In line with the wishes expressed by the Dublin European Council at the end of June, the Commission today adopted a package of measures designed to ensure the rapid integration of the GDR into the Community. German unification will take place without any amendments to the Treaties (exceptions being for a limited time only); and the cost to the Community budget will be reasonable and will not entail any changes in the budgetary and financial arrangements that have been in operation since 1988. Upon unification, the main body of Community legislation will have immediate effect in the territory of the former GDR. As Mr Delors pointed out to the Foreign Ministers of the Twelve on 10 August, now that unification is to take place earlier than expected, at the request of the East German authorities, the Commission will have to be given special powers to apply the proposed transitional measures and technical adjustments before they are formally adopted. (The original timetable - for unification by the end of 1990 - allowed for the requisite two readings of the relevant texts in the Council and Parliament before the end of November.) As Mr Delors has suggested, the Council/Parliament conciliation procedure should therefore be initiated on this matter. These special powers would enable the Commission to authorize the Federal Republic of Germany to maintain provisionally in force legislation now applying in the territory of the former GDR which does not conform to Community law but which may be covered by transitional measures proposed by the Commission. A safeguard clause will be introduced to obviate possible difficulties for the Community. Exceptions of this kind would mainly concern agriculture and fisheries. These are the salient points of the package which the Commission has just adopted and will be putting before the twelve Member States and the European Parliament to bring about the rapid integration of the GDR into the Community. - 2 - The main body of existing legislation will apply immediately The main body of regulations, directives and other provisions of Community legislation will be immediately operative in the former GDR. There will be no need for the internal market to suffer from German unification: the vast majority (80%) of directives laying down technical rules will apply immediately on unification. The same goes for other vital areas such as the free movement of capital, persons and financial services and for indirect taxation; here too Community rules will take effect straight away. In another important area - competition policy - Community legislation will apply at once in the former GDR. Existing rules on state aid, for instance, will allow the Commission some flexibility in dealing with the vital restructuring of the East German economy. Assistance granted by the Federal Government to the territory of West Berlin and the whole area bordering on the GDR will be reviewed on unification and is likely to be phased out. In agriculture, the main thrust of Community policy, i.e. the market mechanisms and guaranteed prices to farmers, will be introduced gradually. As regards fisheries too, the integration of the GDR into the Community will not require any adjustments to the policy currently applied in the Community: the East German fleet will have access to internal resources with no adjustment to existing quotas or total allowable catches. The fields of energy (including the provisions of the Euratom Treaty), research, technology and telecommunications do not pose any particular problems regarding the adjustment of legislation. Lastly, the ECSC Treaty can be applied without adjustments or transitional measures: a six-year restructuring programme is planned for the coal and steel industries, which will be receiving a total of around ECU 120 million of Community aid; a first instalment of ECU 10 million or so may be paid as early as 1991. Relations between the GDR and Comecon countries One of the GDR's main sources of revenue has been its privileged trading relations with other Comecon countries. The Commission has stressed on a number of occasions that these links must be maintained for some time after the GDR's integration into the Community. In its package of measures, the Commission therefore proposes that trade between the GDR and the countries of Eastern Europe, including the Soviet Union and Yugoslavia, be kept up for a transitional period ending on 31 December 1991 (with a possible one-year extension). This would apply: - 3 - - within the limits of existing trade volumes (1990); - for products with a final destination in the former GDR; - with suspension of customs duties and quantitative restrictions; - with exemption from the technical rules applicable within the Community. Agriculture The Commission notes that full application of the common agricultural policy has been facilitated by the economic and monetary union of the two Germanies on 1 July and by the customs union which came into effect on 1 August. The technical adjustments and transitional exceptions relate in the main to agricultural stabilizers, which have been the mainstay of the reform of the common agricultural policy over the last few years, and to measures to support the restructuring of agriculture. The Commission takes the view that for the transitional period - as a general rule, up to the end of 1992 - national aid will be needed to support the process of restructuring farming in the GDR. As regards agricultural stabilizers, the only adjustments planned by the Commission affect meat and processed tomatoes. The Commission does not suggest that maximum guaranteed quantities be set for the former GDR since the Community must in any case review existing stabilizers in the course of the 1991/92 marketing year. Finally on the question of quotas, the Commission is proposing an overall milk quota of 6 570 000 tonnes for the former GDR and a sugar quota of 870 000 tonnes. In the event of any difficulties arising from unification for the Community markets, the Commission will have recourse to the management procedures laid down for emergencies in each of the common organizations of markets. The environment: a long transition In the Commission's view, the parlous state of the environment in the GDR will make numerous transitional measures necessary which will go beyond the date generally proposed in other areas, i.e. the end of 1992. For standards of water and air quality, transitional periods up to the end of 1995 will be needed and clean-up operations are planned. However, no transitional measures are proposed in the field of nuclear safety. - 4 - Apart from the environment, other areas will also require long transitional periods which may in some cases extend beyond the end of 1992, in particular the food, chemical and pharmaceutical industries. The Commission also believes that technical adjustments or temporary exceptions will be necessary in the field of animal and plant health. This should not cause any major problems for the Community, since "substandard" products will only be able to be released for free circulation inside the former GDR. Limited cost for the Community budget The integration of the GDR into the Community will not impose an unbearable strain on the Community budget. According to the Commission's estimates, the additional cost will be no more than an average of ECU 500 million in each year from 1991 to 1993. It is estimated that German unification will entail additional expenditure from the Community budget averaging ECU 2 billion per year for the next three years (ECU 1 billion for the structural Funds, ECU 800 to 900 million for agriculture and ECU 150 million for other policies). This figure should be set against the additional revenue of someECU 1.5 billion which is expected to accrue to the Community budget.