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The Governments  of  the  Member  States  and the  European  Commission  were
represented as follows:

Belgium:
Mr Robert COLLIGNON         Minister-President  of  the  Walloon  Government
                            with  responsibility for  Economic  Affairs, the
                            SMEs, Tourism and External Relations

Denmark:
Mrs Mimi JAKOBSEN           Minister for Trade and Industry
Mr Joergen ROSTED           State Secretary for Industry

Germany:
Mr Norbert LAMMERT          Parliamentary  State  Secretary  to  the Federal
                            Minister for Economic Affairs

Greece:
Mr Athanossios PEPONIS      Minister for Industry, Energy and Technology
Mr Konstantinos VRETTOS     State Secretary for Industry

Spain:
Mr Juan Manuel EGUIAGARAY   Minister for Industry
Mr Juan Ignacio MOLTÓ GARCÍA State Secretary for Industry

France:
Mr Yves GALLAND             Minister for Industry
Mr Jean-Pierre RAFFARIN     Minister    for    Small    and     Medium-Sized
                            Undertakings, Trade and Craft Industries
Ireland:
Mr Richard BRUTON           Minister for Enterprise and Employment

Italy:
Mr Alberto CLO              Minister for Industry and Foreign Trade

Luxembourg:
Mr Robert GOEBBELS          Minister for Economic Affairs

Netherlands:
Mr Hans WIJERS              Minister for Economic Affairs

Austria:
Mrs Judith GEBETSROITHNER   Deputy Permanent Representative

Portugal:
Mr Daniel BESSA             Minister for Economic Affairs
Mr Augusto VENTURA MATEUS   State Secretary for Industry

Finland:
Mr Antti KALLIOMÄKI         Minister for Trade and Industry

Sweden:
Mr Sten HECKSCHER           Minister for Industry and Trade

United Kingdom:
Mr Tim EGGAR                Minister  of  State,  Department  of  Trade  and
                            Industry

For the Commission:
Mr Martin BANGEMANN         Member
Mr Christos PAPOUTSIS       Member
Mr Karel VAN MIERT          Member

POLICY ON SMALL AND MEDIUM-SIZED ENTERPRISES

Commissioner PAPOUTSIS presented the  broad lines of  the communication  that
the Commission intended to  submit to the European Council meeting  in Madrid
(15 and 16 December 1995) on  Union strategy on SMEs.   He also gave  an oral
presentation of a  Commission communication on the  feasibility of creating a
European  capital   market  for  young,   entrepreneurially  managed   growth
companies.

On  that basis and  without prejudice  to the  European Council's forthcoming
discussions,  the Council held a wide-ranging discussion on policy to promote
European Union small and medium-sized enterprises (SMEs).

The  Council  also  adopted  the  following  conclusions  on  SME  access  to
financial markets:

"COUNCIL CONCLUSIONS
ON THE FEASIBILITY OF CREATING A EUROPEAN CAPITAL MARKET
FOR SMALL AND MEDIUM-SIZED ENTERPRISES

In  the  light  of  the  debate   held  on  the  basis  of  the  Commission's
communication  on the  creation  of  a European  capital  market for  smaller
entrepreneurially  managed  growth  companies and  given  the  opportunity to
promote  the setting  up of  innovative  projects in  any  area of  activity,
strengthening  these enterprises' capital structures,  in order to facilitate
the development of European SMEs and create new jobs in the Union,

THE COUNCIL:

- welcomes  the European Commission's initiative to promote the debate on the
  creation of new Europe-wide capital markets;

- invites  the  Commission   to  go  deeper  into   the  conclusions  of  its
  communication and report to the next  Industry Council on ways to  overcome
  the various  obstacles currently existing  in the Member States,  including
  obstacles inhibiting the channelling of funds of institutional  and private
  investors, in order  to support the creation  of secondary European Capital
  Markets  for SMEs, taking into account the national systems and experiences
  already under way;

- submits  to the Commission's consideration  the advisability of encouraging
  investors to  join  the  European  secondary  capital market  in  order  to
  mobilise additional financial resources for European SMEs;

- urges the Commission to cooperate with  Member States in order to  overcome
  the  difficulties that exist in  making cross-border security transactions,
  by  facilitating progress  towards the future  operation of  a pan-European
  secondary capital Market, such as EASDAQ  (European Association of Security
  Dealers Automated  Quotation).  In  this context  it has to be ensured that
  competition between the European stock markets will not be restricted;

- draws the  attention  of  the  financial  community to  the  importance  of
  establishing  efficient,  smooth-running  capital  markets,  working  at  a
  suitable national  or regional level, open to  those European SMEs that can
  form part of a  secondary European Market for shares or that operate in the
  corresponding national  markets, and  submits to  the national  authorities
  involved the opportunity  to stimulate and support  the development of such
  markets;

- notes  the   Commission's  intention  of  studying  the  possibility  of  a
  secondary market for fixed-yield  securities established in certificates of
  income bonds or other securities of a similar nature".

SMALL AND MEDIUM-SIZED INDUSTRIAL  ENTERPRISES AND TECHNOLOGICAL INNOVATION -
COUNCIL RESOLUTION

The Council agreed on the substance of the following Resolution,  the text of
which will be  adopted formally, after legal  and linguistic finalization, at
a forthcoming meeting:

"THE COUNCIL OF THE EUROPEAN UNION,

Notes  that the Treaty establishing the European Community sets the objective
of  achieving  competitiveness  in   Community  industry  and  promoting  its
scientific and technological bases, with special reference to SMEs;

Stresses, on the one  hand, the  relationship between the competitiveness  of
enterprises and research,  technological development and  innovation and,  on
the   other  hand,  the  major  role   played  by  SMEs  in  the  process  of
technological innovation;

Recognizes the  capital importance of  SMEs to  the European Union's  economy
and, especially in the case of  smaller enterprises, to the creation of jobs,
and  the great capacity of  SMEs for adaptation to  structural changes in the
market;

Recalls  that in  the "Initiative on  Growth" (1993)  and the  White Paper on
Growth, Competitiveness  and Employment it  is recognized that measures  must
be taken to promote the international dimension of  SMEs and strengthen their
technological potential and their adaptation to the internal market;

