EN Official Journal of the European Union C 157/99

Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation of the European Parliament and of the Council on the access to Community External Assistance’

(COM(2004) 313 final — 2004/0099 (COD))

(2005/C 157/18)

On 15 August 2004, the Council decided to consult the European Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for External Relations, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 9 November 2004. The rapporteur was Mr Zufiaur Narvaiza.

At its 413th plenary session on 15 and 16 December 2004 (meeting of 15 December 2004), the European Economic and Social Committee adopted the following opinion by 145 votes in favour with five abstentions.

1. Introduction

1.1 The aim of making development aid more effective by reducing the transaction costs involved has prompted the donor community to engage in a constant process of adjustment. This is reflected in the positions of the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD), a body which brings donors together and attempts to harmonise their policies.

1.2 A clear consensus has emerged following several decades of experience that the practice of directly or indirectly tying aid to the purchase of goods or services from the donor is not only inconsistent with the objectives of promoting development, but also reduces its effectiveness. The obligation to buy goods or services from public or private enterprises in the donor country, with the obvious lack of competition, entailed higher costs and also encouraged corruption. Such practices gave rise to a series of internal market distortions and infringed EU rules on competition, mainly with regard to the principles of equal treatment and non-discrimination.

1.3 As a result, this concern has been on the donor agenda over recent years, leading to the adoption by the OECD/DAC in March 2001 of a recommendation to untie aid to the least developed countries, which has since become a benchmark in the field. The underlying purpose of the DAC recommendation is to cut aid transaction costs by 15-30 %. According to World Bank data, complete untying of aid could reduce these costs by 25 %.

1.4 In the Community context, this approach was adopted at the March 2002 General Affairs Council held in parallel with the Barcelona European Council in preparation for the Monterrey international conference on financing for development. It concluded that the European Union would implement the DAC recommendation on untying developing aid to the least developed countries, while maintaining the existing system of price preference under the EU-ACP framework. The Council, and subsequently the Parliament (Report on the Communication from the Commission to the Council and to the European Parliament on Untying: Enhancing the effectiveness of aid COM(2002) 639 final — 2002/2284 (INI) A5-0190/2003) support untying on the basis of three conditions to be met: regional and interregional integration, institutional and capacity building in the recipient countries and avoidance of distortion of competition between donor and recipient countries. To this must be added the principles of reciprocity and cooperation with international organisations.

1.5 This position has been progressively fleshed out in a number of subsequent communications from Community bodies, which are cited in the draft regulation. It still remained to establish and give more practical form to the conditions for access to the various Community external assistance instruments. The present proposal comes in response to this need.

1.6 Since the instruments under the European Development Fund (EDF) and the Community budget are still of differing legal natures, it seems logical to establish two parallel processes. The Commission's recent Communication on Building our common future: Policy challenges and budgetary means in the enlarged Union 2007-2013 (1) provides the framework for the present proposal for a regulation. It must, however, be borne in mind that the EDF budgeting procedure will have a future impact, should the fund come under the EC budget. Therefore, this present proposal for a regulation only covers the scope of the instruments within the EC budget. When the EDF is included in the EC budget, it too will be governed by the present draft regulation (2).

1.7 The proposal for a regulation on access to Community external assistance therefore appears both relevant and fully justified, on the grounds of both the commitments of the Community institutions referred to above and the criteria of subsidiarity and proportionality cited in the explanatory memorandum to the draft regulation.

2. Specific comments

Article 1 — Scope

2.1 The EESC has no objection to make. The scope of the regulation is appropriate, it being clear that certain instruments, such as budgetary support, are excluded from it. The list contained in Annex I is accurate.

Article 2 — Definition

2.2 The EESC agrees with the position set out in the regulation, that it should be interpreted on the basis of the financial regulation and the other instruments applicable to the general budget of the European Communities.

Article 3 — Rules of eligibility

2.3 The establishment of different categories according to the various instruments seems logical. The specification regarding instruments of geographical scope is also appropriate as a means of strengthening regional integration and capacity-building. In view of what is a decades-old tradition in the area of tied aid and the inertia it has produced, the EESC would emphasise the need to foster the involvement of natural and legal persons from the developing or transition countries appearing on the OECD/DAC lists. Application of the principle of non-tied aid and the opening up of public procurement must not be prejudicial to countries receiving Community assistance.

Article 4 — Rules of origin

2.4 In keeping with the previous article, the EESC welcomes all clarification concerning supply of materials and rules of origin. The EESC would highlight the need for very strict compliance with all internationally-approved labour, environmental and human rights rules and standards, as it has done previously (3). Untying aid and opening up markets must be compatible with high standards of social and environmental protection.

