Postal market: final barriers to total liberalisation to be lifted by 2009

By 2009, the internal postal market should be fully open to competition under a new proposal put forward by the Commission on 18 October. In concrete terms, this would mean abolishing the final reserved area, namely the monopoly currently held by traditional public operators on processing mail weighing less than 50 grams. More generally, the universal service would be upheld and European consumers and businesses could expect greater choice and improved quality in a more competitive market. Internal Market and Services Commissioner Charlie McCreevy said: "In preparing the proposal, we have put consumer and user needs first. With full market opening in 2009, we can look forward to more innovation, better services and improved cost-efficiency."

The universal service, as set out in the first postal directive, obliges Member States to provide a high quality postal service with at least one collection and postal delivery per working day to every EU citizen. The new proposal would not alter this, but would add to it by opening the way for more reliable and accessible postal services. It may therefore become possible to send or receive mail at more convenient times or places (e.g. local shops and petrol stations). While prices have been on the rise in recent years, due to increasing fuel and transport costs, universal service obligations will ensure that Member States guarantee the affordability of postal services.

By removing the final barriers to an open market, it is hoped that new jobs will be created within the new postal companies and industries dependent on the postal sector. Mr McCreevy expressed the need for this development, saying: "Without it, EU postal markets will be increasingly unable to meet the challenges of the communications revolution. Market opening plays a crucial role in the long term viability of the sector and the employment it generates."

The timeframe in which total liberalisation should take place was initially decided in 1997 and is likely to be honoured, given the progress to date. A report is due to be released by the Commission by the end of the year on the application of the postal directives.

New Action Plan to reduce the energy bill and prevent climate change

The Commission has presented an ambitious Energy Efficiency Action Plan which aims to reduce the direct cost of our energy consumption by over €100 billion annually by 2020, avoiding around 780 million tonnes of CO2 per year.

The plan, unveiled on 19 October, proposes a number of initiatives to be implemented in the coming six years. The idea is to mobilise market actors and to transform the internal energy market in order to provide EU citizens with the most energy-efficient buildings, appliances, processes, cars and energy systems in the world.
In addition to these measures, the plan contains a number of proposals to raise energy efficiency awareness, such as education and training, and emphasises the need for energy efficiency issues to be addressed on a global level through international partnerships.

"Europeans need to save energy. Europe wastes at least 20% of the energy it uses. By saving energy, Europe will help address climate change, as well as its rising consumption, and its dependence on fossil fuels imported from outside the Union's borders," said Energy Commissioner Andris Piebalgs.

The action plan is a response to a call made at the spring European Council for a realistic energy efficiency strategy. Heads of State and Government pointed out that the EU needs to use all available policy tools at different levels of government and society to reduce energy inefficiency. It must also face up to the unprecedented energy challenges resulting from increased import dependency, as well as address concerns over supplies of fossil fuels worldwide, and more severe climate change.

Ageing population: from challenge to opportunity

Member States need to step up efforts to address the expected decrease in size of the working-age population and the prospect of slippage in public finances. In a Communication issued on 12 October, the Commission set out five areas in which concrete action should be taken at Member State level.

Promoting demographic renewal

The Commission stresses the importance of initiatives which would help citizens to find a balance between work and family life in order to prevent demographic decline. It noted that special attention must be given to gender equality and access to affordable childcare.

More jobs and longer working lives

In addition to employment reforms, and the education and training policies already under way, further efforts will be necessary to improve work opportunities for older people. Far-reaching reforms are needed to increase the rate of participation of men and women aged over 55. These include removing incentives for early exit from the labour market and encouraging the employment of senior citizens.

Higher productivity

A third response to the demographic challenge is to improve the productivity of Europeans at work. European companies should be able to grasp the opportunities offered by demographic change in terms of creating new markets for goods and services which respond to the needs of an older clientele.

Integrating immigrants

The EU is working with the Member States to develop a common policy on legal immigration, focusing particularly on immigration for work purposes in order to satisfy requirements in certain sectors of the labour market.

Sustainable public finances

Budgetary consolidation is necessary to guarantee adequate social security and equity between the generations in the long-term. Increasing the employment participation rate is an effective tool that enables governments to increase their revenue without increasing the rates of taxation.