Recalls  that the European Council  meeting in Cannes  on 26 and 27 June 1995
stressed  the fundamental  role  played  by  SMEs  as  a  factor  for  social
stability and economic dynamism, and asked the Commission  to submit a report
on the policies being developed on the subject at present  and on measures to
improve  their  effectiveness,  in  particular  through  fiscal  measures  to
encourage their  creation, measures  to reduce  their administrative  burdens
and encourage their participation in training and research programmes;

Notes the Council Resolution  of 10 October 1994 on giving full scope  to the
dynamism  and  innovatory  potential of  small  and  medium-sized enterprises
including the craft sector and micro-enterprises, in a competitive economy;

Notes the  Commission communication of  30 September 1993 on  R&D policy  and
SMEs;

Notes the reports by the European Parliament (May 1993)  and the IRDAC, which
describe  the disadvantageous situation of SMEs, insist that they be involved
in the international R&D system and propose measures to encourage it;

Notes  the proceedings  in progress at  the Commission  on the  definition of
SMEs,

I

(a) recognizes that  the internationalization and  globalization of  economic
    relations and  the increase in  competition on the  world market make  it
    necessary to facilitate access to technology for SMEs;

(b) recognizes  the necessity of acquiring the new technologies and of access
    to innovation for  industrial and service  enterprises, particularly  the
    traditional ones;

(c) notes that  from the technological  point of view there  are three groups
    of industrial SMEs:

    1. technology-producing SMEs, in  which intangible factors  are of  great
       importance  and which develop R&D  activities and participate actively
       in them;

    2. SMEs that consume or  use technology,  which translate the results  of
       research and technological development  into applications.  This group
       is of crucial relevance in the achievement of commercial results;

    3. SMEs with limited research  and development capacities which, however,
       need to  incorporate in  their production  processes and products  the
       advances made notably by  the preceding  groups as their survival  and
       competitiveness depend on this;

(d) also  notes the need for SMEs in the traditional sectors, from any of the
    aforementioned  groups,   particularly  in  the  Union's   less  favoured
    regions, to be involved in the process of technological innovation;

(e) points  out  that  in   the  conclusions   adopted  at  its  meeting   on
    7 April 1995  on High-Technology Industries and  Enterprises, in which it
    stresses that amongst the  latter SMEs  play an important role,  measures
    appropriate to such enterprises are specified;

(f) notes   that  there   is   a   need  to   create   and  strengthen   more
    technology-based SMEs in Europe;

(g) considers that both SMEs that use technology and  those that have limited
    R&D capacities should become  more important  in the Union's science  and
    technology system and benefit more from the results achieved within it;

II

INVITES THE COMMISSION TO:

(a) take into account,  in its present  work on the definition  of SMEs,  the
    particular problems faced by technology-based SMEs;

(b) provide statistical studies  on the participation of  SMEs in the Union's
    programmes and,  in  particular,  establish criteria  that  will help  to
    distinguish  independent SMEs from those  that are  subsidiaries of large
    enterprises;

(c) assess  and  report  on  the  progress  of  existing  Community  measures
    intended to facilitate  access to technological innovation  for SMEs.  In
    collaboration with  the Member  States, further  develop those  measures,
    and, when necessary, devise appropriate measures  that will contribute to
    the achievement of that end, and in particular:

   1. access to information and advice:

     - improve systems  for the  dissemination of technological  information,
       Community programmes  and their  results so  that they  are especially
       aimed at SMEs, taking  advantage of  existing Community and  national,
       regional and local networks;

     - promote  the use  of technological  information services,  in order to
       help SMEs in identifying the technologies they need;

     - encourage the  use by  SMEs of  a high-quality  supply of  consultancy
       services in the  field of strategic management, quality,  finance, R&D
       and innovation;

     - increase  the efficiency  of  partner search  instruments  and improve
       their coordination;

   2. cooperation

     - facilitate  industrial cooperation  between enterprises,  particularly
       between technologically  advanced  and traditional  enterprises,  with
       the  aim of applying technical successes in the marketplace as quickly
       and  extensively  as  possible, resulting  in  an  improvement  of the
       competitiveness of Community industry in general;

     - facilitate cooperation  between large enterprises and  SMEs, including
       subcontractors,   in  technological   developments  facilitating   the
       inclusion of SMEs in Community R&D projects;

     - facilitate cooperation between  higher education institutions as  well
       as research and technological centres and SMEs;

   3. technology

     3.1. increase  real, effective participation by  SMEs in R&D programmes.
          In particular:

         - make   the  Commission's   consultation  of   SMEs   and/or  their
           associations the rule;

         - encourage high  quality leadership and  effective participation by
           SMEs in Framework-Programme shared-cost projects;

         - continue   the   process   started   of   harmonizing   management
           procedures, simplifying formalities  and improving and speeding up
           payments and contracts;

         - continue its  efforts in  making the selection  procedures and the
           composition of selection bodies more transparent;

     3.2. taking  into account the complementarity  between the Framework R&D
          Programme  and  EUREKA,  strengthen  the  relations  between  them,
          especially  through the  exchange  of information  on  projects and
          greater fluidity in institutional contacts;

     3.3. facilitate   training  in  new  technologies   for  SME  staff  and
          entrepreneurs, in the framework of existing instruments;

     3.4. strengthen  measures  to  disseminate  and transfer  technology  in
          close collaboration  with the  Member States,  taking advantage  of
          existing networks and structures.  Such  measures would be intended
          to cover the SMEs' technological requirements, in particular:

         - the use of the technological infrastructures available;

         - intermediate  bodies  to  identify requirements,  give  advice and
           carry out technological exchanges between SMEs;

         - cooperative  research  for  those  SMEs  with  little  or  no  R&D
           capacities;

         - the incorporation and adaptation of new technologies in SMEs;

   4. networks and work in networks

     - carry out, in collaboration with the Member States, the  consolidation
       and optimization  of existing networks in which industrial SMEs and/or
       their  associations  participate,  together  with  other   social  and
       economic entities, involving  service enterprises;  where appropriate,
       encourage the development of the networks that are required;

   5. better use of existing financial measures

     - examine alternative financial arrangements  to facilitate  development
       and  participation  by  SMEs  in  activities  connected with  R&D  and
       technological innovation, such as risk capital or soft loans;

     - provide the  possibility, in  the case  of R&D  Programmes, of  better
       targeted financing for SMEs, particularly for the smaller ones;

(d) study  in detail  ways of  coordinating the  relevant Community  policies
    and,  if  appropriate,   develop,  within  the   framework  of   existing
    programmes, further actions in favour of SMEs;

III

UNDERTAKES TO:

have a debate, during the second half of 1996, to analyze and  review, on the
basis  of   a  Commission   report  the   results  and   progress  with   the
implementation of the measures specified in this Resolution".

