a wide geographical base and to preserve the quality and independence of the European public service calls for competitive remuneration with regular adjustments to keep pace with trends in the purchasing power of remuneration on the labour market. In order to maintain harmonious staff relations, the general principles applied must be established by consensus. The Council has long favoured the principle of parallel development with remuneration in the national public services. This calls for a rigorous procedure. Hence the adoption by the Council of a method based on detailed and binding principles (Annex XI to the Staff Regulations) which has the advantage of not requiring annual negotiations and of avoiding the risk of dispute. The Council decision combines a negotiated approach and a procedural approach with a view to limiting conflict. Periodic negotiations since 1971 have produced a series of agreements spelling out the rules for implementing Articles 64 and 65 of the Staff Regulations: the 1971 and 1976 agreements; the 1981 method adopted for a period of 10 years, introducing a crisis levy; the 1991 method adopted for a period of 10 years, introducing a temporary contribution; staff contributions to the pension scheme were also increased. 1. 3. Remuneration: the underlying principles Remuneration, legally grounded exclusively in the Staff Regulations of Officials of the European Communities, comprises basic salary, and family and other allowances, from which are deducted social security contributions, tax and the temporary contribution. Adjustments are governed by a system based on two principles: parallel development of the remuneration of officials of the European institutions and that of civil servants in the Member States of the European Union; purchasing power parity for the remuneration paid in the various places of employment and in Brussels. 1. 4. The 1991 method The 1991 method was adopted following lengthy negotiations involving both the trade unions and staff associations representing the staff of the Community institutions (also consulted by referendum) and the institutions themselves. At its 1528th meeting, the Council endorsed the compromise produced by the Concertation Committee, subsequently confirming its agreement by adopting the corresponding regulations on 19 December 1991. The note transmitted by Coreper to the Council prior to its decision describes the compromise as a comprehensive solution comprising several interdependent components: the method, applying from 1 July 1991 to 30 June 2001; and its «quid pro quo», namely the temporary contribution and the increase in staff contributions to the pension scheme. In other words, the final compromise not only introduced a procedure for adjusting remuneration but also had an impact on its level through these two additional components which have reduced purchasing power. The method negotiated with the Council and adopted by it in December 1991 is valid for ten years (till 2001) with provision for a review in 1996 and, if appropriate, revision on a proposal from the Commission. The Staff Regulations also had to be amended to make provision for the temporary contribution; it too is payable until 30 June 2001 and is equivalent to a gross rate of 5. 83% of the base to which it is applied. In addition, staff contributions to the pension scheme were increased from 6. 75% to 8. 25% of basic salary. 1. 5. Results Since 1991 civil servants in the Member States - and consequently the officials of the European Communities - have suffered a 3. 1% loss in purchasing power, a 13. 8% rise in the cost of living in Brussels producing a 10. 4%1 increase in the salary scale. The two binding measures introduced as the quid pro quo for the method have led to an additional 4. 2% reduction in purchasing power: 2. 9% as a result of the temporary contribution and 1. 3% as a result of the increase in staff contributions to the pension scheme. So, if the impact of this quid pro quo is added to the above, the result is a 5. 7% increase in net remuneration, which actually represents a 7. 1% loss in purchasing power for officials of the European institutions over five years, 4. 2% more than for national civil servants. 1 96,9/100 x 113,8/100 = 110,4/100 = +10,4 4 2. COMPONENTS OF THE METHOD Article 1(1) of Annex XI provides that each year Eurostat «shall draw up. a report on changes in the cost of living in Brussels, the economic parities between Brussels and the other places of employment in the Member States, and changes in the purchasing power of salaries in the national civil services». 2. 1. Changes in the purchasing power of remuneration in the national civil services 2. 1. 1. The specific indicator measures changes in the purchasing power (increase minus inflation) of the remuneration of national civil servants in the Member States of the European Union. Table 1 shows that between 1991 and 1995 they suffered an average loss in purchasing power of 3. 1%. Table 1 SPECIFIC INDICATOR Average change in the purchasing power of remuneration in the national civil services of the Member States of the European Union (1) Date 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 (3) (2) Adjustment of remuneration % t/t-1 cumulative % +4,1 +4,8 +1,9 +1,0 +3,1 +4,1 +9,1 +11,2 +12,3 +15,8 % t/t-1: percentage change year on year (4) (5) (6) (7) Consumer price index Purchasing power (specific indicator) % t/t-1 cumulative % +4,8 +4,2 +3,2 +3,0 +2,9 +4,8 +9,2 +12,8 +16,1 +19,4 % t/t-1 -0,7 +0,6 -1,3 •1,9 +0,2 cumulative % -0,7 -0,1 -1,4 -3,3 -3,1 cumulative %: cumulative values are calculated by multiplying the year-on-year changes 20 10 -10 -20 CUMULATIVE % CHANGE Consumer price index. -~r»^FT&;4 _ - * + i 5 ,8. - • - + i 6 ; i*. ^**9X _M - - 'X+§$ *-*l?Z Adjustment of remuneration Purchasing power (specific indicator) T ^ —r -3,1 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 - 4- The method for calculating the specific indicator derives essentially from decisions taken by the Council (Annex XI to the Staff Regulations). The rules for its practical application are laid down by the Article 65 Working Party, chaired by Eurostat. All calculations are based on the data sent to Eurostat by the national administrations in the Member States relating to the remuneration of central government staff on 1 July of the current year. The data are for a sample population, relating as a rule to the first and last steps of the main grades. Figures are provided for unmarried staff and married staff with two dependent children. The 1994-95 specific indicator already takes account of changés in Finland, Austria and Sweden but with a weighting of only 50% (membership of the European Union from 1 January 1995). Table 2 shows the changes in purchasing power by country. Table 2 SPECIFIC INDICATOR BY MEMBER STATE (1. 7. 90 -1. 7. 95) Change in the purchasing power of remuneration in the national civil services of the Member States of the European Union (D Country (2) Nominal change in net remuneration (3) Change in consumer price index (4) Real change in net remuneration B DK D GR E F IRL 1 L NL P UK (%) +17,7 +12,7 +13,5 +44,9 +21,7 +13,8 +26,7 +13,5 +35,6 +10,8 +46,9 +19,1 (%) +13,6 +10,9 +18,1 +90,3 +29,5 +12,2 +13,6 +28,7 +15,8 +15,7 +42,6 +18,0 SPECIFIC INDICATOR (1. 7. 94 -1. 7. 95) +2,3 +1,4 +1,3 A FIN s +2,6 ~ +1,0 +3,0 SPECIFH EU C INDICATOR +15,8 +19,4 ' (%) +3,8 +1,6 -3,8 -23,8 -5,8 +1,5 -11,9 +17,1 -4,3 +3,0 +1,0 -0,3 +0,4 -1,7 -3,1 (5) Weighting factor 95. (%) 4,1 1,7 26,3 0,8 ~ ^ \ 5 ,0 24,6 0,7 16,1 0,2 3,0 2,3 13,2 1,2 0,4 0,7 100,0 EUR12 until 1. 1. 1995 then EUR 15 Cumulative real values (4) are calculated by multiplying the year-on-year changes Rounding can produce discrepancies between these cumulative values and the relationship (2)/(3). 2. 1. 2. Control indicator Annex XI provides for the year-on-year change in real per capita emoluments in the national civil services to be used as a control indicator to check the gross specific indicator. Table 3 compares the changes in the two indicators. Table 3 CONTROL INDICATOR Change in the purchasing power of gross remuneration in the national civil services of the Member States of the European Union (1) Date 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 (2) (3) Gross specific indicator cumulative % +0,0 +0,1 -0,4 -2,8 -1,0 % t/t-1 +0,0 +0,1 -0,5 -2,4 +1,8 (4) Control indicator (5). (6) (7) Difference % t/t-1 +2,7 +4,5 +2,6 -0,1 +0,9 cumulative % +2,7 +7,3 +10,1 +10,0 +11,0 % t/t-1 -2,6 -4,2 -3,0 -2,3 +0,9 cumulative % -2,6 -6,7 -9,5 -11,6 -10,8 Cumulative values are calculated by multiplying the year-on-year changes [--ngrjiauonwE %7^TARgE 20 10 -10 -20 Control indicator. -•-+1Q. -1- - - * H H ^ ^ ^ ^ ^ t i1- -Q Gross specific indicator -"--•--•2,$"" OT5 _ - •++#• TOT Difference 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 —\ 2. 2. Change in the cost of living in Brussels Changes in the cost of living in Brussels are measured by the composite index, which is constituted as follows: 75% by the joint index for European officials in Brussels; 25% by the Brussels consumer price index. Table 4 CHANGE IN THE COST OF LIVING IN BRUSSELS d) (2) (3) (4) (5) (6) (7) Date Brussels joint index Brussels consumer price index Brussels composite index cumulative % +4,2 +8,0 +10,2 +12,8 +13,7 Brussels composite index(6) = 75% Brussels joint index(2) + 25% Brussels CPI(4) cumulative % +3,9 +7,3 +9,9 +12,9 +14,3 % t/t-1 +4,2 +3,6 +2,1 +2,3 +0,8 % t/t-1 +3,9 +3,3 +2,4 +2,7 +1,3 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 Cumulative values are calculated by multiplying the year-on-year changes 30 20 Cumulative. 0/? change — -• — Brussels joint index - - • - - Brussels consumer price index —•— Brussels composite index % t/t-1 +4,1 +3,5 +2,2 +2,4 +0,9 cumulative % +4,1 +7,7 +10,1 +12,8 +13,8 + 13,8 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 — f— These two indices are calculated in agreement with the Belgian Ministry of Economic Affairs. The joint index measures the change in the cost of living for officials of the European institutions in Brussels, while the consumer price index measures the overall cost of living in the Belgian capital. The weighting used to aggregate the 173 basic indices into the joint index is obtained from a survey of the family budgets of Community officials in Brussels, while the weightings used for the Belgian index are derived from a sample survey of Belgian family budgets conducted by the Belgian National Statistical Institute. And, for the purposes of calculating the joint index, the rent index is replaced by a corresponding index calculated by Eurostat on the basis of an annual survey of Community officials employed in Brussels. 8 2. 3. Changes in the cost of living in other places in relation to Brussels 2. 3. 1. Economic parities Article 1(3)(a) of Annex XI provides that «the Statistical Office, in agreement with the national institutes, shall calculate the economic parities which establish the equivalence of purchasing power of the salaries of European officials serving in the capitals of the Member States and in certain other places of employment specified in Article 9 with reference to Brussels». The economic parity is thus the amount in national currency needed to purchase in the place of residence the equivalent in goods and services to what could be purchased in Brussels with 1 Belgian franc. Table 5 shows the change in economic parities. Table 5 (1) COUNTRY/PLACE B DK D(Berlin) Bonn Kaisruhe Munich GR E F IR I Varese NL A P FIN S UK Culham ECONOMIC PARITIES (2) 1. 7. 91 1 0,23145 0,051095 * 0,045743 0,044747* 0,050291' 4,1453 3,1897 0,18617 0,017600 40,556 37,424 0,053563 (3) 1. 7. 92 1 0,22602 0,052053 * 0,046686 0,045974 * 0,051495 4,7891 3,3062 0,18703 0,017838 41,694 38,893 0,055358 (4) 1. 7. 93 1 0,23175 0,054986 * 0,048548 0,048764 * 0,053788 5,5159 3,4770 0,19031 0,018256 44,756 41,709 0,055442 3,6093 3,8702 4,1109 0,019399 0,016929 0,020171 0,017241 0,020582 0,018072 (5) 1. 