4 A new approach to financing EU external
action
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Joint Communication: Global Europe: A New Approach to Financing EU External Action
Council Regulation establishing common rules and procedures for the implementation of the EU's instruments for external action
Council Regulation on the Instrument for Pre-accession (IPA II)
Council Regulation establishing a Financing Instrument for development cooperation
Council Regulation establishing an Instrument for Stability
Joint Communication: 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 2014-2020 period (11th European Development Fund).
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
Council Regulation establishing a European Neighbourhood Instrument
Council Regulation establishing a Partnership Instrument for the cooperation with third countries
Council Regulation establishing a financing instrument for the promotion of democracy and human rights worldwide
Council Regulation establishing an Instrument for Nuclear Safety Cooperation
Council 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 | International Development and
Foreign and Commonwealth Office
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| Basis of consideration | Ministers' letter of 16 December 2013
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| Previous Committee Reports | HC 83-iv (2012-13), chapter 5 (5 June 2013), 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
4.1 The multiannual financial framework (MFF) sets
out the EU 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.
4.2 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 Instrument for Pre-accession Assistance (IPA), European Neighbourhood
Instrument (ENI), Development Cooperation Instrument (DCI) a new
Partnership Instrument (PI);
· the three thematic instruments —
the European Instrument for Democracy and Human Rights (EIDHR),
Instrument for Stability (IfS) and Instrument for Nuclear Safety
Cooperation (INSC);
· an EDF 11; and
· a revised EU-Greenland partnership.
4.3 Further details of all these documents are set
out in our previous Reports.
4.4 In current prices, the 2007-13 budget for "EU
as a Global Player" (Heading 4 of the budget) is €55.935
billion.
4.5 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.
4.6 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.[17]
4.7 In the first update, in June 2012, the Ministers
sought the Committee's endorsement of a "Partial General
Approach" (PGA),[18]
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.
4.8 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 & 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 to 2020 of the ACP-EU Partnership Agreement (outside Budget)
| 30.3 |
4.9 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.[19]
4.10 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).[20]
4.11 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.
4.12 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 might then arise.
4.13 Looking beyond that point, we also reminded
the Minister that we would 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.
4.14 In the meantime, we continued to retain all
the documents under scrutiny.[21]
The Minister's letter of 21 May 2013
4.15 The Minister said that there had 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 in the continuing "Trialogue"
process between the Irish Presidency, the EP Development and Foreign
Affairs Committees and the Commission — the objective being
to agree as much of the substance of the instruments as possible
before a formal first reading by the EP. However, the European
Parliament continued 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."
4.16 The Minister also noted that texts could not
be agreed until the EP produces its first reading position on
the package; and that, if agreement could not then be reached
through a Council first reading, and then respective EP and Council
second readings, a process of conciliation would be launched.
Our assessment
4.17 We 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.
Were it to succeed in doing so, this would, in our estimation,
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 asked the Government,
therefore, to use its influence within the Council to ensure that
the European Parliament's proposal was 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.
4.18 We again drew this chapter of our Report to
the attention of the International Development Committee.
4.19 We also continued to retain all the documents
under scrutiny.[22]
The Ministers' letter of 16 December 2013
4.20 The Minister for Europe (Mr David Lidington)
and the Parliamentary Under-Secretary of State at the Department
for International Development (Lynne Featherstone) begin by noting
that the European Parliament voted and agreed the overall funding
ceilings of the MFF on 19 November:
"In 2011 prices, the agreed funding ceiling
for EU External Actions under Heading Four will be €58.67
billion, which represents a slight increase on the €57 billion
ceiling under the current MFF."
4.21 The Ministers continue as follows:
"The UK was successful in maintaining the Council's
tough negotiating mandate, and achieved our key reform objectives
for the instruments, including:
· "The Development Cooperation Instrument
(DCI) will focus on the poorest and fragile states;
· "Development assistance will concentrate
on a maximum of three sectors in each country (four in fragile
states), forcing decisions on where the EU really has comparative
advantage;
· "Our text on results, monitoring
and evaluation has been included;
· "Good language on preventative measures
against fraud and corruption and the role of the Court of Auditors
and the European Anti-Fraud Office; and
· "Strict conditionality in the European
Neighbourhood Instrument: funding will be reduced or withdrawn
where partners backslide on reform."
