5 Special Framework of Assistance for
Traditional Suppliers of Bananas
| (28201)
17033/06
COM(06) 806
| Biennial Report from the Commission |
| Legal base | — |
| Document originated | 15 December 2006
|
| Deposited in Parliament | 5 January 2007
|
| Department | International Development
|
| Basis of consideration | EM of 16 January 2006
|
| Previous Committee Report | HC 41-vii (2006-07), para 3 (24 January 2007); also see HC 38-xi (2004-5), para 8 (15 March 2005)
|
| To be discussed in Council | To be determined
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared; further information requested; relevant to any debate on EU development assistance
|
Background
5.1 Banana imports into the European Union have traditionally
been regulated by a quota system with strong preferential treatment
for Africa, Caribbean and Pacific (ACP) bananas. The EU agreed
to introduce a "tariff only" regime for banana imports
no later than 1 January 2006. The ACP countries would continue
to benefit from a tariff preference under the new regime: their
preferential advantage on the market would, however, depend on
the agreed level of the tariff. In order to make it easier for
the twelve traditional ACP banana suppliers to cope with the transition
to the new market conditions, a Special Framework of Assistance
(SFA) was put in place in 1999, through a dedicated budget line.
Five African and seven Caribbean countries were considered to
be traditional suppliers and are therefore beneficiaries.[30]
5.2 The SFA provides technical and financial support
to specific projects presented by the countries concerned, based
on a long-term strategy previously agreed with and approved by
the Commission. The overall objective is either to improve the
competitiveness of traditional ACP banana production or to support
diversification wherever competitiveness is no longer attainable,
which was to be achieved by funding projects designed to:
- increase productivity without
causing damage to the environment;
- improve quality, including phytosanitary measures;
- adapt production, distribution and marketing
to meet the Community's quality standards;
- establish producers' organisations focusing on
improvements in marketing and on the development of environmentally-friendly
production methods, including fair-trade bananas;
- develop marketing and/or production strategies
designed to meet the requirements of the EU common market organisation
for bananas;
- assist banana producers in developing environmentally-friendly
production methods, including fair-trade bananas;
- assist with training and market intelligence,
and improve the distribution infrastructure; and
- support diversification wherever the banana sector
cannot be competitive.
5.3 Article 9 of Council Regulation (EC) No. 856/1999
specifies that by 31 December 2000, and every two years thereafter,
the Commission shall present a report on the operation of this
Regulation to the European Parliament and the Council, accompanied
if appropriate by proposals.
5.4 The history thus far of the SFA — characterised
by our predecessors as "a tale of unadulterated woe"
— is set out in paragraph 3 of our 7th Report.[31]
In a nutshell, the scheme has hitherto displayed all the failings
on the part of Commission delegations and the Commission itself
that the reforms introduced by the Commission in 2000 were supposed
to overcome. Moreover, the Minister seemed to have given up on
getting the Commission to take this seriously, though it had to
be said that he appeared to have had no support from other Member
States. But, relatively small as the sums are, we and our predecessors
have consistently taken the view that understanding why the SFA
has failed and genuinely learning the lessons is important for
the EC's wider development activities (where very large sums are
involved). Moreover, the Minister appeared to have overlooked
the fact that he had undertaken to write to us once the long-delayed
and (it now seemed from his Explanatory Memorandum) half-hearted
evaluation of the SFA had been completed.
5.5 Although nearly £200 million had been devoted
to the SFA, the best that he was able to say about the evaluation's
findings, as set out in the biennial report, was that individual
strategies had "generally been relevant"; that the SFA
has "had an impact in improving productivity where competitiveness
was the objective" and that, after 6 years, it was "too
early to measure the impacts properly". When, we wondered,
would it be possible? And who would do this?
5.6 We were also surprised not to have heard before
now from him about the eventual outcome of this long-delayed review.