INDUSTRIAL COMPETITIVENESS AND  SERVICES TO BUSINESS - COUNCIL CONCLUSIONS

"THE COUNCIL OF THE EUROPEAN UNION,

1. Stresses   that   the    Commission   communication   on   an   industrial
   competitiveness policy for the European  Union which served as a basis for
   the Council Resolution of 21 November 1994 mentions the need to  encourage
   a  favourable  environment  for  enterprises  and  to  promote  intangible
   investment, including services to business.

2. Stresses the complementarity of industrial production and of  services and
   hence the  important role  of services  to business  in strengthening  the
   competitiveness of industry.

3. Stresses the fundamental role  played by  the SMEs in developing  services
   to business.

4. Considers that  the sector of services  to business comprises a  number of
   heterogeneous  activities carried  out by  specialized firms  in order  to
   help  their   clients  to   increase  their   profits,  productivity   and
   competitiveness.    Those  services,  classified  according  to  the  work
   carried  out  on  behalf  of  the  client  firm,  comprise  the  following
   subsectors:

  (i)  professional services, e.g. lawyers, accountants;

  (ii) technical services, e.g. consultant engineers, architects;

  (iii) operational  services, e.g.  cleaning,  leasing of  electronic office
        equipment and computers.

5. Notes that  the current level of services and the opportunities for access
   to them vary considerably from one  region to another within the  European
   Union.

6. Considers it  necessary  to  remedy the  major  shortcomings  in  existing
   statistics  on these  activities  and  their lack  of  consistency in  the
   different  Member States, in order to improve knowledge of their structure
   and to  increase  the  use  of  available information  by  exploiting  the
   Community dimension.

7. Expresses  its interest  in  having a  detailed study  at  Union level  of
   services to business in connection with industrial competitiveness.

8. Recalls the means available  in the context  of Community policies and  in
   particular  the measures deriving from the  integrated programme in favour
   of SMEs and the craft sector.

Invites the Member States and the Commission to:

1. Increase  cooperation in the  field of  services to  business, among other
   things by exchanging information on best practices.

2. Remove  obstacles which hinder freedom to provide services in the European
   Union and  the creation of  conditions conducive  to the achievement  of a
   competitive and competing market in this area.

3. Develop a reliable  and homogeneous statistical structure on the provision
   of services  to business in  accordance with comparable analysis  methods,
   while ensuring that administrative burdens are reduced to a minimum.

Invites the Commission to:

1. Carry  out  an  analysis  of  the situation  with  regard  to  services to
   business   from  the  point   of  view   of  their   contribution  to  the
   competitiveness of European enterprises and job creation.

2. Examine  to  what  extent existing  national  and  Community policies  can
   contribute  towards  improving  the  framework  conditions   within  which
   services to business operate.

3. Assess  the  contribution  of  services  to  business  in  supporting  the
   internationalization of business, in particular of SMEs.

4. Produce  a communication  on  the future  of services  to business  in the
   European Union,  focusing particularly  on the  arguments for and  against
   developing a policy on the subject.

5. Report to the Council on this topic in the second half of 1996."

COMMUNITY  ACTION PROGRAMME  TO  STRENGTHEN THE  COMPETITIVENESS  OF EUROPEAN
INDUSTRY

The Council reached a common position on the above programme.

It instructed  the Permanent Representatives Committee  to finalize  the text
in the  light  of the  European  Parliament's  Opinion and  of  the  imminent
Opinions of  the  Economic and  Social  Committee and  the  Committee of  the
Regions  and to  prepare for  its formal  adoption at  a forthcoming  Council
meeting.

The  action programme - which  will involve no specific  new expenditure - is
intended to achieve the following objectives:

- modernization  of the industrial rôle of the public authorities, inter alia
  to free undertakings (in  particular SMEs)  from all superfluous legal  and
  administrative constraints;
- guaranteed fair competition both within and outside the Community;
- greater industrial co-operation;
- promotion of intangible factors of competitiveness.

INDUSTRIAL ASPECTS OF THE INFORMATION SOCIETY - COUNCIL RESOLUTION

The Council agreed on the substance of the following Resolution,  the text of
which will be  adopted formally, after legal  and linguistic finalization, at
a forthcoming meeting:

"THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Whereas the White Paper on Growth,  Competitiveness and Employment, submitted
to the Brussels European  Council in  December 1993, recommended a policy  to
develop   a  common  information  area  and  in  particular  to  improve  the
efficiency  of the European  information and communication technologies (ICT)
sector;

Having regard to the conclusions  of the Corfu European Council  in June 1994
on the report by the High Level Group chaired by  Mr Bangemann on "Europe and
the Global Information Society";

Whereas  in Cannes the European  Council emphasized the development potential
of new  growth sectors (for  example, multimedia)  and the potential  for job
creation  in  promoting  the  information  society  and  called  for work  to
continue on  establishing the  regulatory framework  that will  enable it  to
develop, while  taking care  to maintain  cultural diversity  and bearing  in
mind the objective of equal access to these new services;

Having regard to  the Commission communication of  July 1994 on "Europe's way
to  the information society: an action plan" and the Commission communication
of May 1995 on a  methodology for the implementation of applications  for the
information society;

Having regard to the Green Paper on  the liberalization of telecommunications
infrastructure and cable television networks of October 1994  and the Council
Resolution of November 1994,

I

 1. Considers that the  reaction to the challenge  of the information society
    is a  political priority for  the European Union  that will help  achieve
    the objectives of  creating employment, improving the  quality of life of
    citizens, increasing  the competitiveness  of the  production system  and
    increasing economic and social cohesion in the Union;

 2. Considers that information  and communication technologies  are of  major
    importance for the  competitiveness of economic activities  and that as a
    mobilizer of  investment they  will be  an important  factor in  economic
    expansion;

 3. Considers that  it is  the responsibility  of enterprises  to ensure  and
    improve  industrial  competitiveness  and of  the  public  authorities to
    foster a competitive  environment and to create  an appropriate legal and
    regulatory framework;