4.22 The Ministers then say:
"Despite these wins, the UK voted against the
package in COREPER. We were the only member state to do so and
we did so for two reasons.
"First, the eventual deal on the Development
Cooperation Instrument went beyond the President's mandate on
delegated acts that FCO and DFID Ministers had approved, i.e.
accepting the use of delegated acts to amend (i) broad priorities
for the geographic, thematic and Pan-African programme and (ii)
financial allocations by region (not by country) and by thematic
programmes. The eventual deal now also includes the use of delegated
acts for specific percentages allocated in geographic programmes
for human rights, democracy, and good governance; for inclusive
and sustainable growth for human development; and for global public
goods in the thematic programme. While the delegated acts have
been framed quite broadly, the UK felt that it could set a potentially
dangerous precedent. The Presidency was successful, however,
in ensuring that the European Parliament will have no veto power
in programming.
"The provisional agreement on the other instruments
in relation to the use of delegated acts was less contentious
and is as follows.
i. "European Neighbourhood Instrument
(ENI): the Commission will be able to bring amendments through
delegated acts to the priorities and percentage financial allocations
set for the different types of programmes. The list of countries
eligible under this instrument will not be amendable by a delegated
act;
ii. "Instrument for Pre-Accession (IPA):
only the broad thematic priorities will be amendable by delegated
act. Other aspects (including the list of eligible beneficiaries)
will not be subject to delegated acts;
iii. "Partnership Instrument (PI):
only the broad thematic priorities will be amendable by delegated
act;
iv. "European Instrument for Democracy
and Human Rights (EIDHR): the objectives of each component,
but not the financial allocations, will be amendable by delegated
act. The agreement also envisages a declaration being issued
foreseeing financial allocation of up to 25% for election observation
missions (EOMs); and
v. "Instrument for Stability (IfS):
there will be no delegated acts in this instrument.
"The second reason for voting against the package
was our objection to the inclusion of terms permitting the reflow
to the instruments of money (e.g. repayments of capital or interest
on loans made under the instruments) that would otherwise be returned
to the EU Budget during the course of the instruments. The impact
of this will be somewhat mitigated by a UK led declaration, supported
by nine other Member States, which calls for limiting reflows
to capital repayments. Securing support for this declaration
was important: on our assessment, if it is ignored by the Commission,
there would be grounds for legal challenge."
4.23 Finally, the Ministers say:
"The regulations will now enter into a legislative
procedure. The European Parliament is expected to give its first
reading at its Plenary this week. The Council's first reading
will follow, at which point agreement will have been reached and
the laws therefore adopted."
Conclusion
4.24 We understand that, since the Ministers
wrote to us, a package acceptable to the Government has now been
agreed via the legislative procedure referred to above. We therefore
ask the Ministers to provide details of this package and to show
how what has been agreed regarding the use of Delegated Acts is
consistent with Article 290 TFEU (c.f. paragraph 4.17 above).
4.25 We presume that the European Parliament
has already given its first reading to this package at its Plenary
during the week in which the Ministers wrote their letter; which
would mean that the next stage is the Council's first reading.
We accordingly again remind the Ministers that we would need
to receive the 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 their views on them, in sufficient time before that point
is reached for questions arising to be considered — if necessary
via a debate.
4.26 In the meantime, we shall continue to retain
the documents under scrutiny.
4.27 We are also again drawing this chapter of
our Report to the attention of the International Development Committee.
17 See HC 428-xlviii (2010-12), chapters 8-12 and 15-19
(25 January 2012). Back
18
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
19
See HC 86-v (2012-13), chapter 6 (20 June 2012) for the Ministers'
full update and the Committee's assessment. Back
20
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
21
See HC 86-xxxiv (2012-13), chapter 2 (6 March 2013) for a fuller
exposition of the Minister's letters and the Committee's assessment. Back
22
See headnote: HC 83-iv (2012-13), chapter 5 (5 June 2013). Back
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