EUROPEAN COMMISSION Brussels,14.6.2018 COM(2018) 461 final 2018/0244(CNS) Proposal for a COUNCIL DECISION on the Association of the Overseas Countries and Territories with the European Union including relations between the European Union on the one hand, and Greenland and the Kingdom of Denmark on the other

('Overseas Association Decision') {SWD(2018) 337 final}

{SEC(2018) 310 final}



EXPLANATORY MEMORANDUM 1.CONTEXT OF THE PROPOSAL •Reasons for and objectives of the proposal This proposal comes in the context of the 2021-2027 Multiannual Financial Framework outlined in the Communications from the Commission to the European Parliament, the European Council and the Council, the European Economic and Social Committee and the Committee of the Regions on a Modern Budget for a Union that Protects, Empowers and Defends. The Communications set the main priorities and overall budgetary framework for EU external action programmes under the heading ‘Neighbourhood and the World’. One such priority is a Council Decision on the Association of the Overseas Countries and Territories with the European Union, including relations between the European Union on the one hand, and Greenland and the Kingdom of Denmark on the other. Overseas Countries and Territories (OCTs) have been associated with the European Union (EU) since the entry into force of the Treaty of Rome. These 25 islands located in the Atlantic, Antarctic, Arctic, Caribbean, Indian Ocean and Pacific regions are not sovereign countries, but depend on four EU Member States: Denmark, France, the United Kingdom and the Netherlands. This proposal provides for a date of application as of 1 January 2021 and is presented for a Union of 27 Member States, in line with the notification by the United Kingdom of its intention to withdraw from the European Union and Euratom based on Article 50 of the Treaty on European Union received by the European Council on 29 March 2017. It therefore does not apply to the 12 OCTs linked to the United Kingdom. The association of the 13 remaining OCTs with the Union flows from the constitutional relations that these countries and territories have with the three Member States: Denmark, France, and the Netherlands. In general, OCTs have wide-ranging autonomy, covering areas such as economic affairs, employment market, public health, home affairs and customs. Defence and foreign affairs usually remain within the remit of the Member States. The OCTs are not part of the Union’s customs territory and are outside the internal market. Union legislation therefore does not apply. As nationals of European Union Member States to which their countries and territories are constitutionally linked, OCTs inhabitants hold EU citizenship. Council Decision EU/2013/755 - the Overseas Association Decision - covers relations between the OCTs (including Greenland), the Member States to which they are linked and the European Union. It outlines the special relationship that OCTs have with the EU as part of the ‘EU family’ and the specific legal framework which applies to them. The main financial source of the current Overseas Association Decision is the 11th European Development Fund (EDF), covering the programming and funding of territorial and regional programmes for OCTs other than Greenland, for which there is a specific decision funded from the EU budget. Prior to 1982 Greenland was considered part of the EU through Denmark, meaning that EU vessels could fish in Greenlandic waters. Subsequently, Greenland withdrew from the EU and became associated as an OCT through the Greenland Treaty. The Treaty emphasised the need to maintain the close relationship between the EU and Greenland, notably in terms of Greenland’s development needs and EU fishing rights. A fisheries agreement was signed on 13 March 1984. Following the mid-term review of the fourth fisheries protocol, in 2003 the European Council concluded that an arrangement should take into account the importance of fisheries and the structural development problems in Greenland. The 2006 Joint Declaration between the Union, Greenland and Denmark set out the common objectives of a new partnership. It formed the political basis for Council Decision 2006/526/EC, which defined the framework for cooperation for 2007-2013. The Council Decision 2014/137/EU now covers the period 2014 to 2020 and is in line with the subsequent 2015 Joint Declaration between the EU, Greenland and Denmark, which reaffirms the close relations between the parties. The current Greenland Decision complements the Overseas Association Decision but outlines some features specific to relations with Greenland. The mid-term review report (December 2017) on 10 external financing instruments, including the Greenland Decision and the 11th EDF, which includes the programming for the other OCTs, concluded that the external financing instruments were ‘fit for purpose’. However, both the report and the consultations conducted highlighted the need for increased flexibility, simplification, coherence and performance. This has led to a proposal for a future Neighbourhood, Development and International Cooperation Instrument, which will draw on lessons learned to help streamline the Union’s external action architecture. The Overseas Association Decision and the Greenland Decision cannot be included in the new Neighbourhood, Development and International Cooperation Instrument or in any other legal act subject to the ordinary legislative procedure. This is because they both have a specific adoption procedure: a Council Decision by unanimity, following consultation of the European Parliament. However, to streamline the number of programmes it is proposed that both Decisions be merged into a single Decision regrouping all OCTs, including Greenland. Moreover, Article 203 in the Treaty on the Functioning of the European Union (TFEU) is the legal basis for the Overseas Association Decision and for the Greenland Decision. Following the proposal to budgetise the EDF, the financing both for Greenland and for the other Overseas Countries and Territories should come from the new budget heading 6 'Neighbourhood and the World'. A new legislative act for all OCTs that covers the political and legal framework and with how cooperation is implemented will deliver: ·unity of management — having all the OCTs under the same source of financing (the EU budget) will create synergies in programming and implementation; ·consolidation of shared objectives; ·simplification and coherence in the legal framework; ·higher profile for the OCTs as a group.

As both decisions have been deemed ‘fit for purpose’, the guiding principle is to preserve what works well, while improving what hinders the partners’ ability to deliver effectively on their policies and priorities. On the other hand, the Member States concerned have firmly insisted on retaining the structure and acquis of the current Overseas Association Decision. •Consistency with existing policy provisions in the policy area The current rules and procedures of the EU-OCT association are laid down in Decision 2013/755/EU of 25 November 2013 on the association of the OCTs with the European Union. Those concerning the relations with Greenland are laid down in Decision 2014/137/EU of 14 March 2014 on relations between the European Union on the one hand, and Greenland and the Kingdom of Denmark on the other. •Consistency with other Union policies ‘Europe 2030’ provides a benchmark for consistency across all policy areas as regards energy efficiency and its contribution to energy security and to the 2030 Framework for climate and energy policy. Coherence with the Paris Agreement on Climate Change will also be ensured. The integrated European Union policy for the Arctic reflects the Union’s strategic interest in playing a key role in the Arctic region. Building on previous initiatives, it sets out the case for a Union policy that focuses on advancing international cooperation in responding to the impacts of the climate change on the Arctic’s fragile environment, and on promoting and contributing to sustainable development, particularly in the European part of the Arctic. Greenland plays an important part in the vision of this policy as part of the Kingdom of Denmark. Actions funded under this proposal should be coherent with those carried out under the Common Foreign and Security Policy and the newly proposed European Peace Facility. Humanitarian actions should not be funded under this proposal as they will continue to be funded through the Humanitarian Aid instrument. The Commission proposal for the 2021-2027 Multiannual Financial Framework set a more ambitious goal for climate mainstreaming across all EU programmes, with an overall target of 25% of EU expenditure contributing to climate objectives. Actions under this Programme are expected to contribute 20 % of the overall financial envelope of the Programme to climate objectives. The contribution of this Programme to the achievement of this overall target will be tracked through an EU climate marker system at an appropriate level of disaggregation, including the use of more precise methodologies where these are available. The Commission will continue to present the information annually in terms of commitment appropriations in the context of the annual draft budget. To support the full utilisation of the potential of the programme to contribute to climate objectives, the Commission will seek to identify relevant actions throughout the programme preparation, implementation, review and evaluation processes. 2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY •Legal basis The Overseas Association Decision is based on Part Four of the TFEU. The detailed rules and procedures of the association are laid down in Council decisions based on Article 203 of the TFEU, under which such acts are adopted through a special legislative procedure. Articles 198-204 of the TFEU apply to Greenland, subject to the specific provisions set out in the Protocol No 34 on special arrangements for Greenland annexed to the TFEU. •Subsidiarity (for non-exclusive competence) The detailed arrangements of the provisions in Part Four of the TFEU have to be made at Union level, as the purpose of the association — social and economic development and close economic ties between the OCTs and the Union as a whole — cannot be achieved via action at Member State level. Moreover, Member States would not be able to take action with regard to the OCT trade regime, as the EU alone is responsible for common commercial policy (Part Five, Title II of the TFEU). The approach towards cooperation with the OCTs contained in the Commission’s legislative proposal respects the principles of partnership, complementarity and subsidiarity. It proposes that the EU financial assistance to OCTs be based on programming documents, for which the competent OCT authorities and the Commission would be jointly responsible and which would define the cooperation strategies between the Union and the OCTs. These cooperation strategies would be based on the development objectives, strategies and priorities adopted by the competent OCT authorities. The Commission, the OCTs and their Member States would work closely together to decide on activities, with full respect for each partner’s institutional, legal and financial powers. Without prejudice to the Commission’s prerogatives, the OCT authorities would have primary responsibility for implementing the operations agreed on under the cooperation strategy. The Commission would be responsible for establishing the general rules and conditions for these programmes and projects. The partnership between the European Union, Greenland and Denmark will facilitate consultations and policy dialogue on the objectives and areas of cooperation established through this Decision. In particular, it will define the framework providing the basis for broad cooperation and dialogue in areas of mutual interest. •Proportionality

