[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 12.4.2005

SEC(2005) 453

COMMISSION STAFF WORKING DOCUMENT

Annex to the : Communication from the Commission Accelerating progress towards achieving the Millennium Development Goals FINANCING FOR DEVELOPMENT AND AID EFFECTIVENESS EU follow – up to the Barcelona Commitments and operationalisation of the Monterrey consensus {COM(2005)133 final}

COMMISSION STAFF WORKING PAPER

ANNEX: EU follow – up to the Barcelona Commitments and operationalisation of the Monterrey consensus Summary of replies to a survey with Member States (January 2005)

1. Commitment I: Increase the volume of EU Official Development Assistance to 0.39% of GNI by 2006, and eventually to 0.7% of GNI 3

2. Commitment II: Coordination and Harmonisation 4

3. Commitment III: Untying 4

4. Commitment IV: Trade Related Assistance 5

5. Commitment V: Global Public Goods. 5

6. Commitment VI: Innovative Sources of Financing 6

7. Commitment VII: Reform of the International Financial System 6

8. Commitment VIII: Debt relief 6

9. ANNEXES 6

Executive Summary - The 2005 Monterrey Monitoring Survey

1. COMMITMENT I: INCREASE THE VOLUME OF EU OFFICIAL DEVELOPMENT ASSISTANCE TO 0.39% OF GNI BY 2006, AND EVENTUALLY TO 0.7% OF GNI BY 2015

The latest ODA projections provided by Member States[1] show that the EU is largely on track to deliver on most of the commitments made in 2002, including those to be honoured by 2006. In this context, the current declining trend of Italian ODA from an already low level remains of particular concern.

In 2003 the EU reached an average of 0.34% of ODA/GNI - above the average of OECD/DAC countries (excluding Norway and Switzerland).

- -If Member States' commitments are confirmed over time, the EU would collectively reach an ODA of 0.42% of GNI in 2006.

- -Between 2002 and 2003, ODA volume rose in 12 of the 25 Member States (additional €4.5 billion).

- -The new Member States increased their collective contribution by 53%.

A majority of Member States is either in favour or took no position on the idea of defining a new interim EU target for additional ODA increases by 2010.

2. COMMITMENT II: COORDINATION AND HARMONISATION

The 2004 Barcelona follow-up report contained substantial proposals for concrete action building on existing political commitments. It led to the establishment of an Ad Hoc Working Party on Harmonisation (AHWPH), which came up with a list of eight recommendations which were endorsed by the Council of Ministers (GAERC) of November 2004. The EU reinforced its commitments at the second High Level Forum on Aid Effectiveness in Paris, in March 2005. In addition to the official declaration of this meeting, agreed by all participating donor and beneficiary countries, the EU committed itself unilaterally to concrete further targets[2].

The Survey of late 2004 shows that the main challenge ahead lies in effective implementation of the comprehensive framework, to ensure the qualitative jump and concrete steps forward in the complementarity of aid delivery.

Furthermore, Survey responses overall revealed that the concept of coordination of policies and harmonisation of procedures is not yet well rooted in the Headquarters administrations of EU Member States. There seems to be scope for improved information flow between Member States capitals and their field offices, to bolster the EU’s joint coordination efforts.

3. COMMITMENT III: UNTYING

Untying aid was recognised in Monterrey as one significant means to improve aid effectiveness, and as agreed in Barcelona the EU has made significant progress on obtaining “better value for money” from its ODA. Member States have untied their aid to Least Developed Countries (LDCs) in line with the DAC recommendation, and a majority of Member States are progressing towards further untying. Moreover, single market and competition rules also apply to untying procurement between the EU-25 and to granting mutual access.

Based on the Survey, a majority of Member States seems to be in favour of untying aid further. In practice, however, few Member States have taken further concrete steps forward in this regard.

4. COMMITMENT IV: TRADE RELATED ASSISTANCE

The EU has stepped up commitments for TRA. Accounting for 50% of total TRA, the EU is by far the largest contributor worldwide, and the main donor to key multi-donor TRA initiatives such as the Integrated Framework for LDCs and the Doha Global Trust Fund, where it also accounts for more than 50% of the pledges. In addition, Member States are making efforts to integrate trade more systematically in their development cooperation programmes.

The replies to the Survey on trade-related assistance (TRA) are inconclusive. The broad picture seems to be that coherent guidelines acceptable for all Member States and the EC programmes still need to be developed. The EU Informal Trade and Development Experts Group could play a key role in triggering progress towards a coordinated TRA approach at EU level.

5. COMMITMENT V: GLOBAL PUBLIC GOODS.

Two EU Member States (France and Sweden), in collaboration with the UNDP, launched the informal International Task Force on GPGs in April 2003; several EU Member States participate in the work of the TF a members of the Group of Friends.

Taking into account the preliminary nature of the outcomes of the International Task Force on Global or International Public Goods, the Survey suggests a need for a new definition of IPGs that broadens the scope of the work to include regional and transnational public goods.

6. COMMITMENT VI: INNOVATIVE SOURCES OF FINANCING

Perhaps the two most prominent innovative finance mechanisms proposed have been: (i) the International Finance Facility (IFF) ( a front-loaded pledge system for aid increases), and (ii) a range of proposals for international taxation and levies.

A handful of Member States are already involved in studies, analysis and development of options on various types of innovative financing mechanisms and/or are considering involvement from 2005. The Survey also produced a mixed picture with regard to current or possible engagement in Public Private Partnerships (PPPs).

7. COMMITMENT VII: REFORM OF THE INTERNATIONAL FINANCIAL SYSTEM

By presenting a single European position as often as possible, the Union would increase its visibility and influence in the IFIs. There has been some modest progress over the past few years pertaining to enhanced EU coordination, but the EU commitment of 2002 is considered vague, making effective monitoring difficult. Concerning the specific question of “enhancing the voice of developing and transition countries ” in the IMF and World Bank, only limited progress has been achieved.

In reply to the Survey, a majority of Member States expressed general satisfaction with the improved informal EU coordination. Several Member States expressed the wish to go further (e.g. improved information sharing, more harmonised approach, etc.). Some Member States would be in favour of extending this kind of collaboration to the regional development banks where collective EU shareholding is significant.

8. COMMITMENT VIII: DEBT RELIEF

All EU Member States had made the necessary provisions to ensure their participation in the HIPC initiative by May 2003. Overall the ten new Member States are fulfilling their financial commitments, some contributing already to the HIPC Trust Fund.

A majority of Member States said “No” to the idea of achieving the minimum target of 0.7% ODA/GNI if the figures excluded debt relief. Member States have already increased the grant elements in their ODA to debt-distressed countries, and the Survey showed a generally positive attitude among donors to the prospects of increasing the grant component of their ODA flows .

The Survey showed that most Member States agree or are not opposed to providing additional debt relief to HIPC-graduated countries who remain or return to debt distress situations. But they have diverging views on how to deliver this. Most Member States agree that the prospects for several countries, mostly in post-conflict situations, are of concern, as they could remain excluded from the HIPC Initiative – but again, they have no coherent view on possible solutions.

Introduction

- Background

The Monterrey Consensus, adopted by the International Conference on Financing for Development (FfD) in Mexico, 18-22 March 2002, reflected a number of critical commitments “to address the challenges of financing for development around the world, particularly in developing countries.”

The FfD Conference emphasised that trade, finance and development are closely interrelated and underlined the shared responsibility of donors and recipient countries in achieving the Millennium Development Goals (MDGs). It addressed the two parallel issues of ensuring the necessary “means “(i.e. financing) and the most effective “ways” (i.e. aid effectiveness) of achieving the Millennium Development Goals (MDG)[3]. These are two mutually reinforcing objectives, and progress should be made on both.

The European Union, collectively representing more than 50% of worldwide Official Development Assistance (ODA)[4], is a key partner in the FfD process. At Monterrey the EU contributed significantly to the overall positive result of the Conference, through the so-called “Barcelona commitments”[5]– composed of:

- Commitments on ODA volume and sources (Nos 1, 5, 6, 8) – increased ODA volumes, innovative sources of financing, initiatives concerning GPG and debt relief for Heavily Indebted Poor Countries (HIPC);

- Commitments on aid effectiveness (Nos 2, 3, 4, 7) – closer coordination of policies, harmonisation of procedures, untying of aid, trade-related assistance (TRA), reform of the international financial system.

In September 2005, five years after the Millennium Declaration, the UN High Level Event (HLE) will take stock of progress towards meeting the MDGs by 2015. This event will include a separate meeting on financing for development and will be prepared by the UN High-level Dialogue on Financing for Development . The EU is aware that the international community has high expectations of a substantial European contribution to the HLE, and is committed to stimulating the international debate.

To this end, the European Council of December 2004 mandated the Commission to present to the Council “ concrete proposals on setting new and adequate ODA targets for the period 2009-2010, while taking into account the position of the new Member States ”. These proposals must be based on consultations with individual Member States. The EU leaders also decided to “ explore innovative ways of financing” and asked the Commission to submit relevant proposals with a view to the 2005 HLE. The annual report on the implementation of the Barcelona commitments is a useful tool to provide a factual basis for such proposals.

The Council of Ministers meetings in spring 2005 and the European Council in June will provide the opportunity to prepare the EU’s contribution to the stocktaking event. Among the key chall enges are: (i) a persistent financing gap , (ii) the effective use of ODA and (iii) the continuing, unsustainable debt burdens of many poor countries.

- Monitoring – mandate, methodology and structure

The Commission is mandated to report annually on the degree of implementation of EU commitments[6] , and to propose corrective measures wherever progress is insufficient. The Commission monitors progress in implementing the “Barcelona commitments” via annual questionnaires to the Member States (MS ) . This provides a good opportunity for collective benchmarking and ensures that action taken by the Union is transparent .

The first monitoring report of 2003 fed into the preparations for the first UN High Level Dialogue on FfD in October 2003[7], while the 2004 report[8] focused on the coordination of policies and harmonisation of procedures. Its recommendations triggered the EU report “Advancing coordination, harmonisation and alignment: The contribution of the EU”, endorsed by the Council in November 2004[9]. This EU Report has in turn become an essential input into the international harmonisation and alignment debate at the OECD/DAC High Level Forum II (HLF II) in Paris in March 2005.

This year’s Survey was based on questions relating to developments on the implementation of the eight EU commitments of 2002, at the international and EU level. It provides a detailed description of the state of play on each individual commitment, as expressed in the replies to the questionnaire.

Overall, the Commission is satisfied with the response to the questionnaires[10]. Some Member States provided more detailed replies, while others preferred not to take a position on all questions. The contribution of the new Member States is particularly impressive and demonstrates their efforts to take on the acquis communautaire in the area of development policy and with regard to the EU’s contribution to the FfD. All these contributions provide a solid basis for drafting the proposals to be incorporated in the Commission Communication.