7. 94 1 0,22931 0,054036 0,049267 0,048398 0,053520 5,8780 3,5112 0,18840 0,018464 45,218 43,315 0,056037 0,37963 4,0149 0,17527 0,24010 0,021103 0,018030 (6) 1. 7. 95 (7) % 95/91 1 0,23354 0,053954 0,049032 0,048641 0,053612 6,3003 3,6192 0,18894 0,018926 46,671 44,812 0,056253 0,38860 4,1809 0,17760 0,24490 0,022178 0,018502 +0,9 +5,6 +7,2 +8,7 +6,6 +52,0 +13,5 +1,5 +7,5 + 15,1 +19,7 +5,0 +15,8 +14,3 +9,3 * Commission proposal not adopted by the Council; Bonn parity is applied Article 1 (3)(b) provides that «the economic parities shall be calculated in such a way that each basic component can be checked by a direct survey at least once every five years». In practice: one third of the basic parities are checked each year and replaced by the new parities produced by the latest price survey; the basic parities are then updated using detailed indices. The economic parity determines remuneration in national currency arrived at by updating the following two components: the annual exchange rate applied to remuneration (July exchange rate); the weighting (ratio economic parity/exchange rate). 2. 3. 2. Exchange rates Table 6 shows that certain currencies fluctuated strongly against the Belgian franc during the period under consideration. Table 6 (D REMUNERATION EXCHANGE RATE* (6) 1. 7. 95 (7) % 95/91 (2) 1. 7. 91 (3) 1. 7. 92 (4) 1. 7. 93 (5) 1. 7. 94 1 0,18665 0,048593 5,9133 3,0703 0,16337 0,018230 36,767 0,054765 1 0,18774 0,048544 5,3189 3,0482 0,16479 0,018151 36,148 0,054692 1FB= FB DKR DM DRA PTA FF IRL LIT HFL OS ESC FMK SKR UKL Article 63 of the Staff Regulatbns: exchange rate used for the implementation of the EC general budget on 1 July* 1 0,18984 0,048638 7,9001 4,2517 0,17057 0,021333 57,113 0,054490 0,34204 5,13901023 0,14923 0,25372 0,022033 1 0,19059 0,048515 7,3282 3,9920 0,16642 0,020048 47,987 0,054413 0,34123 4,9903 0,16114 0,23386 0,019784 1 0,18699 0,048650 6,6260 3,7205 0,16389 0,019945 44,236 0,054558 0,016567 0,016756 0,019187 4,2335 4,0512 4,6281 +1,1 +0,2 +48,5 +39,5 +3,5 +17,5 +58,0 -0,4 +21. 4 +33,0 10 2. 3. 3. Weighting The weighting equals the ratio economic parity/exchange rate. In other words, it is the amount in Belgian francs at the July remuneration exchange rate needed in another place of employment to purchase articles which would cost Bfrs 100 in Brussels. The weightings set out in Table 7 show the relationship in July of each year between the salaries paid in the other places of employment and those paid in Brussels. Table 7 (1) COUNTRY/PLACE B /L DK D(Berlin) Bonn Kalsruhe Munich GR E F !R I Varese NL A P FIN S UK Culham (2) 1. 7. 91 100,0 123,3 105,3 * 94,2 92,2 * 103,6 77,9 104,6 113,0 97,0 112,2 103,5 97,9 WEIGHTINGS (3) 1. 7. 92 100,0 121,1 107,1 * 96,1 94,6 * 106,0 81,0 107,7 114,5 97,8 113,4 105,8 101,1 (4) 1. 7. 93 100,0 123,9 113,0 * 99,8 100,2 * 110,6 83,2 93,5 116,1 91,5 101,2 94,3 101,6 85,3 95,5 88,8 117,1 102,2 120,4 102,9 107,3 94,2 (5) 1. 7. 94 100,0 120,3 111,4 101,6 99,8 110,3 80,2 88,0 113,2 92,1 94,2 90,3 103,0 111,3 80,5 108,8 102,7 106,7 91,1 (6) 1. 7. 95 100,0 123,0 110,9 '100,8 100,0 110,2 79,7 85,1 110,8 88,7 81,7 78,5 103,2 113,6 81,4 119,0 96,5 100,7 84,0 (7) % 95/91 -0,2 +5,3 +7,0 +8,5 +6,4 +2,3 -18,6 -1,9 -8,6 -27,2 -24,2 +5,4 -4,6 •14,0 •17,8 * Commission proposal not adopted by the Council; Bonn weighting is applied With effect from 1 July 1994, the Berlin weighting became the weighting for Germany; this led to the introduction of weightings for Karlsruhe and Bonn. As of 1 January 1995, the weightings for Finland, Austria and Sweden were calculated in accordance with Annex XI. The substantial reductions in a number of weightings were basically caused by increases in the exchange rates (national currency/Belgian franc). 11 3. APPLICATION OF THE METHOD 3. 1. Annual review Article 3(1) of Annex XI provides that «with effect from 1 July and pursuant to Article 65(3) of the Staff Regulations, the Council, acting on the Commission proposal and on the basis of the criteha set out in Section I, shall take a decision before the end of each year adjusting remunerations». These adjustments (see 3. 6) were generally made in December. 3. 2. Arrangements for recovering overpayments The establishment of new weightings at the end of the year effective from 1 July can lead to retroactive upward or downward adjustments to remuneration and pensions. Hence the inclusion in regulations adjusting remuneration, from 1994 onwards, of a provision for the payment of arrears in the event of an increase and for the recovery of sums overpaid in the event of a reduction. The institutions have introduced the necessary implementing measures. 3. 3. Interim review Article 4(1) of Annex XI provides that «interim adjustments of remuneration pursuant to Article 65(2) of the Staff Regulations, taking effect on 1 January, shall be made in the event of a substantial change in the cost of living if the sensitivity threshold is reached and with due allowance being made for the forecast of the change in purchasing power during the current annual reference period». During the period under consideration interim adjustments were made for Italy, Greece, Spain and Portugal. 3. 4. Recruitment requirements Article 2 of Annex XI provides that «the Commission shall produce, before the end of 1992 and every three years thereafter, a comprehensive report on the recruitment requirements of the institutions and transmit it to the European Parliament and the Council. On the basis of this report the Commission shall, if necessary, present proposals based on all relevant factors to the Council after consulting the other institutions within the framework of the Staff Regulations». The second report (SEC(95)2298) was transmitted to the Council and Parliament on 27 December 1995. 12 3. 5. Exception clause Article 10 of Annex XI provides that «if there is a serious and sudden deterioration in the economic and social situation within the Community, assessed in the light of objective data supplied for this purpose by the Commission, the Commission shall submit appropriate proposals on which the Council shall act by qualified majority after consulting the other institutions concerned in accordance with the procedure laid down in the second subparagraph of Article 24(1) of the Treaty establishing a Single Council and a Single Commission of the European Communities». In its report (SEC(94)1027) transmitted to the Council on 27 June 1994, the Commission concluded that the economic situation had already impacted on the remuneration of national civil servants and, through the specific indicator, on the remuneration of Community officials. 13 3. 6. Results of the application of the 1991 method 3. 6. 1. The purpose of the adjustment of the basic salary table is to ensure that the purchasing power of Community officials develops in parallel with that of national civil servants. The change in the cost of living in Brussels as measured by the composite index was+13. 8%. The average change in the purchasing power of the national civil services in the European Union as measured by the specific indicator was -3. 1%. The resulting adjustment to the basic salary table (in Belgian francs) was +10. 4%. Table 8 shows the year-on-year calculations as well as the cumulative results. Table 8 Adjustment of the table of basic salaries of officials of the EU institutions (7) (1) (2) (3) (4) (5) (6) (7) Date Brussels composite index Specific indicator Adjustment of basic salary table 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 cumulative % +3,4 +7,6 +8,6 +9,2 +10,4 (7) Basic salary adjustment = (100+ Brussels composite index (2)) x (100+ specific indicator (4)) /100 ) -100 (3) (5) (7) Cumulative values are calculated by multiplying the year-on-year changes cumulative % +4,1 +7,7 +10,1 +12,8 +13,8 cumulative % -0,7 -0,1 -1,4 -3,3 -3,1 % t/t-1 -0,7 +0,6 -1,3 -1,9 +0,2 % t/t-1 +3,4 +4,1 +0,9 +0,5 +1,1 % t/t-1 +4,1 +3,5 +2,2 +2,4 +0,9 20 10 -10 -20 i IL^CUMI^ATIVE°/o- CHANGE Brussels composite index. --•• +>2,8-. ^ • +4 Adjustment of basic salary table - • + 1 3 ,8 i j-1Û,4 - ^ e ^— -9rt^--~^-_ ,4 _ " ! _ _ "_ ^SpecificjndicatQr. -3;3- 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 H 14 3. 6. 2. The adjustments in national currency made it possible to guarantee the principle of purchasing power parity with Brussels. In most countries devaluation against the Belgian franc was greater than the inflation differential with Belgium (see Tables 5 and 6). The result was a reduction in the price ratio between the other places of employment and Brussels, reflected in the 102. 5% to 86. 6% reduction in the average weighting for the other places of employment. In order to ensure the principle of purchasing power parity, this reduction also has to be reflected in the relationship between remuneration paid in the other places of employment and that paid in Brussels. This is shown in Table 9. Table 9 120 115 110 105 100 95 90 - 85 - 80 Average weighting weighted by the number of officials outside Belgium and Luxembourg 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 86,6 15 4. QUID PRO QUO FOR THE METHOD 4. 1. Temporary contribution When it adopted the method, the Council introduced a temporary contribution as one of the interdependent components of a comprehensive solution. The level of the contribution, the rules for its application, and its commencement and expiry dates were negotiated in this context. The temporary contribution was introduced by inserting Article 66a into the Staff Regulations (Council Regulation (ECSC, EEC, Euratom) No 3831/91 of 19 December 1991) and terminates at the same time as the method. Article 66a(1) and (2) provides that: «1. By way of derogation (EEC, Euratom, ECSC) No 260/68, a temporary measure regarding remuneration paid by the Communities to staff in active employment, to be known as the "temporary contribution", shall be applied for a period running from 1 January 1992 to 1 July 2001. from Article 3(1) of Regulation 2. (a) The rate of this temporary contribution, which shall apply to the base defined in paragraph 3, shall be 5. 8%. (b) The Council, acting in accordance with the procedure laid down in Article 24(1) of the Treaty establishing a Single Council and a Single Commission of the European Communities after consulting the other institutions concerned, may, if appropriate, in the context of the review provided for in Article 15(2) of Annex XI to the Staff Regulations, alter the rate of the temporary contribution referred to in point (a) on the basis of a report and proposal from the Commission». This measure resulted in an average loss in purchasing power of approximately 2. 9%. 4. 2. Increase in pension contributions The Council considered it advisable, in the course of negotiations for a comprehensive solution, in the interests of longer-term stability of the pension scheme to raise the rate of In Article 83(2) of the Staff Regulations, the rate of staff contributions to the scheme. 6. 75% was accordingly replaced by 8. 25% by Council Regulation (ECSC, EEC, Euratom) No 3832/91 of 19 December 1991. This measure resulted in an average loss in purchasing power of approximately 1. 3%. 16 5. CHANGES IN REMUNERATION 1991 TO 1995 5. 1. Changes in remuneration in Brussels and Luxembourg The economic situation has impacted on the salaries of national civil servants in the Member States of the European Union and consequently, through the parallel development principle, on the salaries of officials of the European institutions. Moreover, the purchasing power of officials has been reduced beyond what would be required by this principle, as a result of the supplementary measures (temporary contribution, increased pension contributions). The change in the remuneration in Belgian francs of officials in Brussels and Luxembourg was therefore as follows: Change in the remuneration of officials of the EU institutions (1) (2) (3) (4) (5) Date 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 Adjustment of basic salary table % t/t-1 +3,4 +4,1 +0,9 +0,5 +1,1 cumulative % +3,4 +7,6 +8,6 +9,2 +10,4 Change in deductions % t/t-1 cumulative % -2,9 •1,3 -2,9 -4,2 -4,2 -4,2 (6) (7) Adjustment of remuneration % t/t-1 +3,4 +1,1 -0,5 +0,5 +1,1 cumulative % +3,4 +4,5 +4,0 +4,5 +5,7 (4) Temporary contribution: payable from 1. 