COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT pursuant to the second subparagraph of Article 251 (2) of the EC-Treaty on the Council's Common Position concerning the proposal for a Regulation on Development Cooperation with South Africa

1999/0070 (COD)

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT pursuant to the second subparagraph of Article 251 (2) of the EC-Treaty on the

Council's Common Position concerning the proposal for a Regulation on Development Cooperation with South Africa

1. History of the file

Date of transmission by the Commission of the proposal (COM(1999)124 final) to the European Parliament and to the Council - 15 March 1999.

Date of European Parliament's opinion on first reading - 5 May 1999.

Date of transmission by the Commission of the amended proposal to the Council - 14 July 1999 [COM (1999) 335 Final].

Date of the adoption of the Council's common position:- The Working Group finalised its proposal for a common position on 10 December 1999. This proposal was approved by COREPER on 16 December 1999, and it is anticipated that the common position will be formally adopted on 28.2.2000.

2. Subject of the Commission's Proposal

The Regulation on development cooperation with South Africa subject of the present proposal is intended to replace the existing Regulation (2259/96) which expires on 31 December 1999. The proposed Regulation is considered to be a crucial instrument for the Commission, in that it establishes the legal framework to enable the Commission to pursue the activities of development cooperation undertaken in the past years. It defines the aims and sectors of future intervention in the light of the evolution of the socio-political context within South Africa and of South Africa towards the outside world, in particular in relation to the recently signed Trade, Development and Cooperation Agreement (TDCA) with the European Union. The proposed Regulation establishes the source and level of financial resources for the development cooperation activities under Budget line B7-3200.

3. Comments on the Common Position

1.1. In many aspects the text of the common position is an improvement on the Commission's amended proposal. However, some significant changes, on comitology and the financial reference, raise concerns (see 3.4).

1.2. Action taken on European Parliament amendments adopted in 1st reading:

- Amendment 1 (Article 2). Not incorporated into the Amended Proposal. The text of the common position puts stress on the fight against poverty as an aim of the cooperation with South Africa (Art 1) and brings it, and other cross-cutting issues to the fore in Art 2. The issue of assistance to South Africa's neighbours is to be dealt with under Lomé Convention, and does not have its rightful place in this regulation. These positions are acceptable to the Commission.

- Amendment 2 (Article 6). The principle of recipient led programming is incorporated in text of the Amended Proposal and of the common position. The question of certain initiatives running for longer than the period of triennial programming, incorporated into the amended proposal is deleted in the text of the common position. This does not pose a problem for the Commission, the continuity of actions decided and undertaken being entirely logical and embodied in the Financing Agreements covering these actions.

- Amendment 3 (Article 4.3). Incorporated in the amended Proposal and the common position texts.

- Amendment 4 (Article 4.6). Incorporated in the amended proposal for regular exchange of information, but not for on-the-spot coordination, with the EIB. (EIB is not represented in South Africa.) Common position text follows this position

- Amendment 5 (Article 8.7). Not incorporated in the Amended Proposal nor the common position.

- Amendment 6 (Article 9). Not incorporated into the Amended Proposal. Partially included in the common position text - information to the European Parliament and to other interested parties, without specifying the South African National Assembly.

1.3. New dispositions introduced by Council:

A series of changes have been made in various parts of the text and the Commission sees many of them as simplification or improvement of the previous text:

- changes in recital n° 5, suppression of recitals n° 9 and n° 10, introduction of a new n° 9;

- drafting changes in article 1, article 2, article 4.2, article 4.6, article 4.7;

- cancellation of two paragraphs in article 7.8;

- drafting changes at article 9;

Much more far-reaching changes have been in article 6, article 8 and article 10, which cannot be accepted as they stand by the Commission (see 3.4).

1.4. Important problems for the Commission:

Comitology (Article 8)

To be seen in relation with Article 6 (Programming). The Commission approach on Comitology under this regulation is to use the Committee as much as possible as a forum to debate the effectiveness and efficiency of Member States and Commission development strategy in the context of the European Programme for Reconstruction and Development in South Africa (EPRD), of its impact on poverty alleviation and the other aims and objectives indicated at article 2, rather than entering into constant discussions on the details of proposed projects. The Commission is in agreement with greater strategic involvement for the Committee, but considers that in consequence it should deal in detail only with major projects, with a threshold being established at a significantly higher level.

Council introduces three new elements in the programming in various points of Article 6:

- presentation to the Committee of a draft Indicative Programme at the same time as the Strategy Paper;

- development of performance indicators in relation to the strategy;

- the possibility for the Committee to request revision of the indicative programme after presentation of the Annual review of the strategy and indicative programme.