II

 4. Considers that the  development of the information  society has a twofold
    effect on European industry:

    - it has  a general  influence on the  competitiveness of  industry as  a
      user of infrastructure and information services;

    - it has  a direct  impact on  the European  information industry  as the
      supplier  of operators, producers of all kinds of content and providers
      of information services and on users;

 5. Stresses  that the content  industry will  have great  importance for the
    future  of the  information society  and  that  the information  services
    industry must expand considerably;

 6. Recognizes that the level of  acceptance of the new services  on the part
    of users is one of the decisive factors for effective  development of the
    information society.   The substantial industrial  demand generated  will
    be  both in the  public and  private telecommunications  networks and the
    management  of associated information services and in the area of content
    creation and production;

 7. Considers  that   the   expansion  of   information  and   communications
    technologies in the  information society will depend  on developments  in
    the following areas:

    - New Applications:

      The   identification  of  applications  which   will  generate  a  high
      concentration of  advanced  multimedia services,  producing a  knock-on
      effect  which will  result in  a boom  in supply  through economies  of
      scale, is fundamental.

      Many  of those,  despite the  central responsibility  taken by  private
      initiative,  will be aimed  at socio-economic  areas in  which there is
      considerable  State   participation  (public  administration,   health,
      education and environment).

    - Public communications networks:

      Supplying  the  public networks  accounts  for  a  major proportion  of
      demand  for  switching and  transmission equipment  and  for  ever more
      complex  systems  for  supervising   and  administering  the   networks
      themselves.

    - Business communications:

      The  best  prospects  for  growth  in  developed  societies  come  from
      business demand, headed  by large  industrial groups and  in particular
      the financial sector.

      The interconnection needs  of private networks  generate a  significant
      specialized demand for hardware and software.

    - Supplying of users:

      Supplying  domestic users is one of the basic requirements for securing
      demand which will  make the development of  the new information society
      networks and services viable.

      Professional use  of such equipment  at home, by self-employed  workers
      and   very   small   businesses   of   various   types  (consultancies,
      distribution, etc.), will generate rapidly-expanding demand;

 8. Emphasizes  the  importance  of completing  the  process  of liberalizing
    telecommunications  begun by  the European  Union in  accordance with the
    timetable laid down;

 9. Recognizes that, in  general terms, European industry  is in an excellent
    position  as  regards   technology  and  production  in   the  field   of
    telecommunications  equipment and  has  a solid  industrial base  in  the
    audiovisual industry and considerable capacity  for software development,
    although it does also have some vulnerable aspects.

10. Stresses that, because  of the constant changes  made in the organization
    of firms' production methods, the development of  the information society
    should make  a  critical  contribution  to the  elimination  of  regional
    disadvantages  and the strengthening of  economic and  social cohesion in
    the European Union.

III

THE COUNCIL CALLS ON THE COMMISSION TO:

1. promote  in the  EU's policies, strategies and  actions, especially in the
   implementation  of   the R&D  framework  programme,  the   development  of
   information  and communications technologies  in industry,  paying special
   attention to SMEs;

2. conduct  a  study  of  the  effects  of  the information  society  on  the
   competitiveness  of the  various  sectors of  economic  activity, starting
   with the current  situation of European industry and proposing appropriate
   initiatives  which will contribute  to an  improvement in  its position in
   the world context;

3. consider  such initiatives as part of a policy accompanying the process of
   liberalization  of  telecommunications  in   the  European  Union.    Such
   initiatives may be  encouraged by the appropriate application  of existing
   Community instruments and their efficient and coordinated use;

4. pursue  those initiatives which contribute to the promotion of the content
   industry  and the  new  information services,  taking into  account  their
   implications for industry in general;

5. continue examining the various  pilot projects and other experiments under
   way  at  European  level  and  in   the  Member  States  relating  to  the
   development of the  information society, and  encourage the  dissemination
   of their results and the best practices;

6. take   account,  in  current  and   future  R&D framework  programmes,  of
   priorities  which are  consistent with  the results  of the abovementioned
   analyses  and which promote  the development  of industry  to the greatest
   extent;

7. consider, as part  of the  above policy,  the potential  offered by  joint
   action  at  Union  and  Member  State  level,  intended  to  encourage  in
   particular:

   - closer cooperation between European  enterprises, especially in the case
     of SMEs;

   - increased  work on standardization to  facilitate the rapid introduction
     of new services and access to and exchange of information;

8. continue  the analysis  of  the  obstacles and  the  legal and  regulatory
   implications   linked  with  the  development   of  an  open,  competitive
   environment;

9. submit to the Council  during 1996 a communication containing the  actions
   which must be envisaged at  Union level for the creation  of a competitive
   industrial area capable of  responding to the challenges  and expectations
   arising from the information  society, and inform the Council periodically
   of the  follow-up to  initiatives related  specifically to the  industrial
   aspects of the information society".

INDUSTRIAL  COOPERATION   WITH  OTHER  REGIONS  AND  THIRD  COUNTRIES  -  THE
COUNCIL'S CONCLUSIONS

"THE COUNCIL:

I

1. Reaffirms, in accordance with the Council conclusions  of 22 April 1994 on
   the White  Paper and  the Council  Resolution of  21 November 1994 on  the
   European Union's  industrial  competitiveness  policy, the  importance  of
   industrial cooperation with  third countries in  improving the  industrial
   competitiveness of the European Union. 

2. Considers  that  the  new  geopolitical  context,  the  conclusion of  the
   Uruguay  Round, the  dynamism of  the  processes  of regional  integration
   under way in all parts of the world and  the reinforcement of economic and
   political  relations taking place  on all  sides confirm  and increase the
   prospects  for  industrial  cooperation  between   countries  and  between
   undertakings.

3. Welcomes the Commission communication  of 16 March 1995 on the development
   of  industrial cooperation with the  CCEE, recalls the Council conclusions
   of 7 April 1995 and also welcomes the  progress made in this area with the
   countries of Central and  Eastern Europe,  in connection with approval  of
   the  White Paper on the  preparation of the CCEE  for integration into the
   internal market of the European Community.

4. Takes note of  the efforts being made in the context of European policy on
   the  Mediterranean, and the progress made in relations with Latin America,
   the intensification  of the  transatlantic dialogue  and strengthening  of
   relations with other regions in Africa and Asia.

5. Confirms,  in  accordance with  the  conclusions of  the Corfu,  Essen and
   Cannes European Council meetings, the importance  it attaches to fostering
   and deepening relations with other countries and regions.

