21-22 June European Council

Date: 27/06/1996

Employment and growth

ALL heads of government stressed their commitment to continuing the fight against unemployment. Although many welcomed Commission President Jacques Santer's 'confidence pact', several stressed that responsibility for job creation remained with member states and the social partners. The summit stressed that sustained non-inflationary growth was the key to reducing unemployment, and underlined that socially balanced efforts to reduce budget deficits - through reduced expenditure rather than increased spending - could both create jobs and prepare the way for economic and monetary union at the start of 1999. Member states committed themselves to restructuring expenditure and asked the social partners to adopt a wages policy favourable to employment.

GOVERNMENTS committed themselves to speeding up the completion of the single market, particularly in public procurement, investment and the insurance field; underlined the importance of recent agreements on electricity liberalisation and telecommunications; and emphasised their commitment

to adopting the European Company Statute and a legal framework for biotechnological inventions. The Commission was asked to submit initial results of its initiative on practical simplification measures before the end of the year and to draw up an action plan on innovation. Council was asked to adopt the new action plan for small and medium-sized enterprises, and to submit guidelines on the development of tax systems within the Union, with emphasis on improving environmental policy, before the Dublin summit. Meanwhile, a high-level working group will look at the proposals in the confidence pact and French President Jacques Chirac's memorandum on a European social model.

THE Commission's plan to move unspent money from the agricultural budget into TENs projects was abandoned in the face of resistance, particularly from the UK and Sweden. Budget headings for both agriculture and the Structural Funds will remain unchanged. Instead, the Commission proposed that budget commitments for internal policies should be raised by 1 billion ecu over the 1997-99 period, mainly for the priority transport projects, but payments would be made within the current limit for actual expenditure. A further 200 million ecu would be shifted from other internal policy areas, allowing an increase in funds of 1.2 billion ecu. Santer expressed his “regret” that no final deal had been reached on TENs funding, but the summit welcomed the recent conciliation agreement between the Council and Parliament on the TENs guidelines.

A COMMITMENT was made to focus structural fund payments on job creation, although no changes will be made to the legal framework under which payments are made. Priority will be given to supporting SMEs and local employment initiatives. The Commission will prepare a report on how this can be done before the Dublin summit. Member states who choose to do so will be invited to suggest regions or cities to carry out pilot projects on “territorial and local employment pacts” to be financed from remaining structural fund money during 1997.

LEADERS agreed to speed up labour market reforms to enhance public employment and training. Stressing the importance of the information society, the summit called for the adaptation of educational and training systems and asked the Commission to prepare a proposal on access to life-long learning and a study on the role of apprenticeship, as well as an action plan on “learning in the information society”. The idea of a European voluntary service was also welcomed.

UNDERLINING the priorities identified at Madrid, the social partners were urged to take initiatives to assist the integration of the young, the long-term unemployed and women into the labour market, and to develop a more flexible approach to working time. Welcoming the social partners' decision to negotiate on part-time work, the Council asked for a closer examination of the role of social security systems in job creation. The meeting gave impetus to moves towards introducing a system of common indicators to verify economic performance in terms of job creation across the Union. Council will consider, as soon as possible, Social Affairs Commissioner Pádraig Flynn's proposal to set up an employment and labour market policy committee.

IGC

A SPECIAL summit will be slotted into Ireland's EU presidency - probably on 19 October - to give leaders an informal opportunity to take stock of Union developments and to speed up the pace of the Intergovernmental Conference. EU governments believe that the IGC should now start seeking balanced solutions to the main political issues raised and asked for a general outline of a draft treaty to be ready for their Dublin summit meeting in December.

THE draft treaty should concentrate on three particular themes already identified by EU governments, according to the Florence conclusions. These are to bring the Union closer to its citizens, strengthen and enlarge the scope of the EU's common foreign and security policy, and ensure that the institutions function smoothly even when membership of the Union climbs above the present 15. The strength of feeling raised by the defence options ahead was underlined by the absence in the final summit conclusions of suggestions in earlier drafts that the Western European Union should be “the defence component of the Union and a means to strengthen the European pillar within the Atlantic alliance”.

