OPINION No 3/2018

(pursuant to Article 287(4), TFEU)

concerning the proposal for a Council Regulation on the financial regulation applicable to the 11th European Development Fund (COM(2018) 485 final)

(2018/C 396/01)

CONTENTS

Paragraph Page Introduction … 1-3 2 General observation … 4 2 Specific observations … 5-9 3 Budget support … 5-8 3 Review of individual paragraphs … 9 3 Annex — Analysis of the Commission's proposal and the Court's suggestions

THE COURT OF AUDITORS OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 287(4) thereof,

Having regard to the Internal Agreement between the Representatives of the Governments of the Member States of the European Union, meeting within the Council, on the financing of European Union aid under the multiannual financial framework for the period 2014 to 2020, in accordance with the ACP-EU Partnership Agreement, and on the allocation of financial assistance for the Overseas Countries and Territories to which Part Four of the Treaty on the Functioning of the European Union applies (1), and in particular Article 10(2) thereof,

Having regard to Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union (2),

Having regard to the Court's Opinion No 3/2013 on the proposal for a Council Regulation on the Financial Regulation applicable to the 11th European Development Fund (3),

Having regard to the Court's Opinion No 8/2015 on the proposal for a Council Regulation amending Regulation (EU) 2015/323 on the Financial Regulation applicable to the 11th European Development Fund (4),

Having regard to the Court's Opinion No 1/2017 concerning the proposal for a Regulation of the European Parliament and of the Council on the financial rules applicable to the general budget of the Union and amending Council Regulation (EC) No 2012/2002 (5),

Having regard to the Court's annual reports on the activities funded by the 8th, 9th, 10th and 11th European Development Funds (6),

Having regard to the Court's special reports Nos 9/2013 (7), 4/2013 (8) and 11/2010 (9),

Having regard to the Commission's proposal for a Council Regulation on the financial regulation applicable to the 11th European Development Fund (10),

Having regard to the Council's request for an opinion on the abovementioned proposal received at the Court of Auditors on 16 July 2018,

HAS ADOPTED THE FOLLOWING OPINION:

INTRODUCTION

1. The objective of this proposal is to align the financial rules of the EDF with those applicable to the Union budget. The current Council Regulation on the financial regulation applicable to the 11th European Development fund is structured as a set of references to the Financial Regulation applicable to the general budget of the Union (general financial regulation, GFR) excluding or supplementing provisions to cater for EDF specificities.

2. The Court made observations and recommendations on the GFR proposal in its Opinion No 1/2017.

3. Since the Financial Regulation applicable to the general budget of the Union (Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council ( 11 ) ) has been recently revised it is necessary to adapt the 11th EDF Financial Regulation.

GENERAL OBSERVATION

4. The proposed 11th EDF Financial Regulation contains several references to the GFR in its articles. This practice simplifies the EDF regulatory framework by reducing the number of legal texts to be modified in case of future updates of the GFR and secures consistency between the concerned legal texts. However, this means that the proposed regulation is not a stand-alone document and users would need to consult the GFR in order to apply the EDF's provisions.

SPECIFIC OBSERVATIONS

Budget support

5. Article 236 of GFR establishes the terms and conditions for the use of budget support to be provided to third countries. We understand that the proposed 11th EDF Financial Regulation does not add any new features that are specific to the ACP States or OCTs. Therefore, we consider that the reference to the GFR included in the first paragraph of Article 36 of the proposal is still fully justified.

6. However, paragraphs 2 to 7 of Article 36 paraphrases existing terms and conditions laid down in Article 236 of GFR and also adds new ones. For example, Article 36 of the proposed 11th EDF Financial Regulation stipulates that budget support shall aim at strengthening contractual partnership between Union and ACP States or OCTs in order to support, inter alia, sustainable and inclusive economic growth, and to eradicate poverty. These objectives are not included in the GFR. We consider that these inconsistencies increase the possibility of confusion or misunderstandings in its interpretation and application.

7. Further, the scope of the discretionary power given to the Commission in the final paragraph of Article 36 as regards the provision of budget support to the OCTs is unclear.

8. In its Opinion No 3/2013 on the Commission's proposal of the previous 11th EDF Financial Regulation, the Court has already recommended that the Council examine the article dealing with budget support, which is similar to the one included in the current proposal.

Review of individual paragraphs

9. The results of the Court's detailed analysis and the corresponding suggestions for modifications are presented in the Annex .

This Opinion was adopted by Chamber III headed by Mrs Bettina JAKOBSEN, Member of the Court of Auditors, in Luxembourg at its meeting of 25 September 2018. For the Court of Auditors Klaus-Heiner LEHNE President

(1) OJ L 210, 6.8.2013, p. 1.

(2) OJ L 193, 30.7.2018, p. 1.

(3) OJ C 370, 17.12.2013, p. 1.

(4) OJ C 5, 8.1.2016, p. 6.

(5) OJ C 91, 23.3.2017, p. 1.

(6) OJ C 322, 28.9.2017, p. 281; OJ C 375, 13.10.2016, p. 287; OJ C 373, 10.11.2015, p. 289.

(7) ‘EU support for governance in the Democratic Republic of the Congo’ (http://eca.europa.eu).

(8) ‘EU Cooperation with Egypt in the Field of Governance’ (http://eca.europa.eu).

(9) ‘The Commission's management of General Budget Support in ACP, Latin American and Asian Countries’ (http://eca.europa.eu).

(10) COM(2018) 485 final.

(11) OJ L 298, 26.10.2012, p. 1.