Under Articles 198 and 199 of the TFEU, the association will continue to provide a comprehensive partnership comprising an institutional framework and trade arrangements and covering many areas of cooperation, as well as the basic principles governing Union financial assistance to OCTs. Considering the specificities of the OCTs and their special relationship with the EU, a new legislative act for all OCTs that covers the political and legal framework and how cooperation should be implemented will ensure effectiveness, consolidation of shared objectives and coherence, as well as more visibility for the OCTs as a group. This proposal puts forward an approach that is flexible and tailored to the situation of each OCT. For the sake of consistency and effectiveness, and unless otherwise specified, the proposed Decision will apply the implementation, evaluation and monitoring provisions of the Neighbourhood, Development and International Cooperation Instrument (NDICI). 3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS •Retrospective evaluations/fitness checks of existing legislation Article 7 of the Greenland Decision on implementation requires a mid-term evaluation report at the latest by June 2018 to inform future work on the Decision and its actions. The 11th EDF, which includes the programming of the other OCTs, refers to the need for a performance review by the end of 2018. Therefore, the Greenland Decision (2014/137/EU) and the 11th EDF were included in an evaluation with eight other external financing instruments, all of which, based on Article 17 of the Common Implementing Regulation, required a mid-term review report by the end of 2017. The report, adopted by the Commission in December 2017, assessed whether these 10 instruments remained fit for purpose, with a view to ensuring the effective implementation of EU assistance. It consisted of an overall analysis and 10 individual Staff Working Documents, which assessed each financing instrument based on evaluations conducted by external consultants during 2016-2017. The Staff Working Document on the Greenland Decisionconcluded that its main objective — preserving the close and lasting links between the parties, while supporting sustainable development in Greenland — has been and is being achieved. The strong partnership and cooperation with the European Union has enabled Greenland to increase capacity-building, to develop stronger governance and financial systems, and to strengthen its education system — and, as a result, its workforce. The Greenland Decision was designed in such a way as to cover and better deliver on the wider political aims of the partnership with the European Union. As such, it can continue to deliver on its objectives towards 2020. The Staff Working Document on the 11th EDF concluded that it was relevant. It was an efficient mechanism overall, with proven added value and satisfactory internal coherence. Some inefficiencies in implementation procedures for the OCTs were found to have consequences on the effectiveness of cooperation. Overall, the mid-term review report concluded that the external financing instruments were fit for purpose, relevant, largely in line with EU objectives and partner countries’ needs and flexible enough to support and enable implementation of an evolving policy framework. However, the multiplicity of instruments and processes was found to be undermining the overall coherence and visibility of EU external action, with synergies and complementarities not fully exploited. To respond to the policy and operational challenges set out in the evaluations, the EU budget’s external action heading will need to increase its focus on four key cross-cutting issues: flexibility, simplification, coherence and performance. The Greenland Decision is integrated into the Overseas Association Decision, which also covers Greenland, and the financial resources for both Greenland and the other OCTs will now come from the same EU budget heading. Merging the two decisions will therefore make for simplification, flexibility and coherence, as the political relations with all OCTs and the financial resources will be brought together under a single instrument. This will underline and strengthen the OCTs’ special status and further sharpen the focus on the specificities of the OCTs as opposed to other development partners and highlight that the focus in the cooperation with OCTs is their sustainable development. •Stakeholder consultations Relations with the OCTs, including Greenland, were discussed at a thematic session on post-2020 during the 16th EU-OCT Forum in Brussels on 23 February 2018 and in a background paper on the post-2020 debate and its implications for OCTs, commissioned by the OCTs Association (OCTA). Furthermore, during the external evaluation of the external financing instruments, including the Greenland Decision and the 11th EDF, an open public consultation took place over 12 weeks, closing on 3 May 2017. The consultation also gathered preliminary inputs for future external financing instruments. The consultation took the shape of (i) an online survey, which included some guiding questions to facilitate feedback, and (ii) face-to-face meetings with key stakeholders. The following issues were highlighted during this consultation: The background paper commissioned by OCTA outlined how, in general, the OCTs consider the current Overseas Association Decision to have brought them much progress and to be a good legal tool in no need of significant modification. Future OCT-EU cooperation would gain from focusing on achieving the Sustainable Development Goals. Future relations could operate through a stand-alone, in-budget OCT instrument, with appropriate rules, allowing for simple, flexible and fluid programming. Incorporating the EDF into the EU budget would be welcomed, if certain EDF flexibility features could be maintained. Some OCTs called for increased financial support in recognition of their specific geographical features and of their belonging to the EU family. This view was supported by the Member States, which consider that the Overseas Association Decision provided the right basis for OCT-EU cooperation, even though significant changes in implementation were expected. The background paper also found that the Member States were open to a specific in-budget instrument as long as the attached provisions remained appropriate, and more specifically that the budget support modality and the multiannual principle are preserved. During the public consultation on the evaluation of the Greenland Decision there was overall agreement that the Decision had proven relevant and effective in pursuing and fulfilling its general and specific objectives and in reflecting its general principles as regards facilitating policy dialogue on global and Arctic issues. When considering financial assistance post-2020, the procedures for programming and implementing financial assistance for Greenland could usefully be compared with the EDF procedures available to other OCTs. The Greenland Decision was seen as a valuable instrument for maintaining and strengthening the strong ties between Greenland and the Union. The political aspects of the relationship had very much evolved over the years.

•External expertise The external evaluation of the Greenland Decision and of the 11th EDF was used as the basis for the mid-term review report and its accompanying Staff Working Documents. In addition, a background paper on the post-2020 debate and its implications for OCTs was commissioned by the OCTs and conducted externally. •Impact assessment In 2018 the Commission carried out an impact assessment covering all instruments under the ‘Global Europe’ heading of the 2014-2020 Multiannual Financial Framework (MFF). The impact assessment focused on the major changes proposed for external action in the 2021-2027 MFF. These changes included the streamlining of several instruments into one broad instrument and the integration of the EDF into the EU budget. The analysis concluded that the advantages of integrating the EDF in the budget would outweigh the disadvantages as long as certain pre-conditions could be met. For instance, the amount allocated to external action should not be less than the sum of the EDF and the other external instruments combined; the flexibilities of the EDF should be transferred to the extent possible; and the military operations financed under the EDF’s African Peace Facility should continue through another off-budget mechanism. The impact assessment also concluded that most instruments, aside from those with a very specific legal basis or objectives, could be merged. The instruments that could be merged included the Development Cooperation Instrument, the European Development Fund, the European Neighbourhood Instrument, the European Instrument for Democracy and Human Rights, the Instrument contributing to Stability and Peace and the Partnership Instrument. Those that should remain separate include: Humanitarian Aid; the common foreign and security policy budget; part of the Instrument for Nuclear Safety Cooperation; Overseas Countries and Territories, including Greenland; Union Civil Protection Mechanism; Instrument for Pre-accession Assistance; the EU aid volunteers scheme; support to the Turkish Cypriot community; the Emergency Aid Reserve and the European Peace Facility. As noted by the Commission and supported by feedback from partners during the public consultation, the current architecture of the external financing instruments is too complex. Streamlining a number of instruments into a broad instrument would provide an opportunity to rationalise their management and oversight systems, thereby reducing the administrative burden on EU institutions and Member States. Having a simplified oversight system would allow the relevant institutions to have a better, more comprehensive view of EU external expenditure. On 25 April 2018 the impact assessment was examined by the Regulatory Scrutiny Board and received a positive opinion with comments. •Simplification In terms of simplification, the streamlining of the legal architecture aims to reduce the administrative burden compared to the current instruments. Currently, the relations with OCTs and their financial resources (including programming and implementing rules) are covered by four instruments: (i) the Overseas Association Decision, (ii) the 11th EDF regulation, (iii) the Greenland Decision and (iv) the Common Implementing Regulation. The proposed Decision offers a single instrument which covers both the political aspects and the specific relations between the Union and the OCTs. It includes specific provisions where required guiding the relationship with Greenland, the financial resources consolidated under one heading of the EU budget and implementing rules, which will largely follow the Neighbourhood, Development and International Cooperation Instrument ensuring coherence and simplification. Where necessary, the proposed Decision will provide for the specific, simplified rules for OCTs, as in matter of programming. Furthermore, the transfer (to the extent possible) of EDF features such as the multiannual principle will provide for even simpler and more flexible procedures that were previously unavailable to Greenland. Thus, the proposed Decision will simplify the management and oversight architecture of the current set of instruments. 4.BUDGETARY IMPLICATIONS The financial resources for Greenland will come from budget heading 6 of the EU budget: ‘Neighbourhood and the World’. Given the intention to transfer some features of the EDF such as the multiannual principle to the EU budget, this will simplify the current procedures for allocating funds to Greenland. Concerning the other OCTs, their financial allocations will be moved from the EDF to the ‘Neighbourhood and the World’ budget heading. With the Commission Communications on a modern budget for a Union that protects, empowers and defends, under the ‘Neighbourhood and the World’ heading EUR 500 million is earmarked for cooperation with the OCTs. This Decision provides for a total amount of EUR 500 000 000 (in current prices) to be allocated to the association with the OCTs. Of this amount, EUR 225 000 000 is to be allocated to Greenland, EUR 225 000 000 for other OCTs, which comprise EUR 159 000 000 for territorial programmes and for EUR 66 000 000 to regional programmes. In addition an intra-regional financial envelope of EUR 15 000 000 is open to all the OCTs, including Greenland. Moreover an amount of EUR 22 000 000 for technical assistance is foreseen in accordance with the new Decision as well as a non-allocated amount of EUR 13 000 000. 5.OTHER ELEMENTS •Implementation plans and monitoring, evaluation and reporting arrangements