The report is divided into eight chapters on each of the Barcelona commitments, including: (i) background, (ii) a description of the EU state of play on the given commitment, and (iii) the results of the survey.

The compilation of the answers given by Member States is annexed to this Staff Working Paper.

In addition, some matrices allow the specific answers, comments and/or suggestions of individual Member States to be compared on a few selected topics.

COMMITMENT I: INCREASE THE VOLUME OF EU OFFICIAL DEVELOPMENT ASSISTANCE TO 0.39% OF GNI BY 2006, AND EVENTUALLY TO 0.7% OF GNI

Commitment : “In pursuance of the undertaking to examine the means and timeframe that will allow each of the Member States to reach the UN goal of 0.7% ODA/GNI, those Member States that have not yet reached the 0.7% target commit themselves – as a first significant step – individually to increase their ODA volume in the next four years within their respective budget allocation processes, whilst the other Member States renew their efforts to remain at or above the target of 0.7% ODA, so that collectively an EU average of 0.39% is reached by 2006. In view of this goal, all the EU Member States will in any case strive to reach, within their respective budget allocation processes, at least 0.33% ODA/GNI by 2006.”

1.1. Background

The UN Millennium Project report (J. Sachs) calls for each donor to reach 0.7% by 2015, and calculates that the following global ODA increases are required to meet the MDGs:

- 0.44% by 2006 (probable EU collective average: 0.42%), and

- 0.54% by 2015.

As stated in the Commitment, the Member States promised in Barcelona to generate sufficient financial resources to achieve the MDGs and, in this context, to reach the UN goal of 0.7% ODA/GNI in 2015. The Member States that had not yet reached the 0.7% target committed themselves, as a first significant step, to increasing their ODA to at least 0.33% of GNI by 2006. This individual commitment was coupled with a collective obligation to reach an EU average of 0.39% ODA/GNI by 2006.

1.2. EU performance

The latest indications provided by Member States show that EU is largely on track to deliver on most of the commitments made in 2002, including those to be honoured by 2006 .

In terms of ODA/GNI ratio , in 2003 the EU reached an average of 0.34% ODA/GNI. This is above the average for OECD/DAC countries (excluding Norway and Switzerland). Ten Member States have either achieved or pledged to achieve the commitment of 0.7% ODA/GNI. The 2003 ODA decrease recorded in Austria, Denmark, Ireland, Spain, Sweden and Italy is partly a consequence of the exceptional 2002 ODA increases due to special debt relief efforts.

Diagram 1: EU ODA levels by Member State in 2003

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Data source: OECD/DAC Annual report 2004, statistical annexes.

Diagram 2: ODA/GNI contributions in 2003: The EU compared to other DAC Members

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Data source: OECD/DAC Annual report 2004, statistical annexes.

In terms of actual volume , ODA rose in 2003 in 12 of the 25 Member States compared to 2002[11]. EU-25 ODA flows increased from €28.4 billion in 2002 to €33 billion in 2003, representing an additional €4.6 billion. The new Member States increased their collective contribution by 53% in real terms.

While ODA flows have grown, a sizeable proportion of the increase is due to debt relief operations . This is not in keeping with the spirit of the Monterrey consensus, which stated that the HIPC initiative “should be fully financed through additional resources”. In this respect, the effect of debt relief efforts, such as the one for Iraq, is a matter that may deserve further discussion among Member States.

Diagram 3: EU ODA flows and debt relief 2000-2003

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RE:Data source: OECD/DAC Annual report 2004, statistical annexes.

1.3. Results of the Survey

The Survey showed that a majority of Member States are either in favour or took no position regarding the idea of defining a new interim EU target for additional ODA increases by 2010 – twelve Member States were in favour (nine unconditionally, three conditionally), nine Member States took no position or did not answer the question, while only two were against.

On preparedness to define a new intermediate target ODA increase for new Member States (NMS), the survey showed a similar picture, with nine Member States in favour (including one new Member State), ten taking no position, and four Member States against the idea.

Question | YES | YES conditionally | NO | No reply / No position |

Ready to define new EU interim target for additional ODA increases by 2010 | DK, ES, FI, FR, LU, NL, PT, SE, UK | CZ, EE, PL | LI, LV | AT, BE, DE, EL, HU, IE, IT, MT, SI, SK |

Prepared to define an interim target ODA increase for NMS | DK, FI, FR, LU, LV, SE, SK | AT, UK | CZ, EE, HU, LI | BE, DE, EL, ES, IE, IT, MT, NL PL, PT, SI |

If commitments by Member States are confirmed over time, the EU would collectively reach an ODA level of 0.42% of GNI in 2006 - representing a potential allocation of €46.5 bn p.a.

Table 1: EU ODA levels 2003-2006

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Data sources: OECD/DAC Annual report 2004, statistical annexes and replies of EU Member States to the Monterrey questionnaire

While the Survey indicates important positive developments, in terms of the readiness to define new commitments on ODA volumes, past experience has shown that the “heavyweights” Germany and Italy are of particular importance to the collective achievement of the Barcelona commitments; both countries replied “No position/decision” to the above two questions.

Germany seems to be on track to meet the 2006 target, but it is questionable whether ODA levels – after the Iraqi debt reduction effects – can be sustained beyond that date. Even more critical is the situation of Italy, where there is a risk of a de facto reduction in ODA from an already low level. Italy’s ODA would need to increase very significantly if the EU is to meet the 2006 target. Italy could make a significant step towards its target without engaging further staff resources, for instance by bringing its promised contributions to the Global Environment Facility up to date.

Commitment II: Coordination and Harmonisation

Commitment : “To take concrete steps on coordination of policies and harmonisation of procedures before 2004, both at EC and Member States level, in line with internationally agreed best practices including by implementing recommendations from the OECD Development Assistance Committee Task Force on donor practice

2.1. Background

The 2004 Barcelona follow-up report contained substantial proposals for concrete action, building on existing political commitments. It underlined the discrepancies between political commitment at Council level and implementation. This led to the establishment of an Ad Hoc Working Party on Harmonisation (AHWPH) with a mandate to examine the Commission’s recommendations and other relevant proposals in detail with a view to putting this Barcelona commitment into practice.

2.2. EU performance

The AHWPH agreed to the following eight recommendations, which were endorsed by the Council of Ministers (GAERC) of November 2004:

- Follow these basic principles : focus on a country-based and country-led approach, avoid duplication and work in a complementary way, aim for a wide coverage of aid modalities and procedures, use agreed guidelines on coordination and focus on implementation, openness of all donor initiatives.

- Set time-bound objectives and monitoring mechanisms . For most of the agreed actions implementation is expected in 2006.

- Establish an EU roadmap in every recipient country, offering a menu of actions, to be decided by a common assessment of needs by all EU local representatives.

- Use common EU guidelines based on existing EC guidelines for horizontal issues (such as operational coordination or Sector Support) and for a few selected sectors.

- Establish joint multi-annual programming on the basis of revised Country Strategy Papers (CSP).

- Establish complementarity as an operational objective , by discussing the division of labour at country level and starting a debate at cross-country level on the basis of the Donor Atlas.

- Establish a common framework for implementation procedures in the form of Joint Financial Agreements, covering such issues as reducing the number of missions, operating through budget support, enhancing sector coordination, making aid flows predictable, harmonising Technical Assistance, reinforcing joint evaluations, promoting joint auditing, establishing common cost norms, and strengthening delegated cooperation.

- Reduce micromanagement by the management committees for Community aid: “Member States must ensure that the Commission has the necessary means and freedom of manoeuvre to participate actively in local coordination efforts and to align Commission development aid with national development priorities and procedures”; “Member States should discuss initiatives that can support the decentralisation process in the Council before the end of 2005.”

The results of the process should be the basis for a real step forward at EU level. The EU will, however, also have to quickly follow up and implement several of the recommendations and deliver qualitative outputs.

The results have also been put before the Second High Level Meeting on Aid Effectiveness in Paris in March 2005 , as the EU collective contribution to the international harmonisation agenda. Experience so far indicates that progress is uneven. Administrative costs for the entire DAC membership exceeded €3.5 billion in 2003.

2.3. Results of the Survey

2.3.1. At Headquarters/international level

With regard to involvement in coordination/harmonisation initiatives at headquarters/ international level , a majority of Member States (13) said that they were participating actively; eight were not (of which seven were new Member States) and three did not reply. As to the type of specific coordination/harmonisation initiatives Member States were involved in , a majority referred to work within: (i) the OECD/DAC, (ii) likeminded groups and (iii) the United Nations, Bretton Woods institutions and other international finance institutions.

Question | Yes | No | No reply |

Countries involved in coordination/ harmonisation initiatives among headquarters | AT, BE, DE, DK, FI, FR, IE, LU, NL, PL, SE, SK, UK | CZ, EE, ES, HU, IT, LI, LV, MT, PL | EL, PT, SI |

For more specific answers, we refer to the attached country fiches and matrices, which provide more detailed information per country.

2.3.2. At country/field level

The Survey shows that a majority of Member States were involved in various types of coordination/harmonisation initiatives at country/field level – ranging from participating in local harmonisation and coordination processes and structures among donors and/or led by the recipient government, through involvement in the PRSP process, to increased use of joint programme-based sector support.

Question | Yes | No | No reply |

Countries involved in coordination/ harmonisation initiatives at field/country level | AT, BE, DE, DK, ES, FI, FR, HU, IE, IT, LU, NL, SE, SI, SK, UK | CZ, EE, EL, LI, LV, MT, PL |

On the question of willingness to work through one of five lead donors, there was a generally positive attitude among Member States – seven agreed unconditionally, while another five agreed conditionally (within a sector or country approach). Only two Member States disagreed altogether, while three did not reply.

Complementarity: Proposal to work through 1 of the 5 “lead donors” |

Globally disagrees | Globally agrees | Agrees if within a sector approach | Agrees if within a country approach | No position No reply |

From the Survey one could also sense a general need for further clarification of the concept of complementarity . On the question as to what criteria should be used for the development of operational elements of complementarity (country/sector level), most MS believed that: (i) donors’ comparative advantage overall in a country or sector , and (ii) availability of staff and expertise in a given sector or country , were either very important or important. Very few believed (iii) size of financial allocation to a given sector or country to be very important.

