Explanatory Memorandum to COM(2000)242 - Conclusion of an agreement with Cyprus establishing co-operation in the field of Small and Medium-sized Enterprises within the framework of the Third Multiannual Programme for Small and Medium-Sized Enterprises (SMEs) in the EU (1997 to 2000)

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1. The attached Proposal for a Council Decision represents the legal instrument for the conclusion of an Agreement establishing co-operation between the Republic of Cyprus and the European Community within the framework of the Third Multiannual Programme for Small and Medium-Sized Enterprises (SMEs) in the European Union (1997 to 2000).

2. Article 7 i of Council Decision 97/15/EC of 9 December 1996 establishing the Third Multiannual Programme for Small and Medium-Sized Enterprises (SMEs) in the European Union (1997 to 2000) provides that this programme shall be open to the participation of the Republic of Cyprus and Malta .

Moreover, as stated in the resolution of the EC/Cyprus Association Council of 12 June 1995, the participation of Cyprus in Community programmes is one of the elements of the pre-accession strategy to be implemented for that country in accordance with the conclusions of the General Affairs Council of 6 March 1995 and the conclusions of the European Council in Luxembourg of 12-13 December 1997. The latter were confirmed by the European Council of Helsinki in December 1999, as far as the pre-accession strategy is concerned.

The services of the Commission conducted negotiations with Cyprus on the basis of the Council Decision of 9 December 1996.

3. In accordance with the Council Decision, the Agreement, initialled on 8 February 2000, contains the following elements:

- The Republic of Cyprus will participate in the measures: C. 'Help SMEs to Europeanise and internationalise their strategies in particular through better information services' and E. 'Promote entrepreneurship and support special target groups', in principle in the same way as the Member States of the Community (Art.

1);

- The terms and conditions for the submission, evaluation and selection of applications and proposals of pilot projects, programmes and any other measures shall be the same as these applicable to organisations and individuals of the Community (Art.

3);

- Cyprus shall provide, where necessary, the appropriate structures and mechanisms at national level required for its participation (Art.

4);

- Cyprus shall make an annual financial contribution corresponding to the cost of its participation in the Programme (Annex-Financial conditions);

- Responsibility for the implementation of the Programme will be vested in a Joint Committee (Art.

6); Cyprus will also be invited to attend co-ordination meetings prior to the formal sessions of the Programme committee (Art.

7):

- The Agreement will be concluded for the duration of the programme (Art. 12).

4. The Agreement designed to establish close co-operation with Cyprus in the field of Small and Medium-Sized Entreprises (SMEs), is in the interest of the Community.

It also represents an essential stage in Cyprus' preparation for accession.

The conclusion of the Agreement is, therefore, of considerable political importance.

Ideally, it should enter into effect in the second quarter of 2000 so as to enable the Republic of Cyprus to take part in the actions, including the calls for proposals foreseen for the rest of the year.

5. In view of the foregoing, the Commission invites the Council to adopt the Proposal for a Decision attached and to notify the Cypriot authorities that the procedures necessary for the entry into force of the Agreement have been completed on behalf of the European Community.