2 Financial instruments for EU external
action
(a)
(32508)
6087/11
—
(b)
(32509)
6090/11
—
(c)
(32510)
6091/11
—
(d)
(32511)
6093/11
—
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Draft Regulation amending Regulation (EC) No 1905/2006 establishing a financing instrument for development cooperation — Outcome of the European Parliament's second reading (Brussels, 2 to 3 February 2011)
Draft Regulation amending Regulation (EC) No 1889/2006 on establishing a financing instrument for the promotion of democracy and human rights worldwide — Outcome of the European Parliament's second reading (Brussels, 2 to 3 February 2011)
Draft Regulation amending Regulation (EC) No 1905/2006 establishing a financing instrument for development cooperation — Outcome of the European Parliament's second reading (Brussels, 2 to 3 February 2011)
Draft Regulation amending Regulation (EC) No 1934/2006 establishing a financing instrument for cooperation with industrialised and other high-income countries and territories — Outcome of the European Parliament's second reading (Brussels, 2 to 3 February 2011)
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| Legal base | (a), (c) and (d) Articles 207 and 209 TFEU; QMV; ordinary legislative procedure
(b) Article 209 TFEU; QMV; ordinary legislative procedure
|
| Deposited in Parliament | 15 February 2011
|
| Department | International Development
|
| Basis of consideration | EM of 3 March 2011
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| Previous Committee Report | None; but see (32175) 15028/10 and (32201) 15033/10: HC 428-xi (2010-11), chapters 8 and 9 (15 December 2010); and (32407) 16440/10 + ADD 1 and (32408) 18129/10 + ADD 1: HC 428-xiii (2010-11), chapter 6 (19 January 2011)
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| Discussed in Council | To be determined
|
| Committee's assessment | Politically important
|
| Committee's decision | Not cleared; further information requested
|
Background
2.1 In preparation for the 2007-13 financial perspective, the
Commission, Council and the European Parliament (EP) reduced a
plethora of different financial regulations, or Instruments, to
eight. The ones in question here are:
THE DEVELOPMENT CO-OPERATION INSTRUMENT (DCI)
The DCI covers three main components. The first is to provide
assistance to South Africa and 47 developing countries in Latin
America, Asia and Central Asia, and the Middle East (only those
countries not covered by the European Neighbourhood and Partnership
Instrument or the European Development Fund).[15]
Secondly, it supports the restructuring of sugar production in
18 ACP countries. Thirdly, it runs five thematic programmes: investing
in people; environment and sustainable management of natural
resources including energy; non-state actors and local
authorities in development; food security; as well
as migration and asylum.
The five DCI thematic programmes support actions
in all developing countries (including those covered by ENPI and
the EDF), global actions and external projections of as well as
the fleshing out of Commission internal policies.
THE EUROPEAN INSTRUMENT FOR DEMOCRACY & HUMAN
RIGHTS (EIDHR)
The EIDHR contributes to the development of democracy,
the rule of law, respect for human rights and fundamental freedoms.
It was designed to complement the various other tools for implementation
of EU policies in this area, which range from political dialogue
and diplomatic demarches to various instruments of financial and
technical co-operation, including both geographic and thematic
programmes. It also complements the more crisis-related interventions
of the new Stability Instrument.
THE INSTRUMENT FOR COOPERATION WITH INDUSTRIALISED
COUNTRIES (ICI)
The ICI promotes cooperation between the European
Union and seventeen industrialised and other high-income countries
and territories in North America, the Asia-Pacific region and
the Gulf region. [16]
2.2 The Committee considered these on several occasions
during the gestation process, culminating in a debate in the European
Standing Committee on 10 November 2005,[17]
and subsequently, particularly during the formulation of the thematic
programmes.
2.3 The reform included provision for a Mid-Term
Review (MTR). The details of the MTR and the outcome are set out
fully in our most recent Report.
2.4 In sum, the new instruments are implemented through
Country Strategy Papers, Regional Strategy Papers and Thematic
Strategy Papers. The Commission is required under the regulations
to submit a report on their implementation by 31 December 2010,
and to propose any necessary amendments. In final negotiations
before the instruments were adopted, the Commission agreed —
at the European Parliament's request — to carry out the
review before the 2009 European Parliament elections and to take
the EP's reports and recommendations into account.
2.5 The European Parliament took the view that some
activities programmed by the Commission were not sufficiently
geared to poverty eradication and the Millennium Development Goals
or did not fulfil the criteria for Official Development Assistance.
The Commission proposed to address this by amending the ICI so
as to extend its geographical scope to include DCI countries (and
thereby avoid blurring the focus of the DCI). There was no disagreement
between the Council and Commission on the one hand and the EP
on the other over this proposal.
