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Cohesion and Territorial Cooperation in the new financial framework

(updated on 10/12/2020)

The Trilogue negotiations on Cohesion have ended up on 1 December with an agreement on € 330 billion under this heading in the new Multiannual Financial Framework (MFF) 2021-2027. And, on 2 December, a further agreement has been reached on the Common Provisions Regulations and on the European Territorial Cooperation and the financing of cross-border projects for 2021-2027. Finally, € 8 050 million have been earmarked for Interreg VI.

Cohesion in the Recovery Package

During the negotiations on the MFF and further on with the Recovery Package, the Commission re-confirmed several times its strength in defending the role of Cohesion in the new instruments. During her presentation of the new React-EU emergency instrument (Recovery Assistance for Cohesion and the Territories of Europe) on 28 May, Commissioner Ferreira confirmed that, despite of being one of the oldest EU tools, cohesion would be one of the key elements of this recovery proposal, together with conversion and reforms.

Cohesion is crucial to consider the different starting points of EU territories, and their different capacities to respond to new challenges (including those already known as climate change and new ones, such as the effects of current pandemic). React-EU is an emergency temporary instrument to be implemented until 2022, topping current structural funds with additional €47.5 billion: € 37.5 billion in 2021 and € 10 billion in 2022.

The rules will be the current ones, but with greater flexibility (measures activated during the pandemic will stay: transfer between programmes, objectives and regions). The allocation of funds will consider “the severity of the economic and social impacts of the crisis, including the level of youth unemployment and the relative prosperity of every member state”. An important amount would be allocated to cohesion.”

The Parliament also pushed to include Interreg in React-EU: the REGI Committee proposed to allocate a minimum 3% (1.6 billion) up to 5 % (2.6 billion) of these additional resources under the European territorial cooperation goal.

The Commission has kept the same cohesion’s focus under the new EU budget: “supporting economic competitiveness through research and innovation, digital transition as well as the European Green Deal agenda and the promotion of the European Pillar of Social Rights.” But it pays more attention to strengthening health care systems and sectors particularly impacted by the crisis such as culture or tourism. A big part of the structural funds will go towards fighting youth unemployment and reinforcing education and training frameworks, as well as fighting poverty and exclusion through the European Social Fund Plus (ESF+). Countries with high youth unemployment rates must dedicate at least 15% of the fund to support young people. On top of that, at least 5% of the ESF+ will be dedicated to alleviating child poverty.

“It is a massive increase that is completely necessary if we see the extra effort that is required,” said the Commissioner. “EU cohesion policy was one of the first instruments the Commission used to react to the COVID-19 outbreak”, and flexibility will remain as a key element in the new regional policy, which will also include a “fully-fledged crisis-response mechanism” to respond to potential future crises.

A mid-term “review of national cohesion allocations in 2024, taking into account the latest available statistics,” is also foreseen. This could lead to an adjustment of up to €10 billion for all countries.

The chair of the European Parliament’s Committee on Regional Development, Younous Omarjee, welcomed the proposal but was cautious on the final outcome as the Council has the big say on the final package. “The cohesion policy was the only Union policy capable of responding urgently to the crisis to help the hospital sector, SMEs and employees.” He also stressed the importance of the instrument to support territories “when they are hit by an unprecedented explosion.” (…) “Cohesion policy has helped build Europe. It will help rebuild it,” he said.

The president of the European Committee of the Regions (CoR), Apostolos Tzitzikostas, also praised the recovery plan and called for its swift adoption: “The #MFF proposal goes in the right direction for all regions, cities and villages of the EU. It is based on solidarity, responsibility and subsidiarity. It will benefit all local and regional communities across Europe, as demanded by the CoR.” The CoR has activated in various occasions the #CohesionAlliance during the negotiations period to follow up and discuss with EU institutions.

Partnership Agreement

They will be prepared by national authorities for the ERDF, the Cohesion Fund, the ESF+ and the EMFF in a more simplified way (maximum 35 pages). Local and regional authorities authorities, economic and social partners, civil society and research bodies will be key partners to these agreements.

European territorial cooperation” goal (Interreg)

Regarding Resources for Interreg, the Council’s “Negotiation Box” presented on 10 July included a total of € 7 930 (below the original Commission’s proposal of 8 430 million in May 2018, or the Parliament’s 11 166 million from their First reading in March 2019), increased to 7 950 million, and finally to 8 050 million, distributed as follows:

(a) € 5 800 million for maritime and land cross-border cooperation (strand A);

(b) € 1 467 million for transnational cooperation (strand B);

(c) € 490 million for interregional cooperation;

(d) € 280 million for outermost regions’ cooperation (strand D).

The Commission allocated € 970 million to the ETC-component for interregional innovation investments, which is split into two parts:

  • € 500 million are allocated to interregional innovation investments, with direct or indirect ERDF management, under the “Investments for jobs and growth” goal; and
  • € 470 million are included above taking into account the updated architecture of ETC programmes.

0.35 % of the global resources will be allocated to technical assistance at the initiative of the Commission.

