8 Cotonou Agreement: the 10th
European Development Fund
| (27384)
7625/06
COM(06) 132
| Draft Decision on the position to be adopted by the Community within the ACP-EC Council of Ministers concerning the multiannual financial framework for the period 2008-2013 and the modifications to be inserted in the Agreement revising the Partnership Agreement between the members of the African, Caribbean and Pacific Group of States of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000 and revised in Luxembourg on 25 June 2005.
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| Legal base | Article 300(2) and 310 EC; unanimity
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| Document originated | 17 March 2006
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| Deposited in Parliament | 24 March 2006
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| Department | International Development
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| Basis of consideration | Minister's letter of 6 July 2006
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| Previous Committee Report | HC 34-xxv (2005-06), para 11 (19 April 2006); see also HC 34-i (2005-06), para 37 (4 July 2005)
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| Discussed in Council | 17 July 2006 General Affairs and External Relations Council
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| Committee's assessment | Politically important
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| Committee's decision | Cleared (reported on 19 April); further information requested then, now provided.
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Background
8.1 The European Community (EC) and African, Caribbean and Pacific
(ACP) Partnership Agreement signed in Cotonou on 23 June 2000
(the "Cotonou Agreement") replaced the Lomé Agreement.
It began on 1st March 2000 for a period of 20 years, with five-yearly
reviews. The first review was conducted between May 2004 and February
2005 by the Commission, which negotiated on behalf of EU Member
States on the basis of directives agreed by the Council, and culminated
in ACP and EU Ministers signing a revised Agreement at the ACP-EC
Joint Ministerial Council on 24-25 June 2005. The revisions fell
into three categories:
- New political and security concerns: new Articles concerning
the fight against terrorism, combating the proliferation of weapons
of mass destruction and co-operation with the International Criminal
Court;
- Co-operation strategies: making the UN Millennium Development
Goals[29] the focus of
ACP-EU co-operation and new provisions regarding support for ACP
States facing post-conflict and post-natural disaster situations;
and
- Implementation procedures: clarifying the respective
roles and responsibilities of ACP States and EC Delegations, including
the management of resources in crisis situations, along with updating
some provisions of the European Investment Bank (EIB)-operated
Investment Facility, project-related technical assistance, and
EIB remuneration and procurement rules.
8.2 The European Development Fund (EDF) is the main channel for
EC aid to Africa, Caribbean and Pacific countries. It is separate
from the main EC budget. Member States provide money using a different
contribution key to the main budget and the Commission manages
and disburses the money on their behalf. When we cleared the agreed
changes on 4 July 2005,[30]
we noted that a new multi-annual financial framework (MAFF) starting
from 1 January 2008, for five or six years, had yet to be agreed.
At that time, the Minister noted that ACP States would receive
a sum at least equivalent to that of the €13.8 billion (£9.34
billion) 9th EDF, with additional sums based on Commission estimates
to take account of the effects of inflation, EU growth and enlargement.
With the Commission's initial calculations still under discussion,
the Minister considered it too early to say what implications
the new financial framework might have for the Government, but
pointed out that the Council Decision on the new framework would
be subject to a separate scrutiny process.
The Council Decision
8.3 We considered the Council Decision on 19 April. By then, the
Commission's proposal for EDF 10, of €22,682 (£15,795)
million, had been approved at the December European Council and
communicated to the House by the Secretary of State for International
Development in a Written Statement on 20 December 2005. The Council
Decision gave effect to this agreement, with a view to its adoption
as the Community position (and, it was hoped, its acceptance by
ACP partners) at the 1-2 June EU-ACP Ministerial meeting.
8.4 The main elements are: €18,940 (£13,189.4) million
(83.5% of the total envelope) to finance national and regional
indicative programmes; €2,242 (£1,561.2) million (9.9%)
for intra-ACP and inter-regional programmes; and €1,500 (£1,044.6)
million (6.6%) to finance the Cotonou Investment Facility which
is managed by the European Investment Bank. Germany (20.5%), France
(19.55%) and UK (14.82%) are the largest shareholders. The UK
share is equivalent to €3,361.5 (£2,340 million: rising
from £318 (€456.6) million in 2008 to £426 (€
611.7) million in 2013).