Additionally, the reference to annual programming focussing on a limited number of projects has been deleted.

The greater emphasis sought by Council on the strategy and programming aspects is not counterbalanced by significant reduction in the examination of individual programmes/projects.

On these aspects the Commission has appended a unilateral declaration, noting, inter alia:, that "this proposal is at variance with the approach of the Commission, which considers that in order essentially to concentrate, as is desirable, on questions of development strategy and programme impact, the Committee should examine only the larger projects (over 25 million euro) with, if necessary, a simpler procedure for projects over 5 million euro."

Budget/Financial Reference (Article 10).

The Financial Reference amount adopted by Council reduces by 10% the amount originally proposed by the Commission (EUR875 million) for the full duration of the regulation; the reason for this reduction is the financial effort needed for the reconstruction of the West Balkan region, which was not an issue at the time of the initial proposal. This 10% reduction of the amount proposed by the Commission (EUR875 million) is of particular concern at a time when South Africa desperately needs development assistance for the implementation of its Growth, Employment and Redistribution (GEAR) programme.

The Commission understands the new budgetary constraints which led to a reduction in the existing budget allocations, and that this reduction may have to be confirmed for the whole period of the Regulation. However, it is the Commission's view that the Budget and Financial Reference should be established jointly by both arms of the Budgetary Authority. This position is supported by the decision taken by the Budgetary Authority with respect to the 2000 budget: the reduction for 2000 is minor, approximately 1,5% and therefore far from the 10 % stated in the Council common position text.

4. Conclusions/General Remarks

Commission and Council were able to incorporate a number of the amendments proposed by Parliament, those not included being of less significance in relation to the destination of the Regulation. From this, it can be gauged there is a reasonable common viewpoint on the proposed Regulation.

While the Commission considers that in many aspects the text of the common position improves the initial proposal, and further responds to some of Parliaments concerns, there remain three major points with which the Commission is unable to agree, and on which its position is maintained - programming, under Article 6, comitology under Article 8, and the financial reference amount under Article 10.

5. Commission Statements

See in annex the text of the following statements in the Minutes of the Council:

(1) Joint Council and Commission Statement re Article 4 (2) of the Regulation

(2) Joint Council and Commission Statement re Article 6 (2) of the Regulation

(3) Joint Council and Commission Statement re Article 7 of the Regulation

(4) Unilateral Commission Statement re Articles 8 and 10 of the Regulation

ANNEX

COUNCIL AND COMMISSION STATEMENT (RE ARTICLE 4(2))

As a general rule the EIB will not use interest subsidies as an instrument in this regulation.

JOINT COMMISSION AND COUNCIL STATEMENT (RE ARTICLE 6(2))

The Commission and the Council are of the opinion that a limited number of sectoral support programmes will be launched each year.

COUNCIL AND COMMISSION STATEMENT (RE ARTICLE 7)

The Member States and the Commission note that in order to increase transparency all possibilities of improving the efficiency of information exchange (including the possibilities of electronic information technology) concerning the Commission and Member States' projects in preparation and under implementation should be examined. To this end the Council invites the Commission to report, in close cooperation with experts from Member States, on appropriate steps to be taken.

UNILATERAL COMMISSION STATEMENT (RE ARTICLES 8 AND 10)

(EPRD PROGRAMME)

1. The Commission notes that to implement the EPRD Programme the Council proposes a Management Committee (Article 8(2)) which would also be given additional tasks regarding financing decisions (Article 8(5)) for all projects over euro 3 million. The tasks, role and monitoring powers given to that Committee as regards strategy, programming and follow-up (Article 6) have also been considerably strengthened. This proposal is at variance with the approach of the Commission, which considers that in order essentially to concentrate, as is desirable, on questions of development strategy and programme impact, the Committee should examine only the larger projects (over euro 25 million) with, if necessary, a simpler procedure for projects over euro 5 million.

2. The Commission notes that the Council, on the basis of the appropriations entered for South Africa in the 2000 PDB as amended following the reallocation of the appropriations in heading 4 for the construction of Kosovo, has reduced the financial reference amount for 2000-2006 (Article 10) from the amount in the financial statement attached by the Commission to its proposal. The Commission wishes to pint out that neither the estimate of medium-term requirements for the reconstruction of Kosovo nor the subsequent budgetary reallocations likely to cover those requirements are available at present. Furthermore, it considers that the EPRD financial appropriation must be determined after agreement by the three institutions (European Parliament, Council and Commission) and after agreement by the two branches of the legislative and budgetary authority.

3. Taking into account of the above point, and although it is otherwise favourable towards the other changes made by the Council to the text of its proposal, the Commission is unable to support the draft Council common position.