Documents considered by the Committee on 9 March 2011, including the following recommendation for debate: Use of Passenger Name Records for law enforcement purposes - European Scrutiny Committee Contents


2 Financial instruments for EU external action


(a)

(32508)

6087/11



(b)

(32509)

6090/11



(c)

(32510)

6091/11



(d)

(32511)

6093/11



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)

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 Parliament15 February 2011
DepartmentInternational Development
Basis of considerationEM of 3 March 2011
Previous Committee ReportNone; 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)
Discussed in CouncilTo be determined
Committee's assessmentPolitically important
Committee's decisionNot 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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