Delegation for Relations with Switzerland and Norway and to the EU–Iceland JPC and EEA JPC – 66th EEA JPC Meeting, Session II
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DELEGATIONS European Parliament
Roberts Zīle
It doesn't cover any kind of investment related issues. There could be some indication of infrastructure needs which could be later on mirrored through the MFF, Multiannual Financial Framework, and some other Member State resources how to we have to develop all the infrastructure, bridges, railway, roads, ports and so on.
And there is a lot of, lot of resources needed for four European military mobility corridors, which are, which still confidential, but I guess those who are working with defense know where it is because it's more than 90% the same like TEN-T corridors, which are public, of course. And so, but this regulation is touching only low-hanging fruits, as we are calling, not so much money, there is almost nothing about money, maybe with the digital system which requires some resources, financial and things like that. Most is to remove all obstacles, bureaucratic obstacles which currently exist, and at the same time to keep a sovereignty of member states to, to have a checks on the, on the borders, but they should be much quicker and much, much more limited and cooperative, meaning so if the one member states is clearing a military convoy coming from, let's say, from Rotterdam port to somewhere into the eastern part of, of, of, of European Union, like Latvia, which is my country, or Lithuania, like, like your country. So, and it's currently requires to get a permits to move through, it's almost for one month, at best case scenario, it sometimes it can requires 45 days to get the permits. It, we cannot continue like that, and that's why we going ahead with this issue.
But it's not easy, after this week trilogue with the Council, Irish presidency get some mandate from member states, but those member state sovereignty issues are very difficult to find a good compromise.
We will see how we will finished with this dossier, but aim is to finish in December. 9th of December we have a final trilogue. Could be some nights or maybe several nights, as as it is time to time here in a trilogues. But I guess we will find a solution. I just can give you maybe some examples what we are discussing.
For example, the digital system, SDMMS, so single digital system for military mobility. Well, it's it's already there was European Defense Fund financed the pilot project. They are working. We checked with the ministries of defense and national forces in several member states. 11 member states already are using this system digital, which cover more of those bureaucratic things like NATO forms 302 and things like that.
And it works.
So, but if Council would like or Commission would like to create a completely new system to through the procurements again, because it's already public money paid for those standards, for those who are elaborating this system, to create a new one or even maybe two systems which would be more, more classified, even if the system which existing is classified, of course. But more classified in a sense what we understand from the member states, which would be classified for non-EU member states, which is also partly related to your, your interest. So, I'm a bit confused and it can require at least three years from now. It means 27, 28, 29 and 2030 it would work. So, I guess if we are looking on what's going on, how rapidly in a war in Ukraine by Russia and from both sides, well, we cannot work like that.
So, in our opinion, so it's just one example. And what we see also, which is also I think it's very important for you, particularly some of your member states are also NATO members, yeah. So, that's mean, if in case, if there is a crisis, because regulation core regime is a new regime emergency, emerge. Which is currently we have a peace regime, there is a current system and which also would be with regulation improved. And then there is a war, wartime system, so which is NATO mainly in NATO hands, but in between nothing.
And that's why this regulation created emergency situation where all the procedures should be much more quick. And there is one important example, if one member state initiated or several member states initiated this emergency in a very short time, in a days, in a few days time, we don't know how it will finish, in a few days time it will be well how to say prepared by the Commission for approval in the Council. And then it could be in current Commission proposal and also in Parliament position all this framework, which is European Union, even more maybe also with the third countries partnership through the NATO, it's one emergency system. But Council side is different, they would like to see that could be also some corridor system only, which we can imagine if it's really emergency, it's meaning a pretty serious intelligence information why we have to switch on this intelligence system, this emergency system. And in that case can imagine so that Russians will know where the corridor is, where is those member states who are involved in an emergency system and the remaining member states living as they used to live and still would like to live in, everybody would like to live in a peace regime, but we have to be reality.
So that's just few examples which I wanted to deliver how I see the problems what we have to solve with Council side.
Sundnes
Thank you very much. Coming from Norway when it comes to military mobility, of course, I would think for the rest of Europe, it's not only interesting, but also vital that supplies reaches the European continent and to that extent Norway will be the provider of that. I was wondering, do you discuss, I mean, from the Norwegian point of view, I think it would be important for us to have access to the Council when it comes to the mobility package. Is this something that you also discuss in your work here in Parliament, how to best include Norway in the military mobility in such a sense that we actually get the equipment to the places that they should be? Thank you.
