What changed

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

P9_TA(2020)0357

on the draft Council regulation laying down the multiannual financial framework for the years 2021 to 2027 ***

(09970/2020 – C90409/2020 – 2018/0166(APP))

Committee on Budgets

PE660.266

European Parliament legislative resolution of 16 December 2020 on the draft Council regulation laying down the multiannual financial framework for the years 2021 to 2027 (09970/2020 – C9-0409/2020 – 2018/0166(APP))

(Special legislative procedure – consent)

ANNEX 1: DRAFT COUNCIL REGULATION LAYING DOWN THE MULTIANNUAL FINANCIAL FRAMEWORK FOR THE YEARS 2021-2027

ANNEX 2: DECLARATIONS

The amount of 2,5 billion Euros in 2018 prices referred to in the joint declaration by the European Parliament, Council and Commission on the reinforcement of specific programmes and adaptation of basic acts will be allocated as follows:

 Horizon Europe: +0,5 billion Euros

 Erasmus+: +0,5 billion Euros, of which 165 million Euros in 2021

 EU4Health: +0,5 billion Euros, of which 70 million Euros in 2021

 European Border and Coast Guard Agency: +0,5 billion Euros

 Humanitarian Aid: +0,5 billion Euros

Joint declaration by the European Parliament, Council and Commission on the use of reflows from the ACP Investment Facility to the benefit of the Neighbourhood, Development and International Cooperation Instrument

Against the background of the NGEU, the European Parliament, the Council and the Commission agree that in the framework of the next revision of the Financial Regulation, the following issues will be assessed and as appropriate revised:

 the provisions on the external assigned revenue , in particular as referred to in Article 21(5) of the Financial Regulation;

 the provisions on reporting on borrowing and lending operations.

The three institutions acknowledge that the existing rules on audits and discharge procedure apply to assigned revenue.

The review may, as appropriate, be accompanied by relevant proposals for the revision of the MFF Regulation in accordance with the procedures set out in the TFEU.

EXPLANATORY STATEMENT

On 10 November 2020, Parliament’s negotiating team on the multiannual financial framework (MFF) and own resources (OR) reached an overall political compromise with the Council Presidency, and with the Commission for the relevant parts.

As a result of this compromise, the Council is referring to Parliament a draft Council Regulation laying down the multiannual financial framework for the years 2021 to 2027, that the MFF Co-Rapporteurs recommend consenting to.

The political compromise covers not only the 2021-2027 MFF, but also the future system of own resources and flanking measures for the new EU Recovery Instrument (Next Generation EU). In addition to the MFF Regulation, the compromise is reflected in:

 an Interinstitutional agreement (IIA) between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap for the introduction of new own resources (submitted to Parliament’s approval separately from the present recommendation);

 a set of joint declarations by the European Parliament, the Council and the Commission (annexed to the present recommendation).

Prior to this political compromise, Parliament already:

 cleared the way for a swift adoption and ratification of the Own Resources Decision and, thereby, the launch of the EU’s Recovery Instrument by providing, on 16 September 2020, its compulsory legislative opinion to the new draft Council decision on the system of own resources of the European Union (‘Own Resources decision’), which authorises the borrowing of funds under the Next Generation EU scheme;

 reached, on 5 November 2020, a provisional agreement on a general regime of conditionality for the protection of the Union budget (endorsed by the Committees on Budgets and on Budgetary Control on 12 November 2020 and by the Coreper on 16 November 2020, and submitted to Parliament’s adoption under the ordinary legislative procedure).

Subject to its approval, this political compromise facilitates the conclusion - but does not prejudge the outcome - of the ongoing sectoral negotiations on the new generation of MFF expenditure programmes that are adopted under the ordinary legislative procedure.

1. Results of negotiations between the European Parliament and the Council

The political compromise sets the overall ceiling for the 2021-2027 MFF at EUR 1 074.3 billion in 2018 prices, to be progressively increased to EUR 1 085,3 billion. The MFF will be supplemented by a Recovery Instrument of EUR 750 billion (including EUR 390 billion of grants or direct budget expenditure). The financing of the new MFF and Recovery Instrument/NGEU is to be made possible by a new Own Resources decision which authorises the Commission to start with the borrowing operations to finance the Recovery Instrument/NGEU and temporarily increases by a further 0.6 percentage points the Own Resources ceiling for payments to cover the new borrowing capacity of the Union.

