5 A new approach to financing EU
external action
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Joint Communication: A New Approach to Financing EU External Action
Draft Regulation establishing common rules and procedures for the implementation of the EU's instruments for external action
Draft Regulation on the Instrument for Pre-accession Assistance (IPA II)
Draft Regulation establishing a Financing Instrument for Development Cooperation
Draft Regulation establishing an Instrument for Stability
Commission Communication on the preparation of the multiannual financial framework regarding the financing of EU cooperation for African, Caribbean and Pacific States and Overseas Countries and Territories for the 2014-20 period (11th European Development Fund)
Draft Regulation establishing a European Neighbourhood Instrument
Draft Regulation establishing a Partnership Instrument for cooperation with third countries
Draft Regulation establishing a financing instrument for the promotion of democracy and human rights worldwide
Draft Regulation establishing an Instrument for Nuclear Safety Cooperation
Draft Decision on relations between the European Union, and Greenland and the Kingdom of Denmark
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| Legal base | (a) —
(b-e) Articles 209(1) and 212(2) TFEU; QMV; ordinary legislative procedure
(f) —
(g) Articles 209(2) and 218(9) TFEU; QMV; European Parliament to be informed
(h) Articles 209(1) and 212(2) TFEU; QMV; ordinary legislative procedure
(i) Articles 207 (2), 209(1) and 212(2) TFEU; QMV; ordinary legislative procedure
(j) Articles 209(1) and 212(2) TFEU; QMV; ordinary legislative procedure
(k) Article 203 of the Treaty Establishing the European Atomic Energy Community (the "Euratom Treaty"); unanimity; ordinary legislative procedure
(l) Article 203 TEU; unanimity
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| Departments | Foreign and Commonwealth Office and International Development
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| Basis of consideration | Minister's letter of 21 May 2013
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| Previous Committee Reports | HC 86-xxxiv (2012-13), chapter 2 (6 March 2013), HC 86-v (2012-13), chapter 6 (20 June 2012) and HC 428-xlviii (2010-12), chapters 8-12 and 15-19 (25 January 2012)
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| Discussion in Council | 25 June 2012 General Affairs Council
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| Committee's assessment | Legally and politically important
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| Committee's decision | Not cleared, but waiver granted under paragraph (3)(b) of the Scrutiny Reserve Resolution and further information requested (reported to the House on 20 June 2012); further information now provided and requested
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Background
5.1 In preparation for the 2007-13 financial perspective,
the Commission, Council and the European Parliament reduced a
plethora of different financial regulations, or Instruments, to
eight:
- The Development Co-operation Instrument (DCI)
- The European Neighbourhood and Partnership Instrument
(ENPI)
- The Instrument for Pre-accession Assistance (IPA)
- The Instrument for Stability (IfS)
- The European Instrument for Democracy and Human
Rights (EIDHR)
- The Instrument for Cooperation with Industrialised
Countries (ICI)
- The Nuclear Safety Co-operation Instrument (NSCI)
- The Humanitarian Aid Regulation
5.2 The multiannual financial framework (MFF)
sets out the budget's spending priorities. It lays down maximum
amounts ("ceilings") for each broad category of expenditure
("headings") for a clearly determined period of time
(of several years). It aims to ensure EU expenditure develops
in an orderly manner, within the limit of the EU's own resources.
5.3 The proposed Council Regulation contains
proposals for a set of simplified and harmonised implementing
rules and procedures applicable to the four main geographic instruments
— the IPA, the ENI, the DCI and the new PI; and to the three
thematic instruments — the IfS, the EIDHR and the INSC.
5.4 Further details of all these documents are
set out in our previous Reports.
5.5 In current prices, the 2007-13 budget for
"EU as a Global Player" (Heading 4 of the budget) is
€55.935 billion.
5.6 When the Committee considered this package
in January 2012, the Committee endorsed the Ministers' (Mr David
Lidington and, then, Mr Stephen O'Brien) statement that particular
attention would be paid to:
— reining
in the Commission's proposals for substantial increases in most
cases;
— ensuring sharper focus, better coordination
and better evaluation; and
— effective management, with appropriate
Member State involvement.
5.7 The Committee also noted that the Government
wanted, overall, to see a proportionately larger share for Heading
4 of an EU budget that, at most, increased by no more than inflation,
but reductions nonetheless in the Commission's proposed individual
2014-20 commitment appropriations. As this was but the beginning
of a process of discussion and negotiation, the documents were
retained under scrutiny, and the Ministers asked to keep the Committee
informed of developments.[9]
5.8 In the first update, in June 2012, the Ministers
(Mr David Lidington and, then, Mr Stephen O'Brien) sought the
Committee's endorsement of a "Partial General Approach"
(PGA),[10] in order to
give the Presidency a mandate to enter into informal discussions
with the European Parliament (EP) and the Commission on the basis
of the draft texts thus far.