Having told us that he and his officials would "engage strongly",
he now said that the external evaluation had not made substantial
recommendations about how the SFA could be improved and said little
about administrative problems. Given the history, we found it
extraordinary that he could, it seems, accept such findings; and
hard to be reassured when he said that he would press for future
evaluations to be more comprehensive.
5.7 Nor were we reassured when he said that over
the past two years the Department for International Development
(DFID) had stressed to the Commission the importance of learning
from the SFA experience. Some examples from him of how the Commission
had taken those lessons on board would have been helpful, particularly
since they appear to have dragged their feet from the outset in
finding out what those lessons were. Instead, it seemed to us
that the Minister's continuing endorsement of using budget support
to disburse the remaining funds was based more on a lack of confidence
in the Commission Delegations than anything else; both this and
stressing the importance of encouraging recipient countries to
draw up their plans well in advance seemed to us to overlook the
very limited capacity of the countries concerned.
5.8 All in all, this continued to be a sorry saga.
So we asked the Minister to appear before us to give oral evidence.
The evidence session took place on 7 March 2007. [32]
Our questions
5.9 In sum, we examined the following issues:
— why
had it taken so long for the problems created by the SFA scheme
to be drawn to our attention?
— why had the Minister and his officials
not reacted earlier and pressed for improvements?
— why had the Commission delayed an independent
evaluation for so long?
— why had that evaluation still not been
published?
— what evidence was there of the Commission
having improved its performance?
— did endorsement of budget support reflect
a lack of confidence in the Commission delegations? Why would
small, overstretched government bureaucracies be able to spend
money more effectively? and
— would more bilateral aid and less Community
aid be more effective?
The Minister's responses
5.10 The main points of the Minister's responses
are summarised below:
— The
Minister agreed with the definition of the SFA as a "sorry
saga". His department began to be concerned about the SFA
in 2002/2003, by when it was clear that disbursement rates were
poor. Concerns had been raised with both the EC delegations in
the Caribbean and with the Commission itself — concerns
which came in particular from an independent evaluation DFID had
commissioned in early 2004 — both informally and then in
letters from both the Secretary of State and himself to the past
and the current Development Commissioner. DFID's own staff in
the Caribbean had also provided technical assistance to the Commission
delegations and the countries themselves to enable them to get
access to both SFA and other EC resources, not only to deal with
the particular issues relating to banana producers but also to
ensure that similar assistance relating to the next key issue
facing the Caribbean in particular — restructuring the sugar
industries there — was provided much more quickly and much
more effectively.
— The Commission's own evaluation was finally
completed sometime in 2006. Contracts had been let without the
UK becoming involved in setting the terms of reference or he or
his officials having been able to talk to the consultants who
had been appointed. He had pressed during 2005 and 2006 for the
evaluation to be made public, and continued to do so. He understood
that the report had been delayed due to maternity leave and illness
in both AIDCO[33] and
the consultants. But he continued to be concerned about how the
evaluation of the SFA has been handled and to push strongly for
the evaluation to be released and, if identified, for further
lessons to be learned. The head of AIDCO would be visiting DFID
shortly, when the evaluation and its publication would again be
raised.
— The Commission's performance
had improved, in that disbursements were now much faster, thanks
to wider changes to a flawed and very centralised system which
focussed on decentralisation to and improved staffing in local
EC Delegations and the move to multi-annual programming (and away
from the requirement for a large number of different authorisations
in Brussels concerning annual programming, which had hampered
the SFA). There had been some progress in making the banana industry
more competitive in Belize in particular. He had also seen "slowly
increasing" support for diversification and for addressing
the social impact of the changes in the banana regime, and continued
to press for a broader range of activities to be supported.
— No other Member State shared the same
depth of concern as the UK about this issue; nor was there significant
European parliamentary interest. So the UK had been a lone voice.
There was no doubt in the Minister's mind that if a larger number
of countries had shared UK concerns and agitated in the way that
the UK had, some of the changes which did take place might have
happened sooner.