1. 92 Increased pension contributions: payable from 1. 1. 93 (6) Adjustment of remuneratbn = ( (100+ basic salary adjustment (2)) x (100+adjustment of deductbns (4)) /100 ) -100 (3) (5) (7)Cumulath/e values are calculated by multiplying the year-on-year changes J CUMULATIVE % CHANGE „ - ^-+7+3 " —B + 4 ,5 ^QiQrr Adjustment of basic salary table ,6 f=f9^ , ^*-M0A +5,7 Adjustment of remuneration -•--2,9- -4,2- •--•••-42- Change m deductions «-4,2 •i 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 20 10 •10 -20 Table 10 17 5. 2. Remuneration in other places of employment in relation to Brussels Average remuneration in the other places of employment in relation to Brussels was as follows: Table 11 Average weighting weighted by the number of officials outside Belgium and Luxembourg 1. 7. 91 102,5 1. 7. 92 104,6 1. 7. 93 97,5 1. 7. 94 94,5 1. 7. 95 86,6 5. 3. Change in the purchasing power of remuneration If the change in remuneration of officials in Brussels (+5. 7%) is set against the change in the cost of living (+13. 8%), the result is a 7. 1% reduction in purchasing power. This is shown in Table 12. Table 12 Relative change in the purchasing power of the remuneration of officials of the institutions of the European Union (1) Date 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 (2) (3) Adjustment of remuneration (4) (5) (6) (7) Brussels composite index Purchasing power % t/t-1 +3,4 +1,1 -0,5 +0,5 +1,1 cumulative % +3,4 +4,5 +4,0 +4,5 +5,7 % t/t-1 +4,1 +3,5 +2,2 +2,4 +0,9 cumulative % +4,1 +7,7 +10,1 +12,8 +13,8 % t/t-1 -0,7 -2,3 -2,6 -1,9 +0,2 cumulative % -0,7 -3,0 -5,5 -7,3 -7,1 (3) Temporary contribution: payable from 1. 1. 92 Increased pension contributions: payable from 1. 1. 93 (7) Purchasing power - 100 x (100+adjustment (3)) / (100+ Brussels composite index(5))-100 (3) (5) (7) Cumulative values are calculated by multiplying the year-on-year changes 20 10 -10 -20 CHANGE IN CUMULATIVE %. - • " + 7 ; 7" * * é pT - • + i t J , 1- -»-»-4,e- Brussels composite index. -••-+Î2& « + 1 3. 8 Adjustment of remuneration -•-^4r5- • +5,7 Purchasing power -7r3 "-7,1 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 H —\ 18 5. 4. Comparison with the change in purchasing power of national civil servants Since 1991 there has been a 3. 1% loss in the purchasing power of national civil servants in the Member States and, as a result of the method, in that of officials of the European institutions. If the impact of the temporary contribution (-2. 9%) and of the increase in pension contributions (-1. 3%) is added to the above, the result is a 7. 1% loss in the purchasing power of officials over five years. These figures show that the remuneration of officials of the European institutions has closely followed trends in the social and economic situation, changing at the same rate as national civil service salaries but with an additional reduction in purchasing power. Table 13 Change in the purchasing power of the remuneration of officials of the Member States and of the EU institutions (6) (4) (3) (2) (7) (5) (1) Remuneration of civil servants in the Member States of the EU Remuneration of officials of the EU institutions Date Difference % t/t-1 -0,7 -2,3 -2,6 -1,9 +0,2 (6) Temporary contribution: payable from 1. 1. 92 cumulative0/ •0,7 •0,1 -1,4 •3,3 •3,1 % t/t-1 -0,7 +0,6 -1,3 -1,9 +0,2 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 cumulative % •0,7 •3,0 •5,5 -7,3 -7,1 % t/t-1 +0,0 -2,9 -1,3 +0,0 +0,0 cumulative % +0,0 -2,9 -4,2 -4,2 -4,2 Increased pension contributions: payable from 1. 1. 93 (3) (5) (7) Cumulative values are calculated by multiplying the year-on-year changes 20 10 •10 -20 CUMULATIVE % CHANGE IN PURCHASING POWER _J Remuneration of civil servants in the Member States of the EU " " " • • - - • - 3 , 0. •A A -•-5,5 _ "•-3:3 -•-7-,3 *-3,1 «-7,1 Remuneration of officials of the EU institutions 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 +- - 19 6. CONCLUSION Annex XI to the Staff Regulations (the method) was adopted by the Council for a period of ten years (until 30 June 2001). As such, in common with all other regulations, it is part of the acquis communautaire, with which the Community institutions and all Member States must comply. There is provision for it to be reviewed after five years - an objective review to check that the principle of parallel development has been properly applied. Only if it were established that the method had failed to operate properly could the Commission present a proposal for revision of the Staff Regulations to the Council after consulting the other institutions. The review shows that: there has been a reduction (3. 1%) in the purchasing power of the remuneration of officials of the European institutions, the same as for the salaries of national civil servants; there has been a further reduction (4. 2%) in purchasing power as a result of the temporary contribution and the increase in pension contributions; staff relations have remained conflict-free as a result of the introduction of the procedure. The Commission therefore feels that any proposal to amend the method would affect the very substance of the final compromise resulting from the 1991 negotiations and the commitments entered into by the parties to it. Any departure from this compromise, which has attained its objectives, would undermine the legitimate expectations of staff as regards the institutions' compliance with the commitments entered into and would have grave consequences for the operation of the institutions. The Commission consequently considers that there are no grounds for any proposal to amend any of the components of the compromise. 20 ISSN 0254-1475 COM(96) 258 final DOCUMENTS EN 01 Catalogue number : CB-CO-96-268-EN-C ISBN 92-78-05235-3 Office for Official Publications of the European Communities L-298S Luxembourg 2/)


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text: * ** * ' "* * * * ** I COMMISSION OF THE EUROPEAN COMMUNITIES j I I Brussels, 11. 06. 1996 COM(%)259 final 96/ 0149 (ACC) 96/0150 (ACC) Proposal for a COUNCIL DECISION concerning the conclusion of the framework cooperation Agreement in preparation for the eventual establishment of a political and economic association between the European Community and its Members States, of the one part, and the Republic of Chile, of the other part (presented by the Commission). mm mum • • • n. — —— ni • — i- i • ,. — » • •• Proposal for a COUNCIL DECISION on the exchange of letters between the European Community and Chile concerning the provisional application of certain provisions of the framework cooperation Agreement in preparation for the eventual establishment of a political and economic association between the European Community and its Members States, of the one part, and the Republic of Chile, of the other part (presented by the Commission) EXPLANATORY MEMORANDUM 1. By means of a decision of 29 January, the Council authorized the Commission to open negotiations with Chile with a view to concluding a framework cooperation agreement in preparation for the eventual establishment of a political and economic association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part, and adopted directives to that end. Two negotiating sessions were held in Brussels, the first on 25 and 26 March and 2. the second on 25 and 26 April at which the Agreement was initialled. A meeting was held between those two sessions between Mr Prat and the representatives of the Troika and the Chilean negotiators in Santiago, Chile, on 19 April. The text of this Agreement has now been submitted to the Council for signature and conclusion. 3. In consultation with the special committee appointed by the Council to oversee negotiations, when the Agreement was initialled, the negotiators agreed to adopt the arrangements for the provisional application of the Agreement, and in particular those provisions relating to Community responsibility on trade cooperation under Title III of the Agreement and the institutional framework for such cooperation. The Commission also proposes that the Council approve and sign an exchange of letters on the provisional application of the Agreement's provisions. The Agreement between the European Community and Chile signed on 20 December 1990 will remain in force until the new Agreement comes into force. However, in order to ensure continuity between the two Agreements, the Joint Committee set up under the new Agreement will assume the duties of the 1990 Agreement's Joint Committee. The Commission considers that the initialled Agreement conforms 4. negotiating directives adopted by the Council. to the 5. With a view to signing and concluding the framework cooperation Agreement in preparation for the eventual establishment of a political and economic association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part, the Commission proposes that the Council adopt the proposals for Decisions in the Annex. i- ? Proposal for a ^ /. Î5 J H^ (fc^O COUNCIL DECISION (EC) No concerning the conclusion of the framework cooperation Agreement in preparation for the eventual establishment of a political and economic association between the European Community and its Members States, of the one part, and the Republic of Chile, of the other part (presented by the Commission to the Council) 7 THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Articles 113 and 130y thereof, in conjunction with the first sentence of Article 228(2) and the first subparagraph of paragraph 3 thereof, Having regard to the proposal from the Commission, Having regard to the opinion of the European Parliament, Whereas Article 13 Ou of the Treaty provides that Community policy in the sphere of development cooperation should foster the sustainable economic and social development of the developing countries, the smooth and gradual integration of those countries into the world economy and the combating of poverty in those countries; the eventual Whereas the framework cooperation Agreement establishment of a political and economic association between the Community and its Member States, of the one part, and the Republic of Chile, of the other part, should be approved, in preparation for HAS DECIDED AS FOLLOWS: Article 1 The framework cooperation Agreement in preparation for the eventual establishment of a political and economic association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part, is hereby approved on behalf of the European Community. The text of the Agreement is attached to this Decision. Article 2 In accordance with Article 33 of the framework cooperation Agreement, the President of the Council shall chair the Joint Cooperation Council and shall represent the Community on that Council. A representative of the Commission shall chair the Joint Cooperation Committee and the Joint Subcommittee on Trade in accordance with their rules of procedure and, assisted by the representatives of the Member States, shall represent the Community on those committees. Article 3 The President of the Council shall give the notification provided for in Article 42 of the Agreement on behalf of the European Community. Article 4 This Decision shall be published in the Official Journal of the European Communities. Done at Brussels, For the Council The President / DRAFT FRAMEWORK COOPERATION AGREEMENT IN PREPARATION FOR THE EVENTUAL ESTABLISHMENT OF A POLITICAL AND ECONOMIC ASSOCIATION BETWEEN THE