Despite delays on the part of the Council/European Council and sub-optimal interinstitutional cooperation, the European Parliament actively contributed to the package endorsed by Heads of States and Governments at the summit of 17-21 July 2020 on the basis of Commission proposals of May 2018 and May 2020. Parliament welcomed the historic creation of the Recovery Instrument/NGEU. It however regretted unjustified cuts to future-oriented programmes, insufficient commitment towards the creation of new own resources (to cover at least the costs of the recovery debt), insufficient involvement of the EP in the decision making on and governance of the Recovery Instrument, as well as a weakened rule of law mechanism.

During strenuous negotiations between Parliament, Council and the Commission from 27 August to 10 November 2020, Parliament’s negotiators secured significant improvements on top of the European Council conclusions of 21 July 2020. A provisional agreement was also found on 5 November on the rule of law mechanism.

Positive steps - whether already reflected in the Council’s position of July 2020 or achieved afterwards - are summed up in the following table.

2. Timeline

 14 March 2018: Parliament is the first institution to set out its position on the MFF 2021-2027 and Own resources in two non-legislative resolutions with the aim of influencing the Commission proposals. It states that it will not provide its consent on the MFF without sufficient progress on the own resources.

 2 May 2018: The Commission publishes its proposals on the MFF and the own resources on 2 May 2018, proposing an MFF at EUR 1 134,6 billion in 2018 prices in commitments. It also puts forward a draft Regulation on the protection of the Union budget (‘Rule of law mechanism’) and, in the following weeks, tables proposals for the basic acts of the 37 sectoral programmes. Commission sets the objective of reaching an agreement before the European elections of May 2019. Parliament adopts a short resolution in response to the Commission proposals on 30 May 2018.

 May 2018 (until July 2020): Start of exchanges of views between the negotiating team and successive Council presidencies before and after General Affairs Council (GAC) meeting where the MFF is on the agenda (“GAC briefings/debriefings”). Parliament describes them as short and formalistic. The negotiating team will be invited twice to informal meetings with GAC Ministers on 12 March 2019 (in Bucharest) and on 19 November 2019 (in Brussels).

 14 November 2018: Parliament adopts an interim report constituting its detailed negotiating mandate, containing in particular:

- detailed figures for all MFF ceilings and special instruments, broken down per programme within a ceiling of EUR 1 324,1 billion;

- specific amendments to the Commission’s draft MFF Regulation, as well as the draft Interinstitutional agreement.

Parliament requests stepping up regular meetings with Council to pave the way for official negotiations, aiming at reaching a good agreement prior to the 2019 European Parliament elections.

 December 2018: First partial negotiating box submitted to the General Affairs Council. Parliament’s negotiating team starts the practice of circulating to Council and within Parliament annotated versions of the negotiating boxes prepared in collaboration with the rapporteurs for the sectoral programmes in order to foster information and exchanges about Parliament’s views. The European Council rules out the option of a deal before the elections.

 November 2018-April 2019: Parliament adopts negotiating mandates for the rule of law mechanism and almost all expenditure programmes. Parliament accepts to conclude some partial agreements with Council based on the latter’s partial negotiating mandates (sectoral provisions affected by the negotiating box remain bracketed).

 10 October 2019: Following the European elections, Parliament confirms and updates its negotiating mandate and calls on the Commission to formally reflect in its initial MFF proposal the impact of the commitments taken by its new President . Due to Council’s delays, Parliament asks for a contingency plan should an agreement not be reached in time.

 December 2019: First negotiating box with figures submitted to the General Affairs Council. On top of its annotated versions of the negotiating box, Parliament’s negotiating team starts the practice of circulating comparative analyses of every new set of figures put forward by the other institutions.

 20-21 February 2020: The special European Council meeting is inconclusive. On the basis of Article 225 TFEU, Parliament subsequently prepares a formal request for a contingency plan to the Commission.

 April and May 2020: Due to the health and economic consequences of the COVID-19 pandemic, Parliament calls on the Commission, in two resolutions, to propose a massive recovery and reconstruction package financed by common borrowing guaranteed by the Union budget, with a significant grant component.

 27 May 2020: The Commission puts forward a Recovery plan that includes revised proposals for the MFF and the Own resources, new proposals for the setting up of a Recovery Instrument / Next Generation EU of EUR 750 billion financed by borrowing on financial markets, and new or revised sectoral proposals.

