PURPOSE: to propose
a new multiannual financial framework (2007-2013) revising and codifying the
current financial framework taking into account the entry into force of the
Treaty of Lisbon.
PROPOSED ACT:
Council Regulation.
BACKGROUND:
the Treaty on the Functioning of the European Union (TFEU) stipulates that a
unanimously adopted Council Regulation shall lay down a multiannual financial
framework. The financial framework shall determine the amounts of the annual
ceilings on commitment appropriations by category of expenditure and of the
annual ceiling on payment appropriations and it shall lay down any other
provisions required for the annual budgetary procedure to run smoothly.
The practice
to adopt a multiannual financial framework and provisions on the interinstitutional
cooperation and budgetary discipline started more than 20 years ago. It has
immensely improved and simplified the annual budget procedure and cooperation
between institutions and, as a consequence, increased the budgetary
discipline.
The current multiannual financial framework for 2007-2013 was
agreed between institutions in May 2006 and is laid down in the
Interinstitutional Agreement on budgetary discipline and sound financial
management (the IIA).
With the entry into force of the TFEU, the relevant provisions of the current
IIA need to be codified into a Council Regulation laying down the multiannual
financial framework (the MFF regulation). This codification represents an
alignment of the provisions of the current IIA with the requirements of the
Treaty. However, this alignment has to take into account the change of
instrument, i.e. a regulation instead of an IIA. For legal reasons, it is,
however, neither possible nor feasible to transpose all the provisions of the
current IIA into the MFF regulation. Some of the provisions of the current
IIA became obsolete with the entry into force of the Lisbon Treaty, many
shall be incorporated in this MFF regulation, and some in the revised
Financial Regulation.
A new IIA is
still necessary for those provisions that do not fit into either of these two
regulations and incorporate them into the framework of a revised
IIA (provisions on interinstitutional cooperation, in particular).
Taking into account all the relevant provisions and requirements
of the Treaty, the current proposal seeks to focus on the financial framework
in the strictest sense (e.g. annual adjustments of the financial framework,
revision of the financial framework…). Some of the other provisions
previously in the IIA have become obsolete (i) provisions related to
the distinction between compulsory and non-compulsory expenditure and the
maximum rate of increase, (ii) the classification of expenditure, (iii) significant
parts of inter-institutional cooperation are either inappropriate for a
regulation of this type and should fall within the financial regulation
(rather than in the MFF regulation) or in the IIA.
The remaining
provisions – mainly issues relating to pure interinstitutional cooperation –
are included in a new
IIA which is the subject of a separate procedure.
For the sake
of integrity, the draft MFF Regulation and the new IIA are presented together
and should be negotiated and agreed as one integral package.
IMPACT ASSESSMENT: no impact assessment
has been undertaken.
LEGAL BASE:
Article 312 of the Treaty on the Functioning of the European Union (TFEU) –
special legislative procedure.
CONTENT: since
1988, the multiannual financial framework and related provisions have been
laid down in interinstitutional agreements. The multiannual financial
framework for 2007-2013 was established by the Interinstitutional Agreement
of 17 May 2006 (the IIA).
With the entry into force of the TFEU, the practice of fixing the financial
framework by interinstitutional agreement has to be reviewed and the
multiannual financial framework has to be laid down in the form of a
regulation. This is the purpose of this proposal which integrates the
appropriate provisions of the old IIA and takes into account, where required,
of the amendments that are required by the new Treaty.