The implementation, the monitoring, evaluation and reporting arrangements will follow the rules set out in the Neighbourhood, Development and International Cooperation Instrument, unless otherwise specified in the Decision. •Detailed explanation of the specific provisions in the draft Decision As the Overseas Association Decision and the Greenland Decision will be merged, all areas which are similar or have synergies are merged. The structure of the current Overseas Association Decision and most provisions in it will be maintained, where needed, the specificities of the Union’s relations and cooperation with Greenland will be highlighted, such as the aim of preserving the close and lasting links between the Union, Greenland and Denmark; the acknowledgement of the geostrategic position of Greenland; policy dialogue and potential cooperation on Arctic issues; and food security. As a result, the positive achievements of the Greenland Decision will be maintained. The new Overseas Association Decision should consist of the same structure with the same political, trade and cooperation pillars as the current Decision. The main changes include: ·The proposed Decision will take into account the consequences of the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the fact that the special regime set out in Part Four of the TFEU would no longer apply to the 12 British OCTs. ·From a formal point of view, a general updating of the text and its annexes is undertaken, notably to take into account the latest changes in taxation and trade legislation. ·With the EDF being integrated into the EU budget, Annexes IV and V of the current Decision will be repealed. Moreover, Annex I on isolated OCT has been integrated in the Decision. Annex III on EIB own resources management will be repealed. ·Addition and updating of provisions reflecting the state of play of relations with Greenland under Article 3 (objectives, principles and values), Article 5 (mutual interests, complementarity and priorities), Article 13 (guiding principles for dialogue), Article 23 (new article on raw materials), Article 31 (cooperation in research and innovation), and Article 35 (public health and food security). ·Part IV on Financing Cooperation includes a dedicated financial envelope under the budget heading 6 ''Neighbourhood and the World" for the OCTs. It provides also: ·A general referral clause to the Neighbourhood, Development and International Cooperation Instrument for implementing the financial cooperation of the proposed Decision. Nevertheless, the proposed Decision will continue to provide for a specific and simplified programming exercise for the OCTs; ·The OCTs will also remain eligible under the next Multiannual Financial Framework to participate in Union programmes as a matter of principle. They will be eligible for the thematic programmes and rapid response actions of the Neighbourhood, Development and International Cooperation Instrument. ·A specific provision/facility allows the Commission to promote in an active way intra-regional projects between OCTs, ACP and non ACP States or territories, and the Union’s outermost regions. 2018/0244 (CNS) Proposal for a COUNCIL DECISION on the Association of the Overseas Countries and Territories with the European Union including relations between the European Union on the one hand, and Greenland and the Kingdom of Denmark on the other

('Overseas Association Decision') THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 203 thereof,

Having regard to the proposal from the European Commission, After transmission of the draft legislative act to the national Parliaments, Having regard to the opinion of the European Parliament, Acting in accordance with a special legislative procedure, Whereas: (1)This Decision establishes the rules and the procedure for the association of the EU with Overseas Countries and Territories (OCTs), including Greenland, and replaces Council Decision 2013/755/EU ('Overseas Association Decision') and Council Decision 2014/137/EU ('Greenland Decision'). (2)Pursuant to Article 204 of the Treaty on the Functioning of the European Union (TFEU), the provisions of Articles 198 to 203 TFEU apply to Greenland, subject to the specific provisions set out in Protocol No 34 to the TFEU on special arrangements for Greenland. In accordance with the Greenland Treaty, the relations between the Union on the one hand, and Greenland and the Kingdom of Denmark on the other are governed by Council Decision 2014/137/EU that highlights the close historical, political, economic and cultural connections between the Union and Greenland and defines a specific partnership and cooperation. Decision 2014/137/EU expires on 31 December 2020. (3)From 1 January 2021, the Union assistance to OCTs previously financed by the European Development Fund (EDF) should be financed from the general budget of the Union. (4)In order to streamline the number of External Financing Instruments and their performance, the relations with all OCTs, including Greenland, should be regrouped by replacing the Overseas Association Decision and the Greenland Decision by a single Decision. (5)The partnership pursuant to this Decision should allow for the continuation of strong relations between the Union on the one hand, and all the OCTs on the other. (6)This new Decision should highlight the specificities concerning the cooperation with Greenland, such as the objective to preserve the close and lasting links between the Union, Greenland and Denmark, the acknowledgement of the geostrategic position of Greenland, the importance of policy dialogue between Greenland and the Union, the existence of a Fisheries Partnership Agreement between the Union and Greenland and the potential cooperation on Arctic issues. It should respond to the global challenges allowing for the development of a proactive agenda and the pursuit of mutual interests, in particular, the increasing impact of climate change on human activity and the environment, maritime transport, natural resources, including raw materials and fish stocks, as well as research and innovation. (7)The TFEU and its secondary legislation do not automatically apply to the OCTs, with the exception of a number of provisions which explicitly provide for the contrary. Although not third countries, the OCTs do not form part of the single market and must comply with the obligations imposed on third countries in respect of trade, particularly rules of origin, health and plant health standards and safeguard measures. (8)The special relationship between the Union and the OCTs is moving from a development cooperation approach to a reciprocal partnership to support the OCTs’ sustainable development. Moreover, the solidarity between the Union and the OCTs should be based on their unique relationship and their belonging to the same European family. (9)The 2030 Agenda for Sustainable Development ('2030 Agenda'), adopted by the United Nations in September 2015, is the international community's response to global challenges and trends in relation to sustainable development. With the Sustainable Development Goals ('SDGs'), the Paris Agreement on Climate Change and the Addis Ababa Action Agenda – at its core, the 2030 Agenda is a transformative framework to eradicate poverty and achieve sustainable development globally. It is universal in scope, providing a comprehensive shared framework for action that applies both to the Union and to its partners. It balances the economic, social, and environmental dimensions of sustainable development, recognising the essential interlinkages between its goals and targets. The 2030 Agenda aims to leave no one behind. Its implementation will be closely coordinated with other international commitments. Actions implemented under this Decision will pay particular attention to interlinkages between SDGs and to integrated actions that can create co-benefits and meet multiple objectives in a coherent way. (10)The association between the Union and the OCTs should continue to be based on the three key pillars of enhancing competitiveness, strengthening resilience and reducing vulnerability, and promoting cooperation and integration between the OCTs and other partners and neighbouring regions. (11)Union financial assistance allocated through the partnership should bring a European perspective to the development of OCTs and should contribute to the strengthening of the close and long lasting ties with it, while strengthening the position of OCTs as advanced outposts of the Union, based on the common values and history which link the partners. (12)Given the OCTs’ geographical position, and despite the different status vis-à-vis Union law of each actor in a given geographical area, cooperation between them and their neighbours should be pursued in the interests of all sides with a particular focus on areas of common interest and the promotion of the Union’s values and standards. (13)Many OCTs are neighbours to outermost regions, referred to in Article 349 TFEU and to African, Caribbean and Pacific (ACP) States and other third territories and countries and share common needs with their neighbours from climate change adaptation and mitigation and the preservation of biodiversity to oceans-related issues, economic diversification and disaster risk reduction. (14)The Commission Communication of 24 October 2017 ‘A stronger and renewed strategic partnership with the Union's outermost regions’, the Conclusions of the 15th and 16th OCT-EU Forums and the Commission recommendations for the negotiations on a Partnership Agreement between the European Union and ACP countries call for a reinforcement of regional cooperation programmes involving OCTs and their neighbours. (15)The OCTs are host to wide terrestrial and marine biodiversity. Climate change is impacting on OCTs’ natural environment and constitutes a threat undermining their sustainable development. Actions in the fields of conservation of biodiversity and ecosystem services, disaster risk reduction, sustainable management of natural resources and promotion of sustainable energy contributes to adaptation and mitigation of climate change in the OCTs. The association should aim at ensuring the conservation, restoration and sustainable use of biological diversity and ecosystem services as a key element for the achievement of sustainable development.

