Introduction to the European Union. Prepared by Dr Introduction to the European Union Prepared by Dr. Endre Domonkos (PhD) Academic Year 2013/2014, Autumn Semester

I. The European Union’s financial perspective for the period 2007-2013 I. The EU’s financial perspective for the period 2007-2013 contains 5 headings. Heading 1- Sustainable growth is divided into two separate: Competitiveness (1a) and Cohesion (1b). 1a. Competitiveness for growth and employment: 1b. Cohesion for growth and employment:

I. The European Union’s financial perspective for the period 2007-2013 II. Heading 2- Preservation and management of natural resources: Heading 3 – Union citizenship, area of freedom, security and justice: Heading 4 – The European Union as a global partner: Heading 5 – Administration: In its proposal, the Commission pointed out that expenditure for the period 2007-2013 was partly decided.

I. The European Union’s financial perspective for the period 2007-2013 III. The Commission’s proposal represented 1.14% of EU GNI on average for the whole period 2007-2013 for covering the common expenditure of a Union of 27 members. According to the Commission’s proposal, commitment appropriations in 2007 should have totalled EUR 133.6 billion (at 2004 prices), which would grow to 158.5 billion by 2013. The most significant change was made in the Commission proposal was in Subheading 1a ‘Competitiveness for growth and employment’.

I. The European Union’s financial perspective for the period 2007-2013 IV. The Commission wished to put more emphasis on the economic policy objective enshrined in the Lisbon strategy: strengthening competitiveness + promoting sustainable growth and improving employment. The Commission proposed maintaining the proportion of cohesion spending within the overall EU-budget, but extending Structural and Cohesion Funds to the new Member States on equal terms.

I. The European Union’s financial perspective for the period 2007-2013 V. The Commission proposed significant increases in Heading 3 ‘Citizenship, freedom, security and justice’ (from EUR 1.381 billion in 2006 to 3.62 billion in 2013). The Commission also proposed a relatively considerable increase in Heading 4 related to external actions (40% over six years) and Heading 5 related to administrative expenditures (30%). Division among the Member States. The proposal of the Luxemburg Presidency:

I. The European Union’s financial perspective for the period 2007-2013 VI. The debate focused not so much on cohesion funding, but much more on the position of net payers and the extent to which they should contribute to the EU-budget. In early December 2005, the British Presidency put forward a new proposal with further cuts to the Luxembourg package, with commitment appropriations at only 1.03% of GNI. Finally, at the European Council meeting of 15-16 December 2005, the Heads of State of Government agreed on a compromise and they capped commitment appropriations at 1.045% of GNI.

I. The European Union’s financial perspective for the period 2007-2013 VII. Rural development funding enjoyed a major boost. Heading 3 ‘Citizenship and the area of freedom, security and justice’. Another novelty of the 2007-2013 financial Perspective is the decision of the Member States to set up a European Globalisation Adjustment Fund. The financial perspective also created a European Union Solidarity Fund with an annual budget of EUR 1 billion. Another novelty is the Emergency Aid Reserve.

I. The European Union’s financial perspective for the period 2007-2013 VIII. The review clause served as a compromise solution to the most controversial budgetary issues (UK rebate, CAP reform) postponed to a later date. The review of clause stipulates that both the revenue and expenditure side of the budget has to be reviewed. The Financial Perspective includes some key auxiliary rules for improving the budgetary positions of net contributors. The VAT collection rate was capped at 0,3%.

I. The European Union’s financial perspective for the period 2007-2013 VIII. The review clause served as a compromise solution to the most controversial budgetary issues (UK rebate, CAP reform) postponed to a later date. The review of clause stipulates that both the revenue and expenditure side of the budget has to be reviewed. The Financial Perspective includes some key auxiliary rules for improving the budgetary positions of net contributors. The VAT collection rate was capped at 0,3%.

I. The European Union’s financial perspective for the period 2007-2013 IX. The UK rebate was maintained in the form agreed by the 1999 Berlin European Council, except for the Member States that joined in 2004 and 2007, which can reduce their financial obligations vis-à-vis the United Kingdom. The biggest single structural change in the 2007-2013 Financial Perspective was the increased proportion of non-agricultural and non-cohesion internal policies (Headings 1a and 3). Another important structural change was the increase in rural development spending and the falling ratio of agricultural market support and direct payments within the budget.

II. The new budgetary procedure in the Treaty of Lisbon I. The Treaty of Lisbon institutionalised the now standard practice of multi-annual financial planning. The Council and the Parliament adopt multi-annual financial frameworks jointly. The Union’s annual budget is established in accordance with the provisions of Articles 313-316 of the TFEU in a special legislative procedure by the EP and the Council. The compulsory and non-compulsory expenditure was abolished by the Treaty of Lisbon.

II. The new budgetary procedure in the Treaty of Lisbon II. The stages of the budgetary procedure: Each institution, before 1 July, draws up estimates of its expenditure for the following financial year. The Commission submits a proposal containing the draft budget to the European Parliament and to the Council not later than 1 September of the year preceding that in which the budget is to be implemented. The Council adopts is position on the draft budget and forwards it to the European Parliament not later than 1 October of the year preceding that in which the budget is to be implemented. If within forty-two days such communication, the European Parliament can do the followings:

II. The new budgetary procedure in the Treaty of Lisbon III. The Conciliation Committee has the task of reaching agreement on a joint text within twenty-one days of its being convened. If within the twenty-one days the Conciliation Committee agrees on a joint text, the European Parliament and the Council will each have a period of fourteen days from the date of that agreement in which to approve the joint text. 7. The role of the European Parliament and the Council: 8. When the procedure provided is completed, the President of the European Parliament will declare that the budget is definitively adopted.

III. Commission's proposal for the Multiannual Financial Framework 2014-2020 The European Commission's proposal for the Multiannual Financial Framework 2014-2020. A “Budget for Europe 2020”. The overall amount proposed for the next seven years is \1,025 billion in commitments (1.05% of the EU GNI) and \972.2 billion (1% of EU GNI) in payments. 27 June 2013. Political agreement among European institutions on the 2014-2020 Multiannual Financial Framework 2014-2020. The content of the agreement.

IV. Main figures of the Multiannual Financial Framework 2014-2020

V. Funding and programmes: to help Europe recovery from the crisis Spending plan of the Multiannual Financial Framework 2014- 2020: job creation, encourage green agriculture and more emphasis on environment. Special attention to R&D and education and training. Specific funds against crime and terrorism, and for migration and asylum policies. Connecting Europe Facility: support cross-border transport, energy and digital infrastructure projects.

VI. Literature - Zoltán Horváth (2011): Handbook on the European Union, Hungarian National Assembly, Fourth Edition, Chapter 7., The budget of the European Union, pp. 268-301. - Zoltán Horváth – Bálint Ódor (2010): The Union after Lisbon. The Treaty Reform of the EU, Chapter 7., The Union’s budget, pp. 194- 202. - Commission's proposal for the Multiannual Financial Framework 2014-2020, Documents on the financial framework for 2014-2020.