I thank the committee for giving me the opportunity to make this presentation today on the regulation dealing with the European grouping for territorial co-operation, EGTC. I will set out the context for the regulation of the EGTC, the main provisions of the regulation and what the main issues of concern to Ireland were at the time. The draft possessed by the Chairman dates back to last March. I would also like to draw the committee's attention to the fact that all our concerns were resolved at the drafting stage when the regulation was being considered by the structural actions working group, the relevant committee in Brussels. The regulation has since been approved by the Council and agreed by the European Parliament and was published in the Official Journal of the European Union, OJEU, on 31 July. It took effect from 1 August.
I will explain some of the background. The Commission set out its proposals for the next round of programmes from 2007 to 2013 in the third cohesion report published in February 2004. Subsequently, the Commission published five draft regulations on the governance of cohesion policy in July 2004. The structural actions working group debated the draft regulations and a consensus was achieved on the majority of the provisions.
The proposals contained a radical shake-up of existing cohesion policy prompted by enlargement and an attempt to focus investment on a limited number of priorities reflecting the Lisbon and Gothenburg agendas, particularly in non-Objective One status regions. Management will be streamlined and the number of main objectives or priorities in the regulations has been reduced to three. The first is the convergence objective, the second is the regional competitiveness and employment objective and the third is the territorial cohesion objective. The bulk of the European Union's Structural Funds are being provided in respect of the first objective, but Ireland will not benefit from it in the next round. It replaces the existing Objective One and is aimed at EU regions with per capita GDP below 75% of the EU 25 average. Special provisions are proposed for regions that would have GDP per capita of less than 75% of the EU 15 average, but due to enlargement are now above the 75% of the EU 25 average.
Neither of Ireland's NUTS II regions, the southern and eastern region and the Border, midland and western region, will be eligible for support due to their GDP levels. As most committee members know, Ireland is divided into two regions for Structural Funds purposes. Both Irish regions will qualify for support under the second objective, which is aimed at all EU regions not covered by the convergence objective.
The Commission proposed that activities to be funded should concentrate on implementing community policies, that is, the Lisbon and Gothenburg agendas and the European employment strategy, with particular focus on innovation and the knowledge economy, environment and risk prevention, accessibility to services of general interest, such as public transport or broadband, increasing adaptability of workers and enterprises, enhancing access to employment and social inclusion measures. Transitional arrangements and enhanced support were proposed for current Objective One status regions that now have a per capita GDP above 75% of the EU average because of natural growth. The BMW region is eligible for these transitional arrangements and will get more money from Ireland’s allocation.
The Commission proposed a territorial cohesion priority aimed at supporting cross-border and inter-regional activities. This replaces the INTERREG Community initiative programmes of the current round. In this respect, the Commission proposed a package of five regulations. Four regulations concern cohesion policy and one proposes a framework for promoting cross-border co-operation, that is, the regulation on European groupings for territorial co-operation before the committee. The four cohesion regulations establish the objectives, policy orientation, linkages with the Lisbon Agenda, funding for the objectives, general planning, management and implementation arrangements, financial control, the roles of various bodies, partnership, the role of the EIB and the need for consistency with other Community instruments and policies. This is the general framework through which Structural Funds are disbursed.
There are separate regulations for the operation of the three main funds, namely, the European Regional Development Fund, the European Social Fund and the Cohesion Fund. These regulations concern the orientation and programming of the separate funds, the eligibility of activity and specific arrangements linked to the character of each fund. In the next round, the funds relating to Ireland will be the ERDF and the ESF, but we will no longer benefit from the Cohesion Fund.
The European grouping for territorial co-operation regulation is designed to provide for cross-border arrangements between public bodies to overcome differences in administrative arrangements on either side of the relevant borders. The regulation provides a common statutory framework for the conclusion of agreements to co-operation. However, recourse to the EGTC is optional. It is designed to promote co-operation primarily between different local and regional authorities and certain other public bodies in the European Union. Member states may also be members of the groupings. The intention is for all types of territorial co-operation to be covered. These range from cross-border co-operation in the case of bodies or regions that share common borders, transnational co-operation where regions do not share common borders and inter-regional co-operation, which relates to regions with or without common borders. The proposal is essentially a successor to the current INTERREG regional programme instrument for member states' co-operation in Structural Funds expenditure.
An EGTC can be established as a distinct legal entity with the same legal rights afforded to it as other legal persons in member states. However, potential members of the grouping must apply to their respective member states for approval to participate in the first instance. The EGTC must have its own conventions and statutes, be registered in a member state and draw its membership from at least two member states. While the main aim of the establishment of the EGTCs is to facilitate the implementation of the co-operation programmes financed by the funds, they can also carry out actions or programmes that are not Community-funded.
The above is a summary of the main provisions circulated to the committee. A copy of the regulation has also been made available. For convenience, I have set out in appendix 1 the main provisions of the regulation. I do not propose to go through these, but I will happily take members' questions.
Ireland's interest in the drafting process and the matters considered by us revolve around three issues, one of which relates to the establishment of an EGTC. Our main interest in this regulation concerned Article 3.3 as originally drafted, which described the procedure for the establishment of an EGTC and provided that a member state must agree to the participation of an applicant body in the grouping unless such participation essentially contravened the regulation or the member state's national law. We found this measure restrictive. Approximately half of the 25 member states expressed varying degrees of opposition to and dissatisfaction with the proposal, which they saw as limiting their powers to refuse an application. Ireland, the Netherlands, Denmark and the UK were among the more vociferous member states that called for more discretionary powers of refusal to be introduced into the text.
After some time, the Commission responded specifically to suggested Irish textual amendments, which not only allow a member state to veto an application on public interest or public policy grounds, but also extend this discretion to Article 9 of the regulation relating to the activities of an EGTC. The inclusion of this public interest provision was sufficient to address the main element of our concerns.
A second issue related to the nature of the activities an EGTC could undertake. The regulation allowed non-Community finance tasks to be undertaken by the European grouping for territorial co-operation, EGTC, and still does. A number of member states sought to restrict such tasks to Community funded tasks or to give member states discretion in this matter. Others did not have difficulty with a territorial grouping carrying out a wide range of tasks and did not agree. The final version of the regulation provides that a grouping on territorial co-operation will focus primarily on promotion and implementation of territorial co-operation projects co-financed by the EU structural or cohesion funds while allowing some room for activities that facilitate territorial co-operation. That is addressed in the relevant article of the regulation.
The third part relates to the public interest. This article, dealing with how a member state can address a situation where undesirable activities are being carried out by an EGTC, may have caused some concern because of the ex post facto nature of the remedies proposed at the outset. This was amended following the new Commission proposal. The proposal expanded the grounds for prohibiting such activities to include the public interest and allayed our concerns. I thank the committee and hope I have provided an overview of the main provisions of the regulation.