The financial framework and related chapters

The chapters of the negotiations concerning agriculture and regional policy have important budgetary components and are related to the chapter concerning financial and budgetary provisions. Negotiations on these three chapters must therefore be conducted within a coherent overall framework.

The Berlin European Council in March 1999 agreed the financial framework for the period 2000-2006, including arrangements for enlargement based on the assumption that 6 new members would accede in 2002. The results were laid down in an inter­institutional agreement between the Parliament, the Council and the Commission.

The comprehensive agreement reached in Berlin covered at the same time policy reform and the reservation of the necessary funds for pre­accession and accession, including:

• a maximum ceiling for total payments (set at 1.27% of GNP) and absolute ceilings for annual budgetary commitments for each category of expenditure (the Financial Perspective for the period 2000-2006). Together, the absolute ceilings were expected to stay well below the maximum ceiling of 1.27%, including after enlargement;
• the reform of the common agricultural policy, structural and cohesion funds;
• the doubling of pre­accession support for the candidate countries EUR 3.1 billion per year³);
• amounts reserved for the financing of accession, gradually increasing from EUR 6.5 billion in 2002 to EUR 16.8 billion in 2006.

The assumptions underlying the Berlin agreement have changed, notably as regards possible dates for accession and the potential number of new Member States.

However, if it is assumed that the first accessions will take place in 2004 instead of 2002 and that more than 6 and up to 10 new Member States will join, the updated cost of enlargement in each of the years 2004-2006 would stay below the amounts agreed in Berlin. This takes into account updated information on agricultural production and consumption data in the 10 candidates.

The annual amounts reserved for accession in the Financial Perspectives increase substantially from 2002 to 2006. Since the first accessions will take place later, the annual amounts needed for the corresponding years are smaller than if the first accessions had taken place in 2002. This allows the Berlin figures to accommodate a larger number of up to 10 new Member States.

The Commission will present proposals to the Council for common negotiation positions in the fields of agriculture, regional policy and budgetary issues on the basis of the existing acquis and the principles inherent in the Berlin agreement. The accession negotiations can thus be concluded independently of decisions for financing the EU after 2006.

The Commission will ensure that the budgetary implications of its proposals for common negotiation positions are in line with the expenditure ceilings agreed in Berlin for the period until 2006, incorporating the foreseen necessary adjustments for the potential number of new Member States. In particular, the Commission will, without prejudicing future decisions for the financing of the EU:

• in the agriculture chapter, examine how to tackle the issues of direct payments and supply management instruments in the negotiations;
• in the area of structural policy, identify the organisational and institutional conditions to be met by the various countries for provisionally closing the negotiations in this chapter as well as explain the method for the allocation of the structural funds to new Member States until 2006;
• as to the budget chapter, examine possible transitional arrangements.

The Commission will ensure that the Council can debate these issues in a common framework early in 2002, with a view to preparing the further pursuit of the accession negotiations in line with the road map.

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