A3-0008/92

RESOLUTION

on the Commission's annual report on the economic situation in 1991-92

The European Parliament,

- having regard to the Commission proposal to the Council

(COM(91) 0484 - C3-0017/92),

- having been consulted by the Council pursuant to Article 4

of Council Decision 90/141/EEC of 12 March 1990 on the

attainment of progressive convergence of economic policies

and performance during stage one of economic and monetary

union,

- having regard to the report of the Committee on Economic and

Monetary Affairs and Industrial Policy (A3-0008/92),

A RETURN TO GROWTH IN THE COMMUNITY

1. Notes that, according to the Commission report, there has

been a marked slowdown in growth in the Community, from 2.8

per cent in 1990 to 1.3 per cent in 1991, against a

background of rising unemployment (8.6 per cent in 1991

compared to 8.4 per cent in 1990). The average budget

deficit in the Community widened from 4.1 per cent of GDP

in 1990 to 4.4 per cent in 1991; the current balance deficit

is increasing noticeably (from -0.2 per cent in 1990 to -

0.8 per cent in 1991), though the inflation rate has been

kept down (5 per cent in 1991);

2. Also notes that according to the same report there has been

an even more pronounced deterioration in the world economic

situation, with poor or negative growth especially in the

United States where it fell from 0.9 per cent in 1990 to -

0.4 per cent in 1991) and a fall in the volume of world

trade (from 7 per cent in 1990 to 2 per cent in 1991);

3. Considers that possibly the Community's best response to the

world-wide deterioration in the economic situation should

not be to seek to disguise the inadequacy of its economic

performance, either in comparison with initial forecasts

(2.25 per cent) and the single market's anticipated benefits

or in comparison with the continuing achievements of the

Japanese economy: a high growth rate (4.6 per cent),

although down on 1990 (5.6 per cent), low inflation (2.8 per

cent) and low unemployment (2.1 per cent);

4. Considers that the Community's current economic situation

gives cause for concern. As well as giving rise to marked

differences in growth (-1.8 per cent in the United Kingdom

because of recession and poor growth in France and Italy of

around 1.2 per cent, whereas Germany, Luxembourg and Spain

have managed to sustain growth of 2.5 per cent or more), the

economic situation threatens to undermine the single

market's benefits, to jeopardize progress towards economic

and monetary integration and to aggravate social unrest;

5. Questions the accuracy of the - hardly impressive - growth

forecasts made in the annual economic report of 2.25 per

cent for 1992 and 2.5 per cent for 1993, as this will be a

period of some uncertainty owing to:

(a) the expected fall in exports due to poor world demand

and the current rise of the ECU against the dollar,

(b) a rise in the export industry's wage costs,

(c) poor gross capital formation due to high interest

rates,

(d) the low level of savings;

6. Notes that the deterioration in the economic situation in

the Community is partly due to external factors such as the

consequences of the Gulf crisis, uncertainty over the

outcome of the Uruguay Round, economic and political

developments in the countries of Central and Eastern Europe,

and the low level of savings worldwide;

7. Considers, however, that the deterioration in the

Community's economic situation would not have been so

serious if adjustment policies had been implemented more

consistently; considers, in this respect, that against a

background of poor growth, this raises some major structural

issues, such as:

(a) the consolidation of non-inflationary growth,

guaranteeing increased employment,

(b) a policy that will lead to a growth in the savings

necessary to finance public investment, both physical

(infrastructure) and less tangible (R&D, education and

training),

(c) greater flexibility in the supply of capital and

greater readiness on the part of employers to offer

alternative working patterns, for example to achieve

compatibility between work and domestic

responsibilities,

(d) more flexibility of supply in the employment market,

whilst ensuring that the precarious employment

situation is not aggravated,

(e) a European industrial policy that also helps to improve

the Community's trade balance;

8. Considers that concerted action should be taken as a matter

of priority to achieve a reduction in real rates of

interest in the Community, a necessary condition for

reducing investment costs and the financial burden on

States and to boost consumption, since the coordination of

interest rates in the EEC is a political and economic

necessity which will help to guarantee the credibility of

the future EMU;

