Select Committee on European Scrutiny Third Report


16 Pre-accession measures for agriculture and rural development in EU candidate countries

(26139)

14727/04

+ ADDS 1 and 2

European Court of Auditors Special Report No. 2/2004 concerning pre-accession aid: "Has SAPARD been well managed?"

Legal baseArticle 248 EC
DepartmentInternational Development
Deposited in Parliament23 November 2004
Basis of considerationEM of 3 December 2004
Previous Committee ReportNone
To be discussed in CouncilTo be determined
Committee's assessmentPolitically important
Committee's decisionCleared

Background

16.1 The Special Accession Programme for Agricultural and Rural Development (SAPARD) is designed to provide support for structural adjustment in agriculture and rural development in the candidate countries of Central and Eastern Europe, to deal with implementation of the acquis communautaire related to the CAP (Common Agricultural Policy) and related legislation, and to address other relevant priorities identified in the Accession Partnerships.

16.2 SAPARD is the first EC external aid instrument to be implemented in a decentralised manner, using the Extended Decentralised Implementation System (EDIS), under which primary responsibility for implementation lies with the candidate country, the intention being to increase its administrative capacity by closely following the systems and procedures that will be faced after accession to the EU.

The Court of Auditors Report

16.3 SAPARD was launched on 1 January 2000. This report covers the period 2000-2003, within which period the Court of Auditors examined 76 projects in Bulgaria, Lithuania, Poland and Romania. The annexes related to the report are in ADD 1; the Commission's replies are in ADD 2.

16.4 The report finds that the institution-building effect of SAPARD has been largely positive. It has provided hands-on experience of managing EU funds. Structures and procedures in programming, implementation and monitoring are now in place. SAPARD systems are well documented and generally working in practice. But best practices were not always applied universally, due to the difficulty in disseminating lessons and problems identified in individual countries across the whole of SAPARD. The report identifies measures the Commission took to address this, but nonetheless recommends that greater human resources be allocated to this in future.

16.5 Up until the end of 2003, only 14.8% of the available budget had been paid to final beneficiaries, which low level of expenditure had seriously reduced the effectiveness of SAPARD in meeting its other objectives. Significant delays in the setting up of SAPARD systems also had a negative impact on effectiveness. According to the report, this delay was caused by a lack of guidance from the Commission and by the steep learning curve that candidate countries faced in implementing SAPARD, and in preparing for accession generally. In response, the Commission states that seven out of eight of the new EU Member States will be able to contract all of the funds committed in 2000-2003, and that delays are to be expected where entirely new systems are set up in countries with little experience.

16.6 The Court also notes a bias in the agricultural processing sector towards projects that increase quantity rather than those that focus on qualitative improvements such as meeting health standards and environmental protection. The Commission argues that increasing production capacity is compatible with improving standards and market efficiency.

16.7 The Commission welcomes the Court's assessment that SAPARD systems have generally worked and, while recognising that there have been problems, says it has instituted improvements and that a final analysis can be made only when SAPARD has been fully implemented.

The Government's view

16.8 The Parliamentary Under-Secretary of State at the Department for International Development (Mr Gareth Thomas) comments in his Explanatory Memorandum of 3 December:

      "The SAPARD programme …plays an important role in helping new Member States prepare for meeting the requirements of the acquis, i.e. establishing the necessary administrative institutions to implement CAP regulations. The Commission is right to consider this capacity building to be an essential and important part of SAPARD.

      "Although there have been delays in the payment of SAPARD funds to beneficiaries, this has been primarily a result of the need to set up entirely new decentralised implementation systems in SAPARD countries, and to ensure that these systems met with EC rules. The decision to use this system has allowed SAPARD to act as preparation for CAP.

      "The report and the Commission's replies highlight that little importance was placed on agri-environment measures, with the result that there was a low actual spend in this area. Emphasis on agri-environment measures should be increased in future.

      "While it is clear that qualitative improvements in SAPARD countries' agricultural processing industries are extremely important, the Commission's argument that quantitative and capacity improvements are not inconsistent with this is accepted. Agricultural industries in SAPARD countries have undergone serious restructuring as a result of the transition process. Increasing efficiency and productivity is a key element in dealing with this restructuring.