Criteria for the development of operational elements of complementarity (country/sector level) |

Criteria: | Very Important | Important | Less Important | Irrelevant |

Comparative advantage of donors at global level of a country or sector | BE, DE, EE, EL, FI, HU, IE, IT, PT, NL | CZ, ES, LI, LV, PL, SK, UK | AT, DK, FR, LU, SI |

Availability of staff and expertise in a given sector or country | AT, CZ, DE, DK, EE, FI, FR, IE, IT, PL, NL | BE, ES, HU, LV, LI, PT, SI, SK, UK | EL, LU |

Size of financial allocation to a given sector or country | BE, UK | CZ, DK, FR, EL, HU, IT, LI, NL, PL, SK | AT, DE, EE, ES, FI, IE, LU, LV, PT, SI |

2.3.3. Experience from the EU’s four pilot countries

Regarding coordination and harmonisation in the four EU pilot countries (Morocco, Mozambique, Nicaragua and Vietnam), the Survey indicated broadly positive developments in three out of the four:

- Mozambique: particularly positive developments and an advanced level of donor harmonisation, including:

- alignment around the Government’s Poverty Reduction Strategy,

- joint Memorandum of Understanding with 15 donors leading to coordinated and untied budget support,

- wide use of SWAP/sectoral programmes, joint performance assessment framework.

- However, improvements can still be made in the predictability of aid, complementarity and selectivity among donors.

- Vietnam: equally positive developments, where EU donors have agreed on a joint Action Plan for harmonisation and coordination and already delivered on the following:

- an annual "Blue Book" directory of all EU cooperation activities in Vietnam;

- establishment of EU norms for local costs in development activities (also followed by other donors);

- Framework Agreement on cooperation covering issues like tax status for consultants;

- joint EU statements and pledges at the Consultative Group meetings;

- EU working groups on how to work more effectively in key sectors;

- EU system of delegated co-representation in policy dialogue discussions;

- making available the services of a harmonisation adviser to the Government.

- However, Member States expressed the need a need to further refine the EU Action Plan, and establish targets for closer coordination such as a reduction in the number of EU projects and the identification of specific joint actions. In February 2005 the Member States active in Vietnam agreed on such a concrete roadmap including time-bound targets.

- Nicaragua: the Survey showed a positive, albeit qualified picture:

- A 10-donor budget framework (Joint Financing Agreement) to support the Government’s National Development Plan is being negotiated, and is expected to produce a positive result for the 2005 budget.

- Opportunities for greater harmonisation will improve as the Plan becomes better linked with the national budget.

- The organisation of – so far - six sector coordination round tables organised.

- On areas which need improvements, the Survey showed that despite progress in harmonisation, alignment with Government policies seems often to be lacking. The Government of Nicaragua’s leadership in harmonisation and alignment should be respected, instead of creating parallel structures for donor coordination.

- At the same time, stronger government leadership in policy development is necessary; this partly explains why sector coordination activities and initiatives on budget financing in the framework of the National Development Plan have been mainly donor driven up to now.

- Institutional capacity is still weak and im plementation is falling behind.

- The Nicaraguan Government has expressed concern that complementarity (leading to a reduction in the number of donors per sector) may increase vulnerability where aid is not sufficiently predictable. It would prefer to maintain some choice over partners and focus on donor quality and a reduction in financing instruments.

- Morocco: the coordination process seems to be dragging behind and operates below its potential. This is reflected by the few responses provided by the survey (partly due to the relative absence of MS). Moreover, the Government of Morocco seems less committed to cooperating more openly with donors than the other three pilot countries. Against the background of the comprehensive EU–Morocco Partnership Agreement, the slow progress towards more consolidated EU action to achieve better coordinated bilateral cooperation programmes is a matter of concern.

- Despite the holding of regular donor meetings, progress is slow on coordination and harmonisation activities (despite some positive developments in the water sector).

Countries involved in bilateral programmes in the four EU pilot countries |

Pilot Country | Yes | No |

Morocco | BE, DE, FR, IT | AT, EL, ES, FI, HU, IE, LI, LU, LV, MT, NL, PL, PT, SK, SI, UK |

Mozambique | AT, BE, DE, FI, FR, IT, PT, NL, UK | ES, HU, IE, LI, LU, LV, MT, PL, SI, SK |

Nicaragua | AT, DE, FI, FR, IT, NL, PT, UK | BE, ES, HU, IE, LI, LU, LV, MT, PL, PT, SI, SK |

Vietnam | BE, CZ, DE, FI, FR, HU, LU, NL, SE, UK | AT, ES, IT, LI, LV, MT, PL, PT, SK, SI, |

Overall the responses revealed that the concept of coordinating policies and harmonising procedures is not yet well rooted in all Headquarters administrations of EU Member States. Moreover, some replies imply that Headquarters is not aware of involvement (via their Embassies) in enhanced coordination activities in the EU pilot countries (e.g. Vietnam). There seems to be scope for improved information flow between Member States capitals and their field offices , to bolster the EU’s joint coordination efforts.

Commitment III: Untying

Commitment: To implement the DAC recommendation on untying of aid to Least Developed Countries and continue discussions in view of further untying bilateral aid. The EU will also consider steps towards further untying of Community aid while maintaining the existing system of price preferences of the EU-ACP framework.

3.1. Background

Untying aid was recognised in Monterrey as one significant means to improve aid effectiveness. In order to support its added value, the European Union agreed in Barcelona:

- to implement the DAC recommendation on untying aid to Least Developed Countries,

- to continue discussions with a view to fur ther untying bilateral aid, and

- to consider steps towards further untying Community aid.

In addition, two recent studies commissioned by the OECD/DAC and the Commission have simultaneously highlighted the added benefit and positive impact of further untying – in particular untying food aid and food aid transport – in terms of aid effectiveness and coherence.

3.2. EU performance

As agreed in Barcelona, the European Union has made significant progress on obtaining “better value for money” from its ODA. Member States have untied their aid to Least Developed Countries (LDCs) in line with the DAC recommendation (since the new Member States are not yet members of the DAC, the recommendations do not yet apply to them). Moreover, a majority of Member States are progressing towards further untying.

Furthermore, single market and competition rules also apply to procurement for the purpose of implementing the Member States’ development policy. Under these rules, Member States are obliged to untie aid between the EU-25 and grant mutual access, and any infringement is an offence. So by law, all EU aid is untied and mutual access is granted between the EU-25.

In line with the conclusions adopted by the General Affairs Council in May 2003 and the European Parliament in September 2003, the Commission submitted two proposals on untying EC aid to the Council and Parliament and that are currently in the legislative process: (i) for a Regulation on untying EC-funded aid and tentatively for adoption in 2005 and (ii) for the renegotiation of Annex IV to the Cotonou Agreement . The EU and ACP partners concluded the renegotiations of the Cotonou Agreement in February 2005.

3.3. Results of the Survey

On the question of whether they had introduced new proposals/policy papers in 2003/2004 relating to untying aid (reality check), the survey showed relatively little concrete action over the last two years – only four Member States said “Yes”, while another twenty Member States answered that no action had been taken. It is worth noting that four Member States’ development aid is already fully untied - excusing them from further policy reform in this area, while another four countries claim that their aid is mostly untied.

Have you introduced further proposals/policy papers in 2003/2004 on untying bilateral aid beyond OECD/DAC recommendations? |

Yes | No | No reply | Comments/reservations |

DE, FI; FR; NL, SE, | AT, BE, CZ, DK, EE, EL, ES, HU, IT, LV, LI, MT, PL, PT, SK, SI | IE, LU, SE, UK aid is already fully untied NL food aid is already untied. Proposal calling for further untying under study FR, FI, PT |

The Survey also showed a willingness among most Member States to discuss broadening the scope of and simplifying OECD/DAC recommendation on untying – thirteen Member States were willing (nine unconditionally, four only after 2007), while seven Member States were against it, and one did not reply. In this context, it is worth noting that only four of the new Member States have observer status in the OECD/DAC (Czech Republic, Hungary, Poland and Slovakia), and that none of the new Member States, therefore, are legally bound by OECD/DAC recommendations.

Ready to enter a discussion with OECD on the broadening of the scope and simplification of the OECD/DAC recommendation on untying? |

Yes | Yes but after 2007 | No | No reply | Comments/reservations |

DK, FI, FR, LU, PT, SK, NL, SE, UK, | BE, DE, HU, IT, LI, | AT, EL, LV, MT, PL, ES | CZ, IE | EE, LV, PL (not members of the OECD-DAC) |

The Survey also showed that there was broad support among Member States for discussing all four amendment proposals presented: (i) to extend beyond the LDCs , (ii) to cover food aid , (iii) to cover technical assistance and (iv) to provide access for recipient countries .

If YES the following amendments to the scope of the DAC recommendations should be discussed: |

Amendments: | Agrees | Disagrees | No position |

Extend beyond the LDCs | BE, DE (after 2007), DK, FI, LI, LU, PT, NL, SE, UK | FR, HU |

Cover food aid | BE, DK, FI, FR, DE, HU, LI, SK, PT, NL, SE, UK | LU |

Cover Technical Assistance | BE, DE (after 2007), DK, FI, LI, LU (under conditions), NL, SE, SK, UK | FR, HU, PT |

Provide access for recipient countries | BE, DK, FI, HU, IT, LI, NL, PT, SE, SK, UK | FR | DE, LU |

So, based on the feedback from the Survey, a majority of Member States is in favour of broadening the discussion on and the scope of untying of aid . In practice, however, few Member States have lately taken concrete steps forward in this regard.

Commitment IV: Trade-related assistance

Commitment : To increase assistance for long-term trade-related capacity building, productive capacity and measures addressing supply-side constraints in developing countries, as well as to provide immediate support for trade-related technical assistance in order to improve the negotiating capacity of developing countries in trade negotiations, including by commitments made at the WTO pledging Conference in Geneva on 11 March 2002.

4.1. Background

Since the launching of the Doha Development Agenda (DDA) in November 2001, and the WTO pledging conference in Geneva of March 2002 the EU - Commission and Member States - has seriously taken up the commitment to increasing the quantity and quality of trade-related assistance and capacity building (TRA/CB) for developing countries. For that purpose the Commission Communication on Trade and Development of 2002[12] outlines the EC’s trade and development strategy and contains proposals for action at three different levels: (a) intensifying the dialogue with partner countries; (b) enhancing the effectiveness of EU support; (c) contributing to international effectiveness and coordination.

4.2. EU performance

The Communication has become the main reference for the European Commission, and increasingly the EU Member States, in guiding development cooperation on trade. Accordingly, the EU has stepped up commitments for TRA/CB and is by far the largest contributor worldwide as reported in the Doha Development Agenda Trade Capacity Building Database (TCBDB). The figures have increased over time: the EU provides about 50% of total TRA, and the annual budget committed for TRA in the last four years is around €1 billion[13].

