Parliament calculations turn budget losers into winners

Date: 19/03/1998

FRANCE and the UK emerge as surprising net recipients of money from EU coffers under new calculations being examined in the European Parliament.

The exercise to identify the Union's main bankrollers and beneficiaries also concludes that real net contributions from Germany and the Netherlands - the two largest per capita contributors to the cost of EU policies - are considerably lower than is usually claimed.

The figures are likely to be used by supporters of the status quo to argue that the present arrangements for financing EU activities should not be changed, despite claims from Bonn, The Hague and to some extent Stockholm, that the budgetary burden should be more evenly distributed.

They may also be deployed by critics of the special annual budget rebate which the UK negotiated at the Fontainebleau summit in 1984, to compensate it for being one of the biggest contributors to the Union budget while also one of the poorest per capita economies.

The calculations produced by UK Socialist MEP Terry Wynn, using information on budgetary contributions and revenues in the Court of Auditors' latest annual report, challenge the usual method of determining member states' payments towards the cost of running the Union.

These have traditionally relied on the four main ingredients - known as 'own resources' - used to finance the EU budget: agricultural levies and customs duties on goods imported into the Union, a share of the value added tax collected in member states, and a financial contribution calculated according to each member state's gross national product.

Wynn argues that the first two elements - levies and duties - are not revenues which belong to member states and are subsequently transferred to the Union. They are, he says, EU duties levied on imports when they first enter the Union.

"They are real, traditional own resources which the member state collects on behalf of the EU. Member states even receive a fee for collecting this money: 10% of the amount collected. Customs officers merely act as duty collectors for the Union," he explained.

By stripping out these two categories, Wynn's calculations reduce Germany's net contributions in 1996 from 10.9 billion ecu to 7.4 billion ecu, and the Netherlands' from 2.8 billion ecu to 840 million ecu.

France and the UK go from the red into the black, the former moving from a 460-million-ecu deficit to a 1-billion-ecu surplus, and the latter from a net contribution of 2.3 billion ecu to a positive balance of 420 million ecu.

The calculations have, however, already been challenged by both German and Dutch officials, who insist "the overall picture" has to be taken into account.

But the principle is being taken seriously by the European Commission, which has commissioned a study on what is termed the 'Rotterdam effect' to establish what impact the vast volume of EU imports passing through the Dutch port has on the Netherlands' financial standing in the Union.

The Commission, acting on instructions from EU leaders at last December's Luxembourg summit, is preparing a report analysing how the system for financing the Union's budget is working in practice.

This will be completed by the autumn and is certain to reopen the debate over whether or not the present arrangements are fair.

All figures in billions of ecu

(1) calculated using all the EU's own resources

(2) calculated with agricultural levies and customs duties excluded

(Source: Court of Auditors' Annual Report 1997)

MEP Terry Wynn has produced a new method of calculating how much each Member State puts into and takes out of the EU budget.