9 The EU financing instrument for
development cooperation (DCI)
| (32201)
15033/10
—
| Draft Regulation amending Regulation (EC) No 1905/2006 establishing a financing instrument for development cooperation
|
| Legal base | Article 209(1) TFEU; QMV; ordinary legislative procedure
|
| Document originated | 27 October 2010
|
| Deposited in Parliament | 18 November 2010
|
| Department | International Development
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| Basis of consideration | EM of 9 December 2010
|
| Previous Committee Report | None; but see (31424) 7709/10 (31427)
7703/10 and (31429) 7717/10: HC 428-i (2010-11), chapter 43 (8 September 2010); and (31431) 7776/10 and (31432) 7780/10: HC 428-i (2010-11), chapter 44 (8 September 2010)
|
| Discussed in Council | 10 December 2010
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| Committee's assessment | Politically important
|
| Committee's decision | Not cleared; further information requested
|
Background
9.1 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.[42]
9.2 In chapter 44 of the Report of our meeting on
8 September we discussed two Council Decisions designed to usher
in new arrangements between the EU and banana producers generally,
which have particular implications for those banana producers
with whom the EU has long had a special relationship, namely those
from the ACP countries. As explained there, it has been necessary
to come to these new arrangements because: since 1995 the EU has
been challenged at the World Trade Organisation (WTO) by the US
and countries from Latin America over the preferential market
access given to ACP countries by the EU; the WTO has repeatedly
ruled against the EU; and, as a result, the EU has negotiated
the "Geneva Agreement on Trade in Bananas" with Latin
American countries and the "Agreement on Trade in Bananas"
with the US — which agreements settle all disputes with
the US and Latin American countries over bananas.
9.3 In that chapter, we also outlined the steps that
the EU had taken to facilitate the adjustment that ACP banana
producers would have to make, viz., a package of transitional
financial assistance — the Banana Accompanying Measures
(BAMs) — worth €190 million (£170 million) over
four years, and what the UK was doing in the Caribbean —
a $42 million Challenge Fund Programme, implemented in partnership
with the Inter-American Development Bank (IDB) and the Canadian
International Development Agency (CIDA), in which the Department
for International Development (DFID) would contribute $16m (c.
£10m), CIDA $16m (c. £10m) and the IDB $9m (c. £6m).[43]
9.4 Against this background, the other related documents
we considered on 8 September were:
— an amendment to the DCI to enable the
financing of the BAMs;
— a Commission Communication outlining
the BAMs in greater detail; and
— a Commission Communication on the Special
Framework of Assistance (SFA) for traditional ACP suppliers of
bananas, which was created in 1999, expired in 2008 and, under
which, some €376 million was provided.
9.5 The SFA is being implemented
across twelve ACP countries[44]
and was designed either to improve the competitiveness of ACP
banana producers or to support diversification into other economic
activities.
9.6 In his Explanatory Memorandum of 31 March 2010,
the then Minister of State at the Department for International
Development (Mr Gareth Thomas) said that evaluation of the SFA
and of similar EC measures to support loss of preferences for
ACP sugar producers highlighted the need to integrate programmes
better, consider using budget support as a delivery mechanism
and ensure appropriate stakeholder consultation before and during
implementation. Turning to the future, the then Minister said
that the BAMs plan to apply the lessons of these earlier programmes
with clearer objectives to facilitate clear demonstration of results;
BAMs would be implemented through country specific strategies,
and where possible be incorporated into wider National Adaptation
Strategies. They would also try to address the broader social
impacts of restructuring and reducing the banana sector in recipient
ACP countries. Budget support would be considered where appropriate.
Future trading prospects of ACP exporters within a changing trade
environment would be assessed more carefully to ensure any competitiveness
measures implemented have a good chance of success. The assistance
scheme would be monitored throughout and assessed in 2012."
9.7 The then Minister also explained that the BAMs
would be financed by the use of margins and redeployment within
EC expenditure allocated under "The EU as a Global Player".
The choice of financing in this way was, he said, due to under-utilisation
and absorption constraints. Disbursements would take place through
the DCI and under a specific budget line, entitled BAMs.
9.8 The then Minister went on to say that the EU
commitment to provide the BAMs to the ACP had been essential to
the conclusion of the banana dispute by reassuring ACP countries
they would have support to adjust or diversify. He again expressed
his belief that it was right to open up the EU market to other
developing countries at an appropriate pace, to ensure non-discrimination
between countries of similar levels of development, and that it
is also important to comply with WTO rulings.
9.9 He noted that, although many ACP banana producers
have been undergoing structural adaptation activities, the reduced
tariff reduction on Latin American banana exporters will require
further and more rapid adjustment. He expressed his belief that
the BAMs would be an improvement on previous EC support to banana
producers: but the Commission would, he said, need to follow up
proactively to ensure that lessons learnt previously were acted
upon. He undertook to continue to lobby the EC to do this, and
noted that the UK would, where possible, monitor the implementation
of EC aid at the local level and feedback wider systemic lessons
that need to be addressed at headquarters, and engage with the
Commission in Brussels to ensure that BAMS applies the lessons learned
from earlier programmes of support for both bananas and sugar.