(16)Reflecting the importance of tackling climate change in line with the Union's commitments to implement the Paris Agreement and the United Nations Sustainable Development Goals, this Programme will contribute to mainstream climate action in the Union's policies and to the achievement of an overall target of 25 % of the Union´s budget expenditures supporting climate objectives. Actions under this Programme are expected to contribute 20 % of the overall financial envelope of the Programme to climate objectives. Relevant actions will be identified during the Programme's implementation and reassessed in the context of its mid-term evaluation and review processes. (17)The significant role which OCTs could play in contributing to the EU’s commitments under Multilateral Environmental Agreements should be recognised in the relations between the Union and the OCTs. (18)The Union and the OCTs recognise the special importance of education and vocational training as a lever for the OCTs’ sustainable development. (19)The association between the Union and the OCTs should take into account and contribute to the preservation of the cultural diversity and identity of OCTs. (20)Trade and trade-related cooperation between the Union and the OCTs should contribute to the objective of sustainable economic development, social development and environmental protection. (21)This Decision should provide for more flexible rules of origin, including new possibilities of cumulation of origin. Cumulation should be possible not only with OCTs and Economic Partnership Agreement (EPA) countries, but under certain conditions also for products originating in countries with which the Union is applying a free trade agreement as well as for products entering the Union duty-free and quota-free under the Union’s General System of Preferences, also subject to conditions. These conditions are necessary to prevent trade circumvention and ensure the proper functioning of the cumulation arrangements. (22)The procedures for certification of OCT origin should be updated, in the interests of the operators and administrations concerned in the OCTs. Provisions on administrative cooperation between the Union and the OCTs should also be updated accordingly. (23)In addition, sufficiently detailed safeguard and surveillance provisions should be laid down. This would allow OCTs' and Union competent authorities as well as economic operators to rely on clear and transparent rules and procedures. Finally, it is a matter of common interest to ensure the proper application of the procedures and arrangements that allow the OCTs to export goods to the Union duty-free and quota-free. (24)Taking into account the aims of integration and the developments of global trade in the area of services and establishment, it is necessary to support the development of services markets and investment possibilities by improving the market access of OCTs' services and investment to the Union market. In this regard the Union should offer to OCTs the best possible treatment offered to any other trading partner through comprehensive most favoured nation clauses, while ensuring more flexible possibilities for trade relations for OCTs by limiting the treatment offered by OCTs to the Union to what has been offered to other major trading economies. (25)Cooperation in the area of financial services between the Union and OCTs should contribute to building a safer, sounder, more transparent financial system that is essential to enhance global financial stability and to underpin sustainable growth. Efforts in that area should focus on convergence with internationally agreed standards and approximation of OCTs' legislation with Union acquis on financial services. Adequate attention should be paid to strengthening administrative capacity of OCTs' authorities, including in the area of supervision. (26)Union financial assistance should focus on areas where it has most impact, having regard to its capacity to act on a global scale and to respond to global challenges such as poverty eradication, sustainable and inclusive development or the worldwide promotion of democracy, good governance, human rights and the rule of law, its long-term and predictable engagement in development assistance and its role in coordinating with its Member States. (27)In the interest of efficiency, simplification and recognition of the management capacities of the OCTs' authorities, the financial resources granted to the OCTs should be managed on the basis of a reciprocal partnership. Moreover, the authorities of the OCTs should assume the responsibility for the formulation and implementation of those policies agreed upon between the parties as cooperation strategies. The limited administrative and human resources of the OCTs should be taken into account in the programming and implementation process. (28)This Decision lays down a financial envelope for the association of the OCTs with the Union, the ‘Overseas Association Decision’, which is to constitute the prime reference amount, within the meaning of point 16 of the Interinstitutional Agreement of [ ---] between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management for the European Parliament and the Council during the annual budgetary procedure. (29)Horizontal financial rules adopted by the European Parliament and the Council on the basis of Article 322 of the Treaty on the Functioning of the European Union apply to this Decision. These rules are laid down in the Financial Regulation and determine in particular the procedure for establishing and implementing the budget through grants, procurement, prizes, indirect implementation, and provide for checks on the responsibility of financial actors. Rules adopted on the basis of Article 322 TFEU also concern the protection of the Union's budget in case of generalised deficiencies as regards the rule of law in the Member States, as the respect for the rule of law is an essential precondition for sound financial management and effective Union funding. (30)The types of financing and the methods of implementation under this Decision should be chosen on the basis of their ability to achieve the specific objectives of the actions and to deliver results, taking into account, in particular, the costs of controls, the administrative burden, and the expected risk of non-compliance. This should include consideration of the use of lump sums, flat rates and unit costs, as well as financing not linked to costs as referred to in Article 125(1) of the Financial Regulation. (31)The Union should seek the most efficient use of available resources in order to optimise the impact of its external action. That should be achieved through coherence and complementarity between the Union's external financing instruments, as well as the creation of synergies with other Union policies and Programmes. In order to maximise the impact of combined interventions to achieve a common objective, this Decision should allow for the combination of funding with other Union Programmes, as long as the contributions do not cover the same costs. (32)This Decision should make reference, where required, to [NDICI Regulation] (Neighbourhood, Development and International Cooperation Instrument) for the purpose of the implementation of the cooperation and thus ensuring coherence in the management across instruments. (33)In order to take into account developments and changes in customs and trade legislation, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of the content of Annex II, III and IV to enable the Commission to translate into the Decision these changes. Pursuant to paragraph 22 and 23 of the Inter-institutional agreement for Better Law-Making of 13 April 2016, there is a need to evaluate this Programme on the basis of information collected through specific monitoring requirements, while avoiding overregulation and administrative burdens, in particular on Member States. These requirements, where appropriate, can include measurable indicators, as a basis for evaluating the effects of the Programme on the ground. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement on Better Law-Making of 13 April 2016. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts. (34)The references to the external assistance instruments in Article 9 of Council Decision 2010/427/EU should be read as reference also to this Decision. The Commission should ensure that this Decision is implemented in accordance with the role of the EEAS as provided in that Decision. (35)In order to ensure uniform conditions for the implementation of Article 10(6) and 16(8) of Annex II, Article 2 of Annex III, Article 5 and 6 of Annex IV of this Decision, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council.

(36)In accordance with the Financial Regulation, Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council, Council Regulation (EC, Euratom) No 2988/95, Council Regulation (Euratom, EC) No 2185/96 and Council Regulation (EU) 2017/1939,the financial interests of the Union are to be protected through effective and proportionate measures, including the prevention, detection, correction and investigation of irregularities, including fraud, the recovery of funds lost, wrongly paid or incorrectly used and, where appropriate, the imposition of administrative sanctions. In particular, in accordance with Regulation (EU, Euratom) No 883/2013 and Regulation (Euratom, EC) No 2185/96, the European Anti-Fraud Office (OLAF) may carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union. In accordance with Regulation (EU) 2017/1939, the European Public Prosecutor's Office (EPPO) may investigate and prosecute fraud and other criminal offences affecting the financial interests of the Union as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council. In accordance with the Financial Regulation, any person or entity receiving Union funds is to fully cooperate in the protection of the Union’s financial interests and grant the necessary rights and access to the Commission, OLAF, the EPPO and the European Court of Auditors (ECA) and to ensure that any third parties involved in the implementation of Union funds grant equivalent rights. For this reason, agreements with third countries and territories and with international organisations, and any contract or agreement resulting from the implementation of this Decision should contain provisions expressly empowering the Commission, the Court of Auditors and OLAF to conduct audits, on-the-spot checks and inspections, according to their respective competences and ensuring that any third parties involved in the implementation of Union funding grant equivalent rights. (37)By virtue of this Decision, the Council should be able to give an innovative response to all the factors mentioned above, which is both consistent and tailored to the variety of situations, HAS ADOPTED THIS DECISION PART I GENERAL PROVISIONS OF THE ASSOCIATION OF THE OVERSEAS COUNTRIES AND TERRITORIES WITH THE UNION CHAPTER 1 GENERAL PROVISIONS Article 1

Subject matter 1.This Decision establishes an association of the overseas countries and territories (OCTs) with the Union (the ‘association’), which constitutes a partnership, based on Article 198 TFEU, to support the OCTs’ sustainable development as well as to promote the values and standards of the Union in the wider world. 2.The partners to the association are the Union, the OCTs and the Member States to which they are linked. 3.This Decision establishes, in its Article 73, the funding programme for the association with all the OCTs for the period 2021 to 2027 (the ‘Programme’). It lays down the objectives of the Programme, the forms of Union funding and the rules for providing such funding, as set out in Annex I of this Decision. Article 2

Territorial application The association shall apply to the OCTs listed in Annex II to the TFEU. Article 3

Objectives, principles and values 1.The association between the Union and the OCTs shall be based on objectives, principles and values shared by the OCTs, the Member States to which they are linked and the Union. 2.The partners recognise each other’s rights to determine their sustainable development policies and priorities, to establish their own levels of domestic environmental and labour protection, and to adopt or modify accordingly the relevant laws and policies, consistently with commitment to the internationally recognised standards and agreements. In doing so, they shall strive to ensure high levels of environmental and labour protection 3.In implementing this Decision, the partners shall be guided by the principles of transparency, subsidiarity and the need for efficiency and shall equally address the three pillars of OCTs’ sustainable development: economic development, social development and environmental protection. 4.The general objective of this Decision is to promote the economic and social development of the OCTs and to establish close economic relations between them and the Union as a whole. The association shall pursue this general objective by the enhancing the OCTs’ competitiveness, strengthening the OCTs’ resilience, reducing their economic and environmental vulnerability and the promoting of cooperation between them and other partners. 5.In accordance with Articles 3(5) and 21 of the TEU, the specific objectives of this Decision are the following:

(a)to foster and support cooperation with OCTs, (b)to support and to cooperate with Greenland in addressing its major challenges as the raising of education level and to contribute to the capacity of the administration of Greenland to formulate and implement national policies. 6.In pursuing those objectives, the association shall respect the fundamental principles of liberty, democracy, human rights and fundamental freedoms, the rule of law, good governance and sustainable development, all of which are common to the OCTs and the Member States to which they are linked. Article 4

