8 Financing EU external action:
11th European Development Fund
| (a)
(33530)
18431/11
COM(11) 837 + ADDs 1-2
(b)
(33533)
18480/11
COM(11) 836
+ ADDs 1-2
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Commission Communication: Preparation of the Multiannual Financial Framework Regarding the Financing of EU Cooperation for African, Caribbean and Pacific States (ACPs) and Overseas Countries and Territories (OCTs) for the 2014-20 period (11th European Development Fund)
Council Decision on the position to be adopted by the European Union within the ACP-EU Council of Ministers Concerning the Multiannual Financial Framework for the Period 2014 to 2020 of the ACP-EU Partnership Agreement
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| Legal base | (a) —
(b) Articles 209(2) and 218(9) TFEU; QMV; European Parliament to be informed
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| Department | International Development
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| Basis of consideration | Minister's letter of 17 April 2013
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| Previous Committee Reports | HC 428-xlviii (2010-12), chapter 12 (25 January 2012), HC 86-v (2012-13), chapter 6 (20 June 2012) and HC 86-xxxiv (2012-13), chapter 2 (6 March 2013); also see (33244) 15560/11 + ADDs 1-2: HC 428-xli (2010-12), chapter 6 (9 November 2011)
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| Discussion in Council | To be determined
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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Background
8.1 The European Development Fund (EDF) is the main instrument
for delivering EU assistance for development cooperation under
the Cotonou Agreement with ACP States and for financing EU cooperation
with the OCT. The EDF is funded outside the EU budget by the Member
States on the basis of specific contribution keys. Each EDF is
concluded for a multi-annual period. The 10th EDF Internal Agreement,
establishing the resources of the 10th EDF and their share in
broad sub-categories, covers the period 2008-13, and includes
provisions on implementation and financial monitoring. As the
current 10th EDF period will expire at the end of 2013, the Communication
and proposal for a Council Decision were produced in January 2012,
to start discussions on the EU's plans for 2014-20.
8.2 The Communication includes a draft EDF 11
Internal Agreement. The proposed overall figure for EDF 11 is
set at 34,275.6 million. The UK's share would be 14.33%.
The Commission will present proposals for the Implementing and
Financial Regulations at a later stage. The draft Council Decision
is based around the proposed Internal Agreement, and embodies
the position to be taken by the EU in discussion at the EU/ACP
Council of Ministers; once agreed with the ACP, it will then form
a new annex to the Cotonou Agreement. They form part of the EU's
External Action (Heading 4 of the EU budget).
Our initial assessment
8.3 We considered the overarching Joint Communication
on this package (and each of the relevant Instruments) in our
25 January 2012 Report.[40]
In that instance, we recalled the European Parliament's sustained
attempts to create an enhanced role for itself during the mid-term
review of these Instruments in their present form,[41]
and the Joint Communication's reference to its additional powers,
in particular under the budgetary procedure, and to more European
Parliament debate and scrutiny of the — presently non-budgetised
— EDF by bringing it in line with the Development Cooperation
Instrument (DCI, which covers EU development assistance to non-EU,
non ACP countries/OCTs). Again, with a view to ensuring the right
balance of responsibilities, we asked the Minister for International
Development (Mr Stephen O'Brien), also to keep a close eye on
the details there.
8.4 The Commission had proposed a 50% increase
in this voluntary fund. The Minister was right in judging this
to be excessive. As the Commission noted, what was needed was
to make this expenditure more effective.
8.5 As this was but the beginning of a process
of discussion and negotiation, we retained the documents under
scrutiny, and looked forward to hearing from the Minister about
developments — if not sooner, then certainly in good time
before the point at which any political agreement on the draft
Internal Agreement or on the draft Council Decision was imminent.
