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Europaudvalget 2005-06, Det Udenrigspolitiske Nævn 2005-06
Det Europæiske Råd 23-24/3-06 Bilag 8, UPN Alm.del Bilag 72
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COUNCIL OF

THE EUROPEAN UNION

Brussels, 17 March 2006

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LIMITE

POLGEN 38

NOTE

from :

to :

Subject :

Presidency

Council

European Council (23 and 24 March 2006)

– Draft conclusions

The Presidency submits herewith to Council a revised set of draft conclusions to be adopted by the

European Council at its meeting on 23 and 24 March 2006.

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The meeting was preceded by a presentation given by Mr Josep Borrell, President of the

European Parliament, followed by an exchange of views.

THE RELAUNCHED STRATEGY FOR JOBS AND GROWTH

Drawing on lessons learnt from five years of implementing the Lisbon Strategy, the European

Council in March 2005 decided on a fundamental re-launch. It agreed to refocus priorities on

jobs and growth coherent with the Sustainable Development Strategy, by mobilising to a

greater degree all appropriate national and Community resources. It also agreed on a new

governance cycle based on partnership and ownership.

At Hampton Court, the Heads of State or Government provided further political impetus to

the relaunched Strategy, in particular by emphasising the way in which European values can

underpin modernisation in our economies and societies in a globalised world.

Finally, the agreement reached at the December 2005 European Council on the Financial

Perspectives 2007-2013 represented an important step forward in providing the Union with

the means to carry through its policies, including those contributing to an effective

implementation of the renewed Strategy. On that basis, the European Council stresses the

importance of concluding as soon as possible the new Inter Institutional Agreement and of

rapidly adopting the necessary legal instruments.

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The background in Europe is characterised by intensified competition from abroad, an ageing

population, higher energy prices and the need to safeguard energy security. Since the end

of 2005, a gradual economic recovery is under way, with growth expected to return towards

potential in 2006. The EU is expected to create six million new jobs during the three-year

period 2005-2007, helping to reduce unemployment from a peak of 9 % at the end of 2004 by

roughly 1% in 2007. However, the further reduction of unemployment, raising productivity

and the increase of potential growth remain the key challenges for the Union.

Preparing for ageing populations and the ambition to reap the full benefits of globalisation

will be the two main drivers for structural reforms. Further structural reforms are required to

increase the competitiveness of Europe and to sustain growth, thereby contributing to an

increase in living standards and the creation of new jobs. At the same time, appropriate

macro-economic policies are key towards reaping the full benefits of structural reforms in

terms of growth and employment. Improving business and consumer confidence will

contribute to durably bring growth up to its potential level. Determined fiscal consolidation

will further strengthen the conditions for more jobs and growth.

The economic recovery provides a strong opportunity for pursuing vigorously structural

reforms in line with the National Reform Programmes, as well as for enhanced fiscal

consolidation in line with the renewed Stability and Growth Pact. In this context, concrete

targets and timetables are a useful tool for speeding up the implementation of the envisaged

reforms and for delivering better results in terms of growth and employment.

The European Council welcomes the Commission's communication "Time to move up a

gear", the work carried out by the Council and the fact that all Member States have rapidly

drawn up their National Reform Programmes (NRPs) on the basis of the Integrated

Guidelines. The NRPs are geared to Member States' own needs and specific situations. It also

welcomes progress made concerning the Community Lisbon Programme.

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The European Council notes the large convergence of views in the NRPs on the key

challenges. It also notes that the NRPs contain a wealth of promising policies to be shared and

learnt from. However, the European Council at the same time notes the Commission's view

that some NRPs could include more specific targets and timetables and that they could also be

more detailed as concerns competition and removing obstacles to market access. Further

details on the budgetary aspects of envisaged reforms should be provided.

10.

Member States have made real efforts to involve national parliaments and representatives

from regional and local authorities as well as social partners and other stakeholders of the

civil society in the formulation of their NRPs. It also welcomes the initiatives taken up by the

European Parliament, the Committee of the Regions and the European Economic and Social

Committee to increase the ownership on Community level. It encourages the European

Economic and Social Committee and the Committee of the Regions to continue their work

and asks for summary reports in support of the Partnership for growth and employment in

early 2008.

11.

It is necessary to involve European citizens more actively in the process in order to increase

the understanding how timely and properly implemented reforms will contribute to greater

and better shared prosperity. An effective renewed Partnership for jobs and growth will

require an active contribution and responsibility of the social partners. In this context, their

recently agreed joint multi-annual work programme will be a valuable instrument. The

European Council welcomes the intention of the Finnish Presidency to hold a Tripartite Social

Summit.

12.

Now that the NRPs are in place, it is essential to maintain momentum by ensuring their

effective, timely and comprehensive implementation and if necessary, strengthening of

measures agreed in the NRPs, in conformity with the framework, the procedures and the

reporting obligations defined by the European Council in March 2005 and the guidelines

adopted in June 2005. Accordingly, the European Council:

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

calls on the Member States to report in Autumn 2006 on the measures taken to

implement their NRPs, according to their priorities, taking due account of the assessment

by the Commission and the Council in the context of multilateral surveillance, as well as

of the agreed priority actions mentioned below, and to take account of the NRPs when

drawing up their Strategic Reference Frameworks for Cohesion;



invites the Commission and the Member States to organise the exchange of experiences

in a practical way; and the Commission to pay particular attention, in its report in view

of the 2007 Spring European Council on progress towards implementing the NRPs, to

the priority actions and to propose any additional measures that may be required.

13.

The European Council confirms that the Integrated Guidelines 2005-2008 for jobs and growth

remain valid. Within that framework it agrees on:



specific areas for priority actions

concerning investment in knowledge and

innovation, business potential, especially of SMEs and employment of priority

categories (see part I); as well as the definition of an

Energy Policy for Europe

(see

part II);



measures to be taken across the board in order to

maintain the momentum

under all

pillars of the Partnership for growth and employment (see part III).

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PART ONE

SPECIFIC AREAS FOR PRIORITY ACTION

14.

