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?"
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| Legal base | Article 248 EC
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| Department | International Development
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| Deposited in Parliament | 23 November 2004
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| Basis of consideration | EM of 3 December 2004
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| Previous Committee Report | None
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| To be discussed in Council | To be determined
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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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
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