6. Emphasizes that industrial  cooperation must be  geared to  socio-economic
   developments in the various geographical areas.

7. Considers in addition that industrial cooperation has a part to  play in a
   gradual opening-up of markets and in the development of trade.

8. Points out  that in  the sphere  of industrial cooperation  it is  for the
   public authorities to promote and develop a  favourable environment, while
   it  is  for  undertakings  to  make  the  best  use  of the  opportunities
   available.

9.  Considers  that  the European  Union,  while respecting  the subsidiarity
    principle,   should  encourage  industrial  cooperation  initiatives  and
    improve their effectiveness at the level of economic operators.

10. Emphasizes that the European Community, as an industrial partner showing
    openness and solidarity, will contribute to the sustainable economic and
    social  development of  those parts  of the  world involved  in regional
    integration processes which wish to have closer links  with the European
    Union and become integrated into the world economy.

11. Recognizes the major  role of  investment and industrial cooperation  in
    promoting  the socio-economic  development of  certain regions,  such as
    Central and Eastern Europe in the context of the pre-accession strategy,
    the Mediterranean and Latin America.

12. Stresses  that  the  implementation  of  this  strategy  will  stimulate
    cooperation between economic operators and will have a multiplier effect
    on the development of various forms of cooperation between undertakings.

13. Considers  that this  strategy  must  be  based  on  the  principles  of
    partnership, planning  and transparency.  Particular attention should be
    given to  industrial investment projects and  to the development  of the
    related infrastructure. 

14. Considers  that the prospects offered by the  Barcelona Conference on 27
    and 28 November 1995 will  provide the European  Union and  its partners
    with an opportunity to strengthen industrial cooperation.

II

THE COUNCIL REQUESTS THE COMMISSION TO:

1.  Promote the creation of a favourable environment and legal framework for
    industrial cooperation with third countries by acting with the following
    ends in view:

    (a)  greater  transparency   and  legal  certainty  in   legislation  and
         administrative  procedures, especially with regard to investment and
         market access;

    (b)  harmonized  quality  infrastructure  and  rules  and procedures  for
         assessing conformity, taking  into account the existing situation at
         Community and international level;

    (c)  determining of the  legal framework  and the appropriate  conditions
         for ensuring  fair competition, both in external  markets and in the
         Union's internal market;

    (d)  cooperation  measures concerning R&D,  training - both  for heads of
         companies and  for executives in the public  sector - and industrial
         property;

    (e)  processes of regional  integration, on the  basis of the  experience
         gained at Community level.

2.  Promote  action to  foster cooperation  between economic  and industrial
    operators in the following areas:

    (a)  carrying out  industrial and  infrastructure projects  having regard
         to  the  varying   degrees  of  socio-economic  development  and  in
         accordance with  the criteria of an open  market economy taking into
         account market conditions  and the situation  in certain sectors  in
         the Community;

    (b)  intensification  of  industrial,   technological  and  environmental
         cooperation;

    (c)  intensification of transfers of technology and know-how;

    (d)  creation and improvement  of databases  and information networks  on
         business  opportunities, holding  of business  meetings, etc.,  with
         guaranteed  access  by  and  dissemination  among  undertakings,  in
         particular the SMEs;

    (e)  technological  development with  a  view  to  integration  into  the
         information society.

3.  Carry  out  an appraisal  of  the  various  instruments for  cooperation
    available at Community level and  the results achieved and on this basis
    submit to the  Council proposals making for  a more integrated  and more
    effective approach  to  Community action,  with the  aim of  reinforcing
    external action and  the decisive role played  by the European Union  on
    the international geopolitical and economic stage.

4.  Improve  the  arrangements  for coordination  and  for  the exchange  of
    information that  exist  at Community  level so  as  to achieve  greater
    coordination,  integration   and  efficiency  for   the  instruments  of
    industrial cooperation.

5.  Extend and  step up  initiatives for industrial  cooperation with  those
    regional units regarded as a priority in the Commission communication on
    an  industrial competitiveness policy for the European  Union and in the
    subsequent  Council  Decision on  implementation  of a  Community action
    programme to strengthen the competitiveness of European industry, with:

    -    the  briefing of  the  Council  on  the current  situation  and  the
         progress  made  in  achieving  the  objectives set  in  the  Council
         conclusions  of  7 April 1995  on industrial  cooperation  with  the
         CCEE;

    -    the  submission  during   1996  of   an  overall  communication   on
         industrial cooperation with  the other  regions and third  countries
         with  which the  Community  traditionally has  close  relations that
         will enable an industry-oriented action strategy to be drawn up  and
         identify the  broad lines,  criteria and  procedures to  be followed
         when implementing it.

6.  Encourage business cooperation relations  with the United States  within
    the framework of the transatlantic dialogue, based on criteria of mutual
    interest  and taking into account the outcome  of the Seville Conference
    on 10 and 11 November 1995.

7.  Monitor  the various  measures adopted  at Community level,  the results
    achieved and  their effectiveness, after consulting undertakings and the
    Member States  through the Directorates-General for Industry, and report
    to the Council at least once a year.

III

WITHIN  THE FRAMEWORK OF THE EURO-MEDITERRANEAN CONFERENCE IN BARCELONA ON 27
AND 28 NOVEMBER 1995,
THE COUNCIL INVITES:

1.  the  participants  in  the  Euro-Mediterranean  Conference  to  look  at
    industrial cooperation  as a major  instrument for economic  development
    and job creation in  the Mediterranean, giving particular  encouragement
    to industrial investment projects and related infrastructure projects;

2.  the  Commission to submit,  in 1996,  a communication on all  aspects of
    Euro-Mediterranean   industrial  cooperation   in   order   to  identify
    appropriate lines,  criteria and procedures to  be followed in  order to
    implement a more industry-oriented action strategy;

3.  the Presidency and the Commission to organize early in 1996 a Conference
    bringing  together the Ministers for Industry of  the European Union and
    our Mediterranean partners in order to open detailed  discussions on the
    development  of  industrial cooperation  within  the framework  of Euro-
    Mediterranean policy."