      "While the Court's report highlights several areas where real improvement is needed, the introduction of SAPARD has required beneficiary countries and the Commission to embark on a very steep learning curve. Neither had implemented Community pre-accession programmes in a fully decentralised manner before. Other pre-accession instruments such as Phare and ISPA have not used decentralised implementation. Despite criticisms of other aspects of SAPARD, the Court's report states clearly that the established systems have worked well, and this is expected to have a long lasting positive effect. Also, programme implementation is continuing, and rates of disbursement have increased greatly. In parallel, the Commission has gained more experience in guiding SAPARD countries. We can therefore expect greater impact and improvements for future SAPARD countries."

16.9 On the financial aspects, the Minister says:

      "A total annual budget of €520m (£361.8m) a year was originally set aside for SAPARD for the period 2000-2006. This is divided up based on farming population, agricultural area, the level of prosperity (Gross Domestic Product) and the specific territorial situation. The amount has been adjusted slightly each year. By 2004 the overall SAPARD budget (commitments) for Central and Eastern European beneficiary countries was revised to about €560m (£390m) per year. The budget for Bulgaria and Romania in 2004 is €225.2 m (£156.7). During the period 2000-2003, the UK accounted for 19% of all SAPARD spending, which was attributed to DFID."

Conclusion

16.10 The experience of the SAPARD instrument is important not simply for its own future, but for that of the whole process of EU external assistance. The Court of Auditors' Report is especially timely in that the EU is likely to continue to have long pre-accession relationships with a number of immediate neighbours, notably Turkey, as well as a variety of other less close partnerships, such as the European Neighbourhood Policy and the Cotonou Agreement with the ACP countries.[50] Although the outcome will only be known once agreement is reached on the 2007-13 Financial Perspective, the Commission's proposals envisage expenditure on external assistance in that period equivalent to the current annual EU budget — some €95 billion.

16.11 Low levels of expenditure against commitments, with negative consequences for many of SAPARD's objectives and its overall effectiveness, are not unique; they have also been a bugbear of the EU's partnership with the ACP countries (which we examine elsewhere in this Report).[51] Moreover, the likelihood is that SAPARD, along with the other pre-accession instruments (PHARE, ISA and CARDS),[52] will be incorporated into one all-embracing Pre-Accession Instrument, under Commission proposals currently being developed in consultation with Member States, and which we examined in detail on 1 December.[53]

16.12 In that examination, and also in considering the first seven Action Plans under the European Neighbourhood Policy in our last Report,[54] we noted that what is most important, as the guarantor (or otherwise) of effective expenditure, is not the broad objectives of such assistance, but the detailed management. SAPARD is important because it is the only one of the current instruments that is decentralised. This is consistent with the push for "deconcentration" (i.e. devolving greater responsibility for programme implementation to in-country EC Delegations) in the administration of the ACP assistance programme. So the lessons of SAPARD are important, since that is the direction in which a very significant level of expenditure is heading.

16.13 There is much in the report that is positive and encouraging. But what is most important is that improvements are sustained, and become embedded in the practices not just of the recipient countries but of Commission staff too. In that regard, what the report says about the dedication of more manpower to the application of best practices is particularly significant.

16.14 We accordingly hope that the Commission will be able to incorporate and sustain the lessons of SAPARD not only in its continued implementation but also in the management components of the successor Instruments, which we look forward to studying as they are developed in detail. In the meantime, we clear this Court of Auditors Report.


50   The African, Caribbean and Pacific countries which are signatories of the ACP-EU partnership, also known as the Cotonou Agreement, signed in Benin in June 2000. Back

51   Para 14 of this Report. Back

52   The PHARE programme principally involves institution building measures (with accompanying investment) in candidate countries as well as measures designed to promote economic and social cohesion.The ISPA programme deals with large-scale environment and transport investment support.CARDS is the support programme for the Western Balkans, with a similar focus to PHARE. Back

53   (26042) 13687/04 (26043) 13688/04 (26044) 13689/04 (26045) 13690/04; see HC38-i (2004-05), para 13 (1 December 2005). Back

54   (26155) - (26156) - (26157) - (26158) - (26159) - (26160) -(26174) -; see HC38-ii (2004-05), para 9 (8 December 2004). Back


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2005
Prepared 27 January 2005