As a result, the IIA is to be amended as
follows:
- maintenance of the current financial
framework: the financial framework has not
been changed;
- an obligation to respect the ceilings on expenditures of
budgetary heading s and the ceilings on own resources: as before, the annual ceilings are retained, as well as the
requirement for the institutions to respect these ceilings during the
budgetary procedure. Should the ceilings for payment appropriations
result in a call-in rate for own resources exceeding the own resources
ceiling, the ceilings of the financial framework have to be adjusted;
- the possibility to exceed the ceilings under certain
conditions: provision is made for the
possibility to exceed the ceilings, if necessary, when the
instruments not included in the financial framework are mobilised,
i.e. the Emergency Aid Reserve, the Solidarity Fund, the Flexibility
Instrument and the European Globalisation Adjustment Fund (these
instruments are now defined in the new
IIA). They are not included in the financial framework and ensure
that financing in specific circumstances is provided in excess of the
ceilings of the financial framework, if it is required. They increase
the flexibility of the financial framework and are mobilised jointly by
the two arms of budgetary authority;
- rules on annual technical adjustment of the financial
framework are unchanged: the rules agreed regarding
the annual technical adjustment of the financial framework are unchanged
(revaluation of the financial framework at year n+1 prices and on the
basis of a fixed deflator of 2% a year);
- adjustment of cohesion policy envelopes: the wording in this part has only been slightly changed.
The reference to the current IIA was replaced with the reference to the
period when the cohesion policy envelopes were agreed. The adjustment of
cohesion policy envelopes will be made in the technical adjustment for
the year 2011, to be presented in April 2010. This adjustment
will take place if it is established that cumulated Gross Domestic
Product (GDP) of any Member State for the years 2007-2009 has diverged
by more than +/- 5 % from the cumulated GDP estimated in 2005 for the
establishment of cohesion policy envelopes for Member States for the
period 2007-2013;
- adjustments related to excessive government deficit: the wording of these articles has either not changed or
only changed very marginally (reference to the voting rules for the
adaptation of implementation conditions, in particular);
- revision of the financial framework: the revisions of the financial framework are adopted
according to the same rules as the regulation itself. In order to retain
the current level of flexibility of the financial framework as regards
the revisions below the threshold of 0.03% of GNI, paragraph 3
stipulates that the financial framework may be adapted, if need be, and within
the threshold of 0.03%, in the framework of the annual budgetary
procedure. This does not change the current practice where revisions
below the same threshold were jointly decided by Parliament and
Council, with Council deciding by qualified majority. It should be
noted that the rules regarding the revision of the financial framework
in the event of a revision of the Treaty or enlargement have not been
revised;
- interinstitutional cooperation in the budgetary procedure: this article lays down the general principles in regard to
interinstitutional cooperation in the context of the budgetary
procedure: i) the principle of good faith between the institutions
throughout the procedure with a view to reconciling their positions; ii)
appropriate interinstitutional contacts to monitor the progress of the
work; iii) coordination of their respective calendars of work to enable
proceedings to be conducted in a coherent and convergent fashion; iv)
the retention of the principle of interinstitutional trilogues at all
stages of the procedure to facilitate agreement on the budget. The
technical details of the cooperation are included in the new IIA;
- financing
of the CFSP: the financing of the Common
Foreign and Security Policy has a special standing during the budgetary
procedure. In order to maintain the current balance and to help the
budgetary procedure to run smoothly, the basic rules (the amount entered
in one budget chapter covering the real predictable needs, no funds
entered in a reserve) and the amount agreed for the financing of the
CFSP (without change) are introduced in the MFF Regulation. The total
amount of operating CFSP expenditure shall be entered entirely in one
budget chapter, entitled CFSP. That amount shall cover the real
predictable needs, assessed in the framework of the establishment of the
draft budget, on the basis of forecasts drawn up annually by the High
Representative of the Union for Foreign Affairs and Security Policy, and
a reasonable margin for unforeseen actions. No funds may be entered in a
reserve. An amount of at least EUR 1 740 million shall be available
for the CFSP over the period 2007-2013;
- consequences
of the absence of a financial framework:
overall, the rules relating to the duration of the financial framework
and the consequences of the absence of a financial framework are retained.
The obligation for the Commission to present a new financial framework
before July 2011 is also maintained. Minor changes have been made
to align with the wording of the TFEU;
- entry
into force: it is planned that the new IIA
will enter into force on the same day as this proposed regulation.
BUDGETARY
IMPACT: the proposal has no impact on the EU’s budget. It corresponds to the
financial framework as revised for the second phase of the European
Economic Recovery Plan (EERP), adopted by the Council and Parliament on
17 December 2009.