STRENGTHENING  OF THE COMPETITIVENESS OF  THE EUROPEAN MECHANICAL ENGINEERING
INDUSTRY - COUNCIL RESOLUTION

The Council agreed on the substance of the following Resolution,  the text of
which will be  adopted formally, after legal  and linguistic finalization, at
a forthcoming meeting:

"THE COUNCIL,

Having   regard   to   Commission   Communication COM(94)319  on   Industrial
Competitiveness Policy for the European Union of 19 September 1994;

Recalling its  Resolution of 21  November 1994  on the  strengthening of  the
competitiveness  of Community  industry,  and its  Conclusions  on Industrial
Competitiveness Policy of 7 April 1995;

Whereas  mechanical engineering is of great importance for the EU economy, in
particular for  SMEs,  owing  to  its  large production,  trade  surplus  and
employment;  whereas as  a major supplier  of capital  goods it  is crucially
linked   with   all  significant   upstream   and  downstream   manufacturing
industries; 

Whereas the  goal of Union Industrial Policy is, in particular, to contribute
towards long-term upgrading  of the competitiveness of EU industry, relieving
unemployment and ensuring sustainable growth;  whereas horizontal instruments
should therefore be applied also to the mechanical engineering industry,

HAS ADOPTED THIS RESOLUTION

THE COUNCIL

I

takes note with interest of

(a) Commission Communication  COM(94)380 "Strengthening  the Competitiveness
    of the European Machinery Construction Industry" of 9 November 1994;

(b) the  Commission's  intention  of  presenting  an  Action  Plan  on   the
    dissemination and implementation of the above Communication;

II

calls  upon  the  Member  States,  without  prejudice  to  the  principle  of
subsidiarity, to

(a) pursue a steady  macro-economic policy  as the  best way  of creating  a
    favourable  business environment  for mechanical  engineering  firms and
    maintaining  the  Union  as an  attractive  location  for  manufacturing
    machinery and equipment;

(b) make the necessary efforts with regard to convergence, this being a pre-
    condition for  introduction  of the  single currency,  which  will be  a
    lasting solution to currency turmoil;

(c) encourage  intangible  and  tangible  investment  by  appropriate  means
    without prejudice to existing competition rules;

(d) encourage  R&D  by  appropriate  means  without  prejudice  to  existing
    competition rules;

(e) further build up a secondary risk capital market, especially for SMEs;

(f) improve training in  mechanical engineering to  meet the  needs of  this
    industry and, if required, create additional capacity;

(g) support, within  competition rules, initiatives for cooperation based on
    mutual advantage of mechanical engineering companies;

(h) monitor the  market to ensure a  harmonized and coherent  application of
    the  Directive on  machinery and  other directives  affecting mechanical
    engineering;  review remaining  national  regulations, other  than those
    transposing the  said Directives, while ensuring adequate protection for
    health and safety, and free movement of goods;

(i) pay special attention to SMEs in all national policy measures applicable
    to  the machinery  and related  industries; facilitate  SMEs'  access to
    them;

(j) step up their efforts strictly to observe existing State-aid rules;

III

calls upon the Commission to

(a) take into  account  the R&TD  needs of  the  machinery industry  in  the
    implementation  of  the  Fourth  and  preparation  of  future  Framework
    Programmes,  in   particular  concerning  the   ICT  and  IMT   Specific
    Programmes; extend CRAFT and similar technological incentives for SMEs;

(b) promote,  through  the  Leonardo  Programme,  adaptation  to  industrial
    change, reintegration  into the labour  market, training  at company and
    national levels,  exchanges of young apprentices and cooperation between
    Member States' training schemes in engineering; 

(c) provide  the mechanical  engineering industry  with the  legal framework
    needed for  the  functioning of  the internal  market  through i.a.  the
    acceleration of  the  Strategic Programme  for making  the  most of  the
    Internal Market;

(d) render the  mechanisms for controlling  State aids  more transparent and
    homogeneous;

(e) contribute  to removing obstacles to industrial cooperation in the field
    of machinery, promoting industrial initiatives in growth markets;

(f) increase its efforts to ensure  European machine exporters' fair  access
    to foreign markets;

(g) implement the integrated Programme for SMEs and the  Craft Sector taking
    into account the needs of the machinery sector;

IV

notes that it  is primarily up  to business to  improve its  competitiveness,
and invites

(a) the mechanical  engineering industry, and specially  its SMEs, to deepen
    industrial  cooperation, both among  EU companies  and between  them and
    third country  companies  both  within  mechanical engineering  and  its
    upstream  and  downstream  industries, with  special  attention  to  the
    components sector;

(b) industry  to step  up  its expenditure  in  R&D  to the  extent  of  its
    financial capacity;

(c) the service sector to improve  its offer to Industry; of special benefit
    for engineering  companies would be  improvements in financing  (banks),
    insurance  (insurance   companies),  automation   (data  processing  and
    telecommunications suppliers),  research  (universities,  laboratories),
    studies  (project managers, consultants), design (industrial designers),
    quality (certification bodies),vocational training (training centres)and
    marketing in foreign countries (agents, dealers, etc.);

(d) the  social partners  to  engage  in  dialogue  on  issues  relating  to
    employment,   especially   in   SMEs,   and   competitiveness  such   as
    productivity, training and working practices;

(e) the  European standardization  bodies to  accelerate the  preparation of
    harmonized  standards,  in particular  those  covering the  Directive on
    machinery;

(f) engineering  companies  to  expand   their  presence  on  markets   with
    significant long-term growth potential;

(g) engineering companies to view quality promotion, clean manufacturing and
    environmental protection technologies as business opportunities;

V

declares its intention of

reviewing in  the second  half  of 1996,  on  the basis  of  a report  to  be
submitted by  the Commission,  the  dissemination and  implementation of  the
measures included in this Resolution."

THE TEXTILES AND CLOTHING SECTOR

The  Council  heard  a  statement  from   Mr BANGEMANN  on  the  Commission's
assessment  of the impact of the  Uruguay Round on the Community textiles and
clothing sector further to the Council's conclusions of 22 April 1994.

Following  an  exchange  of  views  the   Council  instructed  the  Permanent
Representatives Committee to study in detail the  Commission communication on
the  impact  of  international  developments  on  the  textile  and  clothing
industry  so  that the  Council could  continue its  discussions at  its next
meeting on Industry.

A EUROPEAN QUALITY-PROMOTION POLICY

Mr BANGEMANN  outlined to  the Council the  Commission's views on  a European
approach to the  promotion of quality  in products, a subject  closely linked
to the competitiveness of the Union's industry.