9. Emphasizes, therefore, that the economic, monetary and

structural policy of the Community and of the individual

Member States for 1992 and 1993 should not seek to follow

the policies of earlier years, which led to a deterioration

in the economic situation;

10. Notes that the proposed Treaty revision agreed to in

Maastricht, by setting financial targets for the transition

to stage 3 of EMU will require deflationary policies to be

pursued simultaneously by eleven of the twelve Member

States, entailing the risk of creating a full recession in

the European economy;

11. Asserts, therefore, the need for a return to sustainable

growth in the Community, the aims of which should be clearly

defined and should entail determined attempts to combat

unemployment, which will affect at least 9 per cent of the

working population by 1992; stresses also the need for

protection of the environment, real convergence of the

economies, particularly in the less-favoured regions, and

aid to the countries of Central and Eastern Europe and the

developing countries;

MAKING A SUCCESS OF ECONOMIC AND MONETARY UNION

12. Considers that along with goals such as growth and reduction

of unemployment, Member States' key economic objectives

should include the creation of the conditions necessary for

the step-by-step establishment of economic and monetary

union together with the wider economic objectives defined

in the new Article 2 of the Treaty proposed by the

Intergovernmental Conference at Maastricht;

13. Urges the Council, since EMU is crucially dependent on the

single market, to adopt as swiftly as possible the last 69

proposals necessary to complete it, particularly those

concerning freedom of movement for individuals, excise

duties, cooperation between companies, and rules relating

to plant health;

14. Calls on those Member States who have neglected to do so to

incorporate without further delay all European directives

into national law, otherwise the single market, far from

bringing the anticipated benefits, will actually lead to

distortions of competition;

15. Notes that transition to stage two of Economic and Monetary

Union on 1 January 1994 is strictly conditional on meeting

the objectives of stage one, which is currently under way:

that is, in addition to the relaxation of restrictions on

capital movements, the coordination of economic policies

(multilateral surveillance) and the implementation of

convergence programmes;

16. Notes that a great deal of progress is still needed to

achieve:

- a drop in the average inflation rate throughout the

Community and a narrowing of the present gap between

the rates of the different Member States

- a tangible reduction in the excessively large budget

deficits in some Member States in 1991 (Greece, 17.3

per cent of GDP; Italy, 9.9 per cent of GDP; Belgium,

6.4 per cent of GDP), whereas the limit laid down in

the criteria for transition to stage three is 3 per

cent, achieved only by the United Kingdom, Luxembourg,

Denmark and France,

- a closer convergence of interest rates

- the removal of obstacles to boosting the part played

by the ECU

- further restructuring of production and the promotion

of high-tech and environmentally sound business

activities;

17. Stresses, however, that the criteria which are to determine

transition to the second stage of EMU do not accurately

reflect the Member States' state of economic health and must

be interpreted in the light of the general economic context

of the countries concerned and the progress currently being

made in their programme for convergence;

18. Stresses that if the Community's policy for change is

designed to limit realignments of central exchange rates

with a view to the transition to stage two of EMU, the

Community should acquire the necessary means to implement

special policies for coping with sudden fluctuations as and

when necessary;

19. Strongly believes that, to achieve greater convergence of

interest rates, two types of decision are required:

(a) a commitment by the Member States concerned to accept

a narrow band of exchange rate mechanism fluctuation,

(b) the participation of all Member States in the exchange

rate mechanism of the European Monetary System;

STRENGTHENING THE COMMUNITY'S COMPETITIVENESS

An active but coherent competition policy

20. Stresses the need to pursue, without weakening the

Community's position with regard to foreign competitors, the

implementation of a rigorous competition policy on the

monitoring of mergers, state aids, tariff transparency in

general (air fares, telecommunications) and financial

relations between states and industry, in accordance with

its resolution of 13 December 1991 on the 20th Report of the

Commission on Competition Policy , since the Community

economy's competitiveness depends on it;

21. Calls in particular on the Commission to display vigilance

in ensuring that the privatization currently taking place

chiefly in the new German Länder, but also in other Member

States, does not lead to discrimination or distortion of

competition;