The European Council agrees on the following specific areas for priority action to be

implemented by the end of 2007 in the context of the renewed Partnership for growth and

employment.

(a)

Investing more in knowledge and innovation

15.

In view of the importance of R&D for future growth and in providing solutions for many of

the problems confronting our society today, the European Council reiterates the commitment

entered into at Barcelona, welcomes the progress made concerning setting specific national

targets and calls upon all Member States to promote policies and actions aiming at the

established overall 3% objective by 2010, taking into account the different starting points of

Member States (see Annex X). To provide more and better resources for research and

innovation, Member States should refocus their public expenditure on research and innovation

as well as promote private sector R&D, in particular by improving their mix of support

instruments.

The European Council calls for the speedy adoption of the

Framework Programme

for

Research and Development and the new Competitiveness and Innovation Programme. It calls

for the quick establishment of the European Research Council working on the basis of criteria

aiming at raising yet further the excellence of Europe's best research teams. Action

undertaken under the Research Framework Programme should be better coordinated with

other European and national actions to promote public-private partnerships, including

intergovernmental initiatives such as Eureka.

16.

17.

The European Council calls on the EIB to support innovation and to reinforce its action in

R&D, through a risk-sharing finance facility to be finalised as soon as possible.

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18.

dynamic environment

should be fostered by the creation of attractive clusters. Member

States are invited to create a single, open and competitive European labour market for

researchers, notably by overcoming remaining obstacles to geographical and intersectoral

mobility, and by improving employment and working conditions for researchers as well as by

attracting young research talent into research careers. The cooperation and technology transfer

between public research and industry should be enhanced, both within and across national

borders, and also creating conditions for placement of researchers in industry.

19.

A comprehensive approach to innovation policy can be achieved by supporting markets for

innovative goods and services and excellence in research in new technologies, including

information and communication technologies (ICT). This would imply inter alia identifying

best practices in innovation policies that would have the greatest potential for creating real

value added and boosting procuctivity. Furthermore links should be stengthened between

R&D, innovation systems and business environment in order to improve the effectiveness of

the innovation process and shorten the time needed for innovations to mature and to be

translated into commercial products and services. The European Council accordingly calls for

a broad-based innovation strategy for Europe that translates invetsments in knowledge into

products and services. In this context, the European Council notes the significance of the Aho

report on Creating an Innovative Europe and invites the Commission to assess its

recommendations.

20.

Education and training

are critical factors to develop the EU's long-term potential for

competitiveness as well as for social cohesion. The search for excellence and innovation at all

levels of education and training, in particular through better links between higher education,

research and enterprises is crucial. Reforms must also be stepped up to ensure high quality

education systems which are both efficient and equitable. National lifelong learning strategies

should provide all citizens with the competences and qualifications they need. To support

greater mobility and an efficient labour market, progress on a European Qualifications

Framework (EQF) should also be achieved.

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21.

Investments in education and training

produce high returns which substantially outweigh

the costs and reach far beyond 2010. They should be targeted on areas where economic

returns and social outcomes are high. Education and Training must occupy a central position

in the Lisbon reform agenda, in this context, the Lifelong Learning Programme 2007-2013

will be essential. The European Council calls on the Member States to facilitate, in line with

national practices, universities' access to complementary sources of funding, including private

ones, and to remove barriers to public-private partnerships with businesses. Furthermore, it

underlines the crucial role of universities and their research staff in the dissemination and

transfer of research results to the business community and hence the need of developing

managerial skills and competencies for the people involved. The European Council looks

forward to the report of the Commission on higher education which will address in particular

the triangle education-research-innovation as well as the links between universities and the

business community.

22.

The European Council recognises that the establishment of a European Institute for

Technology – based on a top-class network open to all Member States – will be an important

step to fill the existing gap between higher education, research and innovation. It invites the

Commission to submit a proposal on further steps concerning its establishment by

mid-June 2006.

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(b)

Unlocking business potential, especially of SMEs

23.

There is consensus on the overall importance of a strong and competitive industrial base in

Europe and therefore on the need for a modern and coherent concept for EU manufacturing.

The European Council stresses the importance of achieving the right balance between

horizontal and sectoral approaches and refers to the necessity of improving the consistency of

policies in order to be able to benefit on a larger scale from potential synergies. The European

Council calls on Member States to proactively develop national strategies and implement

measures to foster competitiveness, innovation and productivity through policies that address

the social dimension and the needs of individuals in the process of internationalisation and

structural change.

24.

The European Council acknowledges the utmost importance of creating a more favourable

business environment, especially for small and medium-sized enterprises (SMEs), which are

the backbone of the European economy. At Community level, significant progress has been

achieved, notably through the Commission's thorough and balanced impact assessments of

new proposals and their strengthened competitiveness dimension, as well as the rolling

programme of simplification. To complement this at national level, the European Council

calls on Member States to transpose, enforce and fully implement Community legislation to

allow consumers, workers and business to enjoy the benefits of the internal market.

25.

SMEs have a crucial role in creating growth and better jobs in Europe. There is a need to

develop comprehensive supportive policies for SMEs of all types, as well as a regulatory

environment that is simple, transparent and easy to apply. The principle of "think small first"

must be applied systematically and become a guiding principle for all relevant legislation at

Community and national levels. The European Council accordingly invites the Commission to

bring forward specific provisions to encourage SME growth and development, such as longer

transition periods, reduced fees, simplified reporting requirements and exemptions. The

European Council also expects the Commission to further assist Member States in adapting

their policies for SMEs and to further promote the dialogue with all stakeholders.

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26.

The Commission is invited to launch an exercise to measure administrative costs associated

with EU rules in specific areas, giving particular attention to SMEs and to identifying which

costs flow directly from EU legislation and which costs arise from Member States' differing

transposition of EU rules. This exercise should be coordinated with ongoing national

initiatives. On this basis, the Commission is invited to explore options for establishing

measurable targets in specific sectors for reducing administrative burdens and report to

Council on progress by the end of 2006.

