Activites

• 2004/02/10 Decision by Parliament, 1st reading/single reading
  • T5-0081/2004 summary

    The European Parliament adopted a resolution based on the own-initiative report drafted by Hans MODROW (EUL/NGL, Germany), welcoming the Commission's approach to the reform of state-owned enterprises in developing countries. (Please see the document dated 20/01/04.) The resolution was adopted by 407 votes in favour to 58 against with 71 abstentions. The Commission's approach does not conceal the perplexities and uncertainties involved in the process, particularly the difficulties of reconciling privatisation measures with guaranteed equal access for all to services of general interest at an affordable price. Parliament felt, however, that the Commission should rely more heavily on EU experience and should not refuse (as it has done so far) to carry out an openly debated assessment of the effect which liberalisation has had on employment, on the quality and the extent of the services provided and on working conditions in Europe. Parliament emphasised that privatisation of a state-owned enterprise is not an end in itself. Priority must be given to combating poverty by improving the services available to the public and reinforcing the national economy, including creating real, i.e. economically sustainable, jobs, for which a lasting improvement in the economic situation of the undertaking is a precondition. Combining the provision of modern public services with private companies can be a useful method. Privatisation must not result in a State monopoly's being replaced with a private one. Parliament went on to acknowledge the dominant role of Trans-National Corporations (TNCs) in multilateral trade (responsible for 70 % of world trade activity). The top 200 TNCs have a combined turnover greater than a quarter of the world's economic activity, amounting to some 28.3% of world GDP. Parliament regretted that there is a lack of recognition by political decision makers of the decisive role that could be played by them. It stated its conviction that privatisation is only permissible if certain conditions are complied with. These include ensuring transparency throughout the process, the reform of the financial sector in parallel, and accompanying the reform process by appropriate social safeguards. Further conditions are taking account of the viewpoints of organisations representing civil society, particularly trade unions and users' associations. Such organisations must be involved in monitoring the decisions to be taken. Furthermore, the management of public utilities should remain accountable to public bodies, regardless of their ownership, and the Commission should assist with the development of appropriate public scrutiny mechanisms. Parliament asked the Commission to encourage developing countries to support private investment in partnership with state-owned enterprises, and to augment in partnership as stakeholders in order to fill the gaps where state-owned enterprises going it alone have no investment capacity, technological ability or knowhow, no audit control or financial control measures, no anti-corruption or anti-waste controls and no other mechanisms which increase productivity and efficiency. Finally, Parliament called for Ethical Investment Committees to identify Enterprise Development projects as Offset projects in which companies can invest. These Ethical Investment Committeesshould operate in conjunction with NGOs and other civil society actors, so that projects are tied to local social, environmental and industrial capacity building, which will lead to poverty eradication and foster the provision of clean water and sanitation as well as basic education and health care.�

• 2004/02/09 Debate in Parliament
  • Debate in Parliament
• 2004/01/20 Vote in committee, 1st reading/single reading
  • A5-0015/2004
• #2540
• 2003/11/17 Council Meeting
• 2003/09/04 Committee referral announced in Parliament, 1st reading/single reading
• 2003/06/03 Non-legislative basic document published
  • COM(2003)0326 summary

    PURPOSE : to propose a more active role for the EC in the debate on State Owned Enterprises (SOEs) in Developing Countries. CONTENT : for some years there has been pressure on developing countries to reform SOEs. This pressure has been prompted by the heavy burden of SOE losses and economic inefficiency on macro-economic and fiscal balances and growth. Though the Commission has often linked its budget support programmes to adjustment conditionality of the Bretton Woods Institutions (BWIs), it has not always been explicit on the specifics of SOE reform included in adjustment programmes. The Commission argues that there are several compelling reasons for a more active involvement of the EC on the issue of SOE reform; - the impact of SOE reform on the economies of developing countries can affect the achievement of the Millennium Development Goals, to which the EU is firmly committed. This effect could be positive, through reduced fiscal deficits, increased economic growth, improved provision of essential services and building of management capacity, if reform is effective. It could be negative, through increased unemployment, reduced access to basic services, loss of managerial and administrative know-how and increased corruption if it is not successful; - Member States have broad expertise in SOE reform. The EU has unique experience of combining economic liberalisation with common "rules of the game", and an unequalled record of reconciling competitive markets with the provision of services of general interest; - the EC already supports many SOE reform programmes - whether privatisation or other forms of change - directly or, more often, indirectly within the framework of adjustment programmes led by the Bretton Woods Institutions (BWIs). The Communication goes on to review the reasons behind the build-up of a large public sector in developing countries. It notes the political nature of some of the key choices involved. It highlights the reasons for reforming SOEs, discusses the risks and benefits of different types of reform, and suggests lessons for best practice for both recipient governments and donors. Public utilities are something of a special case, and of growing importance in the debate. They are frequently characterised by natural monopolies, and each field has specific characteristics that make the debate complex. The importance of the regulatory framework is, however, particularly evident for all public utilities. In general, the key issues are about the access, affordability and quality of each service and quality and efficiency of management. The Commission's guidelines on SOE reform highlight the following: - governments need to define their objectives clearly, in ways that can be monitored transparently. They must decide what is the most important issue for their citizens: service quality or accessibility, fiscal gains or employment generation, taking account of benefits, costs, resources and alternative uses. Decisions like these are fundamentally political decisions and need to be made explicit and transparent if governments are to be held properly accountable; - before deciding on a formula for reform, governments need toexamine all the options, including restructuring within the public sector, PPP, privatisation, and mutualisation, analysing the impact they are likely to have on access, affordability, and quality of services and goods, on public finances and on the country's economy. This assessment should also take into account the employment and social consequences; - transparency in both design and implementation is critical to the outcome of reform. A lack of transparency implies higher risk of corruption and poor information during the process can undermine the confidence of public opinion and oblige the government to reverse the reform; - the design of the regulatory framework and monitoring of post-reform performance are key issues, which have an influence on all the impacts analysed so far. The benefits of a proper regulation and control range from direct reduction of poverty to consumer protection, from better quality of service to less corruption. The Commission advocates technical assistance as well as financial assistance; - SOE reform in developing countries requires a marked increase in the level of foreign direct investment flows. For this to happen governments must create a conducive climate based on peace, democracy and stability, a stable macroeconomic environment, a transparent and predictable fiscal system, enforcement of the rule of law by an independent judiciary, and respect for human rights; - sequencing is crucial and an important sequencing issue is the inclusion of the financial sector reform, given the impact, which unreformed banking institutions, can have on the incentives confronting enterprises during the reform process; - any reform should include an appropriate social protection strategy; EC discussions with the developing countries concerned, and with the BWI, should take place prior to any SOE reform which directly or indirectly involves the EC. European Commission Delegations would need to play an active role in the discussions to be held at country level during PRSP processes or during BWI missions. They would concentrate on the objectives of reform, identification and assessment of reform options, including sequencing issues, the requirements of post-reform regulation and monitoring and the need to address employment and social implications in a consistent and integrated way. Member States should also be involved in these talks.�

  • DG ['Development'],

Documents

• Non-legislative basic document published: COM(2003)0326
• Committee report tabled for plenary, single reading: A5-0015/2004
• Debate in Parliament: Debate in Parliament
• Decision by Parliament, 1st reading/single reading: T5-0081/2004

History

(these mark the time of scraping, not the official date of the change)