EUROPEAN COMMUNITY AND ITS MEMBER STATES, OF THE ONE PART, AND THE REPUBLIC OF CHILE, OF THE OTHER PART * THE KINGDOM OF BELGIUM, THE KINGDOM OF DENMARK, THE FEDERAL REPUBLIC OF GERMANY, THE HELLENIC REPUBLIC, THE KINGDOM OF SPAIN, THE FRENCH REPUBLIC, IRELAND, THE ITALIAN REPUBLIC, THE GRAND DUCHY OF LUXEMBOURG, THE KINGDOM OF THE NETHERLANDS, THE REPUBLIC OF AUSTRIA, THE PORTUGUESE REPUBLIC, THE REPUBLIC OF FINLAND, THE KINGDOM OF SPAIN, THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND, Parties to the Treaty establishing the European Community and the Treaty on European Union, hereinafter referred to as the "European Community Member States", t THE EUROPEAN COMMUNITY, hereinafter referred to as the "Community" THE REPUBLIC OF CHILE hereinafter referred to as "Chile", of the one part, and of the other part, CONSIDERING their common cultural heritage and the deep historical, political and economic ties which unite them; CONSIDERING the significant contribution made by the Framework Agreement for Cooperation between the Community and Chile signed on 20 December 1990 to strengthening all these ties; CONSIDERING their full commitment fundamental human rights as set out in the Universal Declaration of Human Rights; to respect for democratic principles and CONSIDERING the importance which both Parties attach to the principles and values set out in the final Declaration of the World Summit for Social Development in Copenhagen in March 1995; MINDFUL of both Parties' desire to ensure sustainable development and also to conserve and protect the environment; CONSIDERING their attachment to the market economy and reaffirming their willingness to maintain and strengthen the rules of free international trade in compliance with the rules of the World Trade Organization (WTO) and emphasizing, in particular, the importance of open regionalism; CONSIDERING their mutual interest in establishing new contractual links in order to develop closer and more extensive cooperation, to expand and diversify trade and to increase investment; CONSIDERING the political will of both Parties to achieve the ultimate objective of a political and economic association between the European Community and its Member States and Chile founded on greater political cooperation and progressive and reciprocal liberalization of all trade, with due allowance for the sensitivity of certain products and in compliance with the rules of the World Trade Organization, and on investment promotion and closer cooperation; J MINDFUL of the terms of the Joint Solemn Declaration on political dialogue in which both Parties have agreed on closer political dialogue to promote more intensive consultation on matter of mutual interest, with a view to basing their relations on the above long-term aim, HAVE DECIDED to conclude this Agreement: cyCo TITLE I NATURE AND SCOPE ARTICLE 1 Basis of the Agreement Respect for democratic principles and fundamental human rights as set out in the Universal Declaration of Human Rights is at the heart of both Parties' domestic and external policies and constitutes an essential element of this Agreement. ARTICLE 2 Nature and scope 1. This Agreement shall be aimed at strengthening existing relations between the Parties on the basis of reciprocity and mutual interest, paving the way for the progressive and reciprocal liberalization of trade, ultimately leading to the establishment of a political and economic association between the European Community and its Member States and Chile in conformity with the rules of the World Trade Organization (WTO) and with due allowance for the sensitivity of certain products. 2. To this end, the Agreement covers political dialogue, trade and economic matters, cooperation and other matters of mutual interest, its objective being to forge closer relations between the Parties and their respective institutions. TITLE II Political dialogue ARTICLE 3 1. 2. The Parties agree to institute regular political dialogue on bilateral and international matters of mutual interest. Such dialogue shall be conducted in accordance with the Joint Declaration, which shall form an integral part of the Agreement. The ministerial dialogue provided for in the Joint Declaration shall take place within the Council established by Article 33 of this Agreement or within other agreed forums of an equivalent level. SA TITLE III TRADE COOPERATION AND PREPARATION FOR LIBERALIZATION OF TRADE ARTICLE 4 Objectives The Parties undertake to forge closer relations with the aim of increasing and diversifying trade, preparing for progressive and reciprocal liberalization of trade and creating conditions conducive to the eventual establishment of a political and economic association, in conformity with WTO rules and with due allowance for the sensitivity of certain products. ARTICLE 5 Dialogue on trade and economic matters 1. The Parties undertake to hold regular dialogue on trade and economic matters, within the institutional framework established by Title VII of the Agreement, in order to meet the Agreement's trade objectives and prepare the ground for the eventual liberalization of trade. 2. The Parties shall agree on the areas to be covered by trade cooperation without excluding any sector. 3. Such cooperation shall in particular focus on the following: (a) market access and liberalization of trade, the study and establishment of programmes for the reciprocal liberalization of trade (timetable and structure of negotiations, transitional periods, etc. ); (b) tariff and non-tariff barriers, quantitative restrictions on imports and exports and measures having equivalent effect: analyses, studies and management, including quotas, administrative standards applied to external trade, anti-dumping duties, safeguard clauses, technical standards, health and plant health legislation, mutual recognition of certification systems, etc; (c) the Parties' tariff structure; (d) compatibility of trade liberalization with WTO rules; (e) identification of potential tariff reductions and elimination of quasi-tariff measures; (f) definition of sensitive products and products given priority by the Parties;. ^2- (g) cooperation and exchange of information, within the Parties' respective areas of responsibility on transport, insurance and financial services, (h) monitoring of restrictive practices; (i) rules of origin which promote the use of regional inputs with a view to encouraging integration. ARTICLE 6 Cooperation on standardization, accreditation, certification, metrology and conformity evaluation 1. The Parties agree to cooperate on standardization, accreditation, certification, metrology and conformity evaluation. Such cooperation shall take the form in particular of: (a) provision of technical assistance for Chile on standardization, accreditation, certification and metrology to develop an appropriate system and structures compatible: - with international standards; - with the basic requirements of health and safety protection, plant and animal protection, consumer protection and environmental conservation; (b) negotiation of a mutual recognition framework agreement once an appropriate level of technology has been reached in the sectors concerned; (c) cooperation between the Parties on technical standards to facilitate market access. ARTICLE 7 Customs cooperation 1. The Parties shall promote customs cooperation, acting within their respective areas of responsibility, with a view to improving and consolidating the legal framework for their trade relations. A further objective of customs cooperation shall be to strengthen the Parties' customs arrangements and improve their operation within the framework of interinstitutional cooperation. 2. Such cooperation may take the form in particular of: (a) exchanges of information, taking into account the need to protect personal data; (b) development of new training techniques and coordination of activities within the relevant international organizations; (c) exchanges of officials and senior personnel from customs and tax departments; (d) simplification of customs procedures; (e) technical assistance. The Parties affirm their intent to give future consideration, within the institutional framework established by this Agreement, to the conclusion of a customs mutual assistance protocol. k ARTICLE 8 Temporary importation of goods The Contracting Parties undertake to take account of relief from duties and taxes on temporary importation into their territory of goods covered international agreements on such matters. ARTICLE 9 Cooperation on statistics The Parties agree to promote the approximation of statistical methods with a view to using, on a mutually acceptable basis, statistics on trade in goods and services and, in general, statistics in any area which lends itself to statistical processing. ARTICLE 10 Cooperation on intellectual property 1. The Parties agree to cooperate on intellectual property matters in order to promote trade in goods and services, investment, technology transfer, dissemination of information, cultural and creative activities and related economic activities. M 2. For the purposes of this Article, intellectual property shall in particular encompass copyright, including copyright for computer programmes and databases, and related rights, trade or service marks, geographical indications, including designations of origin, industrial designs and models, patents and integrated circuit topographies, data protection and prevention of unfair competition as defined in Article lObis of the Paris Convention for the Protection of Industrial Property. 3. The Parties agree to guarantee, within their respective laws, regulations and policies, adequate and effective protection of intellectual property rights in accordance with the highest international standards laid down in the Agreement on aspects of trade- related intellectual property rights (TRIPS) concluded in the framework of the WTO, and, where necessary, to consider strengthening it, for example by concluding an agreement on the reciprocal protection and recognition of geographical indications and designations of origin. 4. Cooperation in this area may include technical assistance between the Parties in the form of joint programmes and projects. 5. 6. In the event of trade disputes connected with the protection of intellectual property, the Parties may hold consultations in order to settle any doubt or difficulty relating to the application of their respective rules on the protection of intellectual property rights. In research and other joint scientific activities undertaken in the field of science and technology, the Parties shall agree on the intellectual property rules to be applied to their results. ARTICLE 11 Cooperation on public procurement 1. The Parties agree to ensure, on a reciprocal basis, open, non-discriminatory and transparent procedures for their respective government and public sector procurement at central, federal, regional, provincial and local level. to cooperate 2. In order to attain this objective, the Parties agree to consider the possibility of concluding an agreement on access in these sectors of procurement, generating transparent, fair conditions subject to clear complaint procedures. 3. Cooperation between the Parties in this area shall include technical assistance in matters connected with the Agreement on Government Procurement. 4. The Parties shall consider the possibility of holding annual consultations on this sector. ^ TITLE IV ECONOMIC COOPERATION ARTICLE 12 Objectives 1. In the light of the achievements of the Framework Agreement for Cooperation between the Community and Chile of December 1990, both Parties undertake, under this Agreement, to consolidate and expand all areas of economic cooperation by cultivating synergies in productive activities, creating new opportunities and increasing economic competitiveness. 