The EU is also by far the main donor to key multi-donor TRA initiatives, such as the Integrated Framework for LDCs and the Doha Global Trust Fund, where it also accounts for over 50% of the pledges. A sizeable part of the EU’s TRA is channelled through regional integration organisations. Regional initiatives can create trade opportunities that are not available in the multilateral context. It is to be noted, however, that the increased focus on TRA in development aid is different across EU Member States: some countries have taken up the commitment more systematically than others.

In terms of quality, the EU has taken seriously the issue of improving delivery and obtaining concrete results. In 2004 the EC undertook a comprehensive evaluation of TRA. Despite some shortcomings (EC procedures are not always well suited to the fast changing trade area; and trade assistance has not always been based on a detailed assessment) the conclusion is that Commission TRA has resulted in improved knowledge and awareness of trade-related issues in the central institutions of partner countries, and it has contributed to increased export performance and improved productivity among local enterprises. Efforts are being made to deliver more systematic training in that field.

Some Member States (UK, Netherlands) have also carried out external evaluations of their TRA activity. As far as the EC is concerned, its development policy has progressively integrated trade into its assistance programmes. The mid-term reviews of the Country and Regional Strategy Papers have to some extent allowed it to give a more prominent trade focus to the development dialogue with our partners, but the results vary considerably from country to country and from region to region. Developing countries face many competing challenges. Member States are also making efforts to integrate trade more systematically in their development cooperation programmes.

4.3. Results of the survey

Some replies to the survey on trade-related assistance (TRA) are strikingly inconclusive. This may indicate that: (i) TRA is not a core priority in many Member States; (ii) different instruments which have emerged in the context of the Doha Development Agenda (DDA) have not yet found their way into Member States’ cooperation programmes and/or (iii) the questions were not sufficiently focused to trigger clear answers.

There is no systematic use of a single set of TRA-related policy guidelines . Whereas the OECD/DAC guidelines of 2001 are frequently used by eleven Member States, neither the Council Conclusions of 2002 on the EC Trade and Development Communication[14] nor the EC TRA Guidelines of 2003 have – so far – broadly impacted on Member States’ TRA. This is remarkable in so far as they take full account of the DDA, decided in 2002.

Eight Member States refer to the Council Conclusions and five Member States to the EC guidelines frequently. The broad picture seems to be that coherent guidelines acceptable for all Member States and the EC programmes still need to be developed . The EU Informal Trade and Development Experts Group could play a key role in triggering progress towards a coordinated TRA approach at EU level. This seems even more important as the EU is globally the largest provider of TRA.

The most important policy guidelines for delivery of bilateral TRA are: |

Policy guidelines: | Binding | Frequently used | Not relevant | No reply |

Your national policy guidelines | CZ, DE, DK, EE, FI, IT, SE | FR, EL, IE, LI, NL, UK | BE, EC, LU, LV, PL | MT, PT, SI, SK, ES. No national guidelines on TRA: AT, HU |

Council Conclusions of 20.11.2002 on Communication on Trade and Development (COM 513) | EC | BE, DK, FI, FR, EL, IT, LI, NL, | LU, PL |

EC Guidelines on TRA of 2003 | EC | BE, EL, FI, FR, IT | DE, DK, LU, PL |

OECD/ DAC guidelines “Strengthening trade capacity for development (2001)” | BE, DE, DK, FI, FR, EL, IE, IT, PL, SE, UK | LU |

Other, please specify | FR |

Actions taken/planned as from 2005 to facilitate the mainstreaming of trade in your aid programmes |

IN YOUR ADMINISTRATIONS | EC, IT, UK | EC, IE, UK | EC, | BE, EC, DK, EE, FR | DE, EC, IT, MT, UK | DK, EC, UK |

- at Ministerial level | LI, | FI, DE, IE, SE, | SE, | DK, EE, FI, FR, LI, SE | DK |

- in the headquarters | EC, HU, IT, NL, SE, UK | EC, FI, IE, SE, PL | EC, EL, | BE, EC, EE, DK, FI, FR, IE, IT, NL, SE | EC, IT, NL, UK | DK |

- at field level | EC, HU, IT, NL, SE, UK | EC, FI, IE, SE | EC, EL, PL, NL | EC, FR, IT, | DK, EC, IT, UK | DK, NL |

IN IMPLEMENTING AGENCIES: | FR |

-- headquarters | EC, DE, IT, SE | EC, SE | EC, EL, SE, | EC, FR, IT | EC, IT, PL | DK |

a t field level | EC, IT | EC, SE, | EC, EL | FR, IT | EC, IT | DK |

Main beneficiaries within Member States’ TRA for 2005/2006 |

International institutions | Regional organisations | Individual countries | NGO | Other |

AT, BE, CZ, DE, DK, FI, IT, MT, NL, PL, SE, SK, UK. | DE, DK, SE, UK. | CZ, DK, EE, FI, DE, NL, SE, UK. | BE EC IT PL NL SE UK | DK |

Some fifteen Member States stated that they used or were in process of evaluating future use of the Integrated Framework (IF) Diagnostic Trade Integration Study (DTIS) as their main tool for TRA planning and delivery. Another eight Member States replied that they did not use it, while three did not reply. To the extent that coordination of TRA with other donors took place, many Member States stated that it was mainly undertaken at country level.

Question on the Integrated Framework (IF) Diagnostic Trade Integration Study (DTIS) |

Only two Member States were unconditionally ready to apply the IF DTIS approach to non-LDCs as well, while another four were ready to do so if certain conditions were in place. Ten Member States answered that they were not ready, while another seven did not reply – most of these were New Member States, who gave lack of human resources rather than political will as the main reason.

A majority of Member States said they were contributing to the Doha Development Agenda Trade Capacity Building Database (TCBDB), or would start reporting to it soon – thirteen Member States were already contributing, while another three were planning to soon. Eight Member States stated that they did not contribute, while one did not reply.

Question on the Doha Development Agenda Trade Capacity Building Database |

Do you contribute to the Doha Development Agenda Trade Capacity Building Database (TCBDB)? | Yes | Not yet, will start reporting to it soon | No | No reply |

AT, BE, EC, DE, DK, EL, ES, FI, FR, IE, SE, NL, UK. | EE, IT, PL | CZ, HU, LI, LU, LV, MT, SK, SI | PT |

A majority of Member States also expressed their readiness to intensify information exchange, coordination of TRA policies and activities in the Trade and Development Expert Group – thirteen Member States unconditionally and one conditionally, while eight Member States expressed no position and one was opposed to the idea. There was also a call for improved in-country coordination of concrete TRA activities.

Question on information exchange |

Are you prepared to intensify information exchange, coordination of TRA policies and activities in the Trade and Development Expert Group? | Yes | Yes, conditionally | No | No position / not decided |

BE, CZ, DK, EE, EL, IE, LI, LU, MT, ES, NL, SE, UK | IT | FI | AT, FR, HU, LV, PL, PT, SK, SI |

A majority of Member States said that TRA had been relevant to achieving the goal of improved integration of developing countries into the world economy – fourteen Member States found it to be either “highly relevant” (8) or “relevant” (6). Only two Member States found it to be either “less relevant” or “irrelevant”, while another six expressed no opinion. Some replies pointed out that the concept of TRA was still fairly new, and that there yet was not enough experience on hand to assess the effect of TRA on developing- and transition countries’ integration into the world economy.

Has TRA been relevant to achieve the goal of improved integration of developing countries into the world economy? |

Highly relevant | Relevant | Less relevant | Irrelevant | No reply |

EE, DK, EC, EL, ES, LV, PL, SE, UK | AT, EC, FI, FR, IT, LI, LU | NL | BE | CZ, HU, MT, PT, SI, SK |

Most Member States took no position or did not reply as to their readiness to actively participate in the OECD/DAC work towards establishing a common monitoring/evaluation framework for TRA. Thirteen Member States had not yet decided or did not reply. Seven Member States said they were prepared to participate, while four said they were not.

Are prepared to actively participate in the OECD/DAC work towards establishing a common monitoring/ evaluation framework for TRA |

Yes | No | No position / not decided | No reply |

AT, DE, DK, IT, SK, SE, UK | FI, LV, LI, LU | BE, CZ, EC, EE, FR, EL, HU, PT, SI, NL. | ES, MT |

Commitment V: Global Public Goods

Commitment : To further work towards a participatory process at the global level, including the proposal of setting up a task force open to all actors on a temporary basis, designed to lead to the identification of relevant Global Public Goods.

5.1. Background

A crucial element of Global Public Goods is that individual countries or entities cannot, or will not, by themselves act to ensure that they are adequately provided, therefore collective multilateral action is needed.

In the Council Conclusions on Monterrey and the World Summit on Sustainable Development (WSSD) in Johannesburg, the EU confirmed its commitment to tackling the issue of Global Public Goods (GPGs). Even though its proposal for the establishment of a global, participatory process on GPGs was not taken up in the final outcome documents of either event, an informal International Task Force on GPGs was launched at the WSSD by two EU Member States (France and Sweden), in collaboration with the UNDP in April 2003. The Secretariat of the Task Force has kept the process open by involving other stakeholders, the so-called “Group of Friends of the Task Force”

5.2. EU performance

The Commission and several EU Member States have been active members of the Group of Friends. The Commission hosted the Regional Consultation for Europe in February 2005 as part of its support. This event provided a key opportunity to discuss the Task Force’s draft findings and feed into its final recommendations .

The Task Force’s output should be widely disseminated in order to accelerate the provision of public goods vital to development. For this reason the EC questionnaire sent to MS this year centred on the Task Force’s preliminary outcomes – a definition of International Public Goods (IPGs) that broadens the scope of the work to include regional and transnational public goods, and the selection of six priority IPGs for enhanced action.

5.3. Results of the Survey

The 2004 questionnaire focused on the Task Force’s definition of International Public Goods (IPGs) , which seems widely accepted, and six priority IPGs that it selected for enhanced action. All Member States agreed that the selected IPGs (trade, knowledge, peace and security, financial stability, global commons , and eradication of communicable diseases) are relevant, although obviously perceptions of their importance differ.

A majority of Member States (14) and the EC agreed with the Task Force’s definition of IPGs ; nine had no position, while only one Member State expressed the need for a more precise/concrete definition.

Agree with the definition of IPGs recently agreed by the International Task Force on GPG? |

In favour/Yes | Against/No | No position/not decided |

BE, CZ, DE, DK, EC, EL, ES, FI, FR, IT, NL, PL, SE, SK, UK | AT, EE, HU, LI, LU, LV, MT, PT, SI |

However, a majority of Member States considered further analysis of all the proposed areas as either extremely or very important. Peace and security scored highest , with seventeen Member States considering it extremely important, followed by the eradication of communicable diseases and global commons . Member States also made some suggestions on new or other IPGs which could be added to the list (see the country fiches in Annex 1 for further details).