— The next major example where we and taxpayers
more generally would be able to judge the improvement, or not,
in the way the EC operates was the package of assistance for the
sugar protocol countries. Here, the Minister believed that others
had shared UK efforts to make sure that the sugar transitional
assistance did not have the same problems at the outset as the
SFA had, and the Minister was confident that significant improvements
in the way that it is being offered were visible. Precisely because
of the concerns about the way the SFA had operated, the Caribbean
and a number of other countries had been very clear in their comments
to the Commission to make sure that the lessons had been learnt.
— With regard to the Commission's wider
performance, the Minister said there was a significant number
of projects supported by the EC which had delivered on their results
— for example, in India, a programme which the EC is helping
to finance with the UK and the government of India to provide
an extra 15 million places in primary school, was very effective
and well-regarded both by the government of India and "by
those who monitor these things". Evidence of the improvement
in the EC's performance had been captured both by the House of
Lords' EU Committee's detailed investigation of the performance
of EC aid and the positive comments by the OECD's Development
Assistance Committee.
— Budget support was "recognised
as being the most efficient form of donor assistance where you
have confidence that a country is committed to using those resources
effectively". It was not that he did not have confidence
in the Commission Delegations as such, although he had argued
for further changes to the way delegations are organised, and
for the Commission to give greater incentives to getting its best
people into those delegations around the world. There had been
a real step up in the capacity of the EC Delegations. This did
not mean to say that they always did everything that the UK would
like or that they were perfect, which was why he continued to
engage with them, in particular in the Caribbean, on this issue.
— As for the recipient countries, while
he would not want to see budget support given to a country like
Zimbabwe or Burma, where it was necessary to operate through different
mechanisms, in the Caribbean he had confidence, generally speaking,
in the commitment of the governments concerned.
— Rather than having 27 different Member
States spending resources, which would create major problems for
small civil services, he believed that it was more efficient and
more helpful to those countries to have one donor or a small number
of donors with whom they could engage. The challenge was to make
sure that aid was disbursed effectively. He and his officials
had been working extremely hard to get the Commission to improve
the quality of its performance more generally, with success, and
specifically on the question of support to the banana-producing
nations.
Conclusions
5.11 We are grateful to the Minister for his
full and frank responses to our questions. What emerges is nonetheless
a very unhappy tale, and particularly for those who are supposed
to be the beneficiaries. Virtually from the outset, it would seem,
the UK has had to pull the Commission's chestnuts out of the fire,
and in return has received little more than foot-dragging, particularly
by AIDCO, and indifference — and not just on the part of
the Commission, but also the European Parliament and other Member
States.
5.12 Against this background, we would be grateful
if, before the summer recess, the Minister would tell us:
— more
about AIDCO's responsibilities and activities, and about its response
to the latest of his requests for the SFA external evaluation
to be published and to its findings; and
— how transitional support for the sugar
industries is being delivered, how effectively this is being done
by comparison with the SFA and how this is being evaluated.
5.13 In the meantime, we now clear the document,
which we consider relevant to any future debate on EU development
assistance.
30 Belize, Cameroon, Cape Verde, Dominica, Grenada,
Ivory Coast, Jamaica, Madagascar, Saint Lucia, Saint Vincent and
the Grenadines, Somalia, and Surinam. Back
31
See headnote.
32 The full text of our questions and
the Minister's answers will be published as HC 387-i. Back
33 32 Every year, the European Union provides over €7
billion in external assistance to more than 150 countries and
territories. Within the Commission, external aid is channelled
into two main streams of funding, the general budget managed by
the Directorate-General (DG) for External Relations, and the European
Development Fund managed by DG Development. EuropeAid Co-operation
Office (AIDCO) was set up in 2001. It is responsible to the Commissioner
with responsibility for External Relations and European Neighbourhood
Policy. The Director-General is responsible for the overall resources
entrusted to it from the EC budget and the European Development
Fund. In 2005, external assistance amounted to €10.4 billion.
Of this, AIDCO managed €7.5 billion. For further details,
see http://ec.europa.eu/europeaid/index_en.htm
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