2. Economic cooperation between the Parties shall be as broad-based as possible. No sector shall be excluded from the outset, and account shall be taken of the Parties' respective priorities, mutual interests and areas of responsibility. 3. The Parties shall focus on cooperation which will foster economic and social relations and networks between companies (trade, investment, technology, information or communication systems). 4. Within the framework of this cooperation the Parties shall promote the exchange of regular monitoring of information which will serve as a basis macro-economic policies and balances and efficient market operation. the for 5. In view of the degree of liberalization achieved by Chile in the area of services, investment and scientific, technological and industrial cooperation, the Parties undertake to make a special effort to expand and consolidate cooperation in these areas. 6. The need to conserve the environment and ecological balances shall be taken into account by the Parties in any economic cooperation measures they undertake. 7. Any measures sponsored by the Parties in this field shall be guided by the principle of social development, and the promotion of fundamental social rights in particular. yU ARTICLE 13 Industrial and business cooperation 1. The Parties shall promote industrial and business cooperation with the aim of establishing a climate conducive to economic development taking account of their mutual interests. 2. Such cooperation shall focus in particular on: (a) increasing trade flows, investment, industrial cooperation and technology transfer; (b) supporting industrial modernization and diversification; (c) identifying and eliminating obstacles to industrial cooperation between the Parties by means of measures which encourage respect for competition laws and help gear industry to market requirements, allowing for the participation and consultation of operators; (d) encouraging cooperation between economic operators on both sides, particularly small and medium-sized enterprises (SME); (e) promoting industrial innovation by developing an integrated and decentralized approach to cooperation among operators on both sides; (f) ensuring the overall consistency of measures which may have a positive influence on cooperation between businesses on both sides. 3. Such cooperation, which shall be based on a dynamic, integrated and decentralized approach, shall take the form in particular of: (a) encouraging closer organized contacts between businesses, particularly small and medium-sized enterprises (SME), and economic operators on both sides which will provide them with an opportunity to identify and exploit areas of mutual interest, paving the way for increased trade, investment and industrial and business cooperation projects in general, particularly by promoting joint ventures, (b) promoting business initiatives and cooperation projects which shall be identified through closer dialogue between Chilean and European operators' networks; (c) undertaking measures to support business cooperation, notably regarding industrial quality policies and industrial innovation, training and applied research, development and technology transfer. ^ ARTICLE 14 Cooperation on services 1. The Parties recognize the growing importance of services for their economic development. To this end they shall consolidate and step up cooperation in this sector, within their respective areas of responsibility and in accordance with the rules of the General Agreement on Trade in Services (GATS). 2. In terms of practical implementation the Parties shall identify the priority sectors in this area in order to ensure efficient use of available instruments. Measures shall focus mainly on: (a) helping SME gain access to capital resources and market technologies; (b) promoting trade between the Parties and with the markets of third countries; (c) encouraging better and diversified productivity and competitiveness in this sector; (d) exchanging information on the rules, laws and regulations which govern trade in services; (e) exchanging information on the procedure for granting: - licences and certificates to professional service providers and - recognition of professional qualifications. (f) developing the tourism sector, with a view to improving the exchange of information and know-how in order to promote a sustainable and ordered development of the tourist amenity. To this end human resources development and joint operations in the tourist promotion and marketing fields will be encouraged. ARTICLE 15 Investment promotion The Parties shall help create, within their respective areas of responsibility, an attractive and stable environment for reciprocal investment. Such cooperation shall take the form inter alia of: (a) arrangements for information, identification and dissemination relating to investment legislation and opportunities; (b) promoting the development of a legal environment conducive to investment between if necessary, Chile and Community Member States could conclude the Parties; bilateral agreements to promote and protect investment and bilateral agreements to prevent double taxation; (c) developing harmonized and simplified administrative procedures; (d) developing joint investment, in particular with SME on both sides. ARTICLE 16 Scientific and technical cooperation 1. The Parties agree to cooperate in the field of science and technology in areas of mutual interest, taking account of their respective policies. 2. The aims of such cooperation shall be: (a) to encourage exchanges of information and know-how on science and technology, especially on the implementation of policies and programmes, (b) to promote sustainable relations between communities; the two Parties' scientific (c) to foster innovation in Chilean and European businesses; (d) to promote technology transfer; 3. Cooperation shall take the form in particular of: (a) joint research projects in areas of mutual interest, with the active participation of business where appropriate; (b) exchanges of scientists to promote research, project preparation and high-level training; (c) joint scientific meetings to promote the exchange of information, encourage interaction and identify areas where joint research might be undertaken; (d) dissemination of results and development of links between the public and private sectors; (e) exchanges of know-how on standardization; (f) evaluation of the activities concerned. 4. In terms of practical implementation, the Parties shall encourage their respective higher education institutions, research centres and industrial sectors, in particular SME, to play an active role. sV 5. The Parties shall agree, without excluding any sector from the outset, on the areas, scope, nature and priorities of this cooperation, by establishing a multiannual programme which can be adapted to circumstances. ARTICLE 17 Energy cooperation Cooperation between the Parties shall focus on fostering closer links between their economies in the sectors of renewable and non-renewable, conventional and non- conventional energies, and energy-saving technologies. Cooperation shall in particular take the following forms: (a) exchanges of information in all appropriate forms, including the development of databanks to be shared by economic operators on both sides, training and joint conferences; (b) technology transfer; (c) preparatory studies and project implementation by the relevant institutions of both Parties; (d) the participation of economic operators from the two Parties in joint technological development or infrastructure projects; (e) where appropriate the conclusion of specific agreements in key areas of mutual interest; (f) aid for Chilean institutions dealing with energy matters and the formulation of energy policy; (g) technical training programmes. 2x> ARTICLE 18 Cooperation on transport 1. Cooperation in this area shall be aimed essentially at: (a) support for the modernization of Chile's transport systems; (b) efforts to increase personal mobility, the movement of goods and access to the transport market; (c) promotion of operating standards. 2. Cooperation shall take the form in particular of: (a) exchanges of information on respective transport policies and on other topics of mutual interest; (b) training programmes for economic operators and senior public officials; (c) exchange of information on the installation of monitoring stations forming part of the infrastructure of the Global Navigation Satellite System (GNSS). 3. Acting within their respective areas of responsibility, international undertakings, the Parties shall look at all aspects relating to international maritime transport services to ensure that they do not hamper the mutual expansion of trade, paying particular attention to the maintenance of unrestricted access to markets on a commercial and non-discriminatory basis. laws and ARTICLE 19 Cooperation on the information society and telecommunications 1. The Parties recognize that advanced information and communication technologies are a key sector in modern society and are vital to economic and social development and the smooth transition to an information society. 2. Cooperation between the Community and Chile in this area shall focus in particular on: (a) dialogue on all aspects of the information society including telecommunications policy; (b) exchanges of information and any technical assistance required on regulations and standardization, conformity testing and certification for information and telecommunication technologies; (c) dissemination of new telecommunications and information technology and development of new advanced communication, services and information technology facilities; (d) promoting and undertaking joint research and technological or industrial development projects in the field of new information, communication, telematics and information society technologies; (e) providing an opportunity for Chilean institutions to take part in pilot projects and Community programmes, especially in the regional field, under the arrangements pertaining to the areas concerned; (f) interconnection and interoperability of telematic networks and services in the Community and Chile. ARTICLE 20 Cooperation on environmental protection 1. The Parties undertake to develop cooperation to protect, improve and prevent degradation of the environment, control pollution and encourage the rational use of natural resources, in the interests of sustainable development. The emphasis shall be on conservation of ecosystems, the integrated management of natural resources, the environmental impact of economic activities, the urban environment and depollution programmes. 2. Cooperation shall focus on: (a) projects to strengthen environmental structures and policies in Chile; (b) exchange of information and know-how covering various areas including the Parties' respective rules and standards; (c) environmental training and education; (d) technical assistance and the establishment of joint research programmes. 12- ARTICLE 21 Cooperation on the agricultural and rural sector 1. The Parties shall promote mutual cooperation in the agricultural and rural sector. To this end they shall examine: (a) measures to promote mutual trade in agricultural products; (b) environmental health and plant health measures and other related aspects, taking account of the legislation in force for both parties, in compliance with WTO rules. 2. The Parties shall take measures such as the mutual exchange of information, technical assistance and scientific and technological experiments to promote agricultural development cooperation. TITLE V OTHER AREAS OF COOPERATION ARTICLE 22 Objectives and scope The Parties will maintain cooperation on social development, public administration, information and communication, training and regional integration with particular emphasis on areas likely to contribute to the process of cooperation and to the eventual establishment of a political and economic association between the Parties. ARTICLE 23 Financial and technical cooperation and cooperation on social development 1. The Parties reaffirm the importance of their financial and technical cooperation, which should be geared towards combating extreme poverty and generally assisting the most deprived sections of the community. 