22. Insists, however, that the Commission should seek greater

coherence between the implementation of competition policy

and the requirements of the other Community policies, in

particular of industrial policy, which is still inadequate,

particularly in the strategic sectors, and of environmental

policy, so as not to penalize the efforts of the Member

States which are the most advanced in this field;

Community industrial policy

23. Reaffirms the pressing need for a Community industrial

policy designed to ensure:

- substantial growth in the Community research effort

designed to bring research in the EEC up to a level

comparable to that of its principal rivals (the EEC

currently spends 1.9 per cent of GDP on research, as

opposed to 2.6 per cent in the United States and 2.9

per cent in Japan);

- a wider spread of the different technologies and their

industrial applications;

- much better coordination of the industrial strategies

needed to launch vital counter-attacks in sectors

undergoing a European crisis of competitiveness

(electronics, cars, ship building, textiles, etc.);

- generally, a clearer idea of Community interests;

A common energy policy

24. Affirms the need for a common energy policy, the key element

in balanced and sustainable growth, as well as a Community

industrial policy. In this area the Community, which is

relatively short of primary energy sources, still depends

on foreign supplies for more than 45% of its needs. In the

prospect of economic and monetary union and political union

it is paradoxical to find the European Community so lacking

in cohesion in terms of energy policy when this is known to

be a strategic element in the economy;

points out that a common energy policy would seem to

involve six objectives:

- free competition and the free movement of goods:

energy is no ordinary product and the principle of free

competition must be considered in terms of the

principle of public service. Limits must be defined

for each energy sector as the situation varies so much,

- short-and long-term security of supply,

- encouragement of R&D: long-term research programmes and

active technological monitoring of all industries

developing alternatives to fossil fuels,

- climatic change and the greenhouse effect: a policy

of reducing gas emissions that influence the greenhouse

effect and coordinating European research on global

climatic change,

- cooperation with Central and Eastern Europe and the

Commonwealth of Independent States (CIS): technical

assistance for the safety of nuclear power stations and

for the introduction of energy sources to replace the

nuclear power stations called upon to close down in the

next few years; depollution of coal-fired plants;

reorganization of electricity and gas distribution

networks, oil-wells etc. and cooperation in the

research field,

- reduction of energy consumption and North-South

technology transfer: speeding up the transfer of

technologies for clean production to the developing

countries, since it is not possible to offer them our

method of energy consumption,

stresses the particular value of long-term forecasting (of

supply and demand) as the basis of a common energy policy,

making it possible to optimize the allocation of energy

production between the various sources, in relation to

their specific characteristics and their world situation

and to ensure consistent development of the European states

and regions;

25. Calls in particular on the Commission, against the

background of the new international situation, to present

a broad programme laying down conditions designed to

encourage partial conversion of the arms industry to civil

production, particularly in the environmental field;

Promotion of SMUs

26. Reaffirms the leading role that SMUs, which constitute 98

per cent of all companies, may play in growth and

innovation, provided that they benefit from such measures

as:

- more help in training staff

- simpler administration

- easier access to funding

- the elimination of any fiscal or social measures which

discriminate against SMUs

- efficient competition and merger controls;

The restructuring of Community agriculture

27. Strongly asserts the need for a restructuring of European

agriculture, given the impossibly high cost of the current

intervention system and the fatal effect which the

Community's export subsidies could have on a successful

conclusion of the GATT negotiations. This vital and

strategic sector of the Community should today be treated

as the Airbus and Ariane programmes were in the 1970s,

moving towards a new future (with particular regard to the

agri-food sector, quality production and protection of the

environment);

GUARANTEEING ECONOMIC AND SOCIAL COHESION

Refusing to accept that unemployment is inevitable

28. Deplores the steady worsening of unemployment, which will

affect at least 9 per cent of the working population - or

13.6 million people - by 1992, the highest rate throughout

the industrialized world (Japan 2.2 per cent, United States

7 per cent), and refuses to accept that unemployment is

inevitable;

29. Is concerned at the increasingly structural nature of

unemployment which is resulting in a growing proportion of

long-term unemployment and a deterioration in the social

conditions of employment, such as an increase in non-

standard employment, part-time work, shift-work, inequality

in pay, etc.