27.

The Member States should establish, by 2007, a one-stop-shop, or arrangements with

equivalent effect, for setting up a company in a quick and simple way. Member States should

take adequate measures to considerably reduce the average time for setting up a business, with

the objective of being able to do this within one week anywhere in the EU by the end of 2007.

Start-up fees should be as low as possible and the recruitment of a first employee should not

involve more than one public administration point.

28.

Europe needs more entrepreneurs equipped with the appropriate skills to successfully compete

in the markets. The European Council therefore underlines the need of creating an overall

positive entrepreneurial climate and of appropriate framework conditions that facilitate and

encourage entrepreneurship and therefore invites the Member States to strengthen respective

measures, including through entrepreneurship education and training at the appropriate level

of education. Communication and media can also play an important role in promoting

entrepreneurship and in encouraging people to decide for an entrepreneurial career.

Furthermore, measures to improve the business environment for SMEs and to encourage more

people, in particular women and young people, to become entrepreneurs should also be

explicitly mentioned in the NRPs as well as in the reporting.

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29.

A fully integrated financial market and sufficient access to finance is crucial for the growth of

small and medium sized enterprises. If not properly addressed, the lack of finances will

continue hindering innovation in SMEs. At community level, funding sources shall be made

available through the financial instruments under the forthcoming Community programmes,

in particular the 7th Research Framework Programme and the Competitiveness and

Innovation Programme (CIP). In addition, the Council calls on Member States to fully utilise

the potential of structural funds, through traditional and new funding instruments such as

JEREMIE. Moreover, the intellectual property rights' (IPR) potential of SMEs deserves more

attention. Furthermore, SMEs' access to markets will be improved by facilitating their access

to public procurement markets and standardisation as well as by supporting their

internationalisation.

30.

The European Council welcomes the Commission's intention, to take fully into account the

need to give consideration to amending existing state aid rules thus reflecting market failures

relevant to SMEs and to simplifying administrative procedures,

inter alia

through an

increased de-minimis amount and, more importantly, by providing for wider block

exemptions. Taking into account the external aspects of competitiveness, the review of state

aid should encourage a high level of investment in Europe and make Europe attractive for

future investment.

(c)

Increasing employment opportunities for priority categories

31.

Increasing employment in Europe remains one of the top priorities for reform. Labour market

reforms that have been undertaken in recent years are beginning to bear fruit. A key objective

is to increase labour market participation, especially of the young, women, older workers,

persons with disabilities and legal migrants and minorities. To achieve these objectives, work

should be conducted in close cooperation with social partners.

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32.

Taking advantage of Europe's improved economic prospects to create more and better jobs,

more effort must now be put into implementing the European Employment Strategy and the

three priorities for action: attract and retain more people in employment, increase labour

supply and modernise social protection systems, improve adaptability of workers and

enterprises, and increase investment in human capital through better education and skills.

Better organisation of work, quality of working life and continuous updating of workers'

qualifications are factors which should be analysed in view of boosting labour productivity.

33.

Given the gradual economic recovery under way, further efforts should be undertaken to

increase European employment by at least 2 million jobs yearly until 2010 as a further step to

reaching the employment targets of the Partnership for jobs and growth.

34.

The European Council calls on the Member States to:



develop a life-cycle approach to work, facilitating swift employment transitions

throughout working life and leading to an increase in the total number of hours worked

in the economy, and to improving the efficiency of investment in human capital;

pursue the shift towards active and preventative policies, encouraging and helping

people to find paid employment;

better focus measures for those with low skills and low pay, in particular those on the

margins of the labour market.



35.

It is urgent to improve the situation of young people in the labour market and to reduce

significantly youth unemployment. To that end, the European Council stresses that in line

with the agreed target for 2010, efforts should be intensified to reduce early school leaving to

10% and to ensure that at least 85% of 22 year olds should have completed upper secondary

education. By the end of 2007 every young person who has left school and is unemployed

should be offered a job, apprenticeship, additional training or other employability measure

within six months, and within no more than 100 days by 2010.

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36.

With a view to making it more attractive for older workers to stay employed for longer, the

European Council underlines that active ageing strategies should be implemented. In this

context, incentives for prolonging working lives, gradual retirement, part-time work,

improving quality at work and targeted incentives to ensure that the number of older workers

participating in training rises faster than that for the overall workforce should be considered.

37.

Acknowledging that gender equality policies are vital to economic growth, prosperity and

competitiveness, the European Council stresses that it is time to make a firm commitment at

European level to implement policies to promote women's employment and to ensure a better

work-life balance. To this end, the European Council approves the European Pact for Gender

Equality (see Annex Y) and agrees that the availability of quality childcare should be

increased in line with Member States' own national targets.

38.

The European Council stresses the need to develop more systematically in the NRPs

comprehensive policy strategies to improve the adaptability of workers and enterprises. In this

context, the European Council asks Member States to direct, special attention to the key

challenge of "flexicurity" (balancing flexibility and security): Europe has to exploit the

positive interdependencies between competitiveness, employment and social security.

Therefore Member States are invited to pursue, in accordance with their individual labour

market situations, reforms in labour market and social policies under an integrated flexicurity-

approach, adequately adapted to specific institutional environments and taking into account

labour-market segmentation. In this context, the Commission, jointly with Member States and

social partners, will explore the development of a set of common principles on flexicurity.

These principles could be a useful reference in achieving more open and responsive labour

markets and more productive workplaces.

39.

It also notes the proposal by the Commission to establish a European Globalisation

Adjustment Fund to provide additional support for workers made redundant as a result of

major structural changes in world trade patterns and to assist them with their re-training and

job search efforts, and invites the Council, the European Parliament and the Commission to

take the appropriate measures in order for the Fund to be operational as soon as possible and

preferably on 1 January 2007.

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PART TWO

ENERGY POLICY FOR EUROPE (EPE)

40.