8.6 Given the importance of this process, we
also drew this and the other associated chapters of the Report
to the attention of the International Development Committee.[42]
Subsequent developments
8.7 The Committee has had two updates on the
process thus far. On the first occasion, in June 2012, the Committee
agreed to a Partial General Approach in order to enable the Presidency
to begin negotiations with the European Parliament on the main
external action financial instruments (pre-accession finance,
European Neighbourhood Partnership, etc.) — without prejudice
to the financial amounts, and with all documents retained under
scrutiny. Then, in March 2013, the Minister (Lynne Featherstone)
updated the Committee on the Heading 4 outcome of the next MFF
agreed at the 7-8 February European Council, describing it as
"a good outcome for development": Heading 4 was allocated
€58.67 billion, an increase slightly above a real freeze
(Heading 4 stands at €57 billion in the current financial
framework), while the EDF remained off budget, with an allocation
of €26.984 billion. The MFF now had to be agreed as a package
by the European Parliament. Although the statements by the main
party leaders had, she said, been "overwhelmingly negative
about budget cuts so far", she did not expect them to focus
on Heading 4 or EDF levels specifically.
Our further assessment
8.8 Though the general direction of travel continued
to be appropriate, there remained much that was yet to be decided
— in particular, regarding the EP's endeavours to obtain
greater influence over the next budget programming cycle and to
redefine areas which come under delegated acts.
8.9 In a separate letter to us about the Instrument
for Pre-accession (IPA), the Minister noted that the effect of
this would be to give the European Parliament a power of veto
over programming decisions, and said that:
— the
Commission and the Council were resisting this and arguing that
such documents should be implementing acts subject to agreement
by Member State committees;
— the Commission was seeking to define
options for addressing this point in an effort to overcome the
impasse; and
— the Government supported the Commission's
position.[43]
8.10 We noted that agreement on this matter needed
to be reached before there could be agreement on the legislation
for the Heading 4 external instruments. That being so, we asked
the Minister to write to us when agreement on this matter was
in prospect, with details of, and her views on, the prospective
outcome, in good time for us to pursue with her any questions
that might then arise.
8.11 Looking beyond that point, we noted that
we had yet to receive any revised versions of the texts of the
individual financial instruments or of the simplified and harmonised
implementing rules and procedures applicable to those instruments.
We therefore reminded the Minister that we needed to receive
them, together with her views on them, in good time for questions
arising to be considered, which would most likely need to be done
via a debate.
8.12 In the meantime we continued to retain all
the documents under scrutiny.
8.13 We also drew this chapter of our Report
to the attention of the International Development Committee.[44]
The Minister's letter
8.14 In her letter of 17 April 2013, the Minister
writes to update the Committee on negotiations on the 11th EDF
for the period 2014-20.
8.15 The Minister notes that Commission Communication
18431/11 and the Council Decision 18480/11 (on the position to
be adopted by the EU within the ACP-EU Council of Ministers concerning
the 2014-20 MFF for the Cotonou Agreement) were originally being
treated in conjunction with the rest of the external assistance
instruments of EU budget Heading 4: but then says that, given
that the EDF negotiations are progressing at a faster pace than
the other instruments, she now wants to address this separately;
and that Member States will need to agree the final Internal Agreement
at the 28 May Development Foreign Affairs Council, to enable a
joint EU-ACP decision to be adopted at the 6-7 June annual joint
ministerial meeting.
8.16 Recalling the European Council agreement
on the 2014-20 MFF and the EDF allocation of €26.984 billion
in 2011 prices (€30.506 billion in current prices), the Minister
says that with final adjustments, including the contribution of
Croatia and adjusting Member State contributions according to
MFF allocation criteria such as GNI, the final UK contribution
key is now 14.68% or €4.478 billion (still "a slight
decrease from our current contribution of 14.82%").
8.17 The Minister then says that, at the beginning
of March, negotiations resumed on the EDF 11 Internal Agreement
(which sets out overall EDF volumes and Member State contribution
keys) and continues as follows:
"The first chapter sets out the relative share
of the financing envelope for ACP, OCT and support costs, whilst
the second chapter focuses on the implementation of financing.