2.6 However, although the Commission described the
negotiation process as constructive and in line with the essential
objectives and the underlying approach of the Commission's initial
proposal, it also noted two specific EP amendments to the ICI
regulation were not acceptable to the Council:
Delegated acts (Article 290 TFEU):
the Commission said that the EP was seeking by its first reading
amendments to apply this procedure to the adoption of multiannual
strategy papers by the Commission; and that, despite what it described
as long and intensive negotiations, it had not been possible to
reach agreement on this issue. It further noted that the Council
had not accepted these amendments in its positions at first reading,
and that it was ready to continue efforts to reconcile the positions
of the institutions and to find ways to meet the substantive concerns
behind Parliament's amendments, in particular in ensuring that
Parliament can exercise appropriate oversight over the formulation
of external cooperation strategies and the proper implementation
of external financial instruments;
Article 16 on the financial reference amount:
The Commission noted that the Council had not accepted the proposed
EP amendment, preferring to retain the text proposed initially
by the Commission. The Commission supported the Council position;
but, in order to facilitate agreement and re-assure the institutions,
professed itself ready to make the Declaration concerning Article
16 attached to the Communication on the MTR.
2.7 All in all, the Commission said, the Council
position incorporated a negotiated compromise text which reflected
to a very large extent the EP's requests and amendments at first
reading, and that the Commission could therefore accept the Council
position.
2.8 In his Explanatory Memorandum of 10 January 2011,
the Minister for Europe (Mr David Lidington) said that the Government
continued to support the policy of widening the geographical scope
of the ICI in order to ensure that the activities funded under
the DCI remain focused on poverty reduction and were eligible
as ODA, and of opposing any reduction in funding for the DCI as
a result of changes to the ICI regulation. He explained that in
the Council working group discussions the UK had taken a strong
line to this effect, and that the Commission had eventually proposed
funding the additional uplift of €176 million to the end
of the current Financial Perspective from savings elsewhere in
Heading 4 of the EU Budget ("EU as a Global Player"),
together with a declaration that funding for ICI would come from
dedicated non-ODA budget lines and that the amount foreseen for
DCI would not be reduced as a result.
2.9 The Minister then described most of the EP's
amendments as either technical or textual in nature, such as references
to the EU's values and labour standards, and references to support
to SMEs, and said that there was a good deal of cooperation between
the Council and the EP early in the legislative process and that
the Council was able to incorporate in its first reading position
many of the proposed amendments from the EP's first reading.
2.10 But, he said, the Council did not agree with
the EP's interpretation that Geographic Strategy Papers, Multi-Annual
Indicative Programmes and Strategy Papers for thematic programmes
constitute "delegated acts". The definition of "delegated
acts" was intended to cover only the Commission's legislative
proposals. Strategy and Multi-Annual Papers simply implemented
the relevant Instruments, rather than amending them; we therefore
do not consider them to be legislative proposals. The EP's attempt
to interpret Strategy and Multi-Annual Papers as delegated acts
which fall under Article 290 would give it increased powers of
scrutiny before the implementation of programmes and risk considerably
delaying the programming of EU instruments, reversing recent progress
in speeding up disbursement. He could accept the EP's interpretation
of "delegated acts" in this context, which in his view
would constitute "competency creep" by the European
Parliament.
2.11 With regard to the EP proposal to amend Article
16 of the regulation, the Minister noted that:
— Article
16 on Financial Provisions contained standard text on the financial
reference amount and the annual budget procedure used in all the
external instrument regulations;
— the EP's amendments would have deviated
from this standard text, and pre-judged the annual budget process
by specifying that the source of funding could not be the DCI;
— he accordingly agreed with the Council's
position to block the changes to the standard text and did not
wish to set a precedent which could undermine the annual budget
procedure.
2.12 The Minister concluded by noting that, though
the UK had voted against the proposal at the Competitiveness Council
on 10 December 2010 because it had not yet received Scrutiny clearance,
the Council's first reading position was nonetheless adopted;
and that the European Parliament would now consider it.
Our assessment
2.13 As the Minister also noted, the Committee had
already considered similar Explanatory Memoranda on the Development
Co-operation Instrument (DCI) and the European Instrument for
Democracy & Human Rights (EIDHR).[18]
Now, as then, we endorsed the Government's position.
2.14 We also noted that, once the EP responded, the
Council would need to adopt a further agreed position, which would
necessitate a further Explanatory Memorandum outlining the nature
of the EP response and the Council position, and the Government's
views thereon. If it was still proposed to include some sort of
Commission Declaration about Article 16 — about which the
Minister made no comment on this occasion — we asked him
to ensure that his Explanatory Memorandum covered it. We also
asked for his views on the extent to which the outcome with regard
to the Commission goal of providing the EP with "appropriate
oversight over the formulation of external cooperation strategies
and the proper implementation of external financial instruments"
safeguarded, or changed, the status quo.