The European Council notes that Europe is facing a number of challenges in the energy field:

the ongoing difficult situation on the oil and gas markets, the increasing import dependency

and limited diversification achieved so far, high and volatile energy prices, growing global

energy demand, security risks affecting producing and transit countries as well as transport

routes, the growing threats of climate change, slow progress in energy efficiency and the use

of renewables, the need for increased transparency on energy markets and further integration

and interconnection of national energy markets with the energy market liberalisation nearing

completion (July 2007), the limited coordination between energy players while large

investments are required in energy infrastructure. Leaving these challenges unaddressed has a

direct impact on the EU environment, and jobs and growth potential.

41.

In response to these challenges and on the basis of the well articulated Commission's Green

Paper "A European Strategy for Sustainable, Competitive and Secure Energy" and

contribution of the Council, the European Council calls for a Energy Policy for Europe,

aiming at effective Community policy, coherence between Member States and consistency

between actions in different policy areas and fulfilling in a balanced way the three objectives

of security of supply, competitiveness and environmental sustainability.

42.

The European Council underlines that, to achieve this consistency both in internal and

external EU policies, energy policy has to satisfy the demands of many policy areas. As part

of a growth strategy and through open and competitive markets, it prompts investment,

technological development, domestic and foreign trade. It is strongly linked with environment

policy and is closely connected with employment, regional policy and particularly transport

policy. In addition foreign and development policy aspects are gaining increasing importance

to promote the energy policy objectives with other countries. Therefore, the European Council

calls for an enhanced coordination between the relevant Council formations and invites the

European Commission to take into account the better regulation principles when preparing

further actions.

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43.

This EPE should be developed with adequate knowledge and understanding of Member

States' energy needs and policies, bearing in mind the strategic role of the energy sector. The

EPE should therefore be based on shared perspectives on long term supply and demand and

an objective, transparent assessment of the advantages and drawbacks of all energy sources

and contribute in a balanced way to its three main objectives:

(a)

Increasing security of supply through:



Development of a common external policy approach in support of energy policy

objectives, and the furthering of energy dialogues between the EU and its Member

States on the one hand, and their main partners, be they producer, transit or

consumer countries on the other hand, in synergy with relevant international

organisations



Intensified diversification with respect to external as well as indigenous sources,

suppliers and transport routes supported by investments in the necessary

infrastructure, including LNG facilities



Ensuring common operational approaches to address crisis situations, taking

solidarity and subsidiarity into account

(b)

Ensuring the competitiveness of European economies and the affordability of energy

supply to the benefit of both businesses and consumers, in a stable regulatory

framework, by:



Ensuring full, effective and transparent implementation of internal market

legislation, which plays also a key role for the security of supply

Promoting approaches similar to that of the internal energy market to

neighbouring countries and enhancing the coordination and role of energy

regulators



Accelerating the development of regional energy cooperation within the EU,

facilitating the integration of regional markets into and further development of the

EU internal market, paying particular attention to the countries and regions largely

isolated from the EU energy market

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

Fostering the rapid and coherent development of storage and infrastructure in

particular of interconnections with, for electricity, the target of at least 10% of

Member States' installed production capacity, noting that as agreed by the 2002

Barcelona European Council, financing requirements should be met mainly by the

enterprises involved



Reviewing existing directives and legal framework in order to speed up the

administrative authorisation procedures for, and develop a regulatory environment

more conducive to investment projects

(c)

Promoting environmental sustainability by:



Strengthening the EU leadership by adopting an ambitious and realistic Action

Plan on Energy Efficiency bearing in mind the EU energy saving potential of 20%

by 2020, as estimated by the Commission, and taking into account measures

already implemented by Member States



Strengthening the EU leadership by continuing the EU-wide development of

renewable energies (road map) on the basis of an analysis by the Commission of

how to achieve the existing targets (2010) and how to sustain in a cost-efficient

manner the current efforts over the long-term e.g. considering to raise, by 2015,

the share of renewable energies, considering a target of 15% , and the proportion

of biofuels, considering a target of 8%, and developing a medium and long-term

strategy to reduce the EU's dependency on energy imports in a manner that meets

the objectives of the strategy for growth and jobs



Implementing the Biomass Action Plan

In the context of the development of a medium- to long-term EU strategy to

combat climate change, completing the review of the EU Emissions Trading

Scheme as an instrument to achieve climate change objectives in a cost-effective

manner, providing medium and long-term certainty to investors, and assessing the

potential of various sectors with respect to these objectives



Ensuring adequate support from RD & D national and Community instruments to

energy efficiency, sustainable energies and low emission technologies

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44.

In fulfilling these main objectives the EPE for Europe should:



Ensure transparency and non-discrimination on markets

Be consistent with competition rules

Be consistent with public service obligations

Fully respect Member States' sovereignty over primary energy sources and choice of

energy-mix

45.

The European Council welcomes the Commission's intention to present a Strategic Energy

Review on a regular basis, starting in 2007, addressing in particular the aims and actions

needed for an external energy policy over the medium- to long-term. Actions of European

interest could be reported by Member States on that occasion.

46.

Annex Z sets out a series of possible actions that have the potential to contribute to the above

objectives. Deciding on new actions should be done in synergy with the work carried out by

existing international institutions, fora, mechanisms or processes. On that basis the European

Council invites the Commission and the Council to prepare a set of actions with a clear

timetable enabling the adoption of a prioritised Action Plan by the European Council at its

2007 spring session.

47.

Given the urgency of the challenges to be faced, the European Council invites the

Commission to start with the following measures:



Submitting an Action Plan on Energy efficiency by mid-2006

Implementation of the Biomass Action Plan

Developing a priority Interconnection Plan and assisting in the realisation of priority

infrastructure projects supporting diversification of supply and integration of regional

markets into the EU internal market



Making the EU-Russia dialogue more effective including as regards the ratification of

the Energy Charter and the conclusion of the Transit Protocol during Russia's G8

presidency

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

Developing a strategy for exporting the internal energy market approach to

neighbouring countries

Secure adequate priority for energy in the 7th Framework Programme

Initiating the analysis of long term supply and demand perspectives

Improving the transparency of the energy market in particular data on gas and oil stocks

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PART THREE

MAINTAINING MOMENTUM ACROSS THE BOARD

(a)

Ensuring sound and sustainable public finances

48.