Roberts Zīle
This is, we are in current stage when Council already prepared their position.
We have a so-called four-column document, which is just how we are working with the Parliament, of course supporting all those non-EU countries' involvement in this process. And also we have even agreement now, I think with the Council, that we changed a bit language in a draft of regulation, but Moldova and Ukraine as well. So that's why I think I'm sure that your country is a particular NATO member state, so it definitely should be involved. Several paragraphs are related also with NATO involvement. But what I don't know, how deeply Norwegians, for example, were involved in the Council positions' preparation with member states.
We don't know it. So it should be known by your government, Ministry of Defense or Transport, were they involved in a Council positions' preparation and are you informed enough? So I cannot comment on this. But of course in Parliament side, we understand that the majority of Parliament definitely support positions that all the, it cannot be big difference between on those military mobility issues between NATO and the EU countries and the same also with the partner countries like Moldova and Ukraine. That's why I think I cannot answer, but it should be done by your government ministries.
Sundnes
Yes, I know, and and that is firmly the the Norwegian government's position, but I would think that the voters in in Europe would be interested in in the logistics working if there would be an escalation of of a war on on European soil, and and that's why I think that also the European Parliament should make a point out of including Norway in the work done with the mobility package. Thank you.
Yes, I know, and that is firmly the Norwegian government's position.
Roberts Zīle
Parliament's position, I think it's not against at all involvement, there is NATO countries should be as much involved in several paragraphs, so but we cannot create a how to say new we can create compromise with with the Council side how to say making the writing of the text. But we cannot take a position if the if the Council will will didn't not include you, so but I think you are included indirectly, so but but I fully agree from the substance point of view because also Commissioner Kubilius, Defense Commissioner, during this trilogue this week here in Strasbourg again he mentioned we have to understand that one brigade it's about 4-5,000 soldiers and officers, and it requires lot of of course freight as well coming on.
He said that it requires about 25, if I correctly remember, 25 kilometers on the road, truck to truck, or if you will move one division, which is could be about 15,000, so it requires and with all the needs, it could require even like, well, 200 trains, trains with wagons. So it means it definitely will be huge impact on infrastructure, and that's of course related very much geographically where is Norway and some other your association countries. So that's still not, I think, recognized by many member state level here, and also by my colleagues here in Parliament who are living more far from Russia.
Speaker 1
Okay, any other questions or comments? No? Well, then I think we say thank you to you, sir, and thank you for taking the time. And we move on to Ms. Tsvetelina Penkova, the MEP and rapporteur on the grids package. Oh, there you are.
Sorry. Thank you.
Tsvetelina Penkova
Good morning everyone. Thanks for having me here. So, as my colleague, I would also like to outline some of the main political priorities from the European Parliament side on the TEN-E negotiations. And of course I will touch upon the topics of interest to our EEA partners because we do acknowledge the importance of the cooperation and the communication with them. So, on behalf of the Parliament, I want to emphasize that the revision once more should support and help Europe develop the infrastructure that we need for more secure, resilient and affordable energy system.
So, of course our mandate at the moment seeks to strengthen the European dimension of the infrastructure planning and to ensure that the investments that we predict respond to the identified needs of the system and of course they benefit the European citizens and industries.
So, having said that, there are four main priorities at the European Parliament mandate at those negotiations, which I would outline briefly. First of all, we aim to deliver a regulation which guarantees a stronger and more credible European planning framework, which is based on the identified needs, the transparent assumptions, and the appropriate scrutiny. So, having said that, as a rapporteur, we moved the planning development that we have seen so far when it comes to the trans-European energy network. So now we're looking at a needs-based approach rather than project-based. I'll clarify a bit that.
So we want to ensure that we start addressing the problems in the system and we invest quickly in the problems of the systems which are going to resolve some of the bottlenecks at the pan-European level rather than just looking at the list of project and doing them at the regional, I mean when I say regional of course I mean a few countries involved. But it seems that this approach has been there for many years and it's not delivering the results that our member states, our citizens and our industries need. So having said that, I would just list some of the gaps and inefficiencies that we have been observed such as structural congestion, unmatched needs. So having said that, we are aiming to resolve those matters with the new scenario planning approach that the Parliament is proposing based on the initial Commission draft. And from the Parliament perspective, we've also re-emphasized strongly the need for mandatory sensitive analysis and ACER verified data to make sure that everything is really based on verifiable facts and information.