2. Such cooperation may take the form of pilot programmes in the following areas: (a) job creation and vocational training; (b) management and administration of social services; (c) rural development and housing and regional planning; (d) health and primary education; (e) support for the grassroots organizations in civil society; (f) programmes and projects to create business and employment opportunities and thereby help to combat poverty. (g) programmes to improve the quality of life, notably of the most deprived sections of the community. ARTICLE 24 Cooperation on public administration and regional integration 1. The Parties shall support cooperation on public administration to promote the adjustment of Chilean administrative systems to open trading in goods and services with Europe. 2. In this context the Parties shall work together to promote the administrative changes deriving from Latin American integration. 3. To this end, in support of Chile's objectives of administrative modernization, decentralization and regionalization, the Parties shall encourage cooperation within all institutions, drawing lessons from the instruments and policies of the European Community. 4. Cooperation shall be undertaken in particular through: (a) (b) technical assistance to Chilean policy-making and executive bodies, including their Chilean contacts between staff of the European counterparts; institutions and regular exchange of information taking whatever form is appropriate, including the use of computer networks; personal data protection shall be guaranteed in all areas where data are to be exchanged; (c) transfers of know-how; (d) preliminary studies and implementation of joint projects; (e) training and institutional support. if ARTICLE 25 Inter-institutional cooperation 1. The Parties agree on the need to promote closer administrative cooperation between the institutions concerned. 2. Such cooperation shall be as broad-based as possible and shall focus in particular on: (a) any means of fostering regular exchanges of information, including joint development of computerized communication networks; (b) advice and information; (c) transfer of know-how. ARTICLE 26 Cooperation on communication, information and culture 1. In view of Chile's very close cultural ties with Community Member States, the Parties will intensify cooperation in this area and on communication and information. 2. Within the Parties' respective areas of responsibility, the aim of such cooperation shall be to promote: (a) meetings between senior information and communication representatives and, where appropriate, technical assistance; (b) greater exchanges of information on matters of mutual interest; (c) organization of cultural events. (d) activities - studies and training schemes - aimed at protecting the cultural heritage. 3. The parties agree to promote the broadest possible cooperation in the audiovisual and press sector. K ARTICLE 27 Cooperation on training and education 1. The Parties shall identify, within their respective areas of responsibility, ways of improving primary education, youth training, vocational training and inter-university and inter-business cooperation. Particular emphasis shall be given to vocational training for the most deprived sections of the community. 2. The Parties shall place emphasis on measures designed to create permanent links between Community and Chilean specialized agencies which will encourage the pooling of technical resources and exchanges of know-how. 3. These projects shall be undertaken mainly through: (a) agreements between educational and training institutions; (b) meetings between bodies responsible for education and training. 4. A further objective of cooperation in this area shall be the conclusion of sectoral agreements on education, training and youth-related matters. ARTICLE 28 Cooperation on combating drug trafficking 1. Within their respective areas of responsibility, the Parties shall coordinate their efforts and intensify their cooperation to prevent drug abuse and illegal trafficking in drugs, the misuse of chemical precursors and the laundering of profits from drug-trafficking. To this end the Parties shall coordinate their cooperation activities and areas at bilateral level and in international organizations and forums. 2. Such cooperation, which shall make use of specialized agencies, shall focus on: (a) projects to train, educate, treat and rehabilitate drug addicts and programmes to prevent the illegal consumption of drugs; (b) joint research programmes; (c) training programmes for public officials on preventing and controlling drug trafficking, money laundering and on monitoring trade in essential chemical precursors etc; (d) exchange of relevant information and adoption of appropriate measures to combat drug trafficking and money laundering, in the framework of multilateral agreements in force and the recommendations of the Financial Action Task Force on Money Laundering (FATF); 24 (e) prevention of the diversion of chemical precursors and other essential substances used for the illegal production of drugs and psychotropic substances. This prevention is based on the 1988 United Nations Convention, the principles adopted by the Community and the relevant international authorities and on the recommendations of the Chemical Action Task Force (CATF). 3. The Parties may agree to extend such cooperation to other areas. ARTICLE 29 Cooperation on consumer protection 1. The Parties agree that cooperation in this area should be aimed at refining their consumer protection systems and seeking, within their respective legislations, to make their systems compatible. 2. Cooperation shall focus mainly on: (a) exchange of information and experts; (b) organization of training schemes and provision of technical assistance. ARTICLE 30 Cooperation on fishing 1. The Parties agree that, acting trade and environmental undertakings, cooperation in this area shall take the form of a regular dialogue to examine the possibility of establishing closer cooperation in the fisheries sector which could lead to a fisheries agreement. in compliance with international ARTICLE 31 Triangular cooperation The Parties, acknowledging the value of international cooperation for promoting equitable and sustainable development, agree to encourage triangular cooperation programmes with other countries in areas and sectors of mutual interest. TITLE VI MEANS 2. ? ARTICLE 32 In order to help attain the cooperation aims set out in this Agreement, the Parties undertake to make available, within the limit of their abilities and through their own channels, the appropriate resources, including financial resources. The Parties shall call on the European Investment Bank to step up its activities in Chile in accordance with its own procedures and financing criteria. TITLE VI INSTITUTIONAL FRAMEWORK ARTICLE 33 1. A Joint Council of the Framework Cooperation Agreement, hereinafter referred to as the Joint Council, is hereby established. It shall supervise the implementation of this Agreement and shall meet at ministerial level periodically and whenever circumstances require. 2. The Joint Council shall discuss important matters arising in connection with the Agreement and any other bilateral or international issues of mutual interest, with the aim of fulfilling the Agreement's objectives. 3. The Council may also make appropriate proposals by agreement with both Parties. In carrying out its duties, the Cooperation Council shall be responsible in particular for making recommendations which contribute to the ultimate objective of political and economic association. ARTICLE 34 1. The Joint Council shall be composed of members of the Council of the European Union and Members of the European Commission on the one hand, and Chilean representatives, on the other. 2. The Council shall adopt its own rules of procedure. 3. The Council shall be chaired in turn by a Community representative and a Chilean representative. ARTICLE 35 The Joint Council shall be assisted in the performance of its duties by a Joint Committee composed of members of the Council of the European Union and tt Members of the European Commission, on the one hand, and of Chilean representatives, on the other. 2. The Joint Committee shall generally meet once a year, on a date and with an agenda agreed in advance by the Parties, in Brussels one year and Chile the next. Special meetings may be convened by mutual agreement. The office of chairman of the Joint Committee shall be held alternately by a representative of each of the Parties. 3. The Joint Council shall set out the Joint Committee's operating procedures in its own rules of procedure. 4. The Council may delegate all or part of its powers to the Joint Committee. The latter shall provide continuity between its meetings. 5. The Joint Committee shall assist the Council in the performance of its duties In fulfilling these functions, the Joint Committee shall in particular: (a) (b) (c) foster trade relations in accordance with the objectives of this Agreement and in accordance with the provisions of Title III; exchange opinions on future cooperation programmes and the resources available for their implementation and on any matter of mutual interest which relates to progressive and reciprocal liberalization of trade; submit to the Joint Council proposals made by the Subcommittee on Trade with the aim of cultivating preparations for the progressive and reciprocal liberalization of trade and proposals intended to bring about closer cooperation in this area; and (d) in general, make proposals to the Joint Council which will contribute to the ultimate aim of an EU-Chile political and economic association. ARTICLE 36 The Joint Council may decide to set up any other body to assist it in the performance of its duties and shall determine the body's composition, objectives and operating procedures. tî ARTICLE 37 1. The Parties agree to establish a Joint Subcommittee on Trade which shall ensure that the trade-related objectives set out in Article 5 of the Agreement are fulfilled and shall undertake the preparatory work for the progressive and reciprocal liberalization of trade. 2. The Joint Subcommittee on Trade shall be composed of members of the Council of the European Union and Members of the European Commission, on the one hand, and Chilean representatives, on the other. ^ It may commission any studies or technical analyses which it deems necessary. i\ The Joint Subcommittee on Trade shall report at least once a year to the Joint Committee set up under Article 35 of the Agreement on the development of its work, and shall make proposals regarding the subsequent liberalization of trade. 5", The Joint Subcommittee on Trade shall submit its rules of procedure to the Joint Committee for approval. ARTICLE 38 Consultation Within their respective areas of responsibility, the Parties undertake to hold consultations on any matter covered by this Agreement. The procedure for the consultations referred to above shall be laid down in the rules of procedure of the Joint Committee. TITLE VIII FINAL PROVISIONS ARTICLE 39 Definition of the Parties For the purposes of this Agreement, "the Parties" shall mean the Community, its Member States or the Community and its Member States, within their respective areas of responsibility, as defined in the Treaty establishing the European Community, on the one hand, and Chile, on the other. J •o ARTICLE 40 Future developments The Parties may agree to extend the Agreement with the aim of broadening and supplementing the scope and level of cooperation in accordance with their respective legislation, by concluding agreements on specific sectors or activities in the light of the experience gained during its implementation. ARTICLE 41 Territorial application This Agreement shall apply to the territories in which the Treaty establishing the European Community is applied under the conditions laid down in that Treaty, on the one hand, and to the territory of the Republic of Chile, on the other. ARTICLE 42 Duration and entry into force l. This Agreement shall be valid indefinitely. 