At present, 12 EU Member States are in excessive deficit and the debt levels are above 60%

of GDP in several Member States. Against this background, the European Council calls upon

Member States to use the opportunity of the evolving economic recovery to pursue fiscal

consolidation in line with the Stability and Growth Pact. In the context of the recovery

underway, Member States should make fast progress towards their medium term objective

and those Member States in excessive deficit should pursue ambitious fiscal consolidation so

as to put an end to their excessive deficit as soon as possible.

49.

Further comprehensive reforms are needed in many Member States to improve the

sustainability of their welfare systems, and meet the economic and budgetary consequences of

ageing. In this context, the European Council welcomes the report on the impact of ageing

populations on public spending, and reaffirms the three-pronged strategy, aiming at reducing

public debt, increasing employment rates and productivity, and reforming pension and health

care systems. Measures which discourage early withdrawal from the labour force, or reduce

pension costs should be promoted. Further the European Council invites the Commission to

undertake a comprehensive assessment of the sustainability of Member States' public finances

by the end of 2006, using the commonly agreed framework.

50.

The European Council underlines the need to further improve the efficiency and effectiveness

of public spending and taxes in order to enhance the quality of public finances and foster

growth and employment enhancing activities, in line with the priorities of the partnership for

growth and employment.

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51.

Monetary integration creates stronger spill over effects amongst members. Membership in the

euro area places also a particular premium on effective policy coordination to ensure fiscal

discipline and flexibility to cope with asymmetric shocks, and to carry on with structural

adjustment needed for example to deal with deviating trends in competitiveness. In that

respect, further fiscal consolidation and enhanced structural reforms in goods, services, labour

and real estate markets are especially important in Member States of the Euro area and require

effective policy coordination within this area.

(b)

Completing the internal market and promoting investment

52.

The extension and deepening of the internal market is a key element for achieving the aims of

the renewed Strategy. Accordingly, the European Council calls for:



final agreement on the REACH package before the end of 2006, as well as – if

agreement between the European Parliament and the Council can be reached at first

reading – on the closely-related Regulation concerning classification and labelling of

hazardous substances and mixtures;

completion of an effective legal framework of EU and international level for protecting

intellectual property rights;

further progress on simplification and modernisation of the VAT and customs system;

promotion of a fully integrated and well functioning financial market and better access

to finance, particularly through the implementation of the FSAP-measures and the

Commission's working programme outlined in the White Paper on Financial Services

Policy (2005-2010), making progress on clearing and settlement of securities

transactions, the creation of a Single European Payment Area, enhancing the framework

for cross–border financial sectors supervision and crisis management, and a mutual

recognition of accounting standards with the US.



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53.

Recalling the conclusions of the European Council of March 2005, the European Council

stresses that the internal market for services must be made fully operational, while preserving

the European social model. The European Council takes good note of the Commission's

intention to present an amended proposal for the Services Directive largely based on the first

reading of the European Parliament, taking account of the discussions in the Council to date

and ensuring the broadly shared objective of making a significant step forward while

respecting the Treaty and the jurisprudence of the Court of Justice; it invites the Commission

to present the amended version without delay and expresses the hope that the institutions will

be able to swiftly conclude the legislative process.

54.

The European Council welcomes the presentation of the Commission communication on the

functioning of the Transitional Arrangement on freedom of movement and takes note of the

evaluation contained therein. In the light of experience Member States will notify the

Commission of their intentions according to the relevant provisions of the 2003 Accession

Treaty.

55.

The European Council calls on Member States to transpose, enforce and fully implement EC

legislation to allow consumers, workers and businesses to enjoy the benefits of competitive,

border-free markets.

56.

The European Council recalls the Hague Programme of November 2004 whereby legal

migration could play an important role in enhancing the knowledge-based economy in

Europe, in advancing economic development, and thus contributing to the implementation of

the Lisbon. It takes note of the Commission's Policy Plan on Legal Migration presented in

December 2005.

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57.

Taking due account of the principle of subsidiarity and proportionality and the importance of

respecting the acquis communautaire, the European Council underlines the importance it

attaches to Better Regulation at national and European level as a core element to achieving the

goals of the Partnership for jobs and growth and urges all institutions and the Member States

to implement their respective commitments, including using robust and balanced impact

assessment with measurement of administrative costs, delivering the rolling programme of

simplification for the priority sectors of waste, construction and the automotive industries.

Unnecessary bureaucratic burdens hinder entrepreneurial dynamism and pose a significant

barrier to a more innovative and knowledge-intensive economy. Such burdens particularly

harm small and medium-sized enterprises, which account for two thirds of jobs in Europe.

58.

The European Council welcomes the Commission's intention to table an analysis of the

progress to date and of where further work is needed to continue to make progress in all areas

of better regulation: simplification, impact assessment, repeals and withdrawals, codification,

sectoral analysis, reduction in administrative burdens, business involvement, small and

medium sized enterprises (SMEs). The European Council recalls that better regulation is also

a matter for Member States to implement in their domestic law-making and in the

transposition of Community law and reaffirms its commitment to making progress in all of

these areas.

59.

The European Council recognises the importance of a pro-active competition policy, a

regulatory framework that eases market access and a reform of State aid as key policy

instruments to set incentives for innovation and to allocate productive resources efficiently. It

recognises the important role of competition in ensuring effective delivery of Europe's

network industries. It calls on Member States to take action in these areas.

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60.

The European Council recognises the crucial importance to the Partnership for jobs and

growth of more productive use of information and communication technologies in business

and administrative organisations throughout the European Union. Focused, effective and

integrated information and communication technology (ICT) policies at both at European and

national level are essential to achieving the Strategy's goals of economic growth and

productivity. As such, the European Council calls on the Commission and the Member States

to implement the new i2010 Strategy vigorously. Considering the importance of ICTs, the

European Council invites the incoming Presidency to come back to this issue before the end

of 2006.

