Select Committee on European Scrutiny Twelfth Report



Commission Report: overview of EU action in response to the events of 11 September and assessment of their likely economic impact.

Legal base:
Document originated:17 October 2001
Forwarded to the Council: 19 October 2001
Deposited in Parliament: 13 November 2001
Department:Foreign and Commonwealth Office
Basis of consideration: EM of 9 January 2002
Previous Committee Report: None
Discussed in Council: 19 October 2001
Committee's assessment:Politically important
Committee's decision:Not cleared; further information requested

Commission report

  10.1  The Commission submitted this report for the information of Heads of State or Government at the Ghent Informal European Council of 19 October 2001.

  10.2  The report notes that the EU acted with speed and determination in demonstrating its solidarity with the Government and people of the United States and stressing its support for the military action taken. Furthermore, all thirteen candidate countries were quick to lend support to the positions expressed by the Union. The Commission and the Council rapidly became fully engaged in a comprehensive set of responses on the diplomatic, economic, financial, political and security fronts. The full extent of these actions is set out in a roadmap which was agreed by the General Affairs Council and is constantly being updated.

  10.3  The report lists some of the actions which had been taken, as of 17 October, examines the implications for priorities in terms of action and resources, and analyses briefly the impact of the events on the EU economy, paying specific attention to four sectors: financial markets, the global insurance and reinsurance sector, air transport and tourism. We are also reporting today on a follow-up report on the European tourism sector[27].

  10.4  The Parliamentary Under-Secretary of State (Mr Ben Bradshaw) notes, in his Explanatory Memorandum of 9 January, that the range of initiatives surveyed in the report includes:

    "—  agreement on a common approach towards counter-terrorism by Justice and Home Affairs Ministers;

    —  commissioning reports from EU heads of mission in third countries on those countries' counter-terrorism performance ;

    —  commissioning an EU-wide response (to complement national responses) to the questionnaire on counter-terrorist policy issued to governments by the UN Counter-Terrorism Committee under Security Council Resolution 1373;

    —  agreement to strengthen intelligence and police co-operation;

    —  an EU-wide freeze on assets linked to terrorists;

    —  humanitarian assistance to the Afghan people;

    —  efforts to improve trade and co-operation with central Asian states and with Pakistan;

    —  efforts to boost confidence and stabilise financial markets."

  10.5  He adds that the report notes work in progress such as:

    "—  proposals on EU-wide safety and security standards;

    —  reflecting on how custom controls might be placed on large cash movements across the Union;

    —  accelerating work on changes to the money-laundering directive;

    —  efforts to increase co-operation on surveillance and control of communicable diseases in response to the threat from biological agents;

    —  ensuring that counter-terrorism implications are taken properly into account in drafting and adopting EU legislation ("terrorism proofing"); and

    —  considering how to tighten security of communications networks."

  10.6  On the diplomatic front, the Commission notes that the EU Troika visited Pakistan, Iran, Saudi Arabia, Egypt, and Syria as part of a concerted effort by the Union, alongside the activity of individual Member States, to forge the international coalition against terrorism. The European Parliament debated the situation twice and approved the draft Regulation[28] freezing the assets of organisations and individuals suspected of supporting or financing terrorism activities within just two days of its adoption by the Commission.

  10.7  The crisis provided a new impetus for dialogue with the Arab and Islamic worlds. The Commission calls for the EU to work closely with the United States and insist that the Mitchell Report is implemented and that a longer- term political perspective is offered to both parties by resuming negotiations. It goes on to argue that the crisis provides a further reason to increase the momentum of the Barcelona Process and to strengthen trade and co-operation with Pakistan, India, Iran, Saudi Arabia and the Gulf States. Finally, the Commission says that it believes that recent events highlight the need to refine the EU's crisis management procedures. For instance, fuller use should be made of the Rapid Reaction Mechanism, the aid instrument for funding urgent non-combat operations[29]. This should operate with the same speed and flexibility as the European Community Humanitarian Office does with humanitarian relief.

  10.8  Assessing the short-term impact on the economy and on specific sectors, the Commission notes that before the 11 September attacks economic growth was slowing sharply owing to higher prices, falling confidence in the IT and telecoms sectors and a slowdown in world trade. The attacks made the economic prospects worse by increasing uncertainty and undermining confidence globally. It concludes that the conditions exist for a recovery in 2002, provided that the political situation does not deteriorate further. Policy responses should be based on the scenario of a recovery beginning in the second half of 2002, with an annual growth rate around that achieved in 2001, which it forecasts will be 1.5%. It recommends action to restore confidence and pursue vigorously the long-term economic goals of the EU.

  10.9  The Commission suggests that the Lisbon Strategy remains valid and that structural reforms are needed now more than ever. The Council should accelerate work to achieve agreement before the Barcelona European Council on the telecoms package, the Community patent and, in financial services, the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive, rules on cross-border payments and the market abuse Directive. Furthermore, political agreement should be achieved before Barcelona on the Single European Sky package, the pension funds Directive, the new framework for trans-European networks, and the proposed public procurement package.

  10.10  The report also calls "for a 'coalition for development' and for confidence-building progress on EU enlargement and the launch of a new trade round.".


  10.11  It is important that Parliament should be aware of the action taken by the EU in response to the 11 September atrocities. The extent of these activities is impressive and it is unfortunate that we are only now considering this Commission report. As the Minister comments, it is unusual in that it summarises what the EU has done across all fields of work.

  10.12  At 14 pages the report, which was issued on 17 October, is short by Commission standards and the brief Explanatory Memorandum on it cannot have taken long to prepare. Yet the Explanatory Memorandum did not reach this Committee until 9 January 2002. The Commission's intention was to provide the Council with a timely account of action taken. We would like to have seen it at the time that it was really relevant, and must agree with the Minister that it is now largely of historical interest. As he says, policy has moved on considerably since the report was prepared.

  10.13  We understand that the request for an Explanatory Memorandum was not sent to the Foreign and Commonwealth Office in the first instance. This presumably accounts to some extent for the delay and we ask the Government to take swifter action in future to resolve any such confusion over allocation of responsibility. But we also ask for documents on fast-moving events to be transmitted electronically. In this day and age we should not have had to wait 27 days for such a perishable document to be deposited.

  10.14  We do not clear this document but ask the Minister if he will take steps to ensure that, in future, the Institutions transmit urgent documents to the UK for deposit within a few days of issue.

27  (22946)13976/01; see paragraph 19 of this Report. Back

28  (22847) - ; see HC152-vi (2001-02), paragraph 17 (14 November 2001). Back

29  (22105) - ; see HC28-vi (2000-01), paragraph 8 (14 February 2001). Back

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Prepared 25 January 2002