8.5 At that time, there were still ongoing discussions in the
ACP Working Group on the way in which the Member States and the
Commission would jointly manage EDF 10 ("comitology issues"
in Euro-speak), essentially revolving around the size of the Commission's
management charges and the value of individual projects above
which Member State approval would be required, with this latter
bound up in separate but related discussions within the Council
and with the European Parliament over, in particular, the scope
of the proposed new Development and Economic Co-operation Instrument.
The Minister also noted some unresolved issues regarding the sub-envelope
to finance intra-ACP and inter-regional cooperation, and the continuing
endeavour by the Commission (abetted by some Member States) to
keep the option open of "budgetising" the EDF at a later
stage in the 2008-13 period.
8.6 In conclusion, we noted that:
— though
these were not unimportant issues, they were basically managerial,
and that the quantum and the main components of EDF 10 were essentially
a good outcome and unlikely to change;
— most
importantly, Member States were to approve the Country and Regional
programmes upon which 83% of EDF 10 would be spent;
— the
House would have an opportunity to debate this central component
of the EU's relations with the developing world, to which the
UK contributes nearly 15%, when the Agreement came before it for
ratification;
and also endorsed the Minister's determination to
re-affirm the long-held UK position, in the face of the continuing
endeavour by the Commission (abetted by some Member States) to
"budgetise" the EDF by keeping this option open in the
amended agreement.[31]
8.7 In clearing the Council Decision, we asked the
Minister to keep us informed on the negotiations on these "managerial"
and "budgetisation" issues.
The Minister's letter
8.8 The Parliamentary Under-Secretary of State at
the Department for International Development (Mr Gareth Thomas)
has now done so in his letter of 4 July 2006. In addition
to updating us on "recent significant developments on negotiations
of the Multiannual Financial Framework (MAFF) and the other EDF
10 implementing documents", he incorporates further information
requested by the House of Lords Select Committee on the EU about
three issues: the allocations between countries; the Africa Peace
Facility; and a conditional funding tranche.
8.9 The Minister says that the Commission has yet
to finalise the allocations to individual ACP countries and regions.
The indications were, however, that Africa would receive a slightly
higher share of the funds compared to EDF 9 (90.6%) while the
Caribbean and the Pacific regions would receive slightly lower
shares; and that on the basis of this information around 90% of
the baseline allocation funds are likely to go to Low-income Countries.
He continues as follows:
"The €300 million (£208.2m) earmarked
for the African Peace Facility will be allocated using the same
procedure as under EDF 9. The allocation process is triggered
by a request to the European Commission from the African Union
or the relevant sub-regional organisation for support for a particular
operation. Once the Commission is satisfied with the proposal,
they seek political approval to support the mission from the EU
Council of Ministers — usually via the Political and Security
Committee.[32] Assuming
approval is granted, the EDF Committee is asked to approve a financing
proposal. The €300 million is included under the heading
of Intra-ACP cooperation. An additional €300 million has
been set aside in a Reserve under that heading in case the Council
decides during the review of the Peace Facility envisaged for
2010 to provide a further €300m for 2011-2013 from the 10th
EDF.
"The 9th EDF included a conditional
€1 billion, half of which is being used to fund the Water
Facility. Member States made the release of the funds to the Commission
conditional on improved performance of the EDF. There is no similar
'conditional' funding under the 10th EDF. However,
Member States are able to increase their contributions to the
10th EDF on an individual and voluntary basis, thereby
providing a continuing incentive to the Commission to improve
the EDF's performance.
"On 17 May the Committee of Ambassadors
(COREPER) agreed the MAFF. The overall amount of direct financial
assistance for the ACP countries will be €23,966m (£16,637.2m).