61.

In support to the completion and deepening of the internal market, further efforts are required

with a view to making progress on the expansion, improvement, interconnection and

interoperability of European infrastructure. The European Council stresses the importance of

carrying out the TEN projects in the fields of transport and energy and the setting the right

incentives for infrastructure investment by Member States and European institutions.

62.

The European Council welcomes the EIB's Group contribution to promoting growth and

employment, which, building on the European Action for Growth with new financial

instruments combining multi-annual EU and EIB resources, will shift the quality of the Bank's

operations towards higher value added and risk, thereby leveraging private capital to increase

substantially financing available for growth-enhancing investments in R&D, SMEs,

infrastructure and energy security in Europe.

63.

The European Council invites the relevant actors to take the necessary follow-up steps

without delay, taking into account the final agreement on the Financial Perspectives, and

respecting the agreed framework for the EIB's capital (i.e. no capital increase before 2010 and

self financing via reserves) and the need to fulfil its tasks under the Treaty. It also underlines

the need of close co-operation between the EIB and the Commission as well as between the

EIB and the EBRD in order to fully exploit their catalyst function with regard to economic

growth and employment.

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64.

The European Council further underlines the importance of ensuring open and competitive

markets inside and outside Europe. An ambitious and balanced outcome of the WTO DDA

negotiation can make a significant contribution to European growth.

(c)

Enhancing social cohesion

65.

The new strategy for jobs and growth provides a framework where economic, employment

and social policy mutually reinforce each other, ensuring that parallel progress is made on

employment creation, competitiveness, and social cohesion in compliance with European

values. For the European social model to be sustainable, Europe needs to step up its efforts to

create more economic growth, a higher level of employment and productivity while

strengthening social inclusion and social protection in line with the objectives provided for in

the Social Agenda.

66.

The Spring European Council in March 2005 stated on the occasion of the mid-term review of

the Strategy that growth and employment are at the service of social cohesion. In this context,

the European Council welcomes the Joint Report for Social Protection and Social Inclusion

and the new objectives and working methods in this area and asks the Member States to

submit National Reports for Social Protection and Social Inclusion for 2006-2008 by

September 2006. The Commission and the Council will inform the Spring European Council

with the Joint Report on the progress in the area of social protection and social inclusion.

67.

The European Council stresses that the policies for social protection and social inclusion have

to be closely coordinated with the Partnership for jobs and growth, both at national and

European level in order to ensure that economic, employment and social policies interact in a

positive way and that social protection is regarded as a productive factor.

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68.

The European Council reaffirms the objective of the Partnership for growth and jobs that

steps have to be taken to make a decisive impact on the eradication of poverty. Social

inclusion policies should be pursued by the Union and the Member States, with its

multifaceted approach, focusing on target groups such as children in poverty. The European

Council asks the Member States to take necessary measures to rapidly and significantly

reduce child poverty, giving all children equal opportunities, regardless of their social

background.

69.

The European Council stresses that in view of the demographic change in the European Union

employment rates have to be increased and the reconciliation of work and family life has to be

promoted. To tackle these demographic challenges, it will be necessary to support policies

that make it possible to combine working life with children and family life, equal

opportunities, to promote the solidarity between the generations, promote health, improve

affordable care for children and other people in need of care, life-long learning and an

increased employment rate of young people, older workers and disadvantaged groups. The

European Social Fund will play an important role in this context.

70.

Further progress is also needed as concerns measures for young people, including the

implementation of the European Pact for Youth. The European Council encourages the

Member States to reinforce links between policies on education, training, employment, social

inclusion and mobility, so as to develop more effective cross-sectoral strategies. The

Commission and the Member States are requested to involve young people and youth

organisations in the implementation of the European Pact for Youth.

(d)

Environmentally sustainable growth

71.

Over and above its importance in its own right, environmental policy can make an important

contribution to jobs and growth and can impact positively on important sectors such as public

health and health-care costs, and social inclusion and cohesion as well as on the development

of a Energy Policy for Europe, including the promotion of energy security and energy

efficiency.

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72.

The European Council endorses the following lines for action:



strong promotion and diffusion of eco-innovations and environmental technologies,

inter alia

through the Environmental Technology Action Plan and considering setting

performance targets;

following up the Montreal Climate Action Plan under the UN Framework Convention

on Climate Change, preparation of options for a post-2012 arrangement consistent with

meeting the 2°C objective without delay through constructive engagement in a broad

dialogue on long-term cooperative action and at the same time through a process under

the Kyoto Protocol;

review of the environmental structural indicators in order to cover the environmental

dimension of the Strategy for jobs and growth more comprehensively and coherently;

urgent implementation of the EU objective of halting the loss of biodiversity by 2010,

notably by integrating its requirements into all relevant Agenda policies and by swift

presentation and discussion of the Commission communication on biodiversity;

exploration of specific actions to bring about more sustainable consumption and

production patterns at EU and global level, including the development of an EU SCP

Action plan, and fostering green public procurement, inter alia by promoting

environmental criteria and performance targets, by examining the proposal for a

Directive on the promotion of clean road transport vehicles as soon as possible and by

making progress with the realization of an ambitious European source based policy;

further exploration of appropriate incentives and disincentives, and a reform of

subsidies that have considerable negative effects on the environment and are

incompatible with sustainable development, with a view of gradually eliminating them.



________________________

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ANNEX X

R&D expenditure (2004) as % of GDP and targets set by Member States in National Reform

Programmes

Member State

Belgium

Czech Republic

Denmark

Germany

Estonia

Greece

Spain

Ireland

France

Italy

Cyprus

Latvia

Lithuania

Luxembourg

Hungary

Malta

Netherlands

Austria

Poland

Portugal

Slovenia

Slovakia

Finland

Sweden

2004

1,93

1,28

2,61

2,49

0,91

0,58

1,07

1,20

2,16

1,14

0,37

0,42

0,76

1,78

0,89

0,273

1,77

2,26

0,58

0,78

1,61

0,53

3,51

3,74

1,79

Target for 2010

or other years

3,00

2,06

3,00

1,90

1,50

2,00

2,50% of GNP

3,00

2,5

1,0

1,50

2,00

3,00

1,8

0,75

3,00

1,65

1,80

3,00

1,80

4,00

2,50

Remarks

Target of 1% public R&D with estimated 1,06% of

private expenditure

Target for 2013.

with an increased participation of the private sector

Target for 2008.