The Council noted that  the Commission intended to specify its  intentions in
a formal communication.

INDUSTRY AND RESEARCH: JOINT INDUSTRIAL PROJECTS (TASK FORCES)

The Council  took note  of information given  orally by  Mr BANGEMANN on  the
follow-up  to  the  Commission's  initiative  on  the  creation   within  the
Commission of Research/Industry joint operational units.

The  rôle  of  those Task  Forces  will be  to  improve the  co-ordination of
research  and industrial activity  on a  certain number  of topics considered
strategic for  the future  of European  industry.   For the  time being,  the
Commission has chosen the following six fields:

-   the car of tomorrow;
-   multimedia educational software;
-   vaccines against viral illnesses;
-   the train of the future;
-   a new generation of aircraft;
-   intermodal transport.

Inter alia, Mr Bangemann said that:

-   that selection was not necessarily final;

-   programmes would be drawn up by each Task Force and the Commission hoped
    to be able to present them to the Council during the first half of 1996;

-   those programmes should be financed  by means of the Fourth Research and
    Development Framework  Programme, and the  Commission did  not, at  that
    stage, contemplate requesting additional appropriations.

On the  basis of  that information the Council  held a policy  debate, in the
course  of which several  delegations insisted  that the  Commission keep the
Council informed of the operational units' work.

In conclusion, the  Council noted the Commission's  intention of submitting a
report to it on this matter during the first half of 1996.

INDUSTRIAL COMPETITIVENESS AND COMPETITION POLICY - COUNCIL CONCLUSIONS

"THE COUNCIL:

I

1.  Emphasizes that  the Commission communication  on industrial policy  for
    the European  Union  and  the  Council Resolution  of  21 November 1994,
    adopted on the  basis of that  communication, stress  the importance  of
    guaranteeing undistorted competition, both within and outside the Union;

2.  Recalls that the Commission communication and the Council conclusions of
    7 April 1995  based on  it regarding the  implementation of  a Community
    action programme  to strengthen the competitiveness of European industry
    draw  up a set of initiatives  for ensuring fair competition, taking the
    Union's industrial interests into account;

3.  Welcomes with interest the Commission communication on the fourth survey
    on State aid to industrial production and other sectors in the  European
    Union;

4.  Has deliberated on  the discussion  paper presented by  Mr Van  Miert on
    State  aid policy and the Commission staff  working paper on competition
    policy and the competitiveness of Community industry;

5.  Has  favourably welcomed  initiatives to  strengthen the  application of
    competition   policy   as   an   important   component   of   industrial
    competitiveness policy,  taking  into  account  that both  policies  are
    necessary and  complementary and are  mutually reinforcing in  achieving
    the objectives of growth, competitiveness and employment in the Union;

6.  Considers  that  it  is vital,  on  the  one  hand, to  maintain  closer
    bilateral and multilateral  dialogue between  the Member States and  the
    Commission  as regards Community policy on competition  since this is an
    area  in  which  they both  hold joint  interest  in  reaching efficient
    results and,  on  the other  hand, to  take  into account  international
    aspects where appropriate;

7.  Takes note  that the  overall amount  of aid to  sectors covered by  the
    fourth  survey, for 1991  and 1992, is very  high, albeit with  a slight
    downward trend in comparison with previous surveys, and that significant
    differences  are shown between the different Member  States, both in the
    amount of aid granted and in the trends observed;

8.  Considers that in order to achieve greater effectiveness of the rules on
    State  aid,  as  a  fundamental  component  of  competition  policy  and
    important instrument of competitiveness,  it is necessary in  particular
    to:

    -    increase the transparency of control over State aid;

    -    improve  the  legal  predictability  and  certainty  of  the  rules,
         ensuring  that the criteria  for acceptance  of subsidies  are clear
         and objective;

    -    within  the  framework of  the  Treaty,  improve the  conditions  of
         competition by  promoting the reduction of the  level of public aids
         taking  into account  the need to  consolidate the  operation of the
         single  market,  industrial  competitiveness and  the  objectives on
         economic  and  social  cohesion  to  reduce effectively  disparities
         between different regions in the Community;

    -    re-examine  consistency   between  Community  policies  (R&D,  SMEs,
         environmental,  industrial, regional, etc) and  the control of State
         aid;

    -    take  account  where  appropriate  of  international  rules  in  the
         application  of  Community   State  aid  rules,  so  that  Community
         industry is not  unduly penalized and,  at the same time,  Community
         objectives  of reduction,  convergence  and greater  control  and of
         ensuring consistency with other Union policies are achieved;

    -    reinforce control mechanisms for the purposes stated above.

9.  Considers it urgently necessary to  achieve greater compatibility of the
    rules on competition at international  level and effective control  over
    application  of  their  different   aspects  (control  of  mergers   and
    takeovers,  cooperation  between  enterprises, opening  up  of regulated
    sectors, control over State aid, etc.);

10. Considers  that   it  is  necessary  to  ensure   a  particularly  close
    examination on  how competition and competitiveness of European industry
    may  be influenced by agreements, alliances, mergers  and other forms of
    cooperation that are growing in  number and scope, at both Community and
    international level.

II

THE COUNCIL INVITES THE COMMISSION:

1.  To report to it periodically  both regarding State aid, on  the basis of
    exhaustive  two-yearly surveys,  and regarding  enterprises' competition
    behaviour, so  that the  Council can, in  good time,  examine the future
    development and  application of competition  policy with  respect to the
    competitiveness of Community industry,

2.  To take  these Council's considerations into account  in the initiatives
    that the Commission will take in order to  achieve greater effectiveness
    of  Community  rules  on State  subsidies and  to  increase  its efforts
    towards international cooperation between competition authorities and to
    promote an effective application  of competition rules at  international
    level  taking  into  account the  reality of  competition,  in  the best
    interest of the Union.

III

THE COUNCIL INVITES THE COMMISSION AND THE MEMBER STATES:

1.  To pursue a  close dialogue  on the development  and the  application of
    Community policy on  competition, both at bilateral and  at multilateral
    level;

2.  To follow up  activities in pursuance of these conclusions and to inform
    the Council."

AID TO SHIPBUILDING

The Council held an in-depth  policy debate on the proposal  for a Regulation
on  aid  to  shipbuilding  intended  to  transpose  into  the Member  States'
legislation  the  agreement  on the  subject  concluded  in the  OECD.   That
agreement  should enter  into force  on  1 January 1996  if the  ratification
procedures have been completed by that date.