Management of the association Management of the association shall be conducted by the Commission and the OCTs' authorities and, where necessary, by the Member State to which the OCT is linked, in accordance with their respective institutional, legal and financial competences Article 5

Mutual interests, complementarity and priorities 1.The association is the framework for policy dialogue and cooperation on issues of mutual interest. 2.Priority shall be given to cooperation in areas of mutual interest, such as: (a)the economic diversification of OCTs' economies, including their further integration in world and regional economies; in the specific case of Greenland, the need to increase the skills of its labour force. (b)the promotion of green and blue economy; (c)the sustainable management of natural resources, including the conservation and sustainable use of biodiversity and ecosystem services; (d)climate change mitigation and adaptation to the impacts of climate change; (e)the promotion of disaster risk reduction; (f)the promotion of research, innovation and scientific cooperation activities; (g)the promotion of social, cultural and economic exchanges between the OCTs, their neighbours and other partners; (h)Arctic issues. 3.Cooperation in the areas of mutual interest shall aim at the promotion of OCTs' self-reliance and of the development of OCTs’ capacities to formulate, implement and monitor strategies and policies set out in paragraph 2. Article 6

Promotion of the association 1.With an aim to strengthen their mutual relations, the Union and the OCTs shall endeavour to make the association known among their citizens, in particular by promoting the development of the links and cooperation between the authorities, academic community, civil society and businesses of OCTs on the one hand and their interlocutors within the Union on the other. 2.OCTs shall make efforts to strengthen and promote their relations with the Union as a whole. The Member States shall support these efforts.

Article 7

Regional cooperation, regional integration and cooperation with other partners 1.Subject to Article 3 of this Decision, the association shall support the OCTs in their efforts to take part in relevant international, regional and/or sub-regional cooperation initiatives as well as regional or sub-regional integration processes, in line with their own aspirations and in accordance with objectives and priorities defined by the competent OCTs' authorities. 2.To this end, the Union and the OCTs may exchange information and best practices or establish any other form of close cooperation and coordination with other partners in the context of the OCTs’ participation in regional and international organisations, where appropriate by means of international agreements. 3.The association aims at supporting cooperation between the OCTs and other partners in the areas of cooperation set out in Parts II and III of this Decision. In that respect, the objective of the association is to promote the cooperation between the OCTs and the outermost regions, referred to in Article 349 TFEU, their neighbouring ACP and non ACP states and territories. In order to achieve that objective, the Union shall improve coordination and synergies between the relevant Union programmes. The Union shall also endeavour to associate OCTs in its instances of dialogue with their neighbouring countries, whether they are ACP or non-ACP States or territories, and with the outermost regions, where appropriate. 4.The support to OCTs’ participation in relevant regional integration organisations shall focus in particular on: (a)capacity building of relevant regional organisations and institutions of which OCTs are members; (b)regional or sub-regional initiatives such as the implementation of sectoral reform policies relating to the areas of cooperation identified in Parts II and III of this Decision; (c)the awareness and knowledge of the OCTs on the impacts of regional integration processes in different areas; (d)OCTs' participation in the development of regional markets within the context of regional integration organisations; (e)cross-border investment between OCTs and their neighbours. Article 8

Participation in European Groupings of Territorial Cooperation In the application of Article 7(1), (2) and (3) of this Decision, the cooperation initiatives or other forms of cooperation shall also mean that governmental authorities, regional and sub-regional organisations, local authorities and, where appropriate, other public and private bodies or institutions (including public service providers) from an OCT may participate in a European Grouping of Territorial Cooperation (EGTC) subject to the rules and objectives of the cooperation activities of this Decision and those of Regulation (EU) No 1302/2013 and in accordance with the arrangements applicable to the Member State to which the OCT is linked. Article 9

Specific treatment 1.The association shall take into account the diversity of the OCTs in terms of economic development and capacity to fully benefit from regional cooperation and regional integration referred to in Article 7. 2.A specific treatment shall be established for isolated OCTs. 3.In order to enable isolated OCTs to overcome structural and other obstacles to their development, this specific treatment shall take account of their specific difficulties, inter alia, when determining the volume of financial assistance and the conditions attached thereto. 4.The OCT which shall be considered to be isolated is St Pierre et Miquelon. CHAPTER 2 COOPERATION

Article 10

General Approach 1.The association shall be based on a broad dialogue and consultations on issues of mutual interest between the OCTs, the Member States to which they are linked and the Commission, and, if appropriate, the European Investment Bank (EIB). 2.The OCTs shall organise, where appropriate, a dialogue and consultations with authorities and bodies such as: (a)the competent local and other public authorities; (b)the economic and social partners; (c)any other appropriate body representing civil society, such as, environmental partners, non-governmental organisations, and bodies responsible for promoting equality between men and women. Article 11 Actors of cooperation 1.Actors of cooperation in the OCTs shall include: (a)the OCTs' governmental authorities; (b)the local authorities within the OCTs; (c)public service providers and civil society organisations, such as social, business, employers’ and trade union associations, and local, national or international non-governmental organisations; (d)regional and sub-regional organisations. 2.The Member States to which the OCTs are linked shall inform the Commission of the governmental and local authorities referred to in points (a) and (b) of paragraph 1. Article 12

Responsibilities of the non-governmental actors 1.Non-governmental actors may play a role in the exchange of information and consultations concerning the cooperation, and in particular for the preparation and implementation of cooperation assistance, projects or programmes. They may receive a delegation of financial management powers for implementing such projects or programmes for the purpose of supporting local development initiatives. 2.Non-governmental actors eligible for decentralised management of projects or programmes shall be identified by agreement between the OCT authorities, the Commission and the Member State to which the OCT is linked, taking into account the subject concerned, their expertise and field of activity. The process of identification shall be conducted in each OCT as part of the broad dialogue and consultations referred to in Article 10. 3.The association aims at contributing to the efforts of the OCTs to strengthen civil society organisations, concerning in particular their creation and development, and the development of the arrangements necessary for opening their involvement in the design, implementation and evaluation of development strategies and programmes. CHAPTER 3 INSTITUTIONAL FRAMEWORK OF THE ASSOCIATION

Article 13

Guiding principles for dialogue 1.The Union, the OCTs and the Member States to which they are linked shall regularly engage in a comprehensive and political dialogue. 2.The dialogue shall be conducted in full compliance with the respective institutional, legal and financial powers of the Union, of the OCTs and of the Member States to which they are linked. The dialogue shall be conducted in a flexible manner. It may be formal or informal, at an appropriate level or format, and shall be conducted within the framework referred to in Article 14. 3.The dialogue shall enable the OCTs to take a full part in the implementation of the association. 4.The dialogue shall focus, inter alia, on specific political issues of mutual concern or of general significance for the attainment of the objectives of the association. 5.The dialogue with Greenland shall, in particular, provide the basis for broad cooperation and dialogue in areas concerning, inter alia, energy, climate change and environment, natural resources, including raw materials and fish stocks, maritime transport, research and innovation, as well as the Arctic dimension of those issues. Article 14

Instances of the association 1.The association shall establish the following instances of dialogue: (a)an OCTs-EU forum for dialogue (the ‘OCT-EU Forum’), shall meet annually to bring together OCTs' authorities, representatives of the Member States and the Commission. Members of the European Parliament, representatives of the EIB, and representatives of the outermost regions shall, where appropriate, be associated with the OCTs-EU Forum; (b)on a regular basis, the Commission, the OCTs and the Member States to which they are linked shall hold trilateral consultations. These consultations shall be organised at least three times a year on the initiative of the Commission or at the request of the OCTs and of the Member States to which they are linked; (c)in agreement between the OCTs, the Member States to which they are linked and the Commission, working parties, acting in an advisory capacity, shall be set up to follow the implementation of the association, in a form appropriate to the issues to be addressed. These working parties may be convened at the request of the Commission, of a Member State or of an OCT. They shall provide for technical discussions on matters which are of specific concern to the OCTs and the Member States to which they are linked, complementing the work that is being done in the OCTs-EU Forum and/or in the trilateral consultations. 2.The Commission shall chair the OCTs-EU Forum, the trilateral consultations and the working parties and shall provide their secretariat. PART II AREAS OF COOPERATION FOR SUSTAINABLE DEVELOPMENT IN THE FRAMEWORK OF THE ASSOCIATION CHAPTER 1 ENVIRONMENTAL ISSUES, CLIMATE CHANGE, OCEANS AND DISASTER REDUCTION Article 15

General principles In the context of the association, cooperation in the field of environment, climate change and disaster risk reduction may concern: (a)support to the OCTs' efforts to define and implement policies, strategies, action plans and measures;

(b)support to the OCTs’ efforts to integrate in regional networks and initiatives; (c)the promotion of sustainable resource use and resource efficiency, and encouragement to the decoupling of economic growth from environmental degradation; and; (d)support to the OCTs’ efforts to act as regional hubs and centres of excellence. Article 16

