In this report the Commission gives a global evaluation of the experiment to test the effect that reducing the VAT rate on specific, labour-intensive services has had on job creation and cutting back the black economy.

– having regard to the Report from the Commission to the Council and the European Parliament on the experimental application of a reduced rate of VAT to certain labour-intensive services (COM(2003)0309),

1. Notes that, in some regions, there is a high concentration of companies in the textile and clothing sector and jobs and incomes are heavily dependent on that sector; considers this to be especially true of the EU's less-favoured regions, which are less economically developed and which are particularly affected by social and economic crises; notes that, in those regions, the industry employs mainly women having few qualifications and older people close to retirement, who may remain unemployed after the closure of textile companies ...[+++]; recognises that some Member States and regions, heavily dependent on the sector, may be drawn into a socio-economic crisis by the importation of textile products from third countries, given that these can be manufactured with lower labour costs; emphasises that the textile sector, in which SMEs predominate, has suffered from endogenous and exogenous pressures, which are forcing the sector to restructure;

In general, capital-intensive and technologically advanced sectors in the border regions are likely to benefit from enlargement, while labour-intensive sectors (agriculture, heavy industry) are likely to face competition from cheaper labour coming from acceding countries.

I agree with the rapporteur that unfortunately the Commission document contains too little in the way of recommendations to the Member States on simplifying administration, and I support the calls for negotiations to concentrate on promoting a favourable climate for labour-intensive, small and medium-sized enterprises, on setting clear objectives for alternative sources of financing including provisions for risk capital and private financing, and on start-up help for companies including new information technologies and investment in innovative fields.

In this report the Commission gives a global evaluation of the experiment to test the effect that reducing the VAT rate on specific, labour-intensive services has had on job creation and cutting back the black economy.