Examples from Member States show how measures in one of these five areas can trigger positive results: while generous family and reconciliation policies in France and Sweden have resulted in a fertility rate high enough to prevent population decline, large scale migration from the new Member Sates to Ireland and the UK, following the enlargement of the EU in 2004, has contributed to reducing labour market bottlenecks.

As a follow-up to the communication, the Commission will be hosting a European Demographic Forum on 30 and 31 October to exchange best practices on policies for the ageing population.

Deficit cuts and pension reforms now for sustainable public finances in the future

On 12 October the Commission adopted a Communication on the Long-Term Sustainability of Public Finances in the EU, which was accompanied by a study. The two documents highlight the benefits that reducing public deficits and debt, as well as pursuing structural reforms would bring to Member States. EU countries would thereby achieve balanced budgets in the medium-term and be better prepared to face the daunting pension costs of an ageing population.

"Unless most Member States do something serious about defusing the pension timebomb, it will go off in the hands of our children and grandchildren, presenting them with a burden that is simply not sustainable," said Economic and Monetary Affairs Commissioner Joaquín Almunia. "Some progress has been made, but it is clearly not enough, and the window of opportunity during which the working-age population and overall employment levels will continue to rise is closing fast."

The gap between the structural budgetary position in 2005 and a sustainable one is about 3.5% of GDP in both the EU and the euro area. The 2% of GDP deficit should be turned into a structural surplus of about 1.5% of GDP. This can be achieved through a three-pronged strategy.

First, Member States need to achieve and sustain sound budgetary positions and to reduce public debts faster. This would in turn bring about lower interest rates, and high and stable economic growth.

Second, Member States need to raise both employment rates and labour productivity. Implementing measures increasing employment and enhancing productivity, in line with the goals of the Lisbon strategy, would raise potential growth rates and contribute to sustainability.

Third, governments need to reform pension as well as health-care and long-term care systems. In order to be successful, pension reforms need to be accompanied by a prolongation of working lives. This enables a higher accumulation of pension rights and has a positive impact on the level of pensions in relation to wages in the future.

The study divides European countries into three categories depending on the risk level of the sustainability of public finances in the long term (high-risk countries, medium-risk countries and low-risk countries.) It found that the vast majority of Member States still have a long way to go.

EU partnership for the Horn of Africa

The Commission adopted an EU partnership for peace, security and development in the horn of Africa on 20 October. This partnership provides a political framework for concrete regional initiatives to be discussed with the countries concerned, and with the Intergovernmental Authority on Development (IGAD), a regional organisation which coordinates development in the Horn of Africa.

The strategy copes with the root causes of instability in the region. Action will therefore be focused on three areas: fostering regional political cooperation and integration, addressing country-level strategic political issues and addressing regional cross-cutting and cross-border challenges.

"This partnership provides a unique occasion to review the level of our ambitions through a common regional political framework," Commissioner for Development and Humanitarian Aid Louis Michel said. "But the impetus for change must always come from within. I believe that our experience and our commitment to political dialogue and partnership with Africa can be useful in order to promote and support peace and prosperity in this region."

Commission puts plans for a European Institute of Technology on the table

A proposal to set up a European Institute of Technology, to become operational in 2008, has been brought before the European Parliament and the Council. It is hoped that this institute could bridge Europe's innovation gap by translating its knowledge and research into commercial activities. The EIT would take the form of a two-tier structure bringing together a Governing Board to set the strategic priorities, and Knowledge and Innovation Communities to integrate innovation, research and education. The institute would receive both public and private funding of an estimated €2.4 billion for 2008-2013.

"The EIT is designed to attract talent and bring together the very best actors in the knowledge triangle [higher education, research and innovation]. Through its networks, the EIT will tear down the walls between research, education and business to unlock Europe's potential for innovation," said Commission President José Manuel Barroso, whose desire is to see the EIT up and running by the end of this Commission's mandate.

The institute would be run by a Governing Board, made up of representatives from the academic and business communities. The board would be responsible for setting the EIT's overall strategic responsibilities as well as selecting, coordinating and assessing the Knowledge and Innovation Communities. These communities, a defining characteristic of the EIT, are joint ventures of partner organisations, representing universities, research bodies and businesses. The communities would address the strategic, long-term challenges in key fields of potential economic and social interest for Europe.