 8 July 2020: First high-level meeting of the Presidents of the institutions set out in Article 324 TFEU “to promote consultation and the reconciliation of the positions”.

 17-21 July 2020: The European Council reaches political agreement on an MFF at EUR 1 074,3 billion in 2018 prices and a Recovery Instrument of EUR 750 billion, including EUR 390 billion of grants. This makes it possible for the Council to adopt full positions and negotiating mandates on the whole package of proposals.

 23 July 2020: Parliament adopts a resolution setting out Parliament’s assessment of the European Council conclusions and identifying the main elements for the upcoming negotiations.

 27 August 2020: Negotiations start in the form of “trilateral dialogue” meetings between Parliament’s negotiating team, the Permanent Representative of Germany (holding the Council Presidency) and the Commissioner responsible for Budget. They are prepared and followed up by numerous trilateral meetings at technical level.

 16 September 2020: Without waiting for the outcome of negotiations, Parliament provides its compulsory opinion to the Own Resources Decision (ORD) to clear the way for its adoption by Council and subsequent ratification in all Member States, in view of the swift launch of the Recovery Instrument.

 30 September 2020: Council adopts negotiating mandate on the rule of law mechanism. Negotiators will reach provisional agreement on 5 November 2020 (endorsed by the Committees on Budgets and on Budgetary Control on 12 November, and by Coreper on 16 November).

 10 November 2020: At the 12th “trilateral dialogue” meeting, MFF/OR negotiators reach a political agreement on the MFF, the own resources and the Recovery Instrument.

LETTER OF THE COMMITTEE ON THE ENVIRONMENT, PUBLIC HEALTH AND FOOD SAFETY

Mr Johan Van Overtveldt

Chair

Committee on Budgets

BRUSSELS

Subject: Opinion on the consent procedure on the proposal for a Council regulation laying down the multiannual financial framework for the years 2021 to 2027 (2018/0166(APP)

Dear Mr Van Overtveldt,

Under the procedure referred to above, the Committee on the Environment, Public Health and Food Safety has been asked to submit an opinion to your committee. At its meeting of 12 October 2020, the committee decided to send the opinion in the form of a letter.

Due to the very tight timeline in BUDG, as ENVI Chair, together with the ENVI Rapporteur for opinion, Mr Adam Jarubas, let me provide you with ENVI’s contribution, which was adopted on 18 November 2020, and which will hopefully be taken into account by your committee:

SUGGESTIONS

The Committee on the Environment, Public Health and Food Safety:

1. Welcomes the agreement on the next multiannual financial framework 2021-2027 and the legally binding roadmap for the introduction of new EU own resources, and calls on the Committee on Budgets, as the committee responsible, to recommend approval of the agreement for the next multiannual financial framework 2021-2027;

2. Welcomes the agreement on an ambitious, stand-alone health programme of 5.1 billion euros in the next MFF, entailing a twelve-fold increase compared to the previous MFF; underlines the importance of ambitious funding for EU4Health to strengthen the effectiveness, accessibility, sustainability and resilience of health systems in the EU, including by supporting digitalization, ensure in a sustainable manner the availability and affordability of medicines, promote actions to combat cancer and other non-communicable diseases, tackle cross-border health threats and prepare for new emerging health threats, including in the context of the COVID-19 crisis;

3. Welcomes the significant increase in funding for the Union Civil Protection Mechanism (UCPM) to 3 billion euros under the next MFF and NGEU, which is crucial to ensure that the Union and Member States are better prepared to respond to large scale emergencies and to support, coordinate and supplement the action of Member States in the field of civil protection to prevent, prepare for and respond to natural and man-made disasters;

4. Welcomes the increase in the envelope for the LIFE Programme to 4.8 billion euros; notes, however, the Parliament’s position to double current funding; underlines the importance of LIFE for the implementation of the European Green Deal; recalls that that funding for the new “Clean Energy Transition” sub-programme should not be to the detriment of funding for nature and biodiversity, the circular economy, and climate adaptation and mitigation;

5. Welcomes the agreement on the overall climate related spending target of at least 30% applying to the total amount of the Union budget and NGEU expenditure, taking into consideration the effects of the phasing out of NGEU funding and differentiating between climate mitigation and adaptation, where feasible, and the objective of 7.5% of annual spending under the MFF 2021-2027 to biodiversity objectives from 2024 and 10% from 2026; considers that all efforts should be made to reach this 10% annual spending on biodiversity as soon as possible from 2021 onwards;