That was the first and probably the major priority, which completely shifts the way the energy infrastructure system is planned and it's going to be delivered in the near future. The second priority is the project selection criteria to be based on European added value, which includes affordability, security of supply, market integration, and the contribution of flexibility, storage, and grid-enhancing technologies. We're trying to look at the full picture, emphasizing the importance of each one of the components, because just taking one out of the system, it's gonna deliver inefficient results. Third, we are aiming to achieve stronger implementation and more predictable permitting, of course, while preserving the environmental safeguards and the public participation. This is a key debate in the Parliament.
And fourth, which is a very sensitive topic for the Council at the moment, we acknowledge the need for a clearer link between the congestion income and the investment in addressing persistent network constraints, or the so-called bottlenecks.
As a rapporteur and now with the support of my colleagues in the Parliament, we pushed to raise the share of unused congestion income reserved to those projects from 25% as it was the initial proposal from the Commission to to 30% contribution. Our second trilogue took place on the 13th of October and I have to say it was very constructive in terms of the the shared objectives between the European Parliament and the Council. The next one is scheduled for the 10th of November and we are aiming to finalize the negotiations hopefully by the first half of December. And now as I promised at the beginning, I would touch upon a bit on the projects of mutual interest, which are key for our debate here today, as we know that for our EEA partners, this is one of the most important provision with relations to the projects of mutual interest and the eligibility criteria. Those provisions have not yet been discussed with the Council as we stand now, as our discussions were mostly focused initially on the planning framework to make sure that we we start from the big picture.
The Parliament's position when it comes to PMI is very clear.
We recognize the particular status of the European Economic Area and the Energy Community partners. A high level of convergent with the EU policy framework is presumed, the assessment can consider cost and benefit cumulatively for the Union and the partner country concerned, including over the long term, so we do acknowledge that importance and it is part of the Parliament's position. Parliament also adds a requirement that the projects, the PMI list, have sufficient technological maturity or credible evidence of current or expected future demand and supply in the Union market. This is a key aspect, but as I said, we still haven't discussed with the partners from the Council. And as for the general infrastructure planning, we want the projects to respond to the real needs of our citizens and industries and to deliver lasting benefits.
I think you see the underlying logic is coming from the planning framework to the eligibility criteria, but the PMIs have been strengthened in terms of importance and significance in the Parliament's text compared to the initial draft and position from the from the Commission. And we are still about to start that part of the negotiations with the Council. I'll stop here.
Sundnes
Since it's all quiet. No, I just wanted to point out that the work that you do now on the grids package, it's very important for the for the energy supply for the whole of Europe. So I just wanted to underline that that I hope that you succeed and that the bottlenecks that you talked about is solved because I think it's crucial also for for the whole of Europe. Thank you.
Speaker 8
Thank you very much for this introduction.
Maybe one question about interconnection between countries of the grid. Is there something that you're working on that making some demands on that or connecting countries together or hopefully you understand what I mean. Thank you.
Tsvetelina Penkova
Well, this is the the main underlying priority actually of the revision and this is well connected with the bottlenecks as I've underlined because currently there are a few specific regions in Europe like for interconnection exactly across across between countries where it hasn't been considered as a priority or it hasn't been invested. So basically the main idea of the of the revision is to ensure that we identify those weak links, strengthen them, modernize them or invest in additional infrastructure where it's needed.
And I think this is the key point because at the moment we see that in many parts the connectivity doesn't provide enough capacity. But that's why when I was listing the technologies, we are trying to envision the full picture from that perspective. So we make sure that when we're investing in infrastructure, modernizing or building a new one, it's going to have basically all the different elements of guaranteeing flexibility, storage capacity, and enough capacity for the electricity to flow. We've also touched upon quite significantly when it comes to the fact that we need to make sure that our partners from the countries which are outside of the EU but they have a significant participation in guaranteeing supply, it's going to be part of that strengthening of the infrastructure and the network.