Target of 1% public R&D and tripling of private R&D.

Target of 1% public R&D and unchanged private R&D.

Target for 2014.

________________________

Source: Eurostat. Most values are provisional. The values for IT, LU and PT refer to 2003.

Source: National Reform Programmes, with European Commission estimates based on the

targets provided by PT, SE.

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ANNEX Y

EUROPEAN PACT FOR GENDER EQUALITY

Considering the gender equality road map proposed by the Commission and the need to:



contribute to fulfilling EU ambitions on gender equality as mentioned in the Treaty,

close the gender gaps in employment and social protection, thus contributing to make full use

of the productive potential of the European labour force,

contribute to meeting the demographic challenges by promoting better work-life balance for

women and men,

the European Council has adopted a European Pact for encouraging action on Member State and

Union level in the following fields:

Measures to close gender gaps and combat gender stereotypes in the labour market



promote women's employment in all age brackets and reduce gender gaps in

employment, including by combating all forms of discrimination;

equal pay for equal work;

combat gender stereotypes, in particular those related to the sex-segregated labour

market and in education;

consider how to make welfare systems more women's employment friendly;

promote women's empowerment in political and economic life and women's

entrepreneurship;

encourage social partners and enterprises to develop initiatives in favour of gender

equality and promote gender equality plans at the workplace;

mainstreaming the gender perspective into all public activities.

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Measures to promote a better work-life balance for all



achieve the objectives set at the European Council in Barcelona in March 2002 on the

provision of childcare facilities;

improve the provision of care facilities for other dependents;

promote parental leave for both women and men.

Measures to reinforce governance through gender mainstreaming and better monitoring



ensure that gender equality effects are taken into account in impact assessments of new

EU policies;

further develop statistics and indicators disaggregated by sex;

fully utilise opportunities presented by the establishment of the European Institute for

Gender Equality.

The European Pact for Gender Equality, as well as the Annual Report on Equality between Women

and Men, should be integrated into the established follow-up mechanisms of the Partnership for

growth and employment, taking into account the European Youth Pact, and aim to promote the

implementation of gender mainstreaming in actions taken within the strategy. When reporting on

the implementation of their NRPs for jobs and growth, Member States are encouraged to include a

perspective of gender equality, especially concerning Guideline 18. The Commission and the

Council are invited to do likewise in the Annual Progress Report on the Partnership for growth and

employment.

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ANNEX Z

ENERGY POLICY FOR EUROPE (EPE)

INDICATIVE LIST OF ACTIONS

The actions listed below pertain to both the internal and external aspects of energy policy and may

contribute to more than one of its three objectives. Mentioning a particular action is without

prejudice to the division of competencies between the EC and the Member States.

ECURITY OF SUPPLY

Facing supply disruptions

While recalling the primary responsibility of Member States with regard to their domestic

demand and in synergy with existing mechanisms, ensuring the availability of effective

mitigating measures and coordination mechanisms in the event of a supply crisis based on the

principles of solidarity and subsidiarity e.g. by considering a flexible combination of the

measures set out in the Gas Supply Directive, taking into account improved data on gas

storage capacities and stocks.

Enhancing demand-side management, particularly in the housing and transport sectors, to

accelerate the demand response.

Improving the effectiveness of gas and oil provisions.

Intensified Diversification

Member States should intensify their diversification strategies while considering the

development of a common approach, be it in terms of the supplier countries or the

transportation routes. New gas supply routes should be opened in particular from the Caspian

region and North Africa. This diversification should not be limited to external sources but

include the development and exploitation of indigenous energy potential and energy

efficiency.

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Completion of network infrastructure, in the East-West direction but also along a South-North

axis, and LNG (Liquified Natural Gas) facilities contributing to that diversification should be

accelerated, and more competitive LNG markets should be promoted.

Subject to competition requirements, the contribution of long-term contracts should be

acknowledged from both demand and supply points of view.

External dimension of security of supply

Developing a common voice in support of energy policy objectives when addressing third

countries fostering a more cooperative approach regarding access to energy resources,

stability in transit and producer countries, and energy security. In this respect the intensified

diversification to be pursued will increase the EU margin of manoeuvre in its relations with

third countries.

Securing the entry into force of the Energy Community Treaty (with South-East Europe)

in 2006 and considering the extension of its membership or principles to neighbouring

countries.

Developing a common framework for establishing new partnerships with third countries,

including transit countries and improving existing ones. This framework should consider the

geopolitical implications of third countries approaches towards energy. Consumer to producer

partnerships should be supplemented with consumer to consumer ones. All fora should be put

to good use for carrying out these dialogues, which can be conducted in a regional setting

(e.g. OPEC, Euromed, or Northern Dimension area) if this adds to their effectiveness,

including for assisting in mediating in case of disputes affecting supply Member States should

be adequately represented in these fora, notably the IEA.

10.

In order to maximise the outcome of these dialogues as well as facilitating the access of

developing countries to sustainable energy and related technologies, synergies with

international organisations, including IFI's, should be fully exploited.

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11.

The Energy Dialogue with Russia should be revitalised and become more open and effective

in support of EU energy objectives, based on our mutual inter-dependence on energy issues

and thus the need for secure and predictable investment conditions for both EU and Russian

companies and reciprocity in terms of access to markets and infrastructure as well as non

discriminatory third party access to pipelines in Russia, ensuring a level-playing field in terms

of safety, including nuclear safety, and environmental protection. Decisive efforts should be

made to complete the negotiation of the Energy Charter Transit Protocol and secure Russia's

ratification of the Energy Charter Treaty.