These views reinforce the concept of complementarity between Member States: it means that the whole Union can increase its weight in the debate and the global governance mechanisms through action promoted by several constituencies of Member States in all priority IPGs.

Knowledge | FR, IE, LV, NL, SE | BE, CZ, DE, EC, EE, ES, FI, IT, MT, SK, | DK, EL, HU, PL, UK, |

Peace and security | BE, CZ, DK, EC, FI, FR, DE, HU, IE, IT, MT, PL, SK, ES, SE, NL UK, | EE, LV | EL |

Financial stability | FI, FR, IE, ES, SE, NL | CZ, EE, DE, EL, IT, MT, PL, SK, | BE, DK, EC, HU, LV, PL, UK, |

Global commons, in particular natural resources | EC, FR, DE, EL, IE, IT, SE, NL UK, | EE, FI, MT, PL, SK, ES | CZ, DK, HU, LV | BE, |

Eradication of communicable diseases | BE, FR, DE, EL, IE, SK, ES, SE, NL | CZ, DK, EC, EE, FI, IT, UK | HU, LV, MT |

On the question of their involvement in either the Task Force or the Group of Friends, ten Member States said they were actively involved, while eleven were not involved (mostly new Member States), and three did not reply. Most countries that did not participate in the Group of Friends of the Task Force said this was due to lack of human resources.

Yes | No | No reply |

AT (Secretariat of the TF), BE, DK, EC, DE, FI, FR, IE, SE, NL, UK | CZ, EE, EL, HU, LV, LI, LU, MT, PL, SI, SK, | IT, PT, ES, |

A sizeable majority of Member States was in favour of analysing the Task Force Action Plan with a view to using it as a basis for establishing an EU common platform on the provision and financing of GPGs/IPGs .

Agree to analyse the Task Force Action Plan with a view to using it as a basis for elaborating an EU common platform on the provision and financing of GPGs/IPGs |

Yes | No | No position/not decided | Rationale for not participating/comments |

AT, BE, DK, EC, DE, FI, FR, IE, LU, MT, PL, SI, ES, SE, UK | CZ, EE, EL, HU, LV, LI, PT, SK, NL | CZ, EE |

Finally, a majority of fourteen Member States replied that IPGs should be financed from ODA only if especially linked to the MDGs/other objectives of development. Another seven Member States took no position, while one Member State was against financing IPGs from ODA.

Question on the provision of IPGs: Do you agree with the argument that provision of IPGs should not be financed through ODA? |

Yes | Yes, in context of joint initiative | No | No replied/ not position |

IE | BE, CZ, DK, DE, EL, ES, FI, IT, LV, LU, MT, NL, PT, SK | AT, EE, HU, LI, PT, SI, SE |

COMMITMENT VI: INNOVATIVE SOURCES OF FINANCING

Commitment : To further explore innovative sources of financing and taking into account the conclusions of the Commission Globalisation Report.

6.1. Background

With reference to the above Barcelona commitment, six Member States stated in 2002 that they were pursuing such initiatives. Their effort focused on international taxation mechanisms, public/private partnership and the HIPC initiative for the cancellation of the poorest countries’ debt.

6.2. EU performance

The search for innovative sources of finance must not distract from the primary task of increasing ODA directly. At the same time as agreeing and implementing ODA increases we should, however, explore innovative mechanisms that contribute to additional, stable, predictable financing for development. Whatever the source of funding, new delivery mechanisms will be needed to make it fully effective in helping countries to reach the MDGs.

A number of initiatives have been launched to support the provision of adequate resources to meet the MDGs. Perhaps the two most prominent innovative finance mechanisms proposed have been:

- (i) The International Finance Facility (IFF) – a UK proposal for a front-loaded pledge system for aid increases, which would allow borrowing from the markets against binding pledges from donors (with repayments coming from aid budgets), and deliver the resulting funding as grants to developing countries. It is claimed that the UK proposal could double existing ODA (roughly $50bn/year) by 2010, with flows winding down after 2015 and ending by 2020. Payments to the IFF would come from ODA budgets for the next thirty years. However, the UK claims that the proposal should leave total ODA flows (net of repayments to the IFF) from 2015 onwards at least as high as they are now.

- For a donor, increasing ODA normally requires reducing other public expenditure, increasing taxes, or increasing borrowing. The IFF aims at keeping borrowing “off-budget”, arguing that it is a conditional liability rather than debt in a government accounting sense. It is not clear how many donors have the legal freedom to undertake such a long-term binding budgetary commitment, even if its accounting status were clear. Also, this technical device may free politicians from the political challenge of increasing aid directly, leaving politicians and tax payers after 2015 to tackle the issue.

- (ii) A range of proposals for international taxation and levies , drawn together most powerfully perhaps in the “Landau Report” to the French President and – most recently - the work of the “Lula Group” (comprising the Presidents of Brazil, Chile, France and the Prime Minister of Spain) are currently under discussion. A staff paper by the IMF and World Bank to the 2004 Development Committee assessed a range of options.

- The higher-yielding proposals (such as a carbon tax, a tax on multinational corporations, or a “Tobin tax” on currency transactions) pose problems of political acceptability or economic efficiency. Easier options (such as taxing satellite orbits or sea-bed mining) are likely to have modest yields.

- Most examples require widespread – some effectively global – consensus to operate effectively (or to operate at all). However, despite these challenges the Development Committee mandated the International Financing Institutions to continue their work and “report on how to take such options forward”. It is clear that, in view of the long time necessary to reach agreement on such proposals, any initiative is likely to be relevant only in the medium term and will not reduce the necessity of providing more ODA from the budget in the short term.

- Various such initiatives have found favour at national level. The Belgian parliament, for example, has adopted a “Spahn tax” (a variant of the “Tobin tax” on currency transactions) subject to adoption by other EU countries. The European Central Bank has, however, issued an opinion[15] indicating that in its view the “Spahn tax” as passed may be incompatible with the Treaty.

- The Commission Staff Working Paper ‘Innovative sources of financing for development – a review of options’, currently under preparation, examines the most important questions.

6.3. Results of the Survey

A handful of Member States answered that they were already involved in studies, analysis and development of options on various types of innovative financing mechanisms and/or considering involvement from 2005 – basically with regard to the following mechanisms (some Member States are active on more than one mechanism):

- six on a currency transaction tax,

- four on the International Financing Facility for ODA,

- three on other international taxes and levies (e.g. on deep sea minerals),

- two on an international carbon tax,

- two on an aviation fuel tax,

- two on a global lottery.

On whether they were prepared to implement some of these innovative financing mechanisms from 2005, most Member States answered that they were not willing or had no position yet. Broadly speaking, only those Member States who are already actively involved in the analytical work are willing to consider implementing the mechanisms .

Prepared to implement from 2005 the following innovative financing mechanism |

Tax on aviation fuel | IT, | FR, | SE, NL | AT, CZ, DK, EC, EE, FI, HU, IE, LV, MT, PL | BE, DE, EC, EL, SI, SK, ES, UK |

Currency Transaction Tax | IT, | BE, FR, | ES, NL | AT, CZ., DK, EC, EE, FI, HU, IE, LV, MT, PL, SE, | EC, DE, EL, SI, SK, UK |

Other international taxes and levies, e.g. on deep sea mineral extraction/satellite orbits | IT, | FR, | ES, NL, SE | AT, CZ., DK, EC, EE, FI, HU, IE, LV, MT, | BE, DE, EC, EL, PL, SI, SK, UK |

Global lottery for ODA | IT, | FI, FR, | DK PL, SE,NL | AT, CZ., EC, HU, LV, MT, | BE, EC, EE, DE, EL, SI, SK |

International Financing Facility | IT, | FR, UK | AT, CZ, DK, EC, ES, FI, HU, LV, MT, PL, SE, NL, | BE, DE, EC, EE, EL, IE, SI, SK |

Other | DK: Public Private Partnership; FR & ES : Emission of SDRs (given support) |

As to the possible areas in which additional resources resulting from these financing proposals should be used, replies ranged across the spectrum of mechanisms for either ODA, IPGs or both (no clear trend/inconclusive).

Purpose envisaged for the above-mentioned proposals |

Tax on aviation fuel | NL | FR, SE, | IE, |

Currency Transaction Tax | ES, NL | IE, SE, |

Other international taxes and levies, | ES | FR, SE, | IE, NL |

Global lottery for ODA | PL | FR, SE, the NL | IE, |

International Financing Facility | ES, SE, NL, UK | FR, | IE, |

The Survey showed a mixed picture of current or possible engagement in Public Private Partnerships (PPPs) – nine MS are either currently engaged or are considering engagement in PPPs (ranging from business partnerships to infrastructure to environment and climate change), while four Member States are not engaged and eleven did not take a position.

Are you currently engaged in, or considering engagement in PPPs? |

Yes | No | No position / not decided |

AT, BE, DK, FI, FR, IT, SE, NL, UK, | HU, IE, LV, LU, | CZ, EE, DE, EL, LI, MT, PL, PT, SI, SK, ES, |

If YES, specify according to the following PPP purposes: | Engaged by end-2004 | Considering engagement from 2005 |

Development | BE, DK, IT, NL, SE, UK | AT, DK, IT, NL, UK |

GPGs, based in developing or transition countries | DK, FI, SE, UK | DK, SE, UK |

GPGs, based within the EU | DK, SE | DK, SE |

Commitment VII: Reform of the international financial system

Commitment: to influence the reform of the international financial system by combating abuses of financial globalisation, strengthening the voice of developing countries in international decision making and, while respecting their respective roles, enhancing the coherence between the UN, international financial institutions and the WTO. The 2003 report concluded that the uncoordinated initiatives by several MS in the preparation for the governing boards of the WB and IMF have not produced good results.

7.1. Background

If the EU wants to be effective on the international scene and generate changes on the issues covered by this commitment, more needs to be done. By presenting a single European position as often as possible, the Union would increase its visibility and influence in the IFIs.

A joint position by the EU Member States is crucial to moving towards a credible solution which honours the Monterrey commitment to developing countries.

Measuring progress on the 2002 EU commitment is difficult due to the general and complex nature of the undertaking, which requires long-term efforts to achieve progress. Nevertheless, there has been some modest progress over the past few years pertaining to enhanced EU coordination.

Concerning the specific question of “enhancing the voice of developing and transition countries ” in the IMF and World Bank, only limited progress has been achieved .

7.2. EU performance

The informal EU consultation and cooperation processes and mechanisms in the Governing Boards of the IFIs have seen improvements over the last couple of years, in the form of regular coordination meetings with which the Commission is associated. Moreover, the Economic and Financial Committee (EFC) has established a special sub-committee (SCIMF) to coordinate the EU position on IMF and related issues. This kind of EU collaboration has also been extended to the Regional Development Banks, where collective EU shareholding is significant.