And just going back to the remark that was made already by the first, by the first colleague, we do acknowledge the urgency. And that's why we're aiming to finalize the negotiations by the end of this calendar year, which means that already the regulation can start with the new planning framework to be put in place basically as we speak of 2027, with the aim that some of the funding which is going to be provided in the next MFF available as of 2028 to have the list of projects and the plans more or less ready by the moment the money is available. So everyone acknowledges the urgency, it has been underlined many times by the high officials of those institutions because we are quite delayed and lagging behind of the implementation of that.
Speaker 11
Yeah, thanks for the interesting presentation. Could you maybe tell us also something about the timeline, when do you expect to see the first results on the, on the field or on the grid itself and maybe also about the project times, how it will be improved after the new regulation?
Tsvetelina Penkova
Unfortunately, I cannot tie up with deadlines, but that's that's what I've said. We are aiming to have this new framework approved and put in place as we speak of 2027 to give the time for the relevant stakeholders to identify the bottlenecks and to develop the scenarios on the needs-based approach rather than project-based. So once the funding is available with the new MFF to be speaking about proper implementation and the first projects start to being put in place already in in two years' time from now. Having said that, we do acknowledge that the money that's currently being envisioned in the MFF, which is still not finalized the next the next period, and some of the additional programs that are taken into account for the grids are not going to be sufficient. So we're also emphasizing the importance for public-private partnerships when it comes to the funding.
And from what we're speaking with the relevant stakeholders across across Europe, it seems that this is this is not out of scope and it seems to to to attract some interest in terms of raising the funds needed to enhance the grids.
Once we guarantee the regulatory predictability, I think we're going to see a lot of those those bottlenecks unlock.
Speaker 1
Sounds good. Usually we have or most countries, at least Norway has a pricing zone system that reflects the physical bottlenecks in the grid. Whilst you have countries, for instance like Germany, they have one price zone which doesn't reflect the physical bottleneck between the south and the north. So is there any measures in the grid package to remedy that kind of situation, or will it be Germany's prerogative to decide to keep a system that doesn't reflect the actual physical bottlenecks in their own grid? That's one question.
The second question is, are there any measures in this package to incentivize more efficient use of the existing grid in terms of digitalization, spreading the load across across the day and night to ensure that we use existing infrastructure efficiently?
Tsvetelina Penkova
The second part of the question is quite straightforward.
Yes, we are re-emphasizing that everything that we have in place should be should be put to use to the maximum and we should identify where anything should be improved, but acknowledging the existing infrastructure is to be to be to be properly used with the with the with the new framework. When it comes to the bidding to the different bidding zones and the physical bottlenecks within countries, I'm emphasizing that this the scope of this regulation is the the trans-European network, so we're not dealing with the with the network within each one of the Member States. However, the different pricing zones and the different kind of systems in place in each one of the Member States have been taken into account. If if you remember, I've mentioned that we're trying to ensure that some part of the unused reserves or revenues generated for congestion income should be put back into the system to resolve the problems that are generating them. We do have certain exceptions for specific countries with more unique bidding zones to say the least, like for instance Sweden is a very good example on that side.
But when it comes to national grid bottlenecks, this is not in the scope of this legislation and we cannot be influencing the way the pricing is determined in each one of the member states.
Yes, Mr. Tobback.
Bruno Tobback
Yes, well maybe to partly reply on your first question, because outside of the TEN-E revision, the Commission has also right now put on the table a whole package of measures on energy pricing, efficient use of the grids with proposals for example around the grid connection queues, the way to deal with them, the way to prioritize, the way to be able to invest in, for example, more efficient use of the grids in technologies that give time-linked price signals and congestion-linked price signals. That is a package that is separate and that we still need to start treating, so that will be starting to be taking up the most of the first half of next year. And it is obviously, no pun intended, connected to the cross-border investment planning that we have on the table right now.
So and one more thing, maybe an interesting question to link the two the two interventions today. I think that if we look at cross-border infrastructure, not just for electricity, but also for all the other energy and and data, for example, I think the security, the protection, the resilience of that and, for example, repairability, standardization of a bunch of the equipment is something that should be relevant for a forum such as such as this one, because it is a vulnerability that specifically looking at, for example, the North Sea region, where we see a lot of less than friendly activity. I think it is one that is relevant and that connects the two discussions, both between both between NATO and military cooperation on the one hand and energy infrastructure on the other. So I think there's a lot of opportunities to improve what we are doing still.