2.15 In the meantime, we retained the Council Regulation
amending the ICI regulation (document 16440/10) and the Commission
Communication concerning the Council position on the adoption
of a Regulation of the European Parliament and of the Council
amending the ICI regulation (18129/10) under scrutiny.[19]
The European Parliament's response
2.16 The EP response is set out in the four documents.
2.17 In his Explanatory Memorandum of 3 March 2011,
the Parliamentary Under-Secretary at the Department for International
Development (Mr Stephen O'Brien) says that the EP's position at
the second reading has not changed; it is, he says, still attempting
to interpret Strategy and Multi-Annual Papers as "delegated
acts" over which it would have greater powers of scrutiny.
2.18 The Minister then explains that:
— the
Council now has three months to prepare its position in response
to the EP's second reading;
— if no agreement is reached then the process
will go to a conciliation committee which is convened in six to
eight weeks and which then has six to eight weeks to resolve the
situation;
— if there is still no agreement, the Commission's
proposed amendments to the DCI regulations, which he again notes
were uncontroversial, will be rejected.
2.19 The Minister describes this as "a slight
simplification of the full process" and encloses a flow chart
of the co-decision process.[20]
The Government's view
2.20 The Minister says that, through these amendments,
the EP is continuing its attempt to interpret Strategy and Multi-Annual
Papers as delegated acts which fall under Article 290 TFEU and
are therefore subject to greater EP Scrutiny. He continues as
follows:
"This interpretation would, for example, make
it mandatory for the opinion of the EP to be sought before the
Commission adopts annual action programmes. Furthermore, the amendments
would permit the EP to revoke technical powers already granted
to the Commission.
"We do not accept the EP's interpretation of
'delegated acts' in this context, which would enhance the EP's
powers and risk considerably delaying the programming of EU aid,
reversing recent progress in speeding up aid disbursement. As
set out in previous EMs, we consider this to be an issue of competence
creep and have agreed a position across Government rejecting the
EP's interpretation.
"The UK's position on this matter is unanimously
supported by other Member States and the Commission. We will continue
to work through the Council to reject the EP's tabled amendments
to all the DCI regulations and resist any attempts to increase
its powers of scrutiny on this issue.
"If agreement is not reached between the Council
and the European Parliament and the proposed amendments are rejected,
we will consider options to mitigate any potential delays to EU
development programming."
Conclusion
2.21 We continue to endorse the Government's position.
2.22 The Council response to the EP's second reading
will presumably require adoption of a document of some sort. We
accordingly look forward to hearing further from the Minister
in good time prior to that position being adopted.
2.23 In the meantime, we continue to retain the
original documents under scrutiny.
15 European Development Fund (EDF); based on the Cotonou agreement,
which provides the bedrock of EU co-operation with African, Caribbean
and Pacific countries, the EDF supports assistance to the Union's
78 ACP partner countries and the overseas countries and territories
of Member States. The 10th EDF entered into force in January 2008.
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16
The others are: the European Neighbourhood and Partnership Instrument
(ENPI), which provides EU assistance to 17 countries in the EU's
"near neighbourhood"; the Instrument for Stability (IfS),
which aims to contribute to stability in countries in crisis by
providing an effective response to help preserve, establish or
re-establish the conditions essential to the proper implementation
of the EU's development and co-operation policies; the Nuclear
Safety Co-operation Instrument (NSCI), which finances measures
to support a higher level of nuclear safety, radiation protection
and the application of efficient and effective safeguards of nuclear
materials in third countries; the Instrument for Pre-accession
Assistance (IPA), which is the vehicle by which pre-accession
technical assistance is delivered to candidate countries; and
the extant Humanitarian Aid Regulation, which was not amended.See
http://ec.europa.eu/europeaid/how/finance/index_en.htm for full
details. Back
17
See http://www.publications.parliament.uk/pa/cm200506/cmstand/euro/st051110/51110s01.htm
for the record of this debate. Back
18
See headnote: (32175) 15028/10 and (32201) 15033/10: HC 428-xi
(2010-11), chapters 8 and 9 (15 December 2010). Back
19
See headnote: (32407) 16440/10 + ADD 1 and (32408) 18129/10 +
ADD 1: HC 428-xiii (2010-11), chapter 6 (19 January 2011). Back
20
Available at http://ec.europa.eu/codecision/images/codecision-flowchart_en.gif.
This is part of a more detailed step by step explanation to be
found at: http://ec.europa.eu/codecision/stepbystep/index_en.htm.
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