Documents considered by the Committee on 15 December 2010 - European Scrutiny Committee Contents

8 The Development Cooperation Instrument and the European Instrument for Democracy and Human Rights



Draft Regulation amending Regulation (EC) No 1905/2006 establishing a financing instrument for development cooperation and Regulation (EC) No 1889/2006 on establishing a financing instrument for the promotion of democracy and human rights worldwide
Legal baseArticle 209 TFEU; QMV; ordinary legislative procedure
Document originated
Deposited in Parliament15 November 2010
DepartmentInternational Development
Basis of considerationEM of 9 December 2010
Previous Committee ReportNone
To be discussed in CouncilTo be determined
Committee's assessmentPolitically important
Committee's decisionNot cleared; further information requested


8.1 The Development Cooperation Instrument (DCI) and the European Instrument for Democracy and Human Rights (EIDHR) are two of nine external action instruments (or regulations), setting out how EC funds will be spent on development issues under the current Financial Perspective (2007-2013).

8.2 Regulation (EC) No 1905/2006 of the European Parliament and of the Council of 18 December 2006 establishing a financing instrument for development cooperation (DCI) replaced the range of geographic and thematic instruments that had been created over time and as needs arose. Its aim is "to improve development cooperation." Under this instrument, the EU finances measures aimed at supporting geographic cooperation with the developing countries included in the list of aid recipients of the Development Assistance Committee of the Organisation for Economic Cooperation and Development (OECD/DAC), which are listed in Annex 1 to the Regulation.[38]

8.3 The European Instrument for Democracy and Human Rights (EIDHR, which came into force on 1 January 2007) is (according to the Commission website) "the concrete expression of the EU's intention to integrate the promotion of democracy and human rights into all of its external policies." Its key objectives are:

·  Enhancing respect for human rights and fundamental freedoms in countries and regions where they are most at risk;

·  Strengthening the role of civil society in promoting human rights and democratic reform, in supporting the peaceful conciliation of group interests and in consolidating political participation and representation;

·  Supporting actions in areas covered by EU Guidelines: dialogue on Human rights, human rights defenders, the death penalty, torture, children and armed conflicts and violence against women;

·  Supporting and strengthening the international and regional framework for the protection of human rights, justice, the rule of law and the promotion of democracy;

·  building confidence in and enhancing the reliability and transparency of democratic electoral processes, in particular through monitoring electoral processes.

The EIDHR instrument can grant aid where no established development cooperation exists, and can intervene without the agreement of the governments of third countries. It can support groups or individuals within civil society defending democracy as well as intergovernmental organisations that implement the international mechanisms for the protection of human rights. Assistance under EIDHR complements other tools which are used to implement EU policies for democracy and human rights, including the Development Co-operation Instrument, the European Neighbourhood Partnership Instrument and the more crisis-related interventions of the Instrument for Stability.[39]

8.4 In June 2009, the previous Committee considered a proposal regarding the DCI and the EIDHR and the payment of taxes, duties and charges in exceptional cases and duly justified circumstances. The then Minister (Gareth Thomas) explained that the DCI and EIDHR were the only ones among the nine relevant financial instruments that absolutely ruled out the payment of such costs, while the others contained the phrase "in principle'', which provided the flexibility — in exceptional cases and duly justified circumstances — to allow the payment of taxes, duties and charges. He went on to explain that:

—  this was particularly important where projects or programmes were implemented by NGOs which might be obliged to subcontract specific activities to the private sector;

—  one of the fundamental principles of the EIDHR, which works mainly with NGOs, is its independence from the consent of third country governments and other public authorities;

—  in this context, insistence on the ineligibility of payment of taxes and duties had proven to be problematic in practice;

—  the proposal, therefore, was to harmonise the wording of Article 13(6) of the EIDHR and Article 25(2) of the DCI with the corresponding provisions of the other external action financial instruments as follows: 'Community financing shall, in principle, not be used for paying taxes, duties or charges in beneficiary countries'.

8.5 The then Minister supported this alignment of the development regulations, as it would ensure there was a common level of flexibility for the European Commission in taking forward development programmes. He noted that all the EC Development Instruments would continue to lay down that Community support may not be used to finance the costs of taxes, duties and other charges in principle; and that only under exceptional conditions would any such payments be considered. He particularly welcomed that this amendment would help facilitate the European Community to maximise its work through NGOs and civil society in general. He explained that there were no financial implications for the Commission or HMG; while the proposed amendment would allow for greater flexibility in the Commission's implementation of EC development programmes, any such activities would continue to be within the limits of existing EC budgets (2007-2013: €16.9 billion (£14.9 billion) DCI and €1.1 billion (£0.9 billion) EIDHR).

8.6 The previous Committee considered that the case was well-made, that no questions arose and that that this minor change did not warrant a substantive Report to the House.

The draft amendments to the DCI and the EIDHR

8.7 In his Explanatory Memorandum of 9 December 2010, the Parliamentary Under-Secretary at the Department for International Development (Stephen O'Brien) explains that the EP deals with the DCI and EIDHR in two different committees — the Committee on Development for the amendments concerning the DCI; and the Committee on Foreign Affairs for the amendments concerning the EIDHR — and that both committees have tabled amendments to the original proposal. He says that, in each case, the Commission's proposals regarding taxes, duties and charges are accepted.