Speaker 1
Oh, and there's there's more than grids in the North Sea area. We have 8,000 kilometers of pipelines serving the European market. So a lot to do there. My my question just to follow up quickly on that on on I know that the the national grids is a different matter, but still the need for investment in trans-border grids is also reflected partly on irrational or suboptimal grid infrastructure at the national level. So that's why it's sort of connected, I think.
And we see this quite clearly because we are linked to the German market. And if Germany had a different system nationally, that would reflect very much in the price also in Norway. So it's all coming together.
Tsvetelina Penkova
No, no, I'm not not acknowledging this. So that's why we've also, when it comes to to the criteria for some of those new projects planning, we made sure to emphasize on the fact that also the distribution networks should be considered as a significant part of this planning, even though it's not in the scope, because here we are speaking basically everything about on the TSO level, not DSO. But since we had many of those conversations, you're absolutely right that it's very difficult to be building the big highways not acknowledging that there are small roads which are coming into that. So this has been taken into account and there are also quite a few, I would say, conversations with the Commission of something that should be coming from their side, which would also strengthen the the regulatory framework on the distribution network level. Having said though that there is also strong opposition from the member states because this is within their national prerogatives.
But we understand that you cannot be connecting if you don't have everything into account. So especially the case with Germany, I think we had many conversations and you can expect improvement in the system overall there because it does affect everything below Germany as well.
Speaker 1
Thank you so much. If there are no more questions or comments, I think we will move on to the next agenda item. So thank you for taking the time to come to talk to us. Much appreciated. So we will move on to our next item, which is competitiveness with EU programs.
This is a topic of direct interest to the EFTA states, which take part in many EU programs under the EEA agreement. So we would like to start with Mr. Kristmundur Ólafsson, officer at the EFTA Secretariat in Brussels and expert on EU funding programs. And he is joining us online. Welcome.
Kristmundur Ólafsson
Thank you very much for the introduction and the invitation. I would like to, I have a few slides. I'm not sure they are visible or, yes.
Speaker 20
Yes, thank you for the information, invitation. I want to start with that since the publication of the new proposals for the upcoming MFF, the EEA EFTA states have been very active in providing their input into the, for the regulations. Next slide. The EEA EFTA countries have published a total of six EEA EFTA comments, some of which are focused on specific programs, while others are focused on entirely on horizontal aspects of the program proposals. And I had the pleasure of presenting the horizontal comment highlighted in the slide to you last year.
One second.
Speaker 20
Next slide. What I want to maybe focus on in my presentation is highlighting two things. That the first thing is the extent of the cooperation. It has taken place in for 30 years. We are currently participating in 17 programs and with a lot of cooperation between the EEA EFTA countries and EU countries, but also considerable financial costs involved.
And what is maybe most important here is that these programs help us build common European cooperation networks and help us address common challenges, protect shared values, and promote shared interests. As the EFTA countries have highlighted, the EEA participation in the EU programs are a key instrument for the cooperation and a vital part of their participation in the internal market, where these competitiveness is increased and these challenges are addressed. And there's a significant alignment between the priorities being set in the current MFF, upcoming MFF, and with the EFTA countries where they have supported strategic investments in key areas, simplification measures, and program consolidation proposed by the Commission, and the emphasis on increasing Europe's competitiveness, security, and resilience. The second thing I would maybe like to highlight is that because the EFTA countries are participating in the internal market and are members of the single market, the EFTA countries have called for a few amendments to the proposed regulations to recognize their distinct status compared to the third countries with other association arrangements, reminding that the EEA agreement is the legal basis for their participation and the rights and obligations for their participation, which clearly set them apart from other third countries participating.
So why this is important is that with a lack of knowledge of the EEA agreement within that we witness in the Commission and that lack of knowledge can lead to a lack of differentiation between the EEA countries on the one hand and then third other third countries on the other, which can and has proven troublesome in the implementation of of these programs because the lack of knowledge and the lack of differentiation can lead to unnecessary restrictions and not only reduce the competitiveness of the EEA countries but also the European Union at large because when the EEA countries are excluded from the participation, that means that the networks they're excluded from cooperation networks and they that means the lack of projects, the lack of reduced their participation in the projects but also provides lack of predictability for these participants and impact the EEA countries disproportionately to other countries. Next slide please.