UK beef exports

THE summit unanimously supported the Commission's framework for the step-by-step lifting of the export ban on UK beef products, and the UK agreed to end its policy of non-cooperation. There was, however, considerable debate over the final wording of the deal, with leaders including German Chancellor Helmut Kohl and Austria's Chancellor Franz Vranitsky insisting that the final version should not include “endorsement” of the approach. UK foreign minister Malcolm Rifkind and Prime Minister John Major welcomed what they claimed was a clear commitment that decisions would be based “only and exclusively on the basis of public health and objective scientific criteria”. But the staged lifting of the ban will only happen after consideration of British plans by scientific committees and the Commission, followed by a vote by the Standing Veterinary Committee. In response to UK insistence that it be allowed to export beef to third countries who want to restart trade, the presidency drafted a non-binding declaration that the Commission would look into any requests. In response to French pressure, heads of government agreed to raise the level of aid to beef farmers from this year's budget from 650 to 850 million ecu.

Justice and home affairs

WITHIN days of the end of June deadline they set themselves a year ago, EU leaders removed the final obstacle to ratification of the Europol Convention. Under the deal, all member states except the UK will be able to ask the European Court of Justice for preliminary rulings when disputes arise over interpretation of its provisions. Ratification of the convention will provide a firm legal base for a wider range of activities for the intelligence gathering agency. The summit also suggested that a similar formula excluding the UK from the ECJ's jurisdiction might be used to unblock two other conventions designed to protect the EU's financial interests and to use information technology for customs purposes.

FURTHER impetus was given to the Union's fight against drugs through a clear mandate to the Commission and Council to identify any remaining gaps which should be tackled in cooperation with Latin America. Given the seriousness of the drugs problem, the summit called for the early completion of a study into ways in which harmonisation of national legislation in the EU could reduce the consumption and trafficking of illegal drugs.

Single currency

WITH the Dublin summit likely to provide the next serious progress in the debate on economic and monetary union, the Council contented itself with consideration of the progress report prepared by finance ministers, which focuses on budgetary discipline in Stage III and the relationships between 'ins' and 'outs', and also confirmed 1 January 1999 as the start date for EMU. The Commission will now present proposals on the technical preparatory work for EMU by the end of the year. Work will also continue on the new ERM II, although, at the insistence of UK Chancellor of the Exchequer Kenneth Clarke, the conclusions stressed its voluntary nature. It was decided there was no need to do anything to confirm that EMU could not start in 1997, although theoretically there is a legal requirement in the treaty to do so.

External relations

THE US received a clear warning from the Union that a transatlantic clash is inevitable if the Cuban Liberty and Democratic Solidarity (Libertad) Act is implemented. With its plan for sanctions on European firms doing business with Cuba, the act - and similar pending legislation aimed at Iran and Libya - has been strongly criticised by the Union. In an attempt to display even-handedness, EU leaders also called on Cuba to speed up its internal political reforms.

A CLEAR plea was made to all parties involved in the Middle East peace process to resume negotiations as soon as possible. While condemning all acts of terrorism, the Union drew attention to the serious effects which the recent border closures were having on the Palestinian economy and called on Israel to lift all remaining restrictions. It also singled out Iran, stressing that it expected its dialogue with Tehran to lead to concrete results in the areas of non-proliferation, terrorism and human rights, including the treatment of British author Salman Rushdie.

EU leaders signed cooperation agreements with the presidents of Chile and Uzbekistan.

THE Union committed itself to continuing its support for the reform process in Russia and called for early ratification of the partnership and cooperation agreement, which provides the basis of this relationship. A separate declaration on former Yugoslavia stressed the need for full cooperation by all concerned with the international crimes tribunal for former Yugoslavia and welcomed the progress made in the first six months of the peace agreement in Bosnia and Herzegovina.