2. The Parties shall determine the suitability and timing of transition to political and economic association in the light of progress made under the Agreement in accordance with their own procedures and in the light of the work carried out and the proposals made within the institutional framework of this Agreement. 3. This Agreement shall enter into force on the first day of the month following the date on which the Parties notify each other of the completion of the procedures necessary for this purpose. 4. Notification shall be sent to the Secretariat-General of the Council of the European Union which shall be the depositary for the Agreement. 5. On its entry into force the Agreement shall replace the Framework Agreement for Cooperation between the European Community and the Republic of Chile signed on 20 December 1990. yi ARTICLE 43 Non-execution l. The Parties shall adopt any general or specific measure required for them to fulfil their obligations under this Agreement and shall ensure that they comply with the objectives laid down in the Agreement. If one of the Parties considers that another Party has failed to fulfil an obligation under this Agreement it may take appropriate measures. Before doing so, except in cases of special urgency, it must supply the Joint Committee with all the relevant information required for a thorough examination of the situation with a view to seeking a solution acceptable to the Parties. In this selection of measures, priority must be given to those which least disturb the functioning of this Agreement. These measures shall be notified immediately to the Joint Committee and shall be the subject of consultation in that Committee if the other Party so requests. 2. The Parties agree that the term "cases of special urgency" in paragraph 1 of this Article means a case of material breach of the Agreement by one of the Parties. A material breach of the Agreement consists of: (a) repudiation of the Agreement not sanctioned by the general rules of international law; (b) violation of the essential elements of the Agreement referred to in Article 1. 3. The Parties agree that the "appropriate measures" referred to in this Article are measures taken in accordance with international law. If a Party takes a measure in a case of special urgency as provided for under this Article, another Party may ask that an urgent meeting be called to bring the Parties together within 15 days. ARTICLE 44 Authentic text This Agreement is drawn up in duplicate in the Danish, Dutch, English, Finnish, French, German, Greek, Italian, Portuguese, Spanish and Swedish languages, each of these texts being equally authentic. 3L JOINT DECLARATION ON POLITICAL DIALOGUE BETWEEN THE EUROPEAN UNION AND CHILE Annex I 1. Preamble The European Union and Chile, Conscious of their common cultural heritage and the deep historical, political and economic ties which unite them, Guided by their attachment to democratic values, and reiterating the fact that respect for human rights, the freedom of the individual and the principles of the rule of law, as the foundations of a democratic society, lie at the root of their domestic and foreign policies and of their joint undertaking, Wishing to consolidate international peace and security in accordance with the principles set out in the United Nations Charter, and determined to apply the principles of preventing and peacefully resolving international disputes, Declaring their interest in using regional integration to promote sustainable and harmonious development for their inhabitants, using as a foundation the principles of social progress and solidarity between their members, Taking as a basis the special ties established by the Framework Cooperation Agreement between the European Community and Chile, Have decided to give relations between them a long-term perspective. 2. Aims Mindful of the conclusions adopted by the Council of the European Union on 17 July 1995 in the wake of the communication on the strengthening of relations between the European Union and Chile, the Parties reiterate their intention to enter into an agreement which will express their political will to achieve their ultimate goal of political and economic association. To that end, the Parties have agreed to step up political dialogue in order to ensure that there is closer consultation in areas of common interest, primarily through coordination of the Parties' positions in the appropriate multilateral forums. Such dialogue could include other participants from the region or, where possible, be conducted simultaneously with other established forms of political dialogue. 33 3 Procedures The Parties have agreed that political dialogue on bilateral and international issues of common interest should take the form of: (a) periodic meetings between the President of Chile and the highest authorities of the European Union; the Parties should decide on the procedure to be used; (b) periodic meetings between Foreign Ministers; the Parties should decide on the procedure to be used; (c) periodic meetings between other ministers to discuss matters of common interest in cases in which the Parties consider that such meetings will result in closer relations; (d) periodic meetings between senior officials of both Parties. 4. The European Union and Chile agree that this Joint Declaration should signal the beginning of closer and deeper relations. W [Annex II] JOINT DECLARATION ON THE DIALOGUE AT PARLIAMENTARY LEVEL The Parties support the initiative put forward by the European Parliament and the Chilean Parliament to institutionalize a dialogue between them and state their willingness to foster the establishment and development of this Parliamentary dialogue. jr Annex III JOINT DECLARATION ON INTER-REGIONAL ECONOMIC COOPERATION 1. By common accord the Parties will seek ways of linking their methods of preparing for the liberalization of trade with the methods they employ in connection with other individual countries or regional entities, and particularly with the Southern Cone Common Market (Mercosur). Such activities will depend on how regional integration has progressed and on the degree to which they help to achieve the aims of the Agreement. 2. In that connection, the Parties will examine the possibility of Chile becoming involved in the cooperation programmes provided for in the Agreement between the European Community and its Member States and the Southern Cone Common Market and its member countries, and of Mercosur becoming involved in the cooperation programmes provided for in this Agreement. Procedures will be determined on a case-by-case basis by all interested Parties. fcf Proposal for a g Q [^ ^^ r > < ^ >) COUNCIL DECISION (EC) No on the exchange of letters between the European Community and Chile concerning the provisional application of certain provisions of the framework cooperation Agreement in preparation for the eventual establishment of a political and economic association between the European Community and its Members States, of the one part, and the Republic of Chile, of the other part (presented by the Commission to the Council). U THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular' Articles 113 thereof, in conjunction with the first sentence of Article 228(2) thereof, Having regard to the proposal from the Commission, Whereas the framework cooperation Agreement in preparation for the eventual establishment of a political and economic association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part, was signed by the Community and its Member States on ; Whereas the European Community and Chile undertook to establish procedures for the early application of certain provisions of that Agreement which deal with trade cooperation between the parties and the institutional framework for such cooperation; Whereas the provisional application of the provisions in question will facilitate and promote closer trade relations between the European Community and Chile, pending the completion of the procedures required to bring the Agreement into force, HAS DECIDED AS FOLLOWS: Article 1 The attached exchange of letters between the Community and Chile, which provides for the provisional application of certain provisions of the framework cooperation Agreement in preparation for the eventual establishment of a political and economic association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part, is hereby approved on behalf of the European Community. Article 2 The Commission shall represent the Community within the bodies referred to in Articles 35 and 37 of the Agreement. Article 3 This Decision shall be published in the Official Journal of the European Communities. Done at Brussels, For the Council The President 3? Annex EXCHANGE OF LETTERS concerning the provisional application of certain provisions of the framework cooperation Agreement in preparation for the eventual establishment of a political and economic association between the European Community and its Members States, of the one part, and the Republic of Chile, of the other part Brussels, 1996 Sir, Letter No 1 I have the honour to refer to the framework cooperation Agreement in preparation for the eventual establishment of a political and economic association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part, signed on 22 June 1996. Pending the entry into force of that Agreement, I would propose that the European Community and the Republic of Chile, if the legal system of the latter so permits, apply provisionally the provisions of that trade cooperation Agreement as set out in Articles 4 to 7 and 9 of Title III of the Agreement. During the period of provisional application, the relevant provisions of the framework cooperation Agreement between the European Community and the Republic of Chile, signed on 20 December 1990, will remain in force provided that they do not replicate or conflict with the provisions of the Agreement signed on 22 June 1996 which are applied provisionally. I would propose, in addition, the provisional application of certain provisions concerning the setting-up of bodies to supervise the implementation of the cooperation Agreement as set out in Articles 35, 37 and 38 of the Agreement signed on 22 June 1996. The Joint Committee specified in Article 35 of that Agreement will be responsible for matters which fell within the scope of the Joint Cooperation Committee set up under Article 17 of the Agreement signed on 20 December 1990. 