Sustainable management and conservation of biodiversity and ecosystem services In the context of the association, cooperation in the field of sustainable management and conservation of biodiversity, and ecosystem services may concern: (a)the promotion of the establishment and effective management of marine and terrestrial protected areas and improved management of existing protected areas; (b)the encouragement of sustainable management of marine and terrestrial resources, which contribute to protecting species, habitats and ecosystem functions outside protected areas, in particular, endangered, vulnerable and rare species; (c)the strengthening of conservation and sustainable use of marine and terrestrial biodiversity and ecosystems by: (i)addressing the wider ecosystem challenge of climate change by maintaining healthy, resilient ecosystems and fostering green and blue infrastructure and ecosystem-based approaches to climate change adaptation and mitigation which often bring multiple benefits; (ii)strengthening capacities at a local, regional and/or international scale, by promoting exchange of information, knowledge and best practice amongst all stakeholders including public authorities, landowners, private sector, researchers and civil society; (iii)strengthening existing nature conservation programmes and related efforts within and outside conservation areas; (iv)broadening the knowledge base and filling the knowledge gaps, including quantifying the value of ecosystem functions and services; (d)the encouragement and facilitation of regional cooperation in order to address issues such as invasive alien species or the impacts of climate change; (e)the development of mechanisms to lever resources including payments for ecosystem services. Article 17

Sustainable forest management In the context of the association, cooperation in the field of sustainable forest management may concern the promotion of the conservation and sustainable management of forests, including their role in the conservation of the environment from erosion and desertification control, afforestation and management of timber exports. Article 18

Integrated coastal zone management In the context of the association, cooperation in the field of integrated coastal zone management may concern: (a)the support to the efforts of the OCTs towards an effective sustainable management of marine and coastal zones in defining strategic and integrated approaches to marine and coastal zone planning and management; (b)conciliation of economic and social activities such as fisheries and aquaculture, tourism, maritime transports and agriculture with the potential of marine and coastal zones in terms of renewable energy, raw materials, whilst taking into account impacts of climate change and human activities.

Article 19

Oceans 1.In the context of the association, cooperation in the field of international ocean governance may concern: (a)the strengthening of the dialogue on issues of common interest in that field; (b)the promotion of marine knowledge and biotechnology, ocean energy, maritime surveillance, coastal zone management and an ecosystem-based management; (c)the promotion of integrated approaches at international level; (d)the active promotion of good governance, best practices and responsible fisheries management in the conservation and sustainable management of fish stocks, including fish stocks of common interest and those managed by regional fisheries management organisations; (e)dialogue and cooperation regarding the conservation of fish stocks including measures to fight illegal, unreported and unregulated fishing and effectively cooperating with and within regional fisheries management organisations. Dialogue and cooperation shall include control and inspection schemes, incentives and obligations for a more effective management of fisheries and coastal environments in the long term. 2.In the context of the association, and while ensuring consistency and complementarity with existing Fisheries Partnership Agreements, cooperation referred to in paragraph 1 (d) and (e) shall be based on the following principles: (a)commitment to responsible fisheries management and fishing practices; (b)refraining from measures or activities that are inconsistent with the principles of sustainable exploitation of fisheries resources; (c)taking into account existing or possible future bilateral Fisheries Partnership Agreements between the Union and the OCTs, the Union and the OCTs shall aim to regularly consult each other on the conservation and management of the living marine resources and to exchange information on the ongoing state of resources within the context of the relevant instances of the association provided for in Article 14. Article 20

Sustainable water management 1.In the context of the association, the Union and the OCTs may cooperate in the area of sustainable water management through water policy and institution building, protecting water resources, water supplies in rural and urban areas for domestic, industrial or agricultural purposes, storage, distribution and management of water resources and waste water management. 2.In the field of water supply and sanitation sector, particular attention shall be given to access in under-served areas to drinking water supply and sanitation services and those particularly exposed to natural disasters, which contribute directly to human resources development by improving the state of health and increasing productivity. 3.Cooperation in these areas shall be guided by the principle that the continuing need to extend the provision of basic services in water and sanitation to both urban and rural populations must be addressed in environmentally sustainable ways. Article 21

Waste management In the context of the association, cooperation in the field of waste management may concern the promotion of the use of the best environmental practice in all operations related to waste management, including the reduction of waste, recycling or other processes of recovery, e.g. energy recovery and waste disposal. Article 22

Energy In the context of the association, cooperation in the field of sustainable energy may concern: (a)sustainable energy production, distribution and access, in particular the development, promotion, use and storage of sustainable low-carbon energy from renewable energy sources;

(b)energy policies and regulations, in particular the formulation of policies and adoption of regulations guaranteeing affordable and sustainable energy tariffs; (c)energy efficiency, in particular the development and introduction of energy efficiency standards and implementation of energy efficiency measures in different sectors (industrial, commercial, public and households), as well as accompanying educational and awareness activities; (d)transport, in particular the development, promotion and use of more environmentally friendly public and private transport means such as hybrid, electric or hydrogen vehicles, carpooling and cycling schemes; (e)town planning and construction, in particular the promotion and introduction of high environment quality standards and high energy performance in urban planning and construction; and (f)tourism, in particular the promotion of energy self-sufficient (renewable energy based) and/or green tourism infrastructures. Article 23

Raw materials In the context of the association, cooperation in the field of raw materials, including rare earths may concern the promotion of a raw material sector which is sustainable in respect of all operations related to mining, and which aims at: (a)a resources efficiency; (b)the promotion of recycling; (c)the development and strengthening of environmental protection; (d)environmentally friendly handling and exploitation; (e)the strengthening of capacities, training, innovation, research and business measures for raw material exploitation and extraction on a local, regional and national level. Article 24

Climate change In the context of the association, cooperation in the field of climate change shall aim to support the initiatives of the OCTs concerning climate change mitigation and adaptation to the adverse effects of climate change, and may cover: (a)the development of evidence; identification of key risks and territorial, regional and/or international actions, plans, or measures in view of adapting to climate change or mitigating its adverse effects; (b)contributing to partners countries' efforts to pursue their commitments on climate change in line with the Paris Agreement on Climate Change (c) the integration of adaptation to climate change and its mitigation in public policies and strategies; (d)the elaboration and identification of statistical data and indicators, essential tools for policy making and implementation; and (e)the promotion of the participation of the OCTs in regional and international dialogue in order to foster cooperation, including exchange of knowledge and experience. Article 25

Disaster risk reduction

In the context of the association, cooperation in the field of disaster risk reduction may concern: (a)the development or perfection of systems, including infrastructures, for disaster prevention and preparedness, including prediction and early-warning systems, with a view to reducing the consequences of disasters; (b)the development of detailed knowledge of the exposure to the disasters and the current response capacities in the OCTs and in the regions where they are located; (c)the strengthening of existing measures of disaster prevention and preparation at local, national and regional levels; (d)the improvement of response capacities of the actors concerned, to render them more coordinated, effective and efficient; (e)the improvement of awareness-raising and information to the population regarding the exposure to risks, prevention, preparation and the response in the event of disaster, with due attention to the specific needs of persons with disabilities; (f)the strengthening of collaboration between key actors involved in civil protection; and (g)the promotion of the participation of the OCTs in regional, European and/or international instances in order to allow a more regular exchange of information and a closer cooperation among the different partners in the event of disaster. CHAPTER 2 ACCESSIBILITY Article 26

General objectives 1.In the context of the association, cooperation in the field of accessibility shall aim to: (a)ensure greater access of OCTs to global transport networks; and (b)ensure greater access of OCTs to information and communication technologies and services. 2.Cooperation in the context referred to in paragraph 1 may encompass: (a)policy and institution building; (b)transport by road, rail, air, sea or inland waterway; and (c)storage facilities in sea- and airports. Article 27

Maritime transport

1.In the context of the association, cooperation in the field of maritime transport shall aim to the development and promotion of cost-effective and efficient maritime transport services in the OCTs and may concern: (a)the promotion of efficient shipments of cargo at economically and commercially viable rates; (b)the facilitation of greater participation of the OCTs in international shipping services; (c)the encouragement of regional programmes; (d)the support to local private sector involvement in shipping activities; and (e)the development of infrastructure. 2.The Union and the OCTs shall promote shipping safety, security of crews and the prevention of pollution. 3.The Union and the OCTs shall promote maritime safety and security, protection of the marine environment, living-working conditions on board in line with the relevant international conventions and EU legislative framework. Article 28

Air transport In the context of the association, cooperation in the field of air transport may concern: (a)the reform and modernisation of the OCTs' air transport industries; (b)the promotion of the commercial viability and competitiveness of the OCTs’ air transport industries; (c)the facilitation of private sector investment and participation; and (d)the promotion of exchange of knowledge and good business practice. Article 29

Air transport safety and security In the context of the association, cooperation in the fields of air transport safety and security shall aim to support the OCTs in their efforts to comply with the relevant EU and international standards and may cover inter alia: (a)the implementation of the EU aviation safety system, and of international standards where relevant; (b)the implementation of airport security and strengthening of the capacity of civil aviation authorities to manage all aspects of operational security placed under their control; and (c)the development of infrastructures and human resources. Article 30