6. Underlines that the development of a transparent, comprehensive and effective methodology, in line with the European Green Deal and its “do no harm” principle, is crucial to identify and track climate and biodiversity related spending; welcomes the commitment of the Commission to cooperate closely with the Parliament and Council on its development and the achievement of the applicable targets, welcomes that existing overlaps between climate and biodiversity goals will be taken into account;

7. Recalls the importance of allocating sufficient financial and human resources to the decentralised agencies and Commission DGs responsible for the implementation of key policies under ENVI’s remit, such as the European Green Deal and health, based on their individual needs, in particular if new tasks are allocated; highlights the importance of securing genuine income predictability and budget management flexibility which are preconditions for agencies’ successful long-term management and positive contribution towards EU-policies;

The Committee on the Environment, Public Health and Food Safety calls on the Committee on Budgets, as the committee responsible, to recommend approval of the proposal for a Council regulation laying down the multiannual financial framework for the years 2021 to 2027

I have sent a similar letter to Jan Olbrycht and Margarida Marques, BUDG co- rapporteurs for the multiannual financial framework 2021-2027.

Yours sincerely,

Pascal Canfin

LETTER OF THE COMMITTEE ON CONSTITUTIONAL AFFAIRS

19.11.2020

Mr Johan Van Overtveldt

Chair

Committee on Budgets

BRUSSELS

Subject: Opinion on the Proposal for a Council regulation laying down the multiannual financial framework for the years 2021 to 2027 (2018/0166(APP))

Dear Mr Van Overtveldt,

Under the procedure referred to above, the Committee on Constitutional Affairs has been asked to submit an opinion to your committee. At its meeting of 24 September 2020, the committee decided to send the opinion in the form of a letter.

The Committee on Constitutional Affairs considered the matter at its meeting of 19 November 2020. At that meeting, it decided to call on the Committee on Budgets, as the committee responsible, to incorporate the following suggestions into its motion for a resolution.

Yours sincerely,

Antonio Tajani

SUGGESTIONS

1. Underlines the importance of acting in the interest of European citizens and stresses the vital role the European Parliament plays in the preparation of the multiannual financial framework in this respect; welcomes the agreement reached on the proposal for a Council Regulation laying down the multiannual financial framework for the years 2021 to 2027;

2. Welcomes in this context also provisions allowing for better parliamentary scrutiny at European level, in particular, the agreed provisions on enhanced budgetary scrutiny of the spending of Next Generation EU funds and the Joint declaration of the European Parliament, the Council and the Commission on budgetary scrutiny of new proposals based on Article 122 TFEU with potential appreciable implications for the Union budget; welcomes the agreed legally binding roadmap to introduce new Own Resources during the next seven years; furthermore, welcomes the political agreement reached on 5 November 2020 on the proposal for a regulation of the European Parliament and of the Council on the protection of the Union budget in case of generalised deficiencies as regards the rule of law in the Member States;

3. Highlights that the agreement on the MFF-package constitutes a historic step for the further integration process of the European Union; insists on the importance of all political agreements, including the commitment on the introduction of a basket of new Own Resources and the rule of law conditionality mechanism, stresses that all elements of the MFF-package must be implemented in accordance with the principle of mutual sincere cooperation as laid down in Article 13 TEU;

4. Recalls its demand for the alignment of the MFF’s period with the duration of the Parliament’s legislative term and the mandate of the Commission; regrets that this issue has not been addressed at this point in time and considers that it should be revisited at the occasion of the mid-term review of the MFF 2021-2027;

5. Reiterates its call for the activation of the passerelle clause provided for in Article 312(2) TFEU so as to allow the Council to adopt the MFF Regulation by qualified majority and recalls furthermore its proposals to apply the ordinary legislative procedure for the adoption of the MFF Regulation;

6. Proposes to use the momentum of the Conference on the Future of Europe, which needs to be launched during Germany’s Presidency in the Council, to discuss with other EU institutions, citizens and the organised civil society reflecting the difference of views across the EU and representing the geographic and demographic diversity of the EU and its Member States, among other things, the democratic and constitutional challenges linked to the institutional set-up of the recovery instrument and the decision-making procedures on the MFF and own resources more in general, aiming at reinforcing the role of the European Parliament in these procedures.