3? The subcommittees and working groups set up under the 1990 Agreement will continue to perform the functions which fall within their scope. Finally, I have the honour to propose that, if the foregoing points are accepted by Chile, this letter and its confirmation should together constitute an agreement between the European Community and Chile which would enter into force with effect from the date of your letter of confirmation. Please, accept, Sir, the assurance of my highest consideration. For the Council of the European Community Ho Letter No 2 Sir, I have the honour to acknowledge receipt of your letter of today's date concerning the provisional application of certain provisions of the framework cooperation Agreement in preparation for the eventual establishment of a political and economic association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part, signed on 22 June 1996, which reads as follows: "Pending the entry into force of that Agreement, I would propose that the European Community and the Republic of Chile, if the legal system of the latter so permits, apply provisionally the provisions of that trade cooperation Agreement as set out in Articles 4 to 7 and 9 of Title III of the Agreement. During the period of provisional application, the relevant provisions of the framework cooperation Agreement between the European Community and the Republic of Chile, signed on 20 December 1990, will remain in force provided that they do not replicate or conflict with the provisions of the Agreement signed on 22 June 1996 which are applied provisionally. I would propose, in addition, the provisional application of certain provisions concerning the setting-up of bodies to supervise the implementation of the cooperation Agreement as set out in Articles 35, 37 and 38 of the Agreement signed on 22 June 1996. The Joint Committee specified in Article 35 of that Agreement will be responsible for matters which fell within the scope of the Joint Cooperation Committee set up under Article 17 of the Agreement signed on 20 December 1990. The subcommittees and working groups set up under the 1990 Agreement will continue to perform the functions which fall within their scope. Finally, I have the honour to propose that, if the foregoing points are accepted by Chile, this letter and its confirmation should together constitute an agreement between the European Community and Chile which would enter into force with effect from the date of your letter of confirmation. " I have the honour to confirm that the Government of Chile is in agreement with the contents of your letter. Please accept, Sir, the assurance of my highest consideration. For the Republic of Chile 7/ FINANCIAL STATEMENT 1. TITLE OF OPERATION: Framework cooperation agreement with Chile Recommendation for a Council Decision authorizing the Commission to negotiate a framework cooperation agreement with Chile. 2. BUDGET HEADING INVOLVED (a) Implementation of the agreement will directly involve the following items: B7-310: B7-311 B7-870 B7-872 B7-6200: B7-6201: B7-611: B7-6210: B7-703: B7-6211: B7-6000: B7-643: B7-651: B7-653: B7-650: Financial and technical cooperation with Latin American developing countries Economic cooperation with Latin American developing countries Commercial and economic cooperation agreements with third countries Promotion of Community investment in developing countries in Asia, Latin America and the Mediterranean and in South Africa by economic cooperation and trade agreements Environment in the developing countries Tropical forests Women in development North-South cooperation schemes in the context of the campaign against drug abuse Democratization process in Latin America Health programmes and the fight against HIV/AIDS in developing countries Community contributions towards schemes concerning developing countries carried out by non-governmental organizations Decentralized cooperation in the developing countries Coordination of development policy, evaluation of the results of Community aid and practical follow-up measures Development cooperation inspectorate Measures to combat fraud in the cooperation sector (b) Other items that may be used: B6-7211: B4-1041: B4-1000: B7-631: international third countries and International cooperation with organizations European Energy Charter and cooperation with third countries in the energy field Thermie II (Community programme of financial support for the promotion of energy technology in Europe) Aid for population policies and programmes in developing countries, and follow-up of the Conference on population and development Hi- 3. LEGAL BASIS Bilateral framework agreement on trade and economic cooperation. 4. DESCRIPTION OF OPERATION 4. 1 General objective Conclusion of a framework cooperation agreement with Chile. 4. 2 Period covered and arrangements for renewal or extension This is an interim agreement intended to pave the way for a political and economic association between the Union and Chile. 5. CLASSIFICATION OF EXPENDITURE OR REVENUE 5. 1 Non-compulsory expenditure 5. 2 Differentiated appropriations 5. 3 Type of revenue involved Not applicable 6. TYPE OF EXPENDITURE OR REVENUE Expenditure will usually take the form of a 100% grant, though operations may sometimes be cofinanced by other donors (Member States). The recipients will systematically be required to contribute according to their means. 7. FINANCIAL IMPACT 7. 1 Method of calculating total cost of operation (definition of unit costs) This agreement establishes a framework for new measures to reflect the changing content and methods of Community cooperation/relations with Chile in the light both of recent social and economic developments in the country and of the process of strengthening ties between the parties. Although the quality and quantity of cooperation with Chile will be improved, there will be no specific budget for new operations. 8. FRAUD PREVENTION MEASURES; RESULTS OF MEASURES TAKEN In order to ensure maximum accountability in the management of budget resources, projects are subject to the following procedures: committee for the assessment of restricted invitations to tender (technical assistance); system of co-directors (one local and one Community); project administration involving analytical accounts; supervisory missions by desk officers and/or technical and/or financial units, if necessary, evaluation by independent experts; if necessary, ad hoc evaluation in conjunction with the relevant units of DG VIII. For projects of above-average duration and involving large budgets, there will be annual audits by internationally recognized firms, e. g. Price Waterhouse or Ernst & Young. 9. ELEMENTS OF COST-EFFECTIVENESS ANALYSIS 9. 1 Specific and quantified objectives; target population The specific objectives of each project worth over ECU 1 million are set out in the relevant financing proposal approved by the ALA Committee, which includes an economic and financial analysis. For all other projects, specific objectives are set out in the detailed commitment form that accompanies each one. The target population is everyone in Chile, but more particularly: - - the manufacturing and service sectors, especially SME; the most disadvantaged groups. 9. 2 Grounds for the operation The projects launched will be financed under existing budget items and are therefore underpinned by the financial statements accompanying those items in thePDB. 10 ADMINISTRATIVE EXPENDITURE (PART A OF SECTION m OF THE BUDGET) 10. 1 Extra staff The administrative the Commission's annual decision on resource allocation depending on the staff and finance approved by the budgetary authority. resources needed will be mobilized through Staffing Relations with Chile have so far been handled by an A official assisted by a part-time C official. They are unable to cope with the steady increase in political contacts, cooperation programmes and the day-to-day workload of the desk office generated by the stepping-up of relations over the past year. The objective of the framework agreement is to strengthen relations between Chile and the Union in all areas with a view to a future political and economic association. if The agreement will therefore bring with it qualitative requirements quite distinct from the volume of aid granted. This agreement has to reflect the Union's will to maintain closer relations not only in the context of cooperation but in the form of deeper political dialogue and trade cooperation geared to the future liberalization of trade. It is estimated, therefore, that the following extra staff will be needed: one new A official, one B official and one part-time C official. Their tasks will be as follows. Grade A official and temporary member of staff * * Overall direction, general consistency, coordination of activities, in-house coordination, dealings with Chile, information and dissemination, overall administration; technical monitoring of trade relations, supervision of the working parties that will be set up, coordination of trade-related issues with other departments, day- to-day handling of trade questions, preparations for meetings of the joint trade subcommittee, drawing-up of reports, studies and analyses on trade aspects of the future bilateral association agreement; cooperation: identification, implementation, management, monitoring, etc. * Grade B official * Support for A officials, particularly data searches, processing of statistics, data processing, administration and accounting. Grade C officials * Secretarial back-up. The above estimates do not include extra staff that might be needed by other Directorates General as a result of closer ties with Chile. yr Posts to be allocated Staff administering operation to Source Period Permanent Temporary Additional resources Existing resources within DG or department 1 0. 5 1 1 0. 5 Indefinite, starting 1996 2 1 1 or A B C (Officials temporary staff) Other resources TOTAL 4 1. 5 2. 5 The above remarks concerning the need for additional resources are subject to a Commission decision. The allocation of the additional posts will have to be considered in terms of the Commission's priorities when it examines the 1996 budget. 10. 2 Total financial implications of extra staffing A officials B C TOTAL Amounts 100 000 90 000 64 000 254 000 Calculation method Gross salary. List of average annual cost of existing posts The amounts represent the total cost of extra staff for the duration of the operation, if it is of fixed duration, or for one year if it is open-ended. 11. MISSION EXPENSES From its very first contacts with the EC, Chile has expressed a desire for technical assistance from the EC in a number of fields in which Community institutions have acquired experience. To this end, it has expressly asked to be allowed to work directly with the officials of the institutions concerned. u In response to these requests, the Commission has attempted to involve its various DGs and departments in one-off projects to impart the benefits of its experience of integration. While a number of DGs have expressed a desire to take part in this type of project, they have been seriously hampered in financing the relevant missions and many of Chile's requests have had to be turned down for want of a specific budget for such assistance. If appropriate machinery is not set up to facilitate these specific projects, the situation will become even more serious with the advent of the framework cooperation agreement, which seeks to expand the scope of technical assistance. Since it is impossible to predict how much extra will be needed for each DG in the absence of agreements between DGs on mission authorizations, a budget of an extra ECU 50 000 a year from 1996 should be planned to finance projects solely in this field. The budget should be initiated and coordinated by the relevant departments of the DG responsible for relations with Chile. An extra allocation is therefore requested for EC-Chile know-how transfer projects concerned specifically with the Community institutions. The amounts requested represent the cost of organizing missions averaging one week for 10 officials. Budget heading Amount (ECU) Calculation method A-1300 TOTAL 50 000 50 000. See table below No of missions Average cost trip 3 800 10 oflA verage expenses dailyffotal (ECU) Rounded (ECU) total 135 W7 450 50 000 The amounts represent the total cost for the duration of the operation, if it is of fixed duration, or for one year if it is open-ended. H } ISSN 0254-1475 COM(96) 259 final DOCUMENTS EN H Catalogue number : CB-CO-96-269-EN-C ISBN 92-78-05246-9 Office for Official Publications of the European Communities L-298S Luxembourg