7.3. Results of the Survey

The Survey prompted a range of replies. There does not seem to be a single line among Member States – some stressed informal coordination, others called for Brussels-based coordination to complement that of Washington. One could perhaps even say that there still seems to be limited willingness among Member States to improve coordination and the development of an EU profile in the IFIs.

In accordance with the Council Conclusions of April 2004, should EU seek a systematic coordination mechanism and joint EU statements at the governing boards of the IFIs? |

In favour/Yes | Against/No | No position/not decided | No reply |

AT, EC, IE IT, LV, LU | DK, EE, FR, HU, SE, NL, UK | BE, CZ, DE, EL, FI, LI, PL, SI, | MT, PT, SK, |

A majority of Member States, however, expressed general satisfaction with the improved informal EU coordination at the level of EU Executive Directors of the IMF and the World Bank, and other Governing Boards of the IFIs , over the past few years.

Several Member States expressed a wish to go further (e.g. improved information sharing, more harmonised approach, etc.). A first visit by the EU Executive Directors of the World Bank to the European institutions in January 2004 had a catalytic effect on cooperation. Such meetings in Brussels are intended to be held annually, and the second meeting took place in March 2005.

This kind of collaboration could also be extended to other regional development banks where collective EU shareholding is significant, such as the African Development Bank, the Asian Development Bank and the Inter-American Development Bank.

Commitment VIII: Debt relief

Commitment : to pursue the EU efforts to restore debt sustainability in the context of the enhanced Heavily Indebted Poor Countries (HIPC) initiative, so that developing countries, and especially the poorest ones, can pursue growth and development unconstrained by unsustainable debt dynamics.

8.1. Background

The EU’s contribution to the HIPC initiative consists of different strands:

- the EU collectively provides the largest contribution to the HIPC Trust Fund as creditor and donor (with a total pledge > €1.6 billion);

- the EC pledge also includes additional assistance to cope with an unfavourable debt sustainability outlook, stemming from external shocks (so-called ‘topping up’);

- special loans owed to the EC are cancelled in full after full application of the HIPC terms for LDCs.

However, major concerns regarding the debt levels/situation of poor countries remain and require further reflection[16] and action. The more short-term aspect pertains to the overall funding of the HIPC initiative, which is not fully secured as long as non-Paris Club creditors do not deliver their part of debt relief. The other more long-term and increasingly pressing aspect concerns the emerging consensus that despite several extensions the HIPC initiative will not suffice to ensure sustainable debt levels for poor countries in the long run.

8.2. EU performance

By May 2003, all the Member States of the Union had already made the necessary provisions to ensure their own participation in the HIPC initiative. The ten new Member States have made the necessary contribution to HIPC as creditors, and some have contributed to the HIPC Trust Fund.

Most of the EU-25 are committed to going beyond the requirements of the HIPC scheme by providing 100% debt relief on their pre-cut-off-date claims. EU support for the implementation of the extended HIPC initiative, now with the sunset clause extended until 2006, is well on track, and the EU is fully delivering on this commitment.

8.3. Results of the Survey

Concerning the implementation of the extended HIPC Initiative for the ten new Member States, five had already made provisions to fulfil their financial HIPC commitments, while the other five had not (three of them had no bilateral debt with HIPC countries).

Question for the 10 new Member States |

Have you already made provisions to fulfil your financial commitments[17] to the Heavily Indebted Poor Countries (HIPC) initiative? | YES | NO | No reply |

CZ, EE, HU, PL, SK | LV, LI, MT, PL, SI | CY |

On the question of the additionality of debt relief, a majority of Member States (13) rejected the idea of achieving the minimum target of 0.7% ODA/GNI if it excluded contributions to debt relief; five said “Yes” and three had no position.

Question on additionality of debt relief |

Would you agree to achieve the minimum target of 0.7% ODA/ GNI, considering figures excluding debt relief? | YES | NO | No position/ Not replied |

DK, FI, IE, MT, SI, | AT, CZ, FR, DE, EL, HU, IT, LI, PL, SK, ES, NL, UK, | BE, EE, PT, |

Detailed analysis reveals that some countries that have fully benefited from the HIPC initiative remain or return to debt distress (debt overhang) situations, after their graduation from HIPC. The Survey showed that most Member States agree or are not opposed to providing additional debt relief, but have diverging views on how to deliver this.

Should a country be found to remain, following HIPC debt relief, debt distressed according to the debt sustainability analyses of IMF/ WB, would you be ready to finance: |

YES | Yes, conditionally | NO | Not decided/ no position |

-Any additional multilateral debt relief? | UK | DK, FR, DE -IE, IT, LV SE, | EE, HU, SK, NL | AT, CZ EL, FI, LI, PL, PT, SI, ES, |

-Any additional bilateral debt relief? | UK | DK, FR, HU, IT, ES, SE, NL | EE, DE, LV, SK, | AT, CZ, FI, EL, IE, LI, PL, PT, SI, |

-increased ODA allocations? | FR, IE, SE, | DE – HU, IT, UK, NL | EE, LV, | AT, CZ., DK, EL, FI, LI, PL, PT, SI, ES, |

-ODA only in form of grants? | DK,IE,NL | CZ, FR, DE - UK | EE, IT, LV, SE | AT, FI, EL, ES, HU, LI, PL, PT, SI, |

Despite the latest extension of the sunset clause to the end of 2006, which could benefit a minimum of eleven more countries, several countries, mostly in post-conflict situations, will remain excluded from the HIPC initiative. Most Member States agree that this prospect is of concern, but have no coherent view on possible solutions. As to the more specific alternative solutions listed, Member States took the following broad positions on the four sub-questions provided:

- Twelve agreed that the situation of those countries is of concern, but varied in their position as to whether to solve it within HIPC or through an alternative approach, while another seven took no position.

- Eleven agreed that a solution needed to be found, but again positions varied between finding a solution within HIPC or through an alternative approach. Eight took no position.

- Eight would welcome further studies by the World Bank and IMF in order to devise tailor-made solutions for these countries, while seven took no position.

- As to how MS intend to contribute to finding suitable solutions, ten Member States pointed to multilateral consultations/negotiations in the IFI, the HIPC Trust Fund and/or the Paris Club. Some would prefer a case-by-case solution to a more systematic approach to tackling cases of continued debt distress. Seven Member States took no position.

Question: | Country | No replied/ no position yet |

Do agree that the situation of those countries is of concern within HIPC or through an alternative approach: | AT, DK, EE, FR, HU, DE, IE, LV, SK, SE, NL, UK | EL, LI, LU, MT, PL, PT, SI, |

Do agree that a solution should be found, within HIPC or through an alternative approach? | AT, CZ., EE, DE, IE, IT, LV, SK, SE, NL, UK | EL, HU, LI, LU, MT, PL, PT, SI, |

Do intend to call on the World Bank and IMF staff in order to study more tailor made solutions for these countries | AT, EE, DE, HU, IE, IT SE, UK | EL, LI, LU, MT, PL, PT, SI |

How do you intend to contribute to finding suitable solutions? | AT, CZ, DK FR HU, IE, IT, LV, NL, UK | EL, LI, LU, MT, PL, PT, SI |

The Survey showed a generally positive attitude among donors to the prospects of increasing the grant component of their ODA flows , or perhaps moving to purely grant-based assistance (note some Member States’ ODA is already entirely grant-based). Six Member States were unconditionally in favour, another five conditionally in favour (in the context of a joint initiative), while two were against and another seven took no position.

Would consider increasing the grant component of their ODA flows or perhaps moving to a purely grant-based assistance? |

YES | Yes, in context of joint initiative | NO | No reply / no position |

AT, DK, FI, IT, NL, PL | CZ, DE, EL, ES, HU | FR, LV | EE, IE, LI, MT, PT, SI, SK |

The Survey also showed that there is broad agreement in the EU that the forward-looking, sound debt sustainability analysis framework (DSA) for low-income countries currently developed by the IMF and the World Bank, and its strict application, are crucial to tackling the aforementioned problems. This framework is welcomed as it will improve the monitoring of debt levels and offers a much more differentiated approach to measuring debt sustainability in low-income countries.

The DSA framework provides that countries that reach the set lending threshold should receive additional support on a grant basis. The DSA framework has the great merit of emphasising the close relation between debt sustainability and vulnerability to external shocks . The EC is actively involved in these discussions, drawing lessons from its long experience with ex-post instruments of export earning stabilisation (STABEX, Sysmin, FLEX). Further instruments to assist countries hit by external shocks are required (e.g. quick disbursement instruments, market-based ex-ante instruments, or the temporary suspension of debt service). There are, however, some areas of concern concerning the new DSA framework, notably with regard to the transparency and neutrality of the assessment s by the IMF/WB.

ANNEX

Annex 1: Country fiches

Country fiches have been established for all Member States except Cyprus, which did not reply to the Monterrey questionnaire.

AUSTRIA

1. Volume of ODA

New projected ODA in national budget

YEAR | ABSOLUTE AMOUNT | AS % OF GNI |

2003 | 550 m $ | 0,2 |

2004 | First preliminary estimates available in April 2005 | 0,2 |

2005 | 0,25 |

Target-Year 2006 | 0,33 |

2009 | 0,33 |

Not fixed (**) | 0.7 |

- Austria expresses no position concerning a new EU interim target for additional ODA increases by 2010. No timetable has been set to achieve the UN 0,7% ODA/GNI target.

- Austria is ready to define an interim target for the ODA increase of the new Member States and suggests a lower lever than the one set for the EU 15.

- Co-ordination of policies and harmonisation of procedures

- Coordination/ harmonisation initiatives at field / country level : Austria participates in donor coordination in: Nicaragua, Cape Verde, Burkina Faso, Uganda, Ethiopia, Mozambique, Palestine, Bhutan, Albania, Macedonia, Bosnia & Herzegovina, Serbia Montenegro. The density and quality of donor coordination lacks specifically where a small number of donors is present (Cape Verde, Bhutan). Particularly useful are Consultative Group meetings (IFI) and Round Tables (UN).

- Coordination/ harmonisation initiatives among Headquarters: Austria participates in relevant OECD/DAC working groups and the EU “ad hoc Working Party on Harmonization”, relevant Council Working Groups (eg. Dev, ACP). A relevant source for coordination with commission services are the committees such as EDF, ALA, MED etc.; efforts in IFIs and UN.

- On complementarity: Austria suggests that increased complementarity should be achieved by concentrating on SWAPs rather than through the lead donor-driven approach proposed by the Commission.

- Untying of Aid

- Austria has not introduced in 2003 further concrete proposals or policy papers on untying of bilateral aid beyond the OECD/ DAC Recommendations nor is it ready to enter a discussion within the OECD on the broadening of the scope of and/ or simplification of the DAC recommendation on untying of aid.