Information and communication technologies services

In the context of the association, cooperation in the field of information and communication technology (ICT) services shall aim to spur, in the OCTs, innovation, economic growth and improvements in daily life for both citizens and businesses, including the promotion of accessibility for persons with disabilities. Cooperation shall, in particular, be directed at enhancing OCTs’ regulatory capacity and may support the expansion of ICT networks and services through the following measures: (a)creation of a predictable regulatory environment that keeps pace with technological developments, stimulates growth and innovation and fosters competition and consumer protection; (b)dialogue on the various policy aspects regarding the promotion and monitoring of the information society; (c)exchange of information on standards and interoperability issues; (d)promotion of cooperation in the field of ICT research and in the field of ICT-based research infrastructures; (e)development of services and applications in domains of high societal impact. CHAPTER 3 RESEARCH AND INNOVATION Article 31

Cooperation in research and innovation In the context of the association, cooperation in the field of research and innovation may cover science, energy, climate change, disaster resilience, natural resources including raw materials, and sustainable use of living resources. It may also cover technology, including information and communication technologies, with the aim of contributing to the OCTs’ sustainable development and to promoting the OCTs’ role as regional hubs and centres of excellence as well as their industrial competitiveness. In particular, cooperation may concern: (a)dialogue, coordination and creation of synergies between OCTs and Union policies and initiatives with regard to science, technology and innovation; (b)policy and institutional building within OCTs and concerted actions at local, national or regional level, with a view to developing science, technology and innovation activities and their application; (c)cooperation between legal entities from the OCTs, the Union, the Member States and the third countries; (d)participation of individual OCTs researchers, research bodies and legal entities from OCTs in the European Framework Programmes for Research and Innovation and the Programme for the Competitiveness of Enterprises and small and medium size enterprises (COSME), also linking them to already supported activities of these programmes with the aim to ensure complementarity of activities; and (e)training and international mobility of OCTs researchers and exchange. CHAPTER 4 YOUTH, EDUCATION, TRAINING, HEALTH, EMPLOYMENT, SOCIAL SECURITY, FOOD SAFETY AND FOOD SECURITY

Article 32

Youth 1.The Union shall ensure that natural persons from OCTs, as defined in Article 50, can participate in initiatives of the Union concerning youth on the same basis as nationals of Member States. 2.The association aims at strengthening the ties between young people living in the OCTs and the Union, among others by promoting learning mobility of OCTs youth and by fostering mutual understanding between young people. Article 33

Education and training 1.In the context of the association, cooperation in the field of education and training may cover: (a)the provision of high quality, inclusive education at primary, secondary and higher education level and in the area of vocational education and training; and (b)the support to the OCTs in defining and implementing education and vocational training policies. 2.The Union shall ensure that natural persons from the OCTs, as defined in Article 50, can participate in education and vocational training initiatives of the Union on the same basis as nationals of Member States. 3.The Union shall that ensure that educational bodies and institutes from OCTs can take part in education related cooperation initiatives of the Union on the same basis as the educational and vocational training bodies and institutes of the Member States. Article 34

Employment and social policy 1.The Union and the OCTs shall maintain dialogue in the area of employment and social policy in order to contribute to the economic and social development of the OCTs and the promotion of decent work in the OCTs and regions where they are located. Such a dialogue shall also aim at supporting the efforts of the OCTs’ authorities to develop policies and legislation in this area. 2.The dialogue shall mainly consist of exchange of information and best practices relating to policies and legislation in the area of employment and social policy that are of mutual interest to the Union and the OCTs. In this regard, areas such as skills development, social protection, social dialogue, equal opportunities, non-discrimination and accessibility for persons with disabilities, health and safety at work and other labour standards shall be taken into consideration. Article 35

Public health, food safety and food security In the context of the association, cooperation in the field of public health and food safety shall aim, inter alia, to reduce the burden of communicable and non-communicable diseases and, in particular, to develop, strengthen, and maintain the OCTs’ capacity for epidemiological surveillance, monitoring, early warning, risk assessment and response to serious cross-border health threats through measures including: (a)actions to strengthen preparedness and response planning against health emergencies such as outbreaks of communicable diseases including through the implementation of the International Health Regulations, ensure interoperability between the health sector and other sectors, and continuous delivery of critical services and products; (b)capacity building through strengthening public health networks at regional level, facilitating exchange of information among experts and promoting adequate training, including in the field of food safety; (c)development of tools and communication platforms, including rapid alert systems, as well as e-learning programs adapted to OCTs’ particular needs; (d)actions to prevent and reduce food related outbreaks and address food safety and food security issues; (e)actions to reduce the burden of non-communicable diseases in the framework of achieving the sustainable development goals.

CHAPTER 5 CULTURE AND TOURISM Article 36

Cultural exchanges and dialogue 1.In the context of the association, cooperation in the field of cultural exchanges and dialogue may concern: (a)the self-reliant development of the OCTs, this being a process centred on people themselves and rooted in each people’s culture; (b)the support to the policies and measures adopted by the competent authorities of OCTs to enhance their human resources, increase their own creative capacities and promote their cultural identities; (c)the participation by the population in the process of development; (d)the development of a common understanding and enhanced exchange of information on cultural and audio-visual matters through dialogue. 2.Through their cooperation the Union and the OCTs shall seek to stimulate cultural exchanges between each other through: (a)cooperation between the cultural and creative sectors of all partners; (b)promotion of the circulation of cultural and creative works and operators between them; (c)policy cooperation in order to foster policy development, innovation, audience building and new business models. Article 37

Audio-visual cooperation 1.In the context of the association, cooperation in the audio-visual field aims at promoting each other’s audio-visual productions and may cover the following actions: (a)cooperation and exchange between the respective broadcasting industries; (b)encouraging exchange of audio-visual works; (c)exchange of information and views on audio-visual and broadcasting policy and regulatory framework between competent authorities; (d)encouraging visits to and participation in international events held in each other’s territory as well as in third countries. 2.Co-produced audio-visual works shall be entitled to benefit from any scheme for the promotion of local or regional cultural content set up in the Union, the OCTs and the Member States to which they are linked Article 38

Performing arts

In the context of the association, cooperation in the field of performing arts may concern: (a)the facilitation of increased contacts between practitioners of performing arts in areas such as professional exchanges and training including participation in auditions, development of networks and promotion of networking; (b)the encouragement of joint productions between producers of one or several Member States of the Union and one or several OCTs; and (c)the encouragement of the development of international theatre technology standards and the use of theatre stage signs, including through appropriate standardisation bodies. Article 39

Protection of cultural heritage and historic monuments In the context of the association, cooperation in the field of tangible and intangible cultural heritage and historic monuments aims at allowing the promotion of exchanges of expertise and best practices through: (a)the facilitation of exchanges of experts; (b)the collaboration on professional training; (c)the awareness of the local public; and (d)the counselling on the protection of the historic monuments and protected spaces and on the legislation and implementation of measures related to heritage, in particular its integration into local life. Article 40

Tourism In the context of the association, cooperation in the field of tourism may include: (a)measures aiming at defining, adapting and developing sustainable tourism policies; (b)measures and operations to develop and support sustainable tourism; (c)measures aiming at integrating sustainable tourism into the social, cultural and economic life of OCTs citizens. CHAPTER 6 FIGHT AGAINST ORGANISED CRIME Article 41

Fight against organised crime, trafficking in human beings, child sexual abuse and sexual exploitation, terrorism and corruption 1.In the context of the association, cooperation in the field of organised crime may include:

(a)the development of innovative and effective means of police and judicial cooperation, including cooperation with other stakeholders such as civil society, in the prevention of and fight against organised crime, trafficking in human beings, child sexual abuse and sexual exploitation, terrorism and corruption; and (b)support in order to increase the efficiency of OCTs’ policies to prevent and fight against organised crime, trafficking in human beings, child sexual abuse and sexual exploitation, terrorism and corruption, as well as the production, distribution and trafficking of all kinds of narcotic drugs and psychotropic substances, preventing and reducing drug use and drug-related harms, taking into account work carried out in these areas by international bodies, through inter alia: (i)training and capacity building in preventing and fighting organised crime, including trafficking in human beings, child sexual abuse and sexual exploitation, terrorism and corruption; (ii)prevention including training, education and health promotion, treatment and rehabilitation of dependent drug users, including projects for the reintegration of dependent drug users into work and social environments; (iii) development of effective enforcement measures; (iv) technical, financial and administrative assistance on the development of effective policies and legislation on trafficking in human beings, in particular awareness raising campaigns, referral mechanisms and victim protection systems, involving all relevant stakeholders and civil society; (v) technical, financial and administrative assistance relating to the prevention, treatment and reduction of harms related to drug use; (vi)technical assistance to support the development of legislation and of policy against child sexual abuse and sexual exploitation; and (vii)technical assistance and training to support capacity building and encourage compliance with international anti-corruption standards notably those set out in the UN Convention against Corruption. 2.In the context of the association, the OCTs shall cooperate with the Union as regards combatting money laundering and the financing of terrorism in accordance with Article 70. PART III TRADE AND TRADE RELATED COOPERATION TITLE I