ARKET COMPETITIVENESS AND INVESTMENT

Furthering market integration to the benefit of businesses and consumers

12.

Improving regional cross-border exchange and accelerating the development of regional

energy cooperation while facilitating the integration of regional energy markets into and the

further development of the EU internal market notably through adequate interconnection

measures. To that effect the Commission should submit a Priority Interconnection Plan by the

end of 2006 identifying measures to be taken at Member State level as well as Community

level. These measures will also contribute to reaching the target of a level of electricity

interconnections equivalent to at least 10% of their installed production capacity as agreed by

the European Council in Barcelona in 2002.

13.

Making networks operate like a single grid from the end-user's point of view by completing

the technical rules required for cross-border trade in energy, improving the functioning of gas

market flexibility instruments, including storage capacities, access to networks and congestion

management on the electricity market. It is expected that the Commission will address the

issue of full and transparent access to infrastructure in its 2006 report on the internal energy

market.

14.

Ensuring full, effective and transparent implementation of existing legislation. This

implementation should be in line with public service obligations, ensuring that liberalisation is

also beneficial in terms of affordable access to energy. This liberalisation process should also

take into account Member States situation in terms of diversification of supply in order to

avoid excessive control by external suppliers.

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15.

Enhancing cooperation and coordination between regulators and system operators on a

regional basis inter alia by a coordinated exchange of information and at Community level

e.g. by building on already existing administrative bodies like the European Energy

Regulators Group for Electricity and Gas (ERGEG).

Fostering the coherent development of infrastructure

16.

Improving medium- to long-term investment planning procedures and investment

coordination, especially as regards cross-border interconnection, gas infrastructure and LNG

facilities as well as generation capacities, and ensuring a business climate more conducive to

long-term investment through increased transparency and exchange of information based on

Member States' own planning. This should contribute to starting the implementation of

priority energy infrastructure projects without delay.

17.

Providing a balanced mechanism in regard of long term contracts that will strengthen

competition on the internal market and at the same time safeguard investment incentives.

18.

Reviewing existing directives and legal framework conditions in the light of the need to speed

up administrative authorisation procedures substantially while maintaining environmental and

health standards, in particular by considering time-limits for the procedures.

USTAINABLE

NERGY

Renewables

19.

Producing a Commission analysis of how to achieve the existing targets (2010) of renewables

and how to further promote in a cost-efficient manner renewable energies (road map) over the

long-term e.g. considering to raise their share to 15% by 2015 and in the same way further the

use of biofuels in the transport sector by considering to raise their proportion to 8% by 2015

accompanied by a constructive dialogue with the oil industry and by giving maximum support

to research on and development of the 2

generation bio fuels. The setting of new targets

shall be justified on the basis of thorough analysis of the potential and cost-effectiveness of

further measures.

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20.

Promoting the use of biomass with a view to diversify the EU's fuel supply sources, reduce

greenhouse gas emissions and offer new income and employment opportunities in rural areas

by taking forward proposals in the Biomass Action Plan in all of its three sectors: heating and

cooling, electricity and transport. This should be developed in the framework of a long-term

strategy for bioenergy beyond 2010.

21.

Mitigating legislative and administrative obstacles to renewables take-off by facilitating

access to grid, cutting administrative red-tape and ensuring the transparency, effectiveness

and certainty of support policies.

Energy efficiency

22.

Bearing in mind the EU energy saving potential of 20% by 2020, as estimated by the

Commission, the Commission should propose an ambitious and realistic Action Plan on

Energy Efficiency, aiming at strengthening the EU leadership, with a view to its adoption in

2006 and consider how to engage third countries in making progress on energy efficiency.

23.

Improving energy efficiency notably in the transport sector given the important role this

sector has to play, making use of cost-effective instruments, including voluntary agreements

and emission standards.

24.

Fully implementing the legislation on energy performance in buildings and end-use efficiency

and energy services.

25.

Substantially enhancing the efficiency of power stations in particular by further promoting the

use of combined heat and power.

Contributing to climate change policy

26.

Contributing to the development of a medium to long term EU strategy to combat climate

change in a post-2012 perspective and the achievement of the existing Kyoto targets.

27.

Completing in a timely manner the review of the EU ETS as an instrument to achieve climate

change objectives in a cost-effective manner, taking into account its impact on the three

objectives of energy policy, on energy markets, the growth potential and industry structure of

Member States and the need for medium and long term certainty

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28.

In its energy dialogues with third countries, the EU should facilitate the development of

sustainable and efficient energy systems and assume a more proactive approach in combating

climate change, promoting renewables, low emission technologies and energy efficiency and

the implementation of the Kyoto Protocol mechanisms.

ORIZONTAL AND SUPPORTING ACTIONS

Evidence-based policy-making

29.

Developing analytical (energy modelling and regional scenarios; indicators), and market and

stocks monitoring tools in order to provide the EU with shared perspectives on long-term

supply and demand as regards the EU and its partners, in synergy with other international

institutions. In particular the Commission is encouraged to make rapid progress on the means

to provide transparency and predictability regarding demand and supply on EU energy

markets and to complement the work of the IEA while avoiding duplication of work.

30.

Assessing the advantages and drawbacks of all individual energy sources with regard to the

three objectives of energy policy; this assessment should cover all different sources, from

indigenous renewable energy sources, to clean coal and the future role of nuclear energy in

the EU for Member States which wish to pursue this option.

Research, Development and Demonstration - Technology development

31.

Increasing the priority for energy in national and Community RD & D budgets, especially

within the 7th Framework Programme, focusing on energy efficiency, sustainable energies

and low emission technologies responding to the challenges faced by the EU.

32.

Supporting these technologies through a broader range of platforms and partnerships with

third countries, and facilitating the market take-up of the resulting technologies including

through relevant Community instruments, so as to comfort the EU leadership.

Coordination

33.

In order to ensure a coherent implementation of the above priority actions, shared general

orientations addressing the various components of energy policy as implemented by Member

States should be developed, taking due account of Member States' characteristics.

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