    "However, he says, the EP has also tabled amendments to take into account the Commission Communication "Consequences of the entry into force of the Treaty of Lisbon for ongoing inter-institutional decision-making procedures" and some other legislative texts such as the Treaty on the Functioning of the European Union. He analyses these as follows:

    "The main EP amendments concerning the DCI (Regulation No 1905/2006) relate to i) the Commission's powers to adopt delegated acts in respect of Geographic Strategy Papers, Multi-Annual Indicative Programmes and Strategy Papers for thematic programmes; ii) the explanation of delegated acts in Article 35 (amended), Article 35a (new) and Article 35b (new) of the DCI Regulation and their application to Article 17 'ACP Sugar Protocol Countries' and Article 21 'Adoption of strategy papers and multi-annual indicative programmes'; iii) the inclusion of national parliaments in the Article 33 'Evaluation' to provide proposals on external evaluations; iv) and the submission of the Annual Report (Article 34) to national parliaments.

    "The main amendments concerning the EIDHR (Regulation 1889/2006) relate to the Commission's powers to i) adopt delegated acts in respect of Strategy Papers and Annual Action Programmes; and ii) the explanation of delegated acts in the new Articles 17a, 17b and 17c and their application to Article 5 'Strategy Papers'."

8.8 The Minister notes that, overall, the EP adopted 16 amendments for the DCI Regulation and 13 amendments for the EIDHR Regulation in its plenary session on 21 October 2010; and has instructed its President to forward its position to the Council and seek a compromise.

The Government's view

8.9 The Minister HMG welcomes the Commission's proposal to align the regulations relating to the EU's external instruments and supports the EP's amendments to align the proposed legal text with the Treaty of Lisbon.

8.10 However, in line with the position set out in his separate Explanatory Memorandum on the DCI and the package of transitional financial assistance — the Banana Accompanying Measures (BAMs) — to facilitate the adjustment required of ACP banana producers by the ending of the EU preferential access regime, the Minister rejects the EP's interpretation that Geographic Strategy Papers, Multi-Annual Indicative Programmes and Strategy Papers for thematic programmes constitute "delegated acts".[40] He goes on to say:

    "The definition of 'delegated acts' is intended to cover only the Commission's legislative proposals. Strategy and Multi-Annual Papers simply implement the relevant Instruments, rather than amending them: we therefore do not consider them to be legislative proposals.

    "Under the Lisbon Treaty, Article 291 sets out the powers conferred on the EP in terms of scrutinising documents which implement existing Financial Instruments. Article 290 sets out the powers conferred on the EP in terms of scrutinising delegated acts which amend existing Instruments.

    "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 and risk considerably delaying the programming of EU aid, reversing recent progress in speeding up aid disbursement. We do not accept the EP's interpretation of 'delegated acts' in this context, which in our view would constitute 'competency creep' by the Parliament."

8.11 Noting that Council agreement is required before any amendments can be made, the Minister says that the UK's position is unanimously supported by other Member States and the Commission and that the Council will reject the EP's tabled amendments and resist any attempts to increase its powers of scrutiny on this issue.

8.12 He also notes that the EP is pursuing a similar strategy in relation to a number of EU Financial Instruments and that "HMG is taking a strong and coordinated line on this issue."

8.13 Finally, on the timetable, the Minister says that: the EP's first reading debate took place on 20 October 2010; the plenary voted on 21 October 2010 and adopted 16 amendments for the DCI Regulation and 13 amendments for the EIDHR Regulation; the text has now been sent back to the Council for consideration; at Coreper[41] on 8 December, Member States will discuss the Council's agreed position ahead of the EP's second reading; and will reject the EP's attempts to increase its powers of scrutiny on this issue.


8.14 We now understand that, subsequent to the Coreper meeting to which the Minister refers, the agreed position that the Minister outlines was adopted by the Council, without discussion, on 10 December; and that, the matter still being under scrutiny, the Minister abstained from voting.

8.15 We endorse the Government's position, and look forward to hearing about the outcome. Once the European Parliament responds, the Council will need to adopt a further agreed position; in which case we shall expect a further Explanatory Memorandum from the Minister, outlining the nature of the European Parliament response and the Government's views thereon.

8.16 In the meantime we shall retain the document under scrutiny.

38   For full information on the DCI, see Back

39   See for full information on the EIHDR. Back

40   See (32201) 15033/10 at chapter 9 of this Report. Back

41   The Permanent Representatives Committee or "Coreper" (from the French, Comité des représentants permanents) is responsible for preparing the work of the Council of the European Union. It consists of the Member States' ambassadors to the European Union ("Permanent Representatives") and is chaired by the Member State which holds the Council Presidency. Coreper occupies a pivotal position in the Community decision-making system, in which it is both a forum for dialogue (among the Permanent Representatives and between them and their respective national capitals) and a means of political control (guidance and supervision of the work of the expert groups). See for further information. Back

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