So where the EFTA countries have particularly focused on the importance of asking for specific references to the EEA agreement is in the participation clauses in the program proposals. We already see very positive changes in the Erasmus+ program in the draft report for the Erasmus+ program and the Agora program, but the draft reports that are for many of the other programs don't include this specific reference to the EEA agreement in a specific point on the participation of the EFTA countries, where we ask that for a revised point A, that the members of the EEA countries which are members of the EEA are participating in accordance with the terms and conditions laid down in the agreement for the European Economic Area. So this was done quite clearly in the previous period, but the lack of predictability and the lack of inclusion in the regulations this time around can lead to trouble when it comes to the implementation aspect of those programs. The second part and the next slide I would like to maybe address is that there are certain clauses in the programs that also include the eligibility requirements and eligibility restrictions. And this is particularly relevant for the European Competitiveness Fund and the Horizon Europe program.
And there the EFTA countries have asked that not that again that a specific reference is made to the EEA Agreement, inserting that any limitation of the participation of the legal entities established in the associated countries which are members of the EEA shall be in accordance with the Agreement on the European Economic Area. And in both cases there are clear precedents in the current Horizon Europe regulations where these language where this language has been included. So maybe just to wrap up that in order to fully participate in the programs and which they are as a right allowed by the by the EEA Agreement and fully participate in contributing to common challenges, protecting shared values and increasing competitiveness, the increased clarity in the regulations would highly benefit the interest of the EFTA countries and also the European Union at large. So thank you that for me and thank you for including me.
Speaker 1
Thank you so much, Mr. Olafsson. We have two more speakers in this three more speakers, no, two more speakers in this session. So we will welcome now Professor Luis Garicano, Professor of Public Policy at the London School of Economics and Executive Director of the Renew Group, connecting online as well. So welcome, Professor Garicano.
Luis Garicano
So, I am a professor at the London School of Economics indeed. I I have been a member of the European Parliament for for a few years. I am working with Mario Draghi, I worked on the on the competitiveness report and I've been working later with him. My assessment of the competitiveness agenda implementation as of now is, um, not very positive, I have to say. The omnibus legislation that was initially passed, the first omnibus, eliminating paperwork, kind of is a is a positive is a positive development, but the main aspects that have to do with the single market are still a a problem.
Speaker 24
Um, we are seeing difficulty in moving forward on the digital permitting and single market legislation. I want to specifically mention the single market because there are two pieces of legislation that are particularly important and that were both in the Letta and Draghi report.
Luis Garicano
One is EU Inc. EU Inc is a very important idea and a very positive idea, and the idea is simply that a company can incorporate itself in one member state and can operate as a European company under this incorporation and can incorporate itself as a European company everywhere. So there would be a single incorporation, there would be single liquidation, there would be certain rules for the employee stock options that would be common. There would be simple procedures to potentially raise money, exit and enter into the capital of these companies. EU Inc is what was used to be called the 28th regime, and the idea is let's facilitate scale-ups.
As this has been moving through parliament and through the governments, my sensation, my view is that this has gotten less and less powerful.
Right now, I would say the risk is that it's going to become a webpage that will give access to companies to the individual registries of the member states, but that the companies will have to do the individual registrations in the different countries. What that means is that the value in terms of scaling up is going to be very, very limited and that the potential to really achieve a significant gain relative to what was the status quo is limited. The second I want to mention that was also important is the Capital Markets Union, the Savings and Investment Union, and in particular the merger or the possibility of having a European-level stock market. And this would require pan-European operators or at least companies who could operate across stock markets.
And in particular, this would require to give more power to the top stock market regulator, which is ESMA, the European Stock Market Agency, and limiting the powers of the individual members to interfere. What the compromise that is appearing points out is that, like happened with the Banking Union, there is a risk that there will be a double layer in which we give more powers to ESMA, but we don't really reduce the amount of power of the lower layers, so that we increase at the end paperwork and duplication. Those are maybe my two biggest concerns at the moment. I mentioned permitting, where there is an environmental omnibus that will be discussed soon. And but the single market is the ones that are more of concern to me.