Allocation method for the European territorial cooperation goal

The allocation of resources by Member State, covering cross-border, transnational and outermost regions’ cooperation is determined as the weighted sum of the shares determined on the basis of the following criteria, weighted as indicated:

a) total population of all NUTS level 3 border regions and of other NUTS level 3 regions of which at least half of the regional population lives within 25 kilometres of the border (weighting 45.8%);

b) population living within 25 kilometres of the borders (weighting 30.5%);

c) total population of the Member States (weighting 20%);

d) total population of outermost regions (weighting 3.7%).

The share of the cross-border component corresponds to the sum of the weights of criteria (a) and (b). The share of the transnational component corresponds to the weight of criterion (c). The share of the outermost regions’ cooperation corresponds to the weight of criterion (d).

Co-financing rates

The maximum co-financing rates for the Investment for jobs and growth goal will be:

  1. 85% for the less developed regions (GDP per capita <75% of EU27 average);
  2. 70% for transition regions that in the 2014-2020 programming period were classified as less developed regions;
  3. 60% for the transition regions (GDP p.c. 75-100% of EU27 average);
  4. 40% for the more developed regions (GDP p.c. >100% EU27 average).

The co-financing rates for outermost regions will not be higher than (proposed 80), finally 85 %.

The co-financing rate for the Cohesion Fund will not be higher than 85%.

Higher co-financing rates for priorities supporting innovative actions and for support for most deprived under ESF+ may apply.

The specific co-financing rate for Interreg programmes will not be higher than (70 in Negobox 10/7, and finally…) 80 %, increased to 85% for outermost regions.

Higher co-financing rates for external cross-border cooperation programmes under the European territorial cooperation goal (Interreg) may apply.

Technical assistance measures implemented at the initiative of, or on behalf of, the Commission may be financed at the rate of 100%.

Pre-financing

(70) The pre-financing for European territorial cooperation goal (Interreg) will be paid in yearly instalments, subject to availability of funds, as follows:

  1. a) 2021: 1%;
  2. b) 2022: 1%;
  3. c) 2023: 3%;
  4. d) 2024: 3%;
  5. e) 2025: 3%;
  6. f) 2026: 3%.

The pre-financing for each Fund and for the European territorial cooperation goal shall be cleared each year with the acceptance of accounts.

 

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A “territorial” REACT-EU

In mid-September 2020, as already mentioned, the Parliament proposed to include Interreg in REACT-EU, allocating a minimum 3% (1.6 billion) up to 5 % (2.6 billion) of the additional resources under the European territorial cooperation goal. The Commission hesitated, while the Member States had not decided on the allocation yet.

Member states will be able to allocate part of the additional resources to the European Social Fund, the Fund for European Aid to the Most Deprived (FEAD), the Youth Employment Initiative as well as cross-border programmes (Interreg).

  • Eligible expenses as of 1 February 2020, with projects selected for support up to the end of 2023.
  • Implementation of the partnership principle, involving local and regional authorities and relevant bodies representing civil society and social partners.
  • EP has introduced a stronger focus on those hit hardest by the crisis

There will be a 0,35% for technical assistance; it will concentrate on sectors most affected by the economic fallout of the pandemic; and a pre-financing rate of 11% has been proposed.

EUR 30 per inhabitant will be allocated to the outermost regions;

the breakdown of resources will be set out at a later stage by the Commission by means of implementing acts;

the Commission will endeavour to approve any dedicated operational programme or any amendment to an existing programme within 15 working days;

EU support should be made more visible – activities linked to the use of the additional resources must contain a reference to being “funded as part of the Union’s response to the COVID-19 pandemic”.

Last steps for the negotiations

The Trilogues started at the end of October and will last until at least mid-December. This was the time to approach national authorities with specific proposals to adjust their decisions to the needs of border regions and CBC. Programme authorities could also be approached to discuss the best way to respond to those needs.

Great misunderstanding remained on the role of Small Project Funds and people-to-people projects in various CBC programmes, and more awareness is needed among major policy-makers.

Regarding CBC programmes, the Commission prepared Border Orientation Papers for most CB areas, while draft programmes were expected to be submitted in the second half of 2020. Then, the formal submission of programme documents ready for adoption was expected for the end of 2020, but possible delays were also to be expected due to COVID-19.

On 1 December, negotiators from the Parliament and the Council agreed on European Cohesion and, on 2 December, on the Common Provisions Regulation and European Territorial Cooperation:

  • € 8 billion for the four components
  • Interregional Innovation Investments transferred to ERDF
  • 80% co-financing rate and up to 85% for outermost regions
  • 60% of the envelope for Politicy Objetives 2 (a greener and low carbon Europe) and 4 (a more social Europe)
  • Up to 20% to Specific Objective Better Governance and 5% to More Secure Europe
  • Specific provisions for Small Project Funds (up to 20% of every Interreg programme), including higher flexibility.

The PEACE Plus programme will continue in the new programming period to support peace and reconciliation between the border counties of Ireland and Northern Ireland.

On 10 December, the Council has agreed on the MFF 2021-2027 and the Recovery Fund (more information will follow).

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