Article 5 — Reciprocity with third countries

2.5 The EESC fully supports the approach taken by the article in appreciating real, and not only official, reciprocity. Previous experience in this area argues in favour of this basic precaution and of granting reciprocity according to criteria of transparency, consistency and proportionality. The expression ‘to the maximum extent’ with regard to the beneficiary countries in paragraph 5 undermines this. The EESC would propose including a reference to the partnership principle, which is a basic pillar of Community development policy, as well as of the DAC, in order to underscore the importance of beneficiary country involvement.

Article 6 — Derogations from the rules of eligibility and origin

2.6 In the EESC's view, it is reasonable for a regulation of this type to contain exceptions in order to allow the necessary flexibility in application. This is justified on the grounds given in the regulation — urgency, or unavailability on the market of certain products and services — in duly substantiated cases.

Article 7 — Operations involving international institutions or third countries

2.7 A reference of this kind is made necessary by the fact that a large proportion of assistance is channelled through multilateral or other mechanisms, and that many operations are co-financed. It is therefore appropriate. Care must be taken, especially in such cases, to ensure equal treatment of between donors, and reciprocity.

Article 8 — Humanitarian aid

2.8 The particular nature of humanitarian aid, of increasing importance in the international arena, explains why a number of derogations from Community legislation were acknowledged as far back as Regulation 1257/96. The new framework partnership contract which the Humanitarian Aid Office (ECHO) enters into with financial bodies maintains this approach. This seems right, in the interests of speed and effectiveness in responding to emergencies; and it also seems appropriate that the present regulation should apply in cases where the award of procurement contracts is required.

Article 9 — Rapid Reaction Mechanism

2.9 As in the previous article, it is reasonable that such mechanisms should contain exceptional procedures and criteria. The article amended is 6(4)(b).

Article 10 — Implementation of the regulation

2.10 In pursuit of its aim, the regulation amends specific parts of the earlier regulations set out in the Annex. This specific action is justified in view of the proliferation of regulations in the 1990s and the diversity of the instruments created by them. However, the expression ‘from time to time’ does not seem right.

Article 11 — Entry into force

2.11 No comment.

3. General comments

3.1 The present proposal for a regulation on access to Community external assistance follows the established doctrine of donor organisations and the previous positions taken by the Community institutions and the Member States. Consequently, the EESC sees nothing inappropriate or prejudicial to the Union's development cooperation or external action. On the contrary, it considers that it will help enhance the effectiveness of Community cooperation and its famous ‘three Cs’: coherence — complementarity — coordination.

3.2 The EESC would however wish to emphasise certain key ideas and recommend a number of aspects where the regulation could be more rigorous and precise:

3.3 There should be greater insistence on the pro-active role which the recipient countries ought to play as key actors in development. Untying must not be detrimental to their interests, and greater involvement of these countries must be facilitated, as recommended in the above-mentioned international documents and the positions of the Community institutions themselves. The EESC would nevertheless recommend to recipient countries that they adopt and apply the principles of transparency, equality, reciprocal recognition and proportionality in their procurement procedures, as well as good governance practices which will enable them to progress politically as well as economically and socially.

3.4 In the interests of more effective and efficient application of the present regulation, aspects of the Community aid process such as supply costs, real transport costs or deployment of resources need to be analysed in depth, so as to locate more accurately any bottlenecks and inefficiencies in the system. Although both in letter and in spirit, the thrust of the regulation seems to be for simplification and improvement, the EESC is concerned that new and rigid rules may be introduced leading to more red tape and preventing aid from being supplied rapidly.

3.5 The entire regulation should be geared to complying with international socio-occupational and environmental standards, and care must be taken to ensure that nothing in it facilitates labour, social or environmental dumping practices. While respecting the active role of partners in the Community aid recipient countries, and fostering the principle of association, compliance with other labour, environmental or social standards must not be overlooked. Article 4 of the regulation should contain an explicit statement to this effect.

3.6 The dead weight of tied assistance is universally considered as one of the constraints imposed by the prevailing model of development cooperation, reducing its effectiveness and undermining its credibility by giving priority to ‘donor’ goods and services. Untying is not an end in itself; it is to be seen as a tool, a means for achieving greater impact at lower cost. From this point of view, more involvement on the part of the beneficiary countries is vital if they are to take charge of their own development by fostering the participation of a wide range of social, labour and business organisations in the process.

Brussels, 15 December 2004. The President of the European Economic and Social Committee Anne-Marie SIGMUND

(1) COM(2004) 101 final of 10.2.2004.

(2) It is currently difficult to predict when the process through which the EDF would become part of the EC budget could be completed.

(3) See the EESC Opinion on Human rights in the Workplace. Rapporteurs: Mr Putzhammer and Mr Gafo Fernandez, DOC 260 of 17/09/2001, p. 79-85. Also see the EESC Opinion on Generalised system of preferences (GSP). Rapporteur: Mr. Pezzini, OJ C 112, 30.4.2004.