Select Committee on European Communities Seventeenth Report


Letter from the Rt Hon Joyce Quin MP, Minister of State, Foreign and Commonwealth Office, to Lord Tordoff, Chairman of the Committee

  I enclose for your information a copy of the German Presidency non-paper, the so called "negotiating box", which issued on 9 March. It will be before the Foreign Ministers Conclave this weekend. It is unlikely that a revised version will be available until shortly before the meeting of Heads of State and Government at the Special European Council in Berlin on 24-25 March.

  It should be noted that final agreement has not been, nor will be given to any of the individual Agenda 2000 dossiers until political agreement on the package has been reached overall.


  The Government's objective in the future financing negotiation is to make the necessary preparations for enlargement and to keep down the United Kingdom's net contribution. This requires strict control of spending in EU15, and maintenance of the UK abatement. The Government believes that EU15 spending should be stabilised by 2006 at around 1999 levels in real terms.

  Stabilising EU15 spending will, by comparison with the Commission's proposals, increase the margin beneath the 1.27 per cent Own Resources ceiling, and so increase the resources potentially available to finance enlargement in the future.

  The Government considers maintenance of the abatement to be fully justified: the UK is the 9th-11th richest Member State yet the 5th largest net contributor in per capita terms.


  Agriculture Ministers reached agreement, in principle, on a package of CAP reform on 11 March. The UK secured its main objective: significant cuts in EU farm support prices. This will deliver substantial benefits to all EU consumers. Once the price cuts have been fully phased in, we estimate the gain to UK consumers would be of the order of £70 a year for a family of four. The UK countryside will benefit from moves to promote more environmentally sustainable farming, especially in the hills, and a far-reaching package of measures to promote rural areas. Farmers too will benefit from this and from a more market-led agriculture policy.

  But the UK is concerned that the agreement does not respect a commitment made last month by EU Heads of State and Government to stabilise CAP spending at current levels. Additional measures are needed to bring spending down. The only feasible means of doing so is to reduce—gradually over time—the compensation payments which farmers receive for price cuts. This "degressivity" of payments also help the EU prepare for enlargement and strengthen its negotiating position at the next round of WTO talks.


  Substantial reform of the European Union's structural funding arrangements is needed before enlargement. There has been welcome progress in agreeing a reduction in the number of Objectives from seven to three, improved financial control and simplified administration. The Government's main objectives for the remainder of the negotiation are to achieve agreement to stabilisation of total EU15 structural spending, and to Maximise the UK regions' share of receipts within that total.

  On Objective 1 (poorest regions), Merseyside, West Wales and the Valleys, South Yorkshire and Cornwall should all qualify with average per capita GDP below 75 per cent of the Community average. The Highlands and Island (at 76 per cent) do not meet this criterion but the Government is pressing their case for Objective One status by highlighting the similarity of their position with that of other sparsely populated regions in Sweden and Finland (which under the Commission's proposals would benefit from Objective One status).

  Nor does Northern Ireland (at 80 per cent) meet the GDP criterion. The Government is, however, stressing the importance of securing a substantial level of continued support for Northern Ireland, particularly in the light of the Cardiff and Vienna European Council conclusions recognising its special situation.

  On Objective Two (regions with structural problems) our main aim is to retain the safety net proposed by the Commission. This would limit the reduction in current Objective Two and Five b status in the UK to one third. The Government will also be looking to maximise UK receipts under Objective Three (human resource development).


  The Government believes that a solution to Agenda 2000 can be found which is based on stabilising EU15 spending, the cap reform package proposed by the Agriculture Council, and an outcome on structural funds which is fair, efficient, durable and affordable. this will lay the basis for enlargement, and unlock the significant benefits that enlargement will bring.

  Copies of this letter and the "negotiating box" have been sent to the Chairmen of the European Scrutiny and Foreign Affairs.

Committees, and copies of the negotiating box have been placed in the House Libraries.

19 March 1999

Letter from Lord Tordoff, Chairman of the Committee, to the Rt Hon Joyce Quin MP, Minister of State, Foreign and Commonwealth Office

  Thank you for your letter of 19 March, including a copy of the German Presidency non-paper which was issued on 9 March. We were most interested to see this, and we are grateful to you for sending it.

  However, it would have been more helpful if the paper had arrived in time to inform the debate on 22 March on the floor of the House on our Report: Future finance of the EU: who pays and how? I wonder if there is any way to improve co-ordination to avoid near-misses of this kind in future?

31 March 1999

Letter from the Rt Hon Joyce Quin MP, Minister of State, Foreign and Commonwealth Office, to Lord Tordoff, Chairman of the Committee

  Thank you for your letter of 31 March about the German Presidency "negotiating box".

  I am sorry that the non-paper did not arrive in time to inform your debate on future financing of the EU on 22 March. The non-paper, dated 9 March, was considered by Foreign Ministers at their informal meeting on 14 March. The Presidency informed us that a revised negotiating box could be expected in advance of the Foreign Ministers' conclave on 21 March. We accordingly intended to send you the revised version when it was issued. In the event, a revised version did not materialise, so we considered it prudent to keep both Scrutiny Committees informed by sending the 9 March version in advance of the Berlin Special European Council.

22 April 1999

Letter from Lord Tordoff, Chairman of the Committee, to the Rt Hon Ms Joyce Quin, Minister of State, Foreign and Commonwealth Office

  Thank you for your letter of 22 April, explaining why you did not send the non-paper about the German Presidency "negotiating box" to us earlier. We are grateful for your explanation, and we can understand why things happened as they did.

17 May 1999

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