It sets out the process for contributions to the 11th EDF, and
the mandate of the EDF Committee as a Member State oversight body
for the funds. This second chapter remains largely the same as
the last instrument and is uncontroversial.
"On the 19 March, the Council Presidency proposed
a revised draft Internal Agreement on which negotiations are now
based. The allocations for envelopes in Chapter 1 are proposed
as follows:
"€28.943 billion (£24.803 billion)
allocated to the ACP States (94.87% total EDF11, compared to 96.74%
EDF10);
"€0.343 billion (£0.294 billion) allocated
to OCTs (1.13% total EDF11, compared to 1.26% EDF10);
"€1.220 billion (£1.046 billion) allocated
to the Commission for support expenditure (4% total EDF11, compared
to 2% EDF10);
"The amount allocated to ACP states and OCTs
has slightly reduced, as the result of a Commission request to
increase its support costs. It has argued that EDF10 levels have
been insufficient, leading to a need to finance a disproportionate
share of these costs from the EU budget, which will not be possible
for the next financial period. "The UK has taken a strong
line on this and, along with other Member States, we are pushing
hard for the Commission to provide a detailed breakdown of proposed
increases with sufficient justification, as well as outlining
where they intend to make efficiency savings within the current
proposal. This has already led to a reduction from the Commission's
original proposal of 5% of the EDF. Negotiations are expected
to continue up to the end of April until approval of the final
package at the Development Foreign Affairs Council on 28 May.
I am happy to address any remaining questions of the Committee
and would like to reiterate that this is the date when we would
request these EDF Communications to have been cleared from scrutiny."
8.18 Finally, the Minister says:
"Following on from signing the Internal Agreement,
the EDF implementing regulation (describing the programming and
monitoring framework) and financial regulation (with rules for
Member States' contributions and budget implementation) will be
debated in the ACP Working Group. I will be happy to write to
the Committees again when these draft regulations are received
from the Commission, and as key issues develop."
Conclusion
8.19 The only figures in the draft Council
Decision are set out in the Annex to this chapter of our Report.
Before being able to clear the Commission Communication and the
Council Decision, we ask the Minister to provide the corresponding
figures that are now to be inserted in this Annex, and to indicate
if she is happy with the breakdown.
8.20 We share the Minister's opposition to
the notion that the money available for development assistance
should be reduced in order to increase the percentage spent on
Commission support costs. We would like to know what this percentage
was for the current EDF, and if there is any good reason why it
should be exceeded in EDF 11 (unless Member States can reduce
it to below that level, which would be even better).
8.21 We would also like her to provide us
with:
— a
list of all the external action and other instruments that are
currently under discussion/negotiation, and where each of them
is in the discussion/negotiation process (European Parliament
or relevant Council working group);
— a summary of the state of play on
them in the various discussions/negotiations; and
— an indication of when she expects
to be able to provide the Committee with draft texts, so that
we can consider her views on them and any questions that may arise
and, if appropriate, send them for debate prior to any further
decisions by the Council.
8.22 In the meantime, we shall retain the
documents under scrutiny.
40 See (33559) 18726/11 and (33558) 18725/11: HC 428-xlviii
(2010-12), chapter 8 (25 January 2012). For our consideration
of the relevant financial instruments, see chapters 10, 11, and
15-19 of that same Report. Back
41
See (32508) 6087/11, (32509) 6090/11, (32510) 6091/11and (32511)
6093/11: HC 428-xlii (2010-12), chapter 22 (23 November 2011). Back
42
See headnote: HC 428-xlviii (2010-12), chapter 12 (25 January
2012). Back
43
See (34446) 16841/12: HC 86-xxxiv (2012-13), chapter 9 (6 March
2013). Back
44
See HC 86-xxxiv (2012-13), chapter 2 (6 March 2013). Back
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