- Trade Related Technical Assistance

- As a small donor Austria concentrates on few sectors. Trade and development are only part of them to a very limited extent. The main beneficiary is the WTO/DOHA Global Fund (200.000 per year).

- Austria has no bilateral program in this field (with the exception of the promotion of Fair Trade Labelling in the country).

- Austria considers TRA as relevant to achieve the goal of improved integration of developing countries into the world economy.

- Already member of the evaluation network of the OECD/DAC, Austria is prepared to actively participate in the OECD/DAC work towards establishing a common monitoring/evaluation framework for TRA while is not willing to intensify information exchange, and coordination of TRA policies and activities in the Trade and Development Expert Group.

- Global Public Goods

- Austria supports the secretariat of the Task Force.on GPGs and is active member of the Group of Friends.

- Austria considers the proposed definition of international public goods (IPGS) not very concrete; a more operational definition could be politically more acceptable. Austria feels that the question of defining GPGs and “priority areas” shall be discussed in an open participatory way, within the EU and within the UN, especially with the G7. These discussions have not yet taken place.

- Austria agrees to analyse the Task Force action plan with a view to using it as a basis for elaborating an EU common platform on the provision and financing of GPGs/IPGs

- No position on the relation between IPGs provisions and ODA-ability.

- Innovative sources of financing

- Austria has not been involved so far in any study/analysis on innovative financing mechanisms, neither foreseen the implementation of the proposed innovative financing mechanism in the future.

- Austria is currently considering to take part actively in the programmes of the European Investment Bank – the "Investment Facility", the EC-water facility and to help establish the "sustainable energy facility" within the EC-frame.

- Reform of the International Financial System

- In order to improve the quality of the EU co-operation at the governing boards of the IFIS: Austria suggests to “enhance formal and informal coordination at IFI board of directors level; possible additional coordination of EU-capitals for crucial IFI policy positions - including in regional development banks - provided duplication of fora can be avoided (example: economic and financial committee coordination for IMF matters)”.

- concerning the scope for improving the quality of EU coordination at the IFIs (called by the council conclusions of April 2004), Austria agrees to a systematic coordination mechanism and joint EU statements at the governing boards of the IFIs. Austria would welcome with this regards the coordination chaired by the presidency.

- Debt Relief

- No position on additional relief.

- following the extension of the sunset clause until the end of 2006, Austria considers that:

- the situation of HIPC Eligible countries is of concern,

- the HIPC should not be reopened,

- IMF and world bank should come up with genuinely joint proposals

- Austria intends to contribute through IFI and cooperation through Paris club mechanisms. as far as IFI soft windows are concerned Austria supports an increased grant component for debt distressed countries; IFI soft windows, however, should not play main role in provision of grants for debt distressed countries (EU aid and bilateral aid can provide such grant support).

concerning the structure of the Austrian ODA flows it has to be noted, that they consist mainly of grants and that the share of credits is marginal only.

BELGIUM

2. Volume of ODA

New projected ODA in national budget

YEAR | ABSOLUTE AMOUNT (m €) | AS % OF GNI |

2004 | 1.279,73 | 0.45 |

2005 | 1.331,321 | 0.45 |

Target-Year 2006 | 1.541,120 | 0.50 |

2007 | 1.760,924 | 0.55 |

2008 | 1.993,782 | 0.60 |

2009 | 2.242,429 | 0.65 |

2010 | 2.486,022 | 0.7 |

- Belgium expressed no position concerning a new EU interim target.

- Co-ordination of policies and harmonisation of procedures

- at field / country level : through the PRSP-process, basket funding and budget support

- among Headquarters : EU-coordination, OECD/DAC.

- On complementarity : Belgium is favourable to the “five lead donors driven” approach proposed by the Commission, preferably within a sector approach, and in the partner countries where the historical link with the Belgian cooperation is stronger.

- Untying of Aid

- No further proposals. BE agrees on the broadening of the scope of the DAC recommendation.

- Trade Related Technical Assistance

- Actions taken to facilitate the mainstreaming of trade in the aid programs: organisational changes; inter/intra-agency working groups at headquarters level.

- The main beneficiaries for 2005/2006 TRA are the international institutions (1.25 m. €) and NGOs (1.5 m. €).

- Belgium contributes to the Doha Agenda Trade Capacity Building Databases and is ready to intensify the information exchange through the Trade and Development Expert Group.

- Belgium considers TRA as irrelevant with regards to the achievement of the goal of improved integration of developing countries into the world economy.

- No position is taken yet with regards to the participation in the OECD/DAC work towards establishing a common monitoring/evaluation framework for TRA.

- Global Public Goods

- Belgium agrees with the definition of International Public Goods (IPGs) recently proposed by the International Task Force on Global Public Good. With regards to the six IPGs areas identified by the TF as priority, Belgium considers Peace and security and eradication of communicable diseases as being extremely important, followed by knowledge (very important) and financial Stability (important).

- Belgium is currently involved in the works of the Group of Friends of the Task force.

- About the relation between IPGs provisions and ODA-ability, Belgium believes that IPGs should be financed from ODA only if they are especially linked to the MDGs.

- Innovative sources of financing

- Belgium does not agree with the implementing modalities of IFF.

- Belgium has not been involved in any study/analysis on innovative financing mechanisms, but it foresees the implementation of the currency transaction tax proposal as for next year.

- Reform of the International Financial System

- On how to improve the quality of the EU co-operation at the Governing Boards of the IFIs (in accordance with the Council Conclusions of April 2004 regarding the last Monterrey monitoring report): Belgium suggests to organize regular meetings of the resident representatives of the EU Member States at the headquarters of the IFI along the same lines as the SCIMF (mechanism already existing within the IMF).

- Concerning the further exploration of the possibilities for improving the quality of EU coordination at the IFIs called by the Council Conclusions of April 2004, Belgium has no position yet.

- Debt Relief

- No position on additional relief.

CZECH REPUBLIK

3. Volume of ODA

New projected ODA in national budget

YEAR | ABSOLUTE AMOUNT | AS % OF GNI |

2003 | 90.550.000 USD | 0,101 |

2004 | 104.300.000 USD | 0,105 |

2005 | 135.000.000 USD | 0,128 |

Target-Year 2006 | 150.000.000 USD | 0,133 |

- CZ is, depending on the general economic performance, ready to define a new EU interim target for additional ODA increases by 2010 while this is not the case for the new Member States.

- No timetable has been set yet to achieve the UN 0,7% ODA/GNI target.

- Co-ordination of policies and harmonisation of procedures

- Assessment of the four pilot countries : CZ participates in few activities in Morocco, Mozambique and Nicaragua. Vietnam constitutes the priority country of Czech Republic ODA, the EU harmonisation is here at its initial stage.

- At field / country level , among Headquarters : No initiative undertaken at this stage.

- On complementarity : The Czech Republic would be favourable to start working through one of the five “lead donors” as proposed by the Commission, preferably within a sector approach.

- The most important criteria for development of operational elements of complementarity is the availability of staff and expertise in a given sector/country.

- Untying of Aid

- CZ has not introduced so far concrete proposals nor policy papers on untying of bilateral aid beyond the OECD/ DAC Recommendations.

- The competitiveness of the Czech ODA stakeholders is still in the process of evaluation, therefore no position is yet taken with regards to the possibility to broaden the scope of and/ or simplification of the DAC recommendation on untying of aid.

- Trade Related Technical Assistance

- CZ has undertaken few actions to facilitate the mainstreaming of trade in aid programmes. These are mainly taken within the developing countries’ institutions and focus on training and monitoring/evaluating programmes.

- The main beneficiaries for 2005/2006 TRA:

International institutions | 2,5 mil. USD |

Regional organisations with a mandate for trade and integration |

Individual countries: Vietnam, Mongolia, Serbia and Montenegro, Yemen, Bosnia - Herzegovina, Ukraine, Jamaica, Namibia, Philippines and China. | 4,5 mil. USD |

Non-governmental organisations |

TOTAL | 7,0 mil. USD |

- CZ is currently evaluating the scope for future use of the Integrated Framework (IF) Diagnostic Trade Integration Study (DTIS) as main tool for TRA planning and delivery. Experience is insufficient to express a position with regards the use of such approach for non-LDCs.

- CZ does not contribute to the Doha Development Agenda Trade Capacity Building Database (TCBDB) however is willing to intensify information exchange, and coordination of TRA policies and activities in the Trade and Development Expert Group.

- No position has been expressed yet on participating in the OECD/DAC work towards establishing a common monitoring framework for TRA.

- Global Public Goods

- CZ agrees with the definition of international public goods (IPGS) proposed by the International Task Force on Global Public Goods. CZ suggests to add the following IPGs areas to the six selected by the TF: Good Governance, Reproductive Health, Human Rights and Democracy.

- CZ does not participates in the work of the Group of Friends of the Task Force and is not in the position yet to decide whether analysing the TF Action Plan as a basis for elaborating the EU approach before we had an opportunity to see and analyze it. In principle, CZ agrees that a discussion at the EU level of GPGs might be useful and that the Action Plan could be used as a basis for it.

- On the relation between IPGs provisions and ODA-ability, CZ generally agrees that IPGS should be financed from ODA.

- Innovative sources of financing

- Czech Republic has NOT been involved in any study/analysis on innovative financing mechanisms, neither foreseen the implementation of the proposed innovative financing mechanism in the future. CZ has examined the IFF proposal but for the time being, in consideration of the questions that stay open on the IFF mechanism, CZ prefers the utilisation of the already existing financial instruments.

- Reform of the International Financial System

- No position yet

- Debt Relief

- CZ has already made provisions, in accordance with the system of HIPC initiative, to fulfil its financial commitments.

- On additionality of debt relief: no position yet except: - CZ does not agree to achieve the UN target of 0.7% ODA/GNI excluding debt relief. - CZ agrees in principle to deliver ODA in form of grants to the HIPC post completion point countries that continue to face debt sustainability problems.

- Following the extension of the sunset clause until the end of 2006, Czech Republic considers that:

- The situation of HIPC eligible countries (although to be specified) is of concern,

- Debt should be solved within existing mechanisms

- IMF and World Bank should not intervene at present, maybe in the future

- It is necessary to find solution on the basis of an agreement within the international community.

- In the case of countries particoularly vulnerable to debt distress episodes, CZ would consider increasing the grant component of the ODA flows in the context of joint initiatives.