The Council reached agreement in principle on the  proposal for a Regulation,
to  be  formally  adopted  after  examination  of  the  European Parliament's
imminent Opinion.

However,  as regards  the date  of entry  into  force, the  Council expressed
concern  at  the progress  of  the ratification  procedures in  the countries
which  were  the  Union's  partners in  the  agreement.    According  to  the
information available  to the  Council it  could not  be ruled  out that  the
appointed date would be impossible to meet.

Since the Community rules in  force at present (the Seventh Council Directive
on  aid to  shipbuilding)  cease  to apply  on  31 December 1995 the  Council
adopted a guideline by a  qualified majority linking the entry  into force of
the  Community  Regulation  with  that of  the  international  agreement and,
pending  that  event,  continuing  the  relevant  provisions  of the  Seventh
Directive until 1 October 1996 at the latest.   If the OECD agreement  should
not have  entered into  force by 1 June 1996  for lack  of ratification,  the
Commission will  submit appropriate  proposals so  that the  Council will  be
able to take a decision before 1 October 1996.

It will be recalled that the  OECD agreement deals with the normal conditions
of  competition in  the merchant ship  building and  repairing industry.   It
provides  for the  abolition  of  all direct  aid  to shipbuilding  with  the
exception  of  social aid  linked to  the closure  of ship  yards and  aid to
research and development authorized below certain ceilings.

Indirect  aid  to shipbuilding  in  the  form of  credit  facilities  or loan
guarantees for  shipbuilders are  authorized by the  agreement provided  they
comply with the OECD Understanding on Export Credits for Ships.

STEEL INDUSTRY: MONITORING

After recalling  the importance  it attached  to the  monitoring process  the
Council  took note  of  the  Commission's fourth  six-monthly  report on  the
monitoring of steel  aid cases under Article 95 ECSC  and the Steel Aid  Code
and of the oral information given by Mr Van Miert.

It also  took note of the comments  made by delegations in  the course of the
debate.

The aid in question,  authorized by  the Commission on 12 April 1994  further
to  the  assent  granted  by  the  Council  in  December 1993,  concerns  the
following undertakings:

-   Altos Hornos Capital, formerly CSI, Spain;
-   Sidenor, Spain;
-   Ilva, Italy;
-   Siderúrgia Nacional, Portugal;
-   EKO Stahl GmbH, Germany;
-   Sächsische Edelstahlwerke GmbH, Freital/Saxony, Germany.

The  aid  that  those  undertakings  may  receive  is  subject  to  a  strict
monitoring  system  which provides  for  twice yearly  reports by  the Member
States concerned  to the Commission.  On that basis  the Commission will draw
up six-monthly  reports which  it will  submit to  the Council  by 1 May  and
1 November  respectively, so  that  the  Council can  discuss  the matter  if
necessary.

RESTRUCTURING OF IRISH STEEL

The Council  agreed to  instruct the  Permanent Representatives Committee  to
continue the  examination of  this matter  so that the  Council could  take a
decision on the request  for assent as an  "A" item at a  forthcoming meeting
if possible.

THE STEEL AID CODE

The Council  heard  Mr VAN MIERT  give  details  of certain  aspects  of  the
Commission's proposal and noted  that the conditions  did not yet obtain  for
it  to give  its  assent under  Article 95  of the  ECSC  Treaty  to a  draft
Commission Decision on the adaptation of Article 3 of the Steel Aid Code.

It accordingly agreed to instruct the  Permanent Representatives Committee to
continue the  examination of this matter so that the  Council could decide on
the request for assent at a later date.

The draft Commission Decision provides for the alignment  of Article 3 of the
Steel Aid Code, which deals  with aid for the protection  of the environment,
on  the rules  laid down  in the  Community framework  for State  aid for the
protection of the environment that has applied since March 1994.

OTHER DECISIONS

(Adopted  without debate; in the case of legislative decisions, votes against
and abstentions are indicated.)

Industry

The  Council gave  the assent  requested by  the Commission,  under the  ECSC
Treaty, concerning:

-   financial aid of up to ECU 38 million for the grant of loans,  under the
    twelfth programme, for the financing of housing for  persons employed in
    ECSC industries over the last three years of that programme (1995-1997),
    which will be the last such programme;

-   the adoption of a reserve list of projects for technical steel research,
    to be financed as budgetary possibilities permit;

-   the grant of a loan to SIDEX S.A., Galati (Romania);

-   the grant of a loan for the joint financing  of work on the construction
    of a high-speed railway line between Rome and Naples;

-   the authorization of State aid (Austria) during the  period 1995-2002 to
    Voest  Alpine  Erzberg  Gesellschaft mbH  with  a  view  to its  gradual
    closure.

Telecommunications

Telematic exchange of data between administrations

The  Council   unanimously  adopted  a   Decision  (the  Greek  and   Italian
delegations abstained) on a  Community contribution for telematic interchange
of data between administrations in the  Community (IDA).  That contribution -
which will  amount to ECU 60 million for  1995 and 1996; the figure  for 1997
has  still to be fixed -  will help national administrations and institutions
and Community  bodies to process and  exchange with  each other, by  means of
data-transmission  systems,  the  data  necessary for  the  operation  of the
Internal Market and the implementation of common policies.

The Decision accordingly  establishes a list of  projects for 1995, 1996  and
1997 for  which both a  specific need  and the need  for Community  financing
have been recognized.

Environment

The  Council adopted a common position (the Swedish delegation voted against)
on  the  proposal  for  a  Directive  amending  Directive 88/77/EEC   on  the
approximation of the  laws of the  Member States relating to  measures to  be
taken against the  emission of gaseous and  particulate pollution from diesel
engines for use in vehicles.

The  proposal is intended,  inter alia,  to grant  low-powered diesel engines
for  commercial vehicles  a derogation from  the limit value  of 0,15g/kWh of
particulate     pollution     applicable    from     1 October 1995     under
Directive 91/542/EEC.

The  common  position  - on  which  political agreement  was  reached  at the
Council  meeting on the  Environment on  6 October 1995 -  involves setting a
limit  value of 0,25g/kWh  until 30 September 1997,  on which  date the limit
value of 0,15g/kWh will apply.

* * *

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