12 Cotonou Agreement: the 10th
European Development Fund
| (27979)
14661/06
COM(06) 650
| Proposal for a Council Regulation on the Implementation of the 10th European Development Fund
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| Legal base | Article 62 of the Cotonou Agreement; unanimity
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| Document originated | 27 October 2006
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| Deposited in Parliament | 6 November 2006
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| Department | International Development
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| Basis of consideration | EM of 14 November 2006
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| Previous Committee Report | None; but see HC 34-xxv (2005-06), para 11 (19 April 2006); see also HC 34-i (2005-06), para 37 (4 July 2005) and HC 34-xxxvii (2005-06), para 40 (11 October 2006)
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| To be discussed in Council | December 2006
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
12.1 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 1 March 2000 for a period of 20 years, with five-yearly
reviews. The first review was concluded in June 2005, with revisions
that 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[36]
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:
in particular, clarifying the respective roles and responsibilities
of ACP States and EC Delegations.
12.2 The European Development Fund (EDF) is the main
channel for EC aid to Africa, Caribbean and Pacific (ACP) countries
and the Overseas Colonies and Territories (OCT). 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.
12.3 On 19 April, we considered the Council Decision
that gave effect to the December European Council's agreement
on an EDF 10 of €22,682 (£15,795) million. 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 contributors. The UK
share is €3,361.5 (£2,340
million: rising from £318 (€456.6) million in 2008 to
£426 (€ 611.7) million in 2013).
12.4 At that time, discussions were still ongoing
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), which was bound up in separate but
related discussions within the Council and with the European Parliament
over the scope of the proposed new Development and Economic Co-operation
Instrument. In clearing the Council Decision, we endorsed the
Minister's determination, in the face of the continuing endeavour
of the Commission (abetted by some Member States) to "budgetise"
the EDF (i.e., incorporate it into the overall EU budget) by keeping
this option open in the amended agreement, to re-affirm long-held
UK opposition, and asked him to keep us informed on the negotiations
on these "managerial" and "budgetisation"
issues.[37]
12.5 We considered the Minister's 4 July response
on 25 October. He reported that the overall amount of direct financial
assistance for the ACP countries would be €23,966 million
(£16,637.2 million), with the OCT being allocated €316
million (£219.4 million) of which €286 million (£198.5
million) would be grants — with administrative costs and
€2,030 million (£1,409.2 million) in own resources for
loans to be provided by the European Investment Bank (EIB), a
total of €24,712 million (£17,155.1million). Managerial
issues remained unfinalised, reflecting the continuing negotiations
on the Development Instrument with the European Parliament. Based
on a performance review in 2010 and a proposal by the Commission,
the Council retained the option (with 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. All in all, his letter demonstrated
that he had 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 any 9th
EDF underspends (which we consider elsewhere in this Report).[38]
12.6 The Minister concluded by saying that the Internal
Agreement on Financing — which sets out the operational
modalities for MAFF, and which plays the same role as the Financial
Protocol in earlier EDFs — would be formally signed at the
17 July GAERC, and would be submitted to Parliament later in the
year for ratification.[39]
The draft Council Regulation
12.7 In its introductory Explanatory Memorandum,
the Commission says that, as well as establishing the EDF 10,
the Internal Agreement further defines the various financial envelopes
and the contribution key for the Member States, sets up the EDF
Committee (representatives of the Member States and the Commission,
with a similar Committee at the EIB for the management of the
Investment Facility) and provides for the adoption by the Council,
acting unanimously, of an implementing regulation (and the adoption
by qualified majority, of a financial regulation). Regarding the
implementing regulation, the Internal Agreement states that it
shall contain appropriate modifications and improvements to the
programming and decision-making procedures compared to the EDF
9, as well as harmonise Community and EDF procedures as far as
possible, including on co-financing aspects, and establish particular
management procedures for the Peace Facility.[40]
12.8 The Commission says it is preparing a proposal
for an EDF 10 financial regulation which will be submitted to
the Council in the coming months. The present proposal for an
implementing regulation covers the programming and decision-making
procedures which under the EDF 9 were
included in the Internal Agreement. "By addressing these
issues now, through a separate regulation which does not require
ratification, further delays in the launching of the ratification
process of the Internal Agreement could be avoided, while enabling
the Commission to submit a proposal on implementing rules that
is more in line with the procedures proposed under the cooperation
funded by the Community budget".