The Overseas Countries and Territories (OCTs) will be allocated
€316m (£219.4m) of which €286m (£198.5m) in
grants. An additional €430m (£298.5m) will be for administrative
costs. This gives a total of €24,712m (£17,155.1m).
This breaks down between the €22,682m (£15,745.9m) agreed
by the December 2005 European Council and €2,030m (£1,409.2m)
in own resources for loans to be provided by the European Investment
Bank (EIB) of which €2,000m is for ACP countries and €30m
for the OCTs.
"The €21,966m (£15,248.8m) grant
funding available to ACP countries (€22,682m, minus OCT and
administrative costs) will be divided as follows:
- €17,766 m (£12,333.2m)
is for national and regional indicative programmes (80.9%);
- €2,700m (£1,874.3m)
is for intra-ACP and inter-regional programmes (12.3%); and
- €1,500m (£1,041.3m)
will finance the Cotonou Investment Facility, managed by the EIB
(6.8%).
"Compared to the Commission's original proposal,
there is a slight increase in the share going to the intra-ACP
and inter-regional envelope at the expense of national and regional
programmes. This is partly because of the funding for the Africa
Peace Facility as set out above.
"The UK and other Member States removed
any reference to possible future budgetisation. Managerial issues
remain unfinalised, reflecting the continuing negotiations on
the Development Instrument with the European Parliament. The MAFF
was agreed by Council as an 'A' point shortly before the ACP-EC
Council of Ministers meeting in Papua New Guinea on 1-2 June where
it was agreed by the ACP countries.
"During the latter stages of the MAFF negotiations,
the Commission requested that Member States agree to decommit
any unspent funds from the 9th EDF and transfer them
to the Reserve of the 10th EDF. The Government supports
this idea providing that adequate safeguards are in place for
the use of the money including agreement by unanimity of their
use. In the event, the proposal was not approved. Instead, COREPER
agreed a Statement noting that 'Based on the performance review
in 2010 and a proposal by the Commission, the Council of the European
Union will consider a decision by unanimity on the transfer of
any funds de-committed from ACP projects funded out of the 9th
and previous EDFs into the reserves of the 10th EDF.'
This does not affect the sunset clause, and all funds from the
9th EDF still need to be committed by the end of 2007.
Underspends may occur on some projects and so the Government believes
that it is useful to retain the possible option of rolling over
these funds to the 10th EDF. At the Council meeting
in Papua New Guinea, the ACP highlighted costs related to the
implementation of Economic Partnership Agreements and structural
adjustment as priority areas for any rolled over funds."
8.10 The Minister concludes by saying that, following
several months of negotiation, during which the Government "secured
a number of changes to the original Commission text to reflect
development best practice", the Internal Agreement on Financing
— which sets out the operational modalities for MAFF, and
a copy of which he includes with his letter — would be formally
signed at the 17 July GAERC. Discussions on the Financial Regulation
and the Implementation Regulation linked to the Internal Agreement
on Financing had not started; the relevant documents "will
be submitted to Parliament later in the year for ratification".
Conclusion
8.11 We look forward to scrutinising the relevant
further documents which will conclude the management arrangements
for EDF 10 in due course.
8.12 In the meantime, we are grateful to the Minister
for this further information, which demonstrates that he has been
able to secure further positive changes, particularly the removal
of references to "budgetisation" and the retention of
Member State involvement in the use of underspends on the 9th
EDF.
29 The eight UN Millennium Development Goals (MDGs)
that, in 2000, the UN set itself to achieve, most by 2015: eradicate
extreme poverty and hunger; achieve universal primary education;
promote gender equality; reduce child mortality; improve maternal
health; combat HIV/Aids, malaria and other diseases; ensure environmental
sustainability; develop a partnership for development - each with
associated targets and benchmarks to measure progress. Back
30
See headnote. Back
31
See headnote. Back
32
The committee of senior officials from national delegations who,
under article 25 of the EU Treaty, monitor the international situation
in areas covered by the CFSP and, under the general responsibility
of the Council, exercise political control and strategic direction
of crisis management operations.
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