30. Calls on the Commission and the Member States to implement,

finally, the Community's employment strategy based in

particular on:

- resolute action to promote occupational training;

- the encouragement of flexible working conditions and

geographical mobility, with the social guarantees set

out in the Community Charter;

- the abolition of tax and social security measures that

discriminate against SMUs and any other measures which

may prove necessary to support SMUs;

- consolidating the social dialogue at all levels;

- creating jobs to meet the manifest social and cultural

needs of conurbations and rural areas suffering from

depopulation;

- developing employment linked to protection of the

environment;

Remedying disparities in regional development

31. Notes that despite a slight improvement in recent years

mainly due to the favourable economic situation, grave

disparities in economic development persist between the

Community's different regions, with the poorer ones having

an unemployment rate of 15 per cent or more and an average

per capita income level (in terms of purchasing power

parity) a third or less of that of more prosperous regions;

32. Confirms, therefore, especially in view of the persistence

of regional economic development disparities and in

particular risks of losing local investment and the

'skimming-off' of profitable activities by the major

transnational companies to the detriment of local business,

the need to strengthen substantially regional development

aid, particularly in respect of:

- vocational training

- attracting research

- redefining the development of transport infrastructure

according to combined economic and environmental

criteria

- telecommunications

- restoring and maintaining an attractive environment.

Hence the need to contemplate an immediate further increase

in the structural funds and, at the same time, revision of

the IMPs, the efficiency of which will have to be improved,

and the early introduction of the cohesion fund sanctioned

at Maastricht;

33. Stresses, also, the importance of tourism (worth 5 per cent

of GDP and employing more than 8 million people) to economic

and social cohesion, by virtue of its knock-on effects,

making a vigorous Community policy promoting quality tourism

(especially social, cultural and rural tourism) all the more

important;

Strengthening environmental policy

34. Stresses the need to integrate environmental concerns (on

energy, transport, industry and agriculture) into Community

policies as a whole, sustainable growth not being compatible

with economic competitiveness and job creation; this

highlights the need for:

* improved monitoring of the application of the rules

concerning the environment and

* the incorporation of ecological and social costs in

economic calculations, in particular through taxes;

ASSERTING THE COMMUNITY'S IDENTITY

The EEC - the hard core of a big Europe

- Vis-à-vis the EFTA countries

35. Recognizes the treaty between the EEC and the EFTA countries

setting up - without ruling out development towards

political union - a European economic area comprising 19

countries and 370 million people, with a volume of trade

greater than that between the EEC on the one hand and the

United States and Japan on the other, as a major step

towards building a large Europe and an added boost to

economic development;

36. Stresses, however, that the smooth implementation of the

Treaty will depend on the EFTA countries' respect for the

acquis communautaire and the principle of reciprocity;

- Vis-à-vis the countries of Central and Eastern Europe

37. Notes that the economic situation in the countries of

Central and Eastern Europe has deteriorated sharply since

the collapse of the planned economy and that in some

respects their situation can be compared with the

Community's at the end of the Second World War;

38. Considers that in order to curb the damaging effects of the

transformation of the planned economies of Central and

Eastern Europe into market economies on the demand for

capital, the level of world savings, world trade and

international relations, the Community should take steps to

aid the countries in question, such as:

(a) easier access for industrial and agricultural products

from Central and Eastern Europe

(b) direct investment to facilitate gradual privatization

and rapid stabilization

(c) financial help at reduced interest rates and EIB loans

with interest-rate subsidies

(d) introducing a new distribution system.