Speaker 24
So having said this, I am open to your questions or your comments or discussion.
Speaker 1
Thank you so much, Professor Garicano. We will take one more intervention from Trine Lise Sundnes before we then open the floor for questions and comments to all three speakers. So please, Trine Lise.
Well, thank you, Chair, and dear colleagues. And thank you for two very good interventions, both from EFTA and from Professor Garicano. I mean, Norway welcomes the European Competitiveness Fund.
Sundnes
And it's true, Europe has to become more competitive, greener, more digital, and more secure. And no country can do this alone, and that's why it's so important to do this on a European level. So funding should be based on competition, be technologically neutral, and be predictable for long-term investments. And after more than 30 years with the EEA Agreement, Norway is fully integrated and part of the internal market's value chain. And that includes energy, raw materials, maritime industries, space, and defense.
And today we take part in nine of the 11 programs that will be merged into the fund, as well as Horizon Europe. So my main point is this: we must not create new barriers inside the European Economic Area by incident, as Mr. Olafsson pointed out in his intervention. So we are not asking for special treatment, we are asking for legal clarity. We have four proposals.
First, the EEA is not an ordinary third country agreement. The regulation should say so with an explicit reference to the EEA agreement in Article 11. Second, preference criteria must respect the participation rights guaranteed by the EEA agreement. Horizon Europe already has good wording for this and we suggest using it in the new fund as well. Third, security, defense and space.
Norway is a close NATO ally and a security and defense partner to the EU. And rather than long negotiations over separate agreements, let us use the EEA agreement as a framework where security questions can also be handled. That means faster cooperation and less bureaucracy. It also means non-discrimination in the space sector and seats for EEA EFTA states on the advisory boards for space and defense. And fourth, governance.
Taking part in a program has to mean real participation, including in work programs, award criteria and committees.
Horizon Europe should keep its own governance, build on excellence. The rules on dual use should be written into the regulation itself, so they cannot become a backdoor that excludes partners. So, colleagues here at the Parliament, as co-legislators, your amendments can make a difference. So let the fund cover the whole internal market, all 30 countries. Europe's competitiveness is a shared project and we are ready to do our part.
Speaker 27
Thank you so much. Questions and comments. Yes, Hans-Peter Portmann, Switzerland.
Hans-Peter Portmann
Yes, thank you very much, Mr. Chair, colleagues. Of course, we are not EEA members, we are not EU members, but we have also bilateral contracts and also we have participation to programs. So this tractandum is very interesting for us too. Right now, the Swiss Parliament is in the ratification process of the Bilateral III and the big issue there are the EU programs.
And I have two questions to this to understand, and I guess it's the first speaker who maybe can answer it. In which budget, in which budget are these programs budgeted, included? Are they separate budgets, or is this the whole EU budget? As an example, when now Germany says they do not agree with the whole budget and they want to lower it and whatever, is this also then affecting the programs, or is it not affecting the programs? Is this a separate budget process?
That's my first question. And the second question is, behind of how much is your membership cost, there is a mathematic formula. We have in our contracts clearly at the to the contracts in the appendix, there we have this mathematic formula. But who can change this mathematic formula? Who can change this mathematic formula?
Is it only the Commission? Is it the the Minister Council? Is it the Parliament? And how would this affect to a third-part country like us, where we have this formula in the appendix to the contracts?
Speaker 1
Thank you so much, Hans-Peter. I think we will take one more question before we ask the speakers to comment.
Baldursdóttir
Yeah, thank you all for your presentations. Some of you or all of you talked about barriers, and I would like to know how can we ensure that the EU competitiveness programs do not create additional barriers for companies and institutions in the EEA and EFTA countries?
Speaker 1
Thank you. I think we will start with Mr. Ólafsson, and then I'll give the floor to Professor Garicano to comment.
Speaker 20
Yes, thank you very much for the questions. I would like to maybe on the first question on the modes of financial contributions. For the EEA countries, that is clearly sort of clarified in the EEA Agreement where there's a clause that the EEA countries contribute to the EU budget proportionally on the basis of GDP calculations. So it's just on the same manner as EU countries. They are contributing equally, and that is just calculated basically on their relative size of their economies.
This is done annually, and that is clarified in the EEA Agreement.