Our assessment
9.10 We recalled that the previous
Committee had noted that the SFA was not the Commission's shining
hour, and noted that this continued to be borne out in what the
Minister had to say: programmes lacking focus or proper monitoring
and evaluation systems; many small investments with limited potential
for real, measurable impact; difficulty in evaluating full impact,
given only half of SFA funds had been disbursed; evaluation of
similar EC measures to support loss of preferences for ACP sugar
producers also highlighting the need to integrate programmes better;
consider using budget support as a delivery mechanism; and ensure
appropriate stakeholder consultation before and during implementation.
9.11 Against this background, we felt that the BAM
could not but be an improvement. But that would be down to the
Commission in the first instance. As the then Minister noted,
the Commission would need to follow up proactively to ensure that
lessons learnt previously were acted upon. Its record under the
SFA had not been impressive. And, with a much reduced presence
in the Caribbean, it was not clear how the then Minister's Department
was going to be able to keep the Commission under pressure.
9.12 Noting that the BAM scheme was to be assessed
in 2012, we asked the then Minister's successor to write to us
by the end of 2011 with information about, and views on, its impact,
and on the effectiveness of the Commission in fulfilling its brief;
and with similar information and views on what further had happened
under the SFA by then.
9.13 In the meantime, we cleared the documents.[45]
The draft Council Regulation
9.14 The document contains amendments
tabled by the European Parliament (EP) to the Commission's proposal
for the Banana Accompanying Measures (BAMs).
9.15 In his Explanatory Memorandum of 9 December
2010, the Parliamentary Under-Secretary at the Department for
International Development (Stephen O'Brien) explains that the
Commission proposal modifies and replaces several articles and
annexes of the DCI Regulation, as follows:
"Article 4 (Implementation of Union Assistance)
is replaced; Article 17a (Main ACP banana supplying countries)
is inserted; Article 21 (Adoption of strategy papers and Multi-Annual
Indicative Programmes) is replaced; Article 29(1) (Budget Commitments)
paragraph is replaced; Article 31(1) (Public procurement procedures,
grants award procedures, rules of origin) subparagraph is replaced;
Article 38 (1) and (2) (Financial provisions) are replaced; Annex
IIIa is inserted; and Annex IV is replaced."
9.16 He also notes that the EP
encourages the Commission to carry out an impact assessment of
the BAMs and asks the Commission to coordinate this programme
with the regional and national indicative programmes operating
in the beneficiary countries; to prevent the exploitation of local
workers in the banana industry; to include the EP and the Council
opinions when adopting annual action programmes; and to make sure
that Union assistance is not, in principle, used to pay taxes,
duties or charges in beneficiary countries.
9.17 The Minister also notes that:
"EP amendments also suggest interpreting
Geographic Strategy Papers, Multi-Annual Indicative Programmes
and Strategy Papers for thematic programmes as 'delegated acts',
over which the EP has increased powers of scrutiny."
The Government's view
9.18 The Minister then goes
on to comment as follows:
"HMG welcomes some of the EP amendments,
especially those that support the main ACP banana-exporting countries.
We agree that BAMs should not engender deterioration in labour
and environmental standards. We are also of the view that BAMs
initiatives should focus on competitiveness enhancing measures
or restructuring where necessary.
"However, in line with the position set
out in EM 15028/10 we do 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' 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.
"Council agreement is required before any
amendments can be made to the BAMs. The UK's position on this
is unanimously supported by other Member States and the Commission.
The Council will reject the EP's tabled amendments and resist
any attempt to increase its powers of scrutiny on this issue."
9.19 The Minister also notes
that "the EP is pursuing a similar strategy in relation to
a number of EU Financial Instruments and HMG is taking a strong
and coordinated line on this issue."
9.20 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 24 amendments
in the DCI Regulation; the text has now been sent back to the
Council for consideration; and "at Coreper [46]on
8 December, Member States will discuss the Council's agreed position
ahead of the EP's second reading [,which] agreed position will
reject the EP's attempts to increase its powers of scrutiny on
this issue."
Conclusion
9.21 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.
9.22 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.
9.23 In the meantime we shall retain the document
under scrutiny.
42 For full information on the DCI, see http://europa.eu/legislation_summaries/development/general_development_framework/l14173_en.htm. Back
43
See headnote: (31431) 7776/10 and (31432) 7780/10: HC 428-i (2010-11),
chapter 44 (8 September 2010). Back
44
Belize, Jamaica, Dominica, St Lucia, St Vincent, Grenada, Suriname,
Cameroon, Ivory Coast, Somalia, Cape Verde and Madagascar. Back
45
See headnote: (31424) 7709/10 (31427), 7703/10 and (31429) 7717/10:
HC 428-i (2010-11), chapter 43 (8 September 2010). Back
46
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 http://europa.eu/scadplus/glossary/coreper_en.htm
for further information.
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