39. Calls on the Commission to investigate whether Community

agricultural surpluses can be used to a greater extent as

food aid for Central and Eastern Europe without distorting

local markets or depriving the developing countries, and

secondly to use the revenue for the infrastructure which is

urgently needed in the agricultural sector, e.g. cold stores

and storage facilities etc; shipment of the products to the

countries concerned should be arranged and distribution

supervised by the Community;

40. Considers that the Community should take the initiative in

proposing a medium-term development programme for the

countries of Central and Eastern Europe on the model of the

Marshall Plan, with the involvement of the United States,

Japan, the EFTA countries, Australia and Canada;

41. Stresses, however, the need to ensure that these countries

are not drawn into dumping and unfair competition

detrimental to the Community and unsettling for world trade

in general;

42. Considers that assistance and cooperation on energy with the

republics of the former Soviet Union look capable of giving

a major economic boost to both sides, providing the

countries concerned with a source of foreign currency and

guaranteeing the Community the necessary energy supplies,

which underlines the importance of the forthcoming

conclusion of the European Energy Charter;

43. Requests also the provision of financial aid and technical

assistance to make a significant contribution to the

implementation of programmes to restore the environment in

those countries;

Community solidarity with the developing countries

44. Notes that in 1991 the growth rate of the developing

countries as a whole hit its lowest level since 1965;

believes that a failure on such a scale of the regulatory

systems of the world economy demands a reexamination both

of the institutions and the economic doctrines which have

produced this result;

45. Considers it necessary, however, to establish as much

linkage as possible between aid to the developing countries

and cuts in their military spending where it is obviously

excessive, the consolidation of democracy and concern for

the environment;

THE COMMUNITY - AND ITS LEADING ROLE ON THE ECONOMIC AND MONETARY

WORLD STAGE

46. Is concerned at the trade development implications of the

delay in the Uruguay Round negotiations, a successful

conclusion to which is only conceivable if the agreement:

- contributes to a review of world economic and trade

relations, strengthening and extending the GATT rules

and multilateralism to services;

- provides better guarantees than at present for proper

compliance with competition rules and combating

commercial, social and environmental dumping and tax

evasion;

- ensures that the interests of developing countries are

protected from possible negative effects of the

European single market;

47. States that the Community would not be able to open up a

single market of 340 million people with a strict

competition policy to foreign competition, unless its

competitors (EFTA, the United States and Japan) were

prepared to display a similar degree of openness and

reciprocity; notes, in this respect, in anticipation of

their effective implementation, the agreements between the

EEC and the United States on competition and the agreement

on the car industry with Japan; reaffirms, especially in

view of the doubling of the trade gap between the EEC and

Japan, its determination to put Community preference first

in the event of non-reciprocity;

48. Considers that greater liberalization of international trade

is pointless unless it offers the following three guarantees

which do not at present exist in the context of GATT:

- it should be of equal benefit to all the partners

concerned,

- it should incorporate social and environmental costs

in the content and direction of trade,

- it should not increase dependence on the outside, e.g.

because of greater economic instability;

49. Notes that the globalization of capital and world trade

makes a minimum of international cooperation between the

three main trading powers (the Community, the United States

and Japan) vital;

50. Considers, now that it is irreversibly committed to a

federal-type union implying an advanced degree of economic

and monetary integration, that the Community should assert

its full weight on international bodies. The Community, for

example, is in a better position than G7 to make a

significant contribution towards solving problems relating

to exchange rates and interest rate policy, particularly in

terms of setting up a better organized international

monetary system and righting the present imbalances.

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51. Calls on the Commission to bring forward before 30 June 1992

its proposals for meeting the objectives identified in this

resolution, in particular paragraphs 12, 18, 23, 25, 30 and

43 thereof, and to give the European Parliament the

opportunity to comment on those proposals; asks the

Commission to give an immediate indication of its

willingness to meet this request;

52. Considers that the proposal for a Council decision should

be amended as follows:

Article 1 to read:

The Annual Economic Report 1991/92, annexed to the present

decision, is adopted with the economic policy guidelines

set out in Article 1a.

New Article 1a:

The economic policy priorities for the Community are:

- completion of the Single Market;

- achievement of economic and monetary union on terms

beneficial to all regions of the Community;

- the promotion of economic and social cohesion and the

reduction in the gap between rich and poor;

- the achievement of full employment and environmentally

sustainable growth;

Economic policy coordination in the Community will be

directed towards these goals;

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53. Instructs its President to forward this resolution to the

Council and Commission and to the governments and

parliaments of the Member States.