12.9 The
proposal also "reflects as far as possible the common position
of the Council on the adoption of a Regulation of the European
Parliament and of the Council establishing a financing instrument
for development cooperation (DCI) which was adopted on 23 October
2006".[41]
12.10 The
Commission describes the "major changes and improvements"
compared to the EDF 9 as follows:
— "an
enhanced focus by the EDF management committee on strategic issues
and monitoring. The major change in this field is the replacement
of the practice of submitting individual financing proposals to
the EDF committee for an opinion by the submission of annual action
programmes for an opinion. These action programmes will specify
the objectives pursued, the fields of intervention, the expected
results, the management procedures and total amount of financing
planned, as well as a description of the operations to be financed
and an indication of the amounts and implementation timetable
for each operation. This approach allows a more coherent approach
to implementation with a constant interaction between the initial
multi-annual strategy paper and its translation into annual response
strategies. It also leads to a more programmatic approach to implementation
and therefore to a smoother and leaner implementation cycle;
— "strategy papers, aid allocations
and indicative programmes and any modification to these as a result
of periodic or ad hoc reviews remain subject to the prior opinion
of the EDF Committee, as is the case for all special measures
exceeding EUR 10 million;
— "the EDF Committee will receive
for information and discussion the aid allocation criteria, the
special measures not exceeding EUR 10 million and the various
monitoring and evaluation reports. Annual reports and a performance
review undertaken on the basis of a proposal provided by the Commission
in 2010 will be submitted to the Council. Any decision to release
part or all of the funds decommitted after 31.12.2007 from previous
EDFs will be taken by the Council, acting unanimously, on this
basis;
— "the establishment of a framework
for co-financing which will be further elaborated in the financial
regulation;
— "special management procedures for
the Peace Facility;
— "increased possibilities for regional
cooperation, including between the ACP and the Community's outermost
regions, by identifying common priorities and specific resources
and by enhancing the coordination of the selection of common interest
projects, including through the mobilisation of technical assistance
as well as through programme monitoring committees involving the
various stakeholders;
— "an emphasis on the principle of
coordination with Member States and other donors and stakeholders
and on the principle of subsidiarity and complementarity between
thematic programmes and geographic cooperation, whereby support
funded from the Community budget (e.g. sugar protocol countries
and thematic programmes) will, where applicable, be integrated
in the geographic strategy papers; and
— "the introduction of a programmed
approach to intra-ACP funding".
The Government's view
12.11 In his 10 November 2006 Explanatory Memorandum,
the Parliamentary Under-Secretary of State at the Department for
International Development (Mr Gareth Thomas) says that the draft
Financial Regulation will be published in the first half of 2007.
In the meantime, the Minister notes that the recitals in the Regulation's
preamble set out the broader policy background framework, including
the December 2005 European Consensus on Development and Council
Conclusions on aid effectiveness, and that the Regulation provides
a clear read across to the major external spending instruments
in the EC budget such as the DCI and the relevant procedures within
them. He supports "the drive for coherent procedures between
the EDF and the EC Budget", which should help implement specific
initiatives such as the EU-Africa Strategy and sugar transitional
assistance that are funded from both sources, and also improve
overall EC aid effectiveness. He also supports the Commission's
efforts to simplify the ratification process so as to avoid any
break in funding between EDF 9 and EDF 10. He confirms that the
Internal Agreement on Financing will be laid before Parliament
as a Command Paper for ratification later this year.
12.12 He is "largely content with the thrust
of the proposals" which he says "strike a reasonable
balance between ensuring effective control of spending and the
need for flexibility". He welcomes the move to give the EDF
management committee a more strategic role through the use of
annual action programmes rather than focusing on individual projects
and programmes: "this should lead to more coherent and effective
programmes. It will also free up staff time in the Commission
and Member States while continuing to give Member States sufficient
oversight of Commission spending".
12.13 There remain some detailed clarifications
that he will be seeking regarding:
— whether
the language in Article 4.2 relating to the adjustment of allocations
in the light of "current" needs and performance, needs
to be altered to reflect the new Governance Incentive Tranche
which will see up to €2.7 billion allocated on the basis
of performance and also commitment to future performance;
— the proposed mechanism set out in Article
6.3 for altering the annual action programmes, which he says is
different to the DCI;
— the use of specific action programmes
envisaged under Article 6.4;
— the scope of "technical adjustments"
in Article 7.4 and the means of informing the Council about them
which he says is likewise different to the DCI;
— the measures in Article 10.4 for handling
disagreements between the Commission and Member States;
— the scope and management of the proposed
'action programme' for the Africa Peace Facility (Article 10.6);
— Article 4.6 on reviews and Article 13.1
on evaluation, better to reflect the need to involve partner countries
in line with the principles set out in the 2005 Paris Declaration
on Aid Effectiveness;
— more details about the "bilateral
contribution agreements" mentioned in Article 8.4 that will
govern additional voluntary contributions.
12.14 Finally, he says that discussions have recently
begun in the ACP Working Group and the Finnish Presidency wants
to agree the document this year.
Conclusion
12.15 The outstanding issues to which the Minister
refers are essentially technical, and we are content to clear
the draft Regulation as it stands.
12.16 We are reporting it to the House because
of the widespread interest in EC development activity, and as
a prelude to the ratification of the Internal Agreement on Financing.
36 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
37
See headnote. Back
38
See para 11 above, Back
39
Ditto. Back
40
In 2004, in response to a request from the African Union, the
EU established a €250 million development instrument in support
of African peace support operations and capacity building in the
area of peace and security, the African Peace Facility. See http://www.europe-cares.org/africa/docs/peace_facility_en.pdf
for full details. Back
41
Which we cleared on 25 October 2006; see headnote. Back
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