GENERAL PROVISIONS Article 42

Specific objectives The general objectives of the trade and trade-related cooperation between the Union and the OCTs are to: (a)promote the economic and social development of the OCTs by establishing close economic relations between them and the Union as a whole; (b)stimulate the OCTs’ effective integration in the regional and world economies and the development of trade in goods and services; (c)support OCTs in creating a favourable investment climate to support social and economic development of OCTs; (d)promote the stability, integrity and transparency of the global financial system, and good governance in the tax area;

(e)support the process of diversification of OCTs economies; (f)support OCTs capacities to formulate and implement policies necessary for the development of their trade in goods and services; (g)support the OCTs’ export and trading capacities; (h)support OCTs’ efforts to align or converge their local legislation with Union legislation, where relevant; (i)provide possibilities for targeted cooperation and dialogue with the Union on trade and trade-related areas. TITLE II

ARRANGEMENTS FOR TRADE IN GOODS AND SERVICES AND ESTABLISHMENT CHAPTER 1 ARRANGEMENTS FOR TRADE IN GOODS Article 43

Free access for originating goods 1.Products originating in the OCTs shall be imported into the Union free of import duty. 2.The definition of originating products and the methods of administrative cooperation relating thereto are laid down in Annex II. Article 44

Quantitative restrictions and measures having equivalent effect 1.The Union shall not apply to imports of products originating in the OCTs any quantitative restrictions or measures having equivalent effect 2.Paragraph 1 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality or public policy, the protection of health and life of humans, animals and plants, the protection of national treasures possessing artistic, historic or archaeological value, the conservation of exhaustible natural resources or the protection of industrial and commercial property. 3.Prohibitions or restrictions referred to in the first subparagraph shall in no case constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction of trade generally. Article 45

Measures adopted by the OCTs 1.The authorities of the OCTs may retain or introduce, in respect of imports of products originating in the Union, such customs duties or quantitative restrictions as they consider necessary in view of their respective development needs. 2.For the fields covered by this Chapter, the OCTs shall grant to the Union a treatment no less favourable than the most favourable treatment applicable to any major trading economy as defined in paragraph 4. 3.Paragraph 2 shall not preclude an OCT from granting certain other OCTs or other developing countries more favourable treatment than that accorded to the Union. 4.For the purposes of this Title, a ‘major trading economy’ means any developed country, or any country accounting for a share of world merchandise exports above one per cent, or, without prejudice to paragraph 3, any group of countries acting individually, collectively or through an economic integration agreement accounting collectively for a share of world merchandise exports above 1,5 %. For this calculation, the latest available official data by the WTO on leading exporters in world merchandise trade (excluding intra-Union trade) shall be used.

5.The authorities of the OCTs shall communicate to the Commission the customs tariffs and lists of quantitative restrictions which they apply in compliance with this Decision. The authorities of the OCTs shall also communicate to the Commission any subsequent amendments to such measures as and when they are adopted. Article 46

Non-discrimination 1.The Union shall not discriminate between OCTs and the OCTs shall not discriminate between Member States. 2.In compliance with Article 64, the implementation of the specific provisions in this Decision and in particular its Article 44(2), Articles 45 and 48, 49 and 51 and Article 58 (3) shall not be deemed to constitute a discrimination. Article 47

Conditions for movements of waste 1.Movements of waste between the Member States and the OCTs shall be controlled in accordance with international law, in particular the Basel Convention, and Union law. The Union shall support the establishment and development of effective international cooperation in this area with a view to protecting the environment and public health. 2.As regards those OCTs, which, due to their constitutional status, are not Party to the Basel Convention, their relevant authorities shall expedite adoption of the necessary internal legislation and administrative regulations to implement the provisions of the Basel Convention in those OCTs. 3.The Member States to which OCTs are linked shall promote the adoption by the OCTs of the necessary internal legislation and administrative regulations to implement relevant Union law concerning waste and waste shipments. 4.An OCT and the Member State to which it is linked may apply their own procedures to export of waste from the OCT to that Member State. In such cases, the Member State to which the OCT is linked shall notify to the Commission of the applicable legislation as well as any subsequent amendments to such legislation. Article 48

Temporary withdrawal of preferences Where the Commission considers that there are sufficient grounds to question whether this Decision is being correctly implemented, the Commission shall enter into consultations with the OCT and the Member State with which the OCT has special relations, in order to ensure the proper implementation of this Decision. In case the consultations do not lead to a mutually acceptable way of implementing this Decision, the Union may temporarily withdraw preferences from the OCT concerned in accordance with Annex III. Article 49

Safeguard and surveillance measures In order to ensure the proper implementation of this Decision, the Union may take the safeguard and surveillance measures set out in Annex IV. CHAPTER 2 ARRANGEMENTS FOR TRADE IN SERVICES AND FOR ESTABLISHMENT Article 50

Definitions For the purposes of this Chapter: (a)‘natural person from an OCT’ means a natural person ordinarily resident in an OCT who is a national of a Member State or who enjoys a legal status specific to an OCT. This definition is without prejudice to the rights conferred by citizenship of the Union within the meaning of the TFEU; (b)‘legal person of an OCT’ means a legal person of the OCT set up in accordance with the laws applicable in a given OCT, and having its registered office, its central administration, or its principal place of business in the territory in this OCT. Should the legal person have only its registered office or central administration in the OCT, it shall not be considered as a legal person of the OCT, unless it engages in an activity which has a real and continuous link with the economy of that country or territory;

(c)the respective definitions laid down in the economic integration agreements referred to in Article 51 (1) shall apply to the treatment accorded between the Union and the OCTs. Article 51

Most favourable treatment 1.With respect to any measures affecting trade in services and establishment in economic activities: (a)the Union shall accord to natural and legal persons of the OCTs a treatment no less favourable than the most favourable treatment applicable to like natural and legal persons of any third country with whom the Union concludes or has concluded an economic integration agreement; (b)an OCT shall accord to the natural and legal persons of the Union a treatment no less favourable than the most favourable treatment applicable to like natural and legal persons of any major trading economy with whom it has concluded an economic integration agreement after 1 January 2014. 2.The obligations provided for in paragraph 1 of this Article shall not apply to treatment granted: (a)in the framework of an internal market or economic integration agreement requiring the parties thereto to significantly approximate their legislation with a view to removing non-discriminatory obstacles to establishment and to trade in services; (b)under measures providing for recognition of qualifications or licences. This is without prejudice to OCTs specific measures under this Article; (c)under any international agreement or arrangement relating wholly or mainly to taxation; (d)under measures benefiting from the coverage of a most-favoured nation exemption listed in accordance with Article II.2 of the GATS. 3.Nothing in this Decision shall prevent either the Union or the OCTs from adopting or maintaining measures for prudential reasons, including for: (a)the protection of investors, depositors, policy-holders or persons to whom a fiduciary duty is owed by a financial service supplier; or (b)to ensure the integrity and stability of a Party's financial system. 4.The authorities of an OCT may with a view to promoting or supporting local employment, adopt regulations to aid their natural persons and local activities. In this event, the OCT authorities shall notify the Commission of the regulations they adopt so that it may inform the Member States thereof. TITLE III

TRADE RELATED AREAS CHAPTER 1 TRADE AND SUSTAINABLE DEVELOPMENT Article 52

General approach Trade and trade-related cooperation under the association aims at contributing to sustainable development in its economic, social and environmental dimensions. In this context, the domestic environmental or labour laws and regulations of OCTs shall not be lowered in order to encourage trade or investment.

Article 53

Environmental and climate change standards in trade 1.Trade and trade-related cooperation under the association aims at enhancing the mutual supportiveness between trade and environmental policies and obligations. For those purposes, trade-related cooperation under the association shall take into account the principles of international environmental governance and multilateral environmental agreements. 2.Trade-related cooperation shall aim to support the ultimate objectives of the United Nations Framework Convention on Climate Change (UNFCCC) and the implementation of the Paris Agreement. It may also extend to cooperation on other trade related multilateral environmental agreements, such as the Convention on Trade in Endangered Species. Article 54

Labour standards in trade 1.The association aims at promoting trade in such a way that it is conducive to full and productive employment and decent work for all. 2.The internationally recognised core labour standards, as defined by the relevant International Labour Organisation Conventions, shall be respected and implemented in law and practice. Such labour standards include in particular respect for freedom of association, right to collective bargaining, abolition of all forms of forced or compulsory labour, elimination of the worst forms of child labour, the minimum age for admission to employment and non-discrimination in respect to employment. The OCTs shall ensure effective labour inspection, effective measures for occupational safety and health, consistent with relevant ILO Conventions and decent working conditions for all, with regard to, inter alia, wages and earnings, working hours and other conditions of work. Article 55

Sustainable trade in fisheries products The association may include cooperation to promote the sustainable management of fish stocks, as well as to combat illegal, unreported and unregulated fishing and related trade. Cooperation in this field should aim at: (a)facilitating cooperation between OCTs and regional fisheries management organisations, in particular with respect to the development and effective implementation of control and inspection schemes, incentives and measures for effective long term management of fisheries and marine ecosystems; (b)promoting the implementation of measures to combat illegal, unreported and unregulated fishing and related trade in OCTs. Article 56

Sustainable timber trade In the context of the association, cooperation in the field of timber trade aims at promoting trade in legally harvested timber. Such cooperation may include dialogue on regulatory measures as well as exchange of information on market-based or voluntary measures such as forest certification o