5.9 The Ministers also provided the following
table illustrating the Commission's proposals for 2014-20 in 2011
prices:
| Proposed Regulations
| € billions
|
| Development Cooperation Instrument (DCI)
| 20.6 |
| Pre-accession Instrument (IPA)
| 12.5 |
| European Neighbourhood Instrument (ENI)
| 16.1 |
| Partnership Instrument (PI)
| 1.0 |
| European Instrument for Democracy and Human Rights (EIDHR)
| 2.5 |
| Instrument for Stability (IfS)
| 1.4 |
| Instrument for Nuclear Safety Cooperation
| 0.6 |
| Instrument for Greenland
| 0.2 |
| Multiannual financial framework for the period 2014-20 of the ACP-EU Partnership Agreement (outside Budget)
| 30.3 |
5.10 The Committee accepted that the proposed
PGA, which covered the overall objectives of Heading 4 and of
the individual components, and the methodology for implementing
them, would not prejudice discussions on the size of the overall
budget or of the appropriations for those individual components;
granted a waiver; but made it clear that all the documents nonetheless
remained under scrutiny.[11]
5.11 Then, in February and March 2013, the Parliamentary
Under-Secretary of State at the Department for International Development
(Lynne Featherstone) wrote to say that that the MFF negotiations
had yielded what she described as a good outcome for development:
Heading 4 was allocated €58.67 billion (£50.28 billion),
an increase slightly above a real freeze, while the European Development
Fund (EDF) was kept off budget, with an allocation of €26.984
billion (£23.125 billion). [12]
5.12 The Minister noted that the MFF now had
to be agreed as a package by the European Parliament, and that
MEPs continued to look for greater influence over the next budget
programming cycle and were seeking to redefine areas which came
under delegated acts (issues which would be subject to agreement
by the European Parliament as well as the Council) as opposed
to implementing acts (issues subject to agreement by Member States
in committee): the Commission, Council and the EP would need to
reach agreement on this before there could be agreement on the
legislation for the Heading 4 external instruments. She would
continue to push for a division that protected ODA spending levels,
particularly through the Development Cooperation Instrument (DCI)
and the Humanitarian Aid Instrument (HAI), when the Commission
came forward with proposals on the division of the Heading 4 budget
between the external financial instruments.
5.13 We asked the Minister to write to us when
agreement on the MFF was in prospect, with details of and her
views on the prospective outcome, and in good time for us to pursue
with her any questions that may then arise.
5.14 Looking beyond that point, we also reminded
the Minister that we shall need to receive any revised versions
of the texts of the individual financial instruments, and of the
simplified and harmonised implementing rules and procedures applicable
to those instruments, 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.
5.15 In the meantime, we continued to retain
all the documents under scrutiny.[13]
The Minister's letter of 21 May 2013
5.16 The Minister (Lynne Featherstone) says that
there is now a continuing "Trialogue" process between
the Irish Presidency, the Development and Foreign Affairs Committees
of the European Parliament, and the Commission, covering all the
financial instruments outlined above — the objective being
to agree as much of the substance of the instruments as possible
before a formal first reading by the European Parliament.
5.17 She describes the present situation as follows:
"There has been good progress in informally
agreeing large parts of the substance of several of the instruments,
including the DCI, ENI, IPA, EIDHR, and the Common Implementing
Regulation. However, the European Parliament continues to insist
that it should have a right of veto over individual EU country
and regional aid programmes through the use of 'Delegated Acts'.
The UK and all other Member State believe that there are serious
legal problems with this, that it goes beyond the powers of the
European Parliament as set out in the Lisbon Treaty, and that
it would also reduce the effectiveness and responsiveness of EU
aid programmes. There have been informal attempts to find a compromise
on this issue but, as yet, the European Parliament has been unwilling
to discuss compromises."
5.18 She then notes that texts cannot be agreed
until the European Parliament produces its first reading position
on the package; and that, if agreement cannot then be reached
through a Council first reading, and then respective European
Parliament and Council second readings, a process of conciliation
would be launched.
5.19 With regard to the MFF negotiations, the
Minister says:
"There are on-going negotiations on this between
the Presidency, European Parliament and Commission. It is possible
that the European Parliament will vote on the MFF in July and
thus produce its first reading, in which case agreement could
be reached by the end of 2013. However, the vote may well slip
until September in which case it is likely that negotiations will
continue into 2014."
Conclusion
5.20 It would seem that the logjam is unlikely
to be broken in the near future. We would in any event like a
further update in time for our last meeting before the summer
recess (i.e., by mid-July): or — bearing in mind paragraph
5.19 above — sooner should the present situation change
significantly before then.
5.21 We have modified our assessment of these
proposals to "legally" as well as "politically
important", in view of the European Parliament's insistence
on implementing regional and national aid programmes through delegated
acts, which gives it, along with the Council, a right of veto.
If it succeeds in doing so, we think this would breach the explicit
limitations to Article 290 TFEU that delegated acts should only
be used "to supplement or amend non-essential elements of
the legislative act" with the consequence that essential
elements, such as aid programmes in this instance, "shall
be reserved for the legislative act and accordingly shall not
be the subject of a delegation of power". We ask the Government,
therefore, to use its influence within the Council to ensure that
the European Parliament's proposal is not accepted. Should it
be, it would not only be illegal, but also set a worrying precedent
for the use of delegated acts in the future.
5.22 We again draw this chapter of our Report
to the attention of the International Development Committee.
5.23 We also continue to retain all the documents
under scrutiny.
9 See HC 428-xlviii (2010-12), chapters 8-12 and 15-19
(25 January 2012). Back
10
A PGA is defined as "a Council version of each regulation
with any unresolved issues in square brackets and no inclusion
of financial amounts". Back
11
See HC 86-v (2012-13), chapter 6 (20 June 2012) for the Minister's
full update and the Committee's assessment. Back
12
The "package" that the Committee considered also
contained a separate Commission Communication and Council Decision
on 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). These were cleared from
scrutiny at our meeting on 21 May: see (33530) 18431/11 and (33533)
18480/1: HC 83-iii (2013-14), chapter 20 (21 May 2013). Back
13
See HC 86-xxxiv (2012-13), chapter 2 (6 March 2013) for a fuller
exposition of the Minister's letters and the Committee' Back
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