European Parliament : Report - Specific provisions for the European territorial cooperation goal (Interreg) supported by the European Regional Development Fund and external financing instruments - A8-0470/2018 - Committee on Regional Development

1. Introduction

In the 60 years since the Treaty of Rome was signed, the European Union (EU) has evolved from being the purely economic union it originally was to become a peace project for the whole of society. To keep that project going - and in the light of the European policy challenges represented by nationalist and isolationist tendencies and eurosceptic and occasionally anti-European stances - EU Member States must have, and must be seen to have, goodneighbourly relations.

European Territorial Cooperation (ETC) espouses that fundamental notion, in particular, and is playing a visibly instrumental role in ensuring that Europeans get to know each other across national boundaries, tackle challenges together, and take Europe forward, and mould it, in concert. In that way, border hindrances - including, above all, the stumbling blocks in people's minds - are gradually removed and border regions become communal spaces in which Europe becomes a tangible reality in everyday life.

Over the last few decades, ETC has undeniably helped bring Europe closer together and, by removing borders and red tape, has made living side by side without regard for borders an everyday reality. The rapporteur therefore very much welcomes the fact that, by submitting a separate, new draft regulation for the post-2020 funding period, the Commission has confirmed the significant European added value provided by ETC.

In the rapporteur's view, however, ETC's potential is not being fully exploited - despite attractive rates of project funding - because administrative requirements to be met by potential beneficiaries, but also by implementing authorities, have assumed alarming proportions. Those requirements have indeed increased, from one funding period to the next, to such an extent that prospective beneficiaries are already being deterred from even making an application, whereas practised applicants are overrepresented in ETC programmes. If ETC is to reflect again what its job actually entails, and further the European idea in a targeted fashion, the groundwork for and implementation of programmes in the post-2020 funding period must again be made more straightforward for all stakeholders.

In this connection the rapporteur would point to the omnibus regulation already adopted, in connection with the EU's Financial Regulation, which sought to simplify disbursements, the use of funds and settlement arrangements, albeit without neglecting checks on results-focused spending, will apply as from 1 January 2019. The rapporteur would highlight in particular the fact that the new provisions not only will make it easier to make use of lump sums, simplify cost options, make access for small-scale beneficiaries easier, and prevent multiple controls, but also will mean that more funding is spent, with a view to publicising successful projects and investment in the regions.

He furthermore welcomes the simplifications put forward by the Commission in the proposals for the new common provisions regulation, the new ERDF regulation and the new ETC regulation, and is confident that they will produce the desired effect.

2. Components of prospective ETC - scope

The rapporteur welcomes the fact that cross-border, transnational and interregional cooperation programmes will be continued under ETC. Each of those programmes is justified on its own merits; and, in the rapporteur's view, what have been successful programme areas should be maintained. The rapporteur takes the view, however, that the Commission's draft does not sufficiently reflect the key role of border regions; he therefore proposes that funding allocations be shifted in favour of component 1 (cross-border cooperation). At the same time, the rapporteur firmly believes that, even if regions are not connected over the sea by a fixed link, maritime cooperation should continue to be possible under component 1.

He takes a critical view of the introduction of new component 5 - interregional innovation investments - since the cohesion policy relevance of those investments' aims is limited. Furthermore, direct management for component 5, as proposed by the Commission, is at odds with the spirit of subsidiarity that underpins ETC.

3. Budget for ETC

The rapporteur criticises the projected cuts in what have been successful and effective cross-border, transnational and interregional cooperation programmes. As regards the budget earmarked for ETC programmes under components 1 to 4 under the 2021-2027 Multiannual Financial Framework, he therefore advocates an increase to at least 3% of total funding for economic, social and territorial cohesion.

At this juncture, the rapporteur would again point to the key role of border areas and to the essential contribution for cross-border cooperation (component 1) and, accordingly, proposes that the largest allocation (73.8%) should go to that component.