The contributions there come on top of the EU budget which is negotiated within the EU. This is this is another issue that makes the EEA countries different from other third countries because the modes of their payments. In the case of Switzerland, their association arrangement is different from the EEA countries and that goes as well for other third countries as well. They in this tends to take the form of association agreements where the clauses on financial contributions and how they are managed take place, but that is a different way of doing it, but I would I have knowledge on the EEA agreement, I wouldn't like to go into detail on the association arrangements for other countries. On the second question on how we can make sure that the the full participation of entities in the EEA countries and that they contribute equally is that I think that is maybe the core of the what I also touched on in my presentation that at the stage of forming the regulations and for the competitiveness fund specifically is that if you include specific references to the EEA agreement which states that they are allowed to participate on equal terms to entities in the EU agreement, if you have the regulatory clarity in the regulation, that helps ensure that they are treated equally when it comes to participation and inclusion in cooperation networks funded by these programs because any exclusion doesn't impact the EEA countries.
So regulatory clarity and and the modes of of calculation is in for the EEA countries is different from from other third countries participating in the programs, all of which are on top of EU budget. Thank you.
Speaker 1
Thank you so much. And then to Professor Garicano, I would also like to add a question before I give the floor to you on you mentioned the EU Inc and the shortcomings of of that, not least pertaining to the lack of harmonization of national regulations. What kind of concrete changes to the EU Inc legislation would you like to see to make it function according to the ambition that was set out initially?
Luis Garicano
So a very good question and thanks for that.
So, EU Inc., the ambition that we had when, or that everybody has, is that it is something like a Delaware Corp. A Delaware company means like a US company can incorporate in Delaware and be subject to those, to that jurisdiction. Ideally, in the best case, you would want something that incorporates, that makes incorporation easy. So you can register without a notary in 24 hours, digitally. The Commission is committed to that.
There is a comma there that says subject to national legislation, and that's the problem, because then all the incorporation rules are back in through the back door. Second, you would want to allow it to raise money across the continent, without individual national registrations. Third, you would allow it to liquidate across the continent, so a single liquidation procedure. Fourth, you would allow the employees to get stock options, so that you can give them the stock options across the continent.
So you have employees in different places and you would have those stock options taxed later when they are actually exercised and not when they are given because there is no liquidity and it's impossible to pay those taxes. Because that makes those taxes early as they work now, eliminate the real content of the employee stock option, they make it impossible to use. And then there are two issues that to me would be important. Okay, sorry, I want to say the value-added tax. I would want the value-added tax registration to be done once and the liquidation to be done once, even if the tax, so one window, even if the tax is different in different countries.
Right now it is a very complicated thing across countries. I would ideally like two more things. I would want some labor rules that allow for easy hiring across borders. Now it's very, very difficult within our continent to hire workers in a different place and that makes growing for a company very hard. And so employee, everything that has to do with employees is very opposed particularly by Germany because of the co-determination rules and things that have to do with employees are also quite opposed by the French unions have already expressed their opposition.
And I would like to see some convergence on the fiscal treatment of these companies, but I realize that's hard. Now, here's an interesting opportunity for the EEA. If and when this approach, common approach, 27 countries approach delivers a mouse, when and if it doesn't work, which honestly I wouldn't say it would be a big surprise for me at the moment. The type of approach that is a coalition of the willing, where Baltics, Nordics and Portugal, say, I mean just to not make it geographic, say, oh, we're going to have and Switzerland if you want. I'm not being, I'm just giving an example.
In which those countries say, look, we believe that we want to put this statute and we want our companies to be able to operate across borders and this is the single statute for startups and scaleups. I think that opportunity will open pretty soon.
I think the result that we will see will come pretty short of what is needed. And that as a result, it will be quite possible to find the will among member states of the European Union to move forward with a coalition of the willing approach.
Speaker 1
Thank you so much, um, for all to all three speakers and for an interesting discussion on important matters for I think all EEA countries. Um, we now, um, move to, we're going to move to the presentation of the communication on the Arctic. You can leave your belongings here. We're coming back to this room for the last agenda item, but we are now going to switch rooms for the next agenda point. And we have to follow the European Parliament Secretariat to the meeting room.
So please let's move swiftly and then we're coming back here.
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