The initial idea for the EIT came from Mr Barroso in February 2005 during the mid-term review of the Lisbon strategy. Since then, two communications have been issued based on the outcome of a wide consultation with Member States and stakeholders. If this proposal is adopted before the end of 2007, the EIT could become operational in 2008 and the first two Knowledge and Innovation Communities could be set up in 2010.

Commission puts €28.3m into avian and pandemic flu research

New research projects for the protection of human and animal health are to receive an additional €28.3m of funding as part of the EU's Sixth Research Framework Programme. The decision, announced by the Commission on 17 October, finances seventeen avian and pandemic flu projects focusing on specific needs identified by the UN's World Health Organisation, the World Organisation for Animal Health, and the Food and Agriculture Organisation.

The €28.3m comes on top of the €21m already allocated by the EU under its fifth and sixth research framework programmes and is to be divided equally between human and animal health projects. Human health projects will look at how the flu virus works and will include clinical research on vaccine development. Animal health projects will cover vaccines, better diagnosis and early warning systems, as well as increased knowledge of the avian flu virus itself, technology transfer to third countries and a network for monitoring migratory birds.

So far this year, 109 cases of the most deadly strain of the avian flu virus, H5N1, have been reported - 73 of those have been fatal. While no one can accurately predict whether H5N1 will trigger a pandemic, if the virus were to mutate into a fully transmissible human pandemic virus, it is likely it would spread worldwide. It could then, according to the WHO, encircle the globe within three months. The EU is responding to the evolving threat by investing in new research. European Science and Research Commissioner Janez Potočnik stressed: "It is important that the EU is able to target its research programme to meet new needs that arise."

Nine of the selected projects have partners from third countries, such as Canada, China, Croatia, Russia, the US and Vietnam. Several of these countries have been directly affected by outbreaks of avian flu. Vietnam, for example, has been one of the worst affected with 93 cases, 42 of which were fatal. There are also several small and medium-sized companies involved in the projects.

The Commission agreed on an ambitious new agenda for EU-China relations for the coming years. In a communication released on 24 October, it outlined a new strategy which seeks to respond to China's re-emergence as a global economic and political power. The EU's fundamental approach to China remains one of engagement and partnership. The document sets out a comprehensive approach, identifying as priorities support for China's transition towards a more open and plural society, sustainable development, as well as cooperation with China on energy issues, climate change and international development, trade and economic relations, strengthening bilateral cooperation and the promotion of international security. "Getting the partnership between Europe and China right is a key challenge for this Commission and the EU," said Benita Ferrero-Waldner, Commissioner for External Relations and Neighbourhood Policy. "Our joint goal should be to join efforts and offer joint solutions to today's global problems. Today's communication offers an important backdrop to negotiations for a new EU-China Framework Agreement, which I will launch in China early in the New Year." The EU-China Summit in Helsinki on 9 September agreed to launch negotiations on a comprehensive new Partnership and Cooperation Agreement which would encompass the full scope of EU-China relationship, including enhanced cooperation in political matters. On 11 October, partners launched the China-EU Science and Technology Year to increase awareness in China and the EU about the benefits of cooperation. Under the umbrella of the Year, activities will take place in China and the EU to promote cooperation across all fields of science and technology.

EU accounts: Court of Auditors acknowledges progress, but calls for improved control system

The European Court of Auditors has given a positive statement regarding the reliability of EU accounts. In its Annual Report published on 24 October, it concludes that the 2005 consolidated accounts of the EU's general budget (total payments made €104.8 billion) present fairly, in all material respects, the financial position of the European Communities as at 31 December 2005 and the results of the year. The report shows that the Commission has made considerable progress in introducing its new accrual-based accounting system. This modern system of accounting records transactions when they are generated rather than when the cash is received or paid (as in the traditional cash accounting), thereby providing better information for planning, management and policymaking. However, the report mentions weak internal controls for the majority of EU expenditure, and a high incidence of errors in the underlying transactions. The Commission rejected some of the Court's criticism, explaining that the Court did not take into account the multiannual nature of EU programmes and the fact that effective claw-back mechanisms exist but are applied at the end of the project. These mechanisms allowed the Commission to recover the total of €2170m in 2005. Regarding the incidence of errors, Siim Kallas, Commissioner responsible for administration, audit and anti-fraud, said: "The Commission fundamentally disagrees with the way the Court is still focused on finding individual errors in small samples of transactions, and with how it makes extrapolations which are widely misinterpreted."