As regards innovation investments, the rapporteur is of the opinion that the Commission's large funding allocation for the relevant component should under no circumstances be made at the expense of the other ETC components. In the rapporteur's view, there could conceivably an additional budget of 0.3% of total economic, social and territorial cohesion funding.

4. ETC programme content and concentration

The rapporteur regards the five ERDF-derived policy objectives plus the two Interreg-specific objectives - 'Better Interreg governance' and 'A safer and more secure Europe' - as essentially acceptable. He takes a critical view of the inflexible obligation to spend at least 15% of total funding on the two Interreg-specific objectives, since that might make programme planning and management more difficult in practice.

5. Small-project funds

Connecting people across borders and, in so doing, furthering European integration goes to the very heart of what ETC is. In particular small projects and people-to-people projects bring individuals together at local level and are hugely important for the development of border areas. Applicants are usually civil society actors. What sets such projects apart is that they are modest in scope and, accordingly, financial support is modest too. To ensure that small projects can be successfully continued, it is imperative that arrangements for them should be simplified, that the rules governing them should be clear, and that the projects should be directly incorporated into the regulation. The rapporteur expressly welcomes the option - in the Commission's draft regulation - of setting up small-project funds under Interreg programmes; fund management should be flexible, however. Within each programme, in addition, it should be possible to set up a number of small-project funds.

The extent to which the provisions proposed by the Commission would directly simplify and lessen red tape for final beneficiaries of people-to-people and small projects will have to be looked into as discussions continue.

6. Level of cofinancing

The rapporteur regrets the fact that the Commission has proposed a reduction in the maximum cofinancing rate for Interreg programmes. He regards the proposed rate of 70% as inadequate and instead proposes that it be raised to 85%. Cofinancing rates should be applied flexibly; it should be possible to set them in line with requirements in the relevant programme area.

7. Prefinancing

The rapporteur is of the opinion that the reduced level of prefinancing, over the 2014-2020 period, is likely to pose financial difficulties for a number of programmes, since, in particular when programmes begin, there are increased set-up and start-up costs. Prefinancing rules should take appropriate account of the specific features of ETC, which is why the rapporteur has made provision in his draft report for higher levels of prefinancing, especially at the start of the funding period.

8. Indicators

The rapporteur essentially welcomes the introduction of Interreg-specific indicators to measure the results and European added value of cooperation programmes. However, the indicators proposed are possibly not suitable for recording what is the procedural added value of cross-border, transnational and interregional cooperation and thus for providing positive impetus. In the course of discussions, it may prove necessary to adjust indicators accordingly or provide more leeway, within programmes, for specifying the indicator scheme.

9. n+2 rule / Multiple burden for regions

In the light of the experience gained during previous funding periods, the rapporteur would point out that as a result of moving back to the n+2 rule, as proposed by the Commission, from n+3, there might be a risk that appropriations would lapse across the EU, since it may not be possible to draw down funding quickly enough. With regard to ETC, the combined effect of that and possible cuts in total available funding, together with a possible reduction in EU cofinancing rates, would represent a multiple burden for regions.

10. State aid schemes

For many years, promoting ETC has been a major priority of EU cohesion policy. Under the General Block Exemption Regulation (GBER), support for SMEs in connection with the costs of ETC projects is exempted from reporting requirements. Special provisions for regional aid for investments by undertakings of all sizes are also included in the Guidelines on regional State aid for 2014-2020 and in the regional aid section of the GBER.

The rapporteur is of the opinion that aid for ETC projects would be compatible with the internal market and would have only a limited impact on competition and trade between Member States. He therefore proposes that, as a matter of principle, ETC programmes be regarded as not involving State aid and that checks on compliance with aid rules, which are complicated, be forgone.

11. Mid-term review

The projected mid-term review and any adjustments to multilateral Interreg programmes will call for much more complex coordination. The rapporteur would point out that, during the second half of programmes, project funding should not be made more difficult or delayed as a result.