DENMARK

4. Volume of ODA

New projected ODA in national budget

YEAR | ABSOLUTE AMOUNT (X 1000 €) | AS % OF GNI |

2003 | 1547.6 | 0.84 |

2004 | 1641.9 | 0.85 |

2005 | 1682.5 | 0.83 |

Target-Year 2006 | 1722.9 | 0.82 |

2007 | 1749.7 | 0.81 |

2008 | 1776.6 | 0.80 |

2009 | 1803.5 | 0.79 |

- Denmark is ready to define a new EU interim target for additional ODA increases by 2010, as well as an interim target for the ODA increase of the new Member States.

- Co-ordination of policies and harmonisation of procedures

- Coordination/ harmonisation initiatives at field / country level: Denmark is involved in a large number of harmonization and alignment initiatives at national and sectoral level in its 15 priority partner countries. It is therefore not possible to specify each individual activity. It should be highlighted, however, that Denmark is currently co-lead-donor (with the World Bank and Ireland) in the Zambian Wider Harmonisation in Practice initiative.

- Coordination/ harmonisation initiatives among Headquarters:

- DAC Working Party on Aid Effectiveness and subgroups;

- Joint Guidelines on Joint Financial Arrangements are almost finalised. Partner countries: Nordic countries and Canada;

- Joint procurement policy. Partner countries: Nordic Countries. The policy is almost finalised.

- A Joint evaluation planning system has been established with the Nordic countries.

- Joint assessment of multilateral organisations/MOPAN has been established together with the Nordic and other countries.

- A Joint donor training activities system is currently under preparation. Partner Countries: the – Nordic and other countries, the EC

- joint PRSP course under implementation; “Swap and harmonisation” course under preparation

- On complementarity : Denmark is not willing to work towards the five lead donors proposed by the Commission. Denmark considers as the most important criteria for the development of operational elements of complementarity on country or sector level:

- Availability of staff and expertise in a given sector or country

- Overall distribution of sector allocations to the country

- Involvement of partner country in decisions

- Untying of Aid

- No further concrete proposals or policy paper has been introduced during 2003. DK is not considering untying of bilateral aid beyond the OECD/ DAC Recommendations.

- Dk is ready to enter a discussion within the OECD on the broadening of the scope of and/ or simplification of the DAC recommendation on untying of aid on: extending beyond the LDCS; cover food aid; cover technical assistance; provide access for recipient countries.

- Trade Related Technical Assistance

- Denmark has taken action to facilitate the mainstreaming of trade in aid programmes: in developing countries it has intensified initiatives of training, while at the national administration level the DANIDA strategy has

- The main beneficiaries of the 2005/2006 Danish TRA are the WTO/DOHA Global Trust Fund (6.6 m euro per year), IFC – Sustainable Business Action Programme (4.5 m euro per year), Denmark has bilateral program in this field Vietnam, Tanzania, Ghana and others (2.5 m euro per year)

- Denmark has already effectively used the Integrated Framework diagnostic Trade Integration Studies within several frameworks: EU, OECD, Nordic countries, IF, JITP, World Bank and is ready to use such approach also for non LDCs to elaborate a matrix of TRA,

- Denmark contributes to the Doha Agenda Trade Capacity Building Databases and as well ready to intensify the information exchange through the Trade and Development Expert Group.

- Denmark considers TRA as highly relevant to achieve the goal of improved integration of developing countries into the world economy.

- It is willing to intensify information exchange, and coordination of TRA policies and activities in the Trade and Development Expert Group.

- Global Public Goods

- Denmark agrees with the definition of International Public Goods (IPGs) recently proposed by the International task Force on Global Public Good. With regards to the 6 IPGs areas identified by the TF as priority, Denmark considers peace & security and trade as the most important, followed by the eradication of communicable diseases. Knowledge, financial Stability, Global commons are also considered important.

- Denmark is member of the Group of Friends TF and agrees to analyse the Task Force Action Plan with a view to using it as a basis for elaborating an EU common platform on the provision and financing of GPGs/IPGs.

- About the relation between IPGs provisions and ODA-ability, Denmark believes that IPGs should be financed from ODA only if they are especially linked to the MDGs.

- Innovative sources of financing

- Denmark has not been involved in any study/analysis on innovative financing mechanisms, but has implemented already initiatives of public private partnership and foresees the implementation (if globally) of the proposals concerning global lottery.

- Reform of the International Financial System

- On how to improve the quality of the EU co-operation at the Governing Boards of the IFIs (in accordance with the Council Conclusions of April 2004 regarding the last Monterrey monitoring report): Denmark considers important to continue with the current informal Washington –based information-exchange exercise.

- Concerning the further exploration of the possibilities for improving the quality of EU coordination at the IFIs, as called by the Council Conclusions of April 2004: Denmark is against a systematic coordination mechanism and joint EU statements at the governing boards of the IFIs

- Debt Relief

- Denmark’s bilateral assistance is provided in the form of grants (mixed credits a minor part.)

- In consideration of the debt sustainability problems of some HIPCs Denmark, would be ready to finance additional, multilateral as well as bilateral, debt relief. Considering the risks of exclusion that may derive from the expiration of the sunset clause, Denmark is strongly favourable to a higher support for multilateral approach.

- ESTONIA

5. Volume of ODA

New projected ODA in national budget

YEAR | ABSOLUTE AMOUNT | AS % OF GNI |

2003 | 27,4 mil EEK | 0,02 % |

2004 | 73 mil EEK** |

Target-Year 2006 |

- EE is ready, if the special situation of the new member states has been taken into account, to define a new EU interim target for additional ODA increases by 2010. No position has been expressed yet with regards with a possible interim target for the new Member States.

- No timetable has been set yet to achieve the UN 0,7% ODA/GNI target.

- Co-ordination of policies and harmonisation of procedures

- In the four pilot countries: Estonia does not have any bilateral activities in the pilot countries.

- At field / country level , among Headquarters: No coordination/harmonisation initiative undertaken at this stage. EE is ready to coordinate activities with other donors in Georgia.

- On complementarity: No position had been taken yet with regards to the five “lead donors” approach proposed by the Commission. Concerning the criteria for development of operational elements of complementarity the most important are: the comparative advantage of donors at global level and the availability of staff and expertise in a given sector/country.

- Untying of Aid

- EE has not introduced so far concrete proposals nor policy papers on untying of bilateral aid.

- EE is not a member of OECD, but supports initiatives of further untying of ODA. EE considers that coordination of EU positions in the DAC should come from the EC.

- Trade Related Technical Assistance

- EE has taken few actions to facilitate the mainstreaming of trade in aid programmes: - training seminars on WTO issues to the government officials from different developing countries (mainly from CIS) - organisational changes within the national administrations: the officials from the External Trade Department in the Ministry of Foreign Affairs and from other ministries such as Ministry of Economic Affairs and Communications are now members of the inter-ministerial Development Cooperation Committee.

- The main beneficiaries for the Estonian 2005/2006 TRA are individual countries in central Asia.

- EE is currently evaluating the future use of the Integrated Framework (IF) Diagnostic Trade Integration Study (DTIS) as main tool for TRA planning and delivery although for non-LDCS, limited funding makes the elaboration of the TRA matrix not relevant

- EE does not yet contribute to the Doha Development Agenda Trade Capacity Building Database (TCBDB) but will start reporting to it soon.

- EE is willing to intensify information exchange, and coordination of TRA policies and activities in the Trade and Development Expert Group but no position has been expressed yet as to participating in the OECD/DAC work towards establishing a common monitoring framework for TRA.

- Global Public Goods

- EE expresses no position with regards to the definition of international public goods (IPGS) proposed by the International Task Force on Global Public Goods. It regards at the six IPGs areas selected by the TF as all equally important.

- EE does not participates in the work of the Group of Friends of the Task Force and although favourably inclined towards creating a EU common platform, needs to acquaint with the action plan before decision can be made

- No position yet on the relation between IPGs provisions and ODA-ability.

- Innovative sources of financing

- Estonia has not been involved in any study/analysis on innovative financing mechanisms, neither foresees the implementation of the proposed innovative financing mechanism in the future.

- No position yet on PPPs.

- Reform of the International Financial System

- In general, Estonia is satisfied with the level of EU-coordination in the Boards of the IFIs. EE is especially comforted with the EU-coordination in the Board of IMF as it is supported by the formal coordination mechanism in the EFC. For further formalisation of EU-coordination EE needs to take into account the differences in the mandates of the World Bank and the IMF.

- EE would not agree to a systematic coordination mechanism and joint EU statement at the governing board of the IFIs.

- Debt Relief

- Estonia never had any official bilateral claims on HIPC countries. However, to support HIPC initiative Estonia has contributed to the HIPC Trust Fund 372 000 SDR in 2002.

- Following the extension of the sunset clause until the end of 2006, Estonia considers that:

- The situation of HIPC eligible countries is of concern and that a country specific approach should be used in defining sustainable dept levels

- Debt should be solved through an alternative approach

- Close cooperation between the World Bank and IMF is of utmost importance in finding and implementing the future framework. EE supports that WB/IMF staff actively start looking for alternatives beyond the present HIPC initiative.

FINLAND

6. Volume of ODA

New projected ODA in national budget

YEAR | ABSOLUTE AMOUNT (M €) | AS % OF GNI |

2003 | 506,8 | 0,36 |

2004 | 545,6 | 0,37 |

2005 | 601,4 | 0,39 |

Target-Year 2006 | 667,6 | 0,42 |

2007 | 734,3 | 0,45 |

2008 | 839,0 | 0,49 |

2009 | 985,1 | 0,56 |

0.7 % |

- Finland is ready to define a new EU interim target for additional ODA increases by 2010, as well as an interim target for the ODA increase of the new Member States.

- No timetable has been set to achieve the UN 0,7% ODA/GNI target.

- Co-ordination of policies and harmonisation of procedures

- Coordination/ harmonisation initiatives at field / country level: Finland participates in the harmonisation and alignment processes led by the partner country's national institutions and based on the PRSPs. Two main approaches are emerging: in some partner countries the governments have established specific harmonisation processes and structures (e.g. Vietnam), in others harmonisation has been implemented for several years primarily by increasing programme-based support (e.g. Mozambique). Ethiopia and Tanzania are examples of countries that combine these strategies. In Zambia, Finland participates in Harmonisation in Practice-process led by the Zambian government.

- Coordination/ harmonisation initiatives among Headquarters : Finland participates in harmonisation work in partnership with OECD/DAC, Nordic Countries, EU ad hoc working group on harmonisation, United Nations and Bretton Woods

- On complementarity : Finland is not willing to work towards the five lead donors proposed by the commission. it considers that at the opposite also other donors than the top five ones must be able to act as donors at country level. Also small donors may have valuable added value in a certain country or a sector. Finland considers complementarity as achieved most effectively at the country level, agreeing on the division of work based on the added value of each donor present.

- Finland considers as the most important criteria for the development of operational elements of complementarity on country or sector level:

- Availability of staff an