Council reaches agreement on additional funding for EU development activities

At their meeting in Luxembourg on 17 October, EU trade and development ministers agreed to move ahead with pledges to make €2 billion available annually by 2010 for "aid for trade". It agreed that delivering this aid should not be linked to progress in negotiations under the Doha Development Agenda. The "aid for trade" initiative is designed to help developing countries to take advantage of new trade opportunities arising from changes in trade rules and globalisation. Ministers also reached political agreement on a simplified framework for funding development activities. Their consensus opens the way for the EU to spend the €17 billion earmarked for development cooperation under the 2007-2013 budget. The money will go on special aid programmes dealing with migration, education and health in Asia, Central Asia, Latin America, the Middle East and South Africa. The development cooperation budget comes on top of the €22.7 billion already agreed on for African Caribbean and Pacific countries. At the same general affairs meeting, ministers approved a European neighbourhood and partnership instrument for 2007-2013. A financial package of €11.181 billion will go towards funding the EU's neighbourhood policy which aims to avoid new dividing lines between the enlarged EU and its neighbours. The instrument will be up and running from 1 January 2007 and will benefit 17 countries: Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya, Moldavia, Morocco, Palestinian Authority, Russia, Syria, Tunisia and Ukraine.

Commission work programme

On 24 October the Commission adopted its work programme for 2007. It identifies concrete actions – the 21 strategic initiatives – that will be at the core of the Commission's action programme during 2007 and sets out a series of priority initiatives to be adopted over the next 12-18 months. The 2007 strategic priorities build on the four overall priorities for the Barroso Commission: prosperity, solidarity, security and a stronger voice in the world, as well as the "Citizen's Agenda". Concrete action will focus on modernising Europe's economy and help the continent cope with the challenge of globalisation. Energy will be a top priority and the Commission will present its first strategic energy review for Europe. Full compliance with better regulation will gain increasing importance. This entails a wider use of impact assessments and public consultation when putting forward a legislative proposal. "This document sets out our strategic initiatives and builds on our commitment to provide added value to Europe's citizens," Commission President Barroso said. "We have sought to strengthen both the policy content and the process."

Commission allocates €15m for new security research projects

The Commission has decided to allocate €15m for new security research projects in order to combat terrorism more effectively and strengthen the European industrial base. The selected projects cover areas, such as the detection of explosives and biological agents, management tools for humanitarian and rescue operations, the protection of drinking water, and a tracking system for the identification of financial transactions linked to crime or terrorist activities. "The Commission is determined to do its part to better protect our citizens and fund EU-wide targeted research efforts. A strong European security research programme will also enhance Europe's competitive edge in many areas," said Günter Verheugen, Commission Vice-President responsible for enterprise and industry policies. Responding to the increasing security concerns, security research will become an integral part of the 7th RTD Framework Programme (2007-2013) and will receive an average annual budget of €200m.

Second update of airline blacklist

The Commission adopted the second quarterly update of the Community list of airlines banned in the European Union. Two individual airline companies (Kenya's DAS Air Cargo and Uganda's Dairo Air Services) have been added to the list due to serious safety deficiencies. All of the 27 companies certified in the Kyrgyz Republic have been banned due to the national inspection body's inability to supervise them effectively. The lists of companies, certified in four of the five States already banned previously, have been updated on the basis of the latest information supplied by these States. Since Afghanistan's Ariana Afghan Airlines has sold the only aircraft registered in France, with which it was authorised to operate in Europe, it is now banned. Air Services Comores of the Union of the Comoros, previously under a total ban, is now subject to operational restrictions and will be allowed to operate services bound for the Community with an aircraft recently fitted with appropriate safety equipment. "On top of the changes to the black list we are going to keep a closer watch on a number of carriers operating frequent passenger flights in Europe," said Jacques Barrot, Commission Vice-President in charge of transport. The list was drawn up in March 2006 and was already amended last June. The new list replaces the previous one.