43 The EU and ACP banana producers |
+ ADD 1
Draft Council Regulation amending Regulation (EC) No. 1905/2006 establishing a Financing Instrument for Development Cooperation
Commission Communication: Biennial Report on the Special Framework of Assistance for Traditional ACP Suppliers of Bananas
Commission Communication: Banana Accompanying Measures: Supporting the Sustainable Adjustment of the Main ACP Banana-Exporting Countries to New Trade Realities
|Legal base||(a) Article 209(1) TFEU; QMV
(b) and (c)
|Document originated||17 March 2010
|Deposited in Parliament||(a) 19 March 2010
(b) and (c) 23 March 2010
|Basis of consideration||EM of 31 March 2010
|Previous Committee Report||None
|To be discussed in Council||To be determined
|Committee's assessment||Politically important
43.1 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.
43.2 In chapter 44 of this Report we outline two Council Decisions
that are designed to usher in new arrangements between the EU
and banana producers generally, which will 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
43.3 In that chapter, we also outline the steps that the EU has
taken to facilitate the adjustment that ACP banana producers will
have to make, viz., a package of transitional financial assistance
the Banana Accompanying Measures (BAMs) worth
190 million (£170 million) over four years.
43.4 Against this background, the documents considered here are:
amendment to the DCI to enable the financing of the BAMs;
Commission Communication outlining the BAMs in greater detail;
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
43.5 The SFA is being implemented across twelve ACP
was designed either to improve the competitiveness of ACP banana
producers or to support diversification into other economic activities.
43.6 In his Explanatory Memorandum of 31 March 2010,
the then Minister of State at the Department for International
Development (Mr Gareth Thomas) notes that an external evaluation
of the SFA "highlighted some positive results". He says
that 48% of SFA funds supported increased competitiveness objectives
between 1999 and 2008; that the four countries still supporting
this objective (Belize, Cameroon, Cote d'Ivoire and Suriname)
have maintained or increased export quantities during 2006-2008;
and the SFA programme "has offered them stronger prospects
for a viable banana sector in a more open environment."
43.7 He also notes that the results of measures to
support diversification "were less visible, and require more
time to assess." He continues thus:
"As of 2008, nine countries supported diversification
objectives and have seen investments in tourism, horticulture,
agricultural extension, rural development and small scale irrigation.
While SFA diversification efforts will have contributed to economic
diversification and growth, the programmes lacked focus or proper
monitoring and evaluation systems. There were many small investments
with limited potential for real, measurable impact. However given
only half of SFA funds have been disbursed it is hard to evaluate
its full impact at this stage. Efforts to increase disbursements
are beginning to show progress."
43.8 The then Minister (Mr Gareth Thomas) then notes
"An evaluation 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."
43.9 Turning to the future, the then Minister says:
"BAMs plan to apply the lessons of these earlier
programmes with clearer objectives to facilitate clear demonstration
of results. BAMs will be implemented through country specific
strategies, and where possible will be incorporated into wider
National Adaptation Strategies. They will also try to address
the broader social impacts of restructuring and reducing the banana
sector in recipient ACP countries. Budget support will be considered
where appropriate. Future trading prospects of ACP exporters within
a changing trade environment will be assessed more carefully to
ensure any competitiveness measures implemented have a good chance
of success. The assistance scheme will be monitored throughout
and assessed in 2012."
43.10 The then Minister also explains that the BAMs
will 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 is, he says, "due to
under-utilisation and absorption constraints." Disbursements
will take place through the Development Cooperation Instrument
and under a specific budget line, entitled BAMs. "Use of
the margin will result in an increase in the overall level of
the EU budget, which will in turn carry additional cost for the
43.11 He also notes that there will be a small revenue
loss to the Commission because of reduced tariff levels on banana
imports, which will be shared according to each Member State's
GNI-share contribution to the budget.
The Government's view
43.12 The then Minister goes on to say that the EU
commitment to provide the BAMs to the ACP "has been essential
to the conclusion of the banana dispute by reassuring ACP countries
they will have support to adjust or diversify." He again
expresses his belief that it is "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.
43.13 He notes 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: "ACP countries, with appropriate
support from the EU, will have to assess long-term competitiveness
in a more open market either to increase productivity further
or to diversify as their preferences gradually erode."
43.14 Turning to the UK contribution towards supporting
opportunities for increased trade, improved competitiveness and
regional integration in the Caribbean region, the Minister again
highlights COMPETE Caribbean a US $ 42 million Challenge
Fund Programme, implemented in partnership with the Inter-American
Development Bank (IDB) and the Canadian International Development
Agency (CIDA), in which DFID will contribute $16m (c. £10m),
CIDA $16m (c. £ 10m) and the IDB $ 9m (c.£6m)
which he says will "help tackle the lack of export diversification
and innovation, and weak entrepreneurship, across the region."
He continues as follows:
"The UK has also funded a number of initiatives
to support ACP countries adjust to eroding preferences and make
best use of the funds available through the EC, for example funding
studies, workshops and support for ACP countries to draw up national
adaptation plans so they can access EC funds faster. The EC document,
'Biennial Report on the SFA for Traditional ACP suppliers of Bananas'
makes reference to UK support, for example in St. Lucia 'SFA
disbursement rate improved substantially since 2007, especially
with recent help of DFID funded technical assistance to the NAO
between January and December 2008.'
"The UK is actively working with the EC to align
better UK and EC private sector focused initiatives in the Caribbean
supporting improved diversification outcomes. The focus is on
promoting emerging growth sectors
both through improving the investment climate and direct assistance
to firms to innovate and diversify."
43.15 The then Minister then professes himself "encouraged
that the SFA programme is showing improvements in disbursement
rates and that some of the previous recommendations from reviews
have been incorporated" He believes the BAM to be an improvement
on previous EC support to banana producers:
"but the Commission will need to follow up proactively
to ensure that lessons learnt previously are acted upon. We will
continue to lobby the EC to do this.
"The UK will, where possible, monitor the implementation
of EC aid at the local level and feedback wider systemic lessons
that need to be addressed at headquarters. The UK will engage
with the Commission in Brussels to ensure that BAMS applies
the lessons learned from earlier programmes of support
for both bananas and sugar."
43.16 As our predecessors noted, the SFA was not
the Commission's shining hour. This continues to be borne out
in what the Minister has 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 are 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
43.17 The BAM can hardly not be an improvement.
But that will be down to the Commission in the first instance.
As the Minister notes, the Commission will need to follow up proactively
to ensure that lessons learnt previously are acted upon. Its record
under the SFA has not been impressive. And, with a much reduced
presence in the Caribbean, it is not clear how the then Minister's
Department is going to be able to keep the Commission under pressure.
43.18 The BAM scheme is to be assessed in 2012.
We would like the Minister of State at the Department for International
Development 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 (c.f. paragraph 43.16 above);
and with similar information and views on what has happened under
the SFA by then.
43.19 In the meantime, we clear the documents.
171 For full information on the DCI, see http://europa.eu/legislation_summaries/development/general_development_framework/l14173_en.htm.
(31431) 7776/10, (31432) 7780/10; see chapter 44 of this Report. Back
Belize, Jamaica, Dominica, St Lucia, St Vincent, Grenada, Suriname,
Cameroon, Ivory Coast, Somalia, Cape Verde and Madagascar. Back
For example Information and Communication Technologies, niche
tourism, arts and entertainment. Back