EUROPEAN COMMISSION Brussels, 8.7.2021 COM(2021) 378 final REPORT FROM THE COMMISSION TO THE COUNCIL on the implementation of the financial assistance provided to the





Overseas Countries and Territories





under the 11th European Development Fund in 2020









Introduction The Overseas Association Decision (OAD) establishes the legal framework for the relations between the Overseas Countries and Territories (OCTs), the Member States to which they are linked and the European Union. According to the Treaty on the Functioning of the European Union (TFEU) , the purpose of the Overseas Association Decision is to support the sustainable development of the OCTs and to promote the values of the Union in the wider world. Financial support to OCTs is provided mainly through the European Development Fund (EDF), with an amount of EUR 364.5 million allocated under the 11th EDF for the 2014-2020 programming period. In compliance with Article 91 OAD, this report highlights progress achieved in the implementation of 11th EDF resources for OCTs for the year 2020. On 31 January 2020, and following the terms of the Withdrawal Agreement (WA) between the EU and the UK, including a transition period until 31 December 2020, the UK became a third country. In general, EU law continued to apply during the transition period with the exception that the UK no longer participated in the EU’s institutional set-up. This also applied to the former 12 UK OCTs as Article 3(e) of the WA includes the UK OCTs of Annex II of the TFEU in its territorial scope. In accordance with Article 152(1) WA, after 31 January 2020, the UK remained party to the current EDF and to all the previous unclosed EDFs, until their closure. As per Article 152(3) WA, UK OCTs ‘shall benefit from the 11th EDF until its closure and from previous EDFs until their closure’. The impact of ‘Brexit’ was felt at institutional level. The new legal configuration implied that the UK OCTs could no longer participate in the association’s institutional framework, as laid down in Article 14 OAD, which includes principles for dialogue and instances of the association (annual OCT-EU Forum, Tripartite regular meetings and ad hoc Working parties on specific sectors). Financial Resources under the 11th EDF-OCT The 11th EDF resources available to OCTs are split into the following allocations, based on Annex 2 of the Overseas Association Decision, for the period 2014-2020: ·EUR 229.5 million for the territorial (bilateral) allocations;

·EUR 100 million for regional and “all OCT” cooperation; ·EUR 21.5 million to finance humanitarian and emergency assistance; ·EUR 5 million to finance interest subsidies and technical assistance linked to the OCT Investment Facility; ·EUR 8.5 million for studies and technical assistance. Sixteen OCTs are considered eligible for a territorial allocation under the 11th EDF, defined according to criteria established in the Decision. It should be noted that Greenland is funded directly by the general budget of the Union on the basis of the “Greenland Decision” . The three regional programmes seek to foster cooperation among OCTs of the same region sharing similar challenges and priorities. Actions financed under the regional allocation support the elaboration and implementation of comprehensive regional programmes and projects for addressing these challenges. Partnerships with other funding sources, including other European Union financial instruments, are encouraged through cooperation with the neighboring African, Caribbean and Pacific (ACP) and/or third countries, as well as the Outermost Regions of the EU. In addition to territorial and regional programmes, the thematic programme, the only “all OCTs” programme under the 11th EDF, fosters inter-OCT cooperation. Programming process for the 11th EDF-OCT Part Four of the Overseas Association Decision establishes a programming process, which is specific to OCTs. Unlike ACP States, programming is not based on national indicative programmes but is organised around a one-step process, the elaboration of a Programming Document, which has two components: 1) the EU response strategy (Part A) and 2) the Action Document (Part B). Only one formal Commission Decision was taken to approve each OCT’s Programming Document, covering both the strategic orientations and the detailed programme design. Budget support is the preferred implementation modality for territorial allocations in the OCTs (to date, 13 out of the 16 OCTs benefitting from the EDF). This represents a positive shift away from the project modality, previously used in several OCTs. Budget support offers an efficient way of addressing cross-cutting, long-term and structural challenges and maintain a constructive policy dialogue. OCTs hold the primary responsibility for the establishment of Programming Documents, including the priorities upon which their strategies are based and for ensuring the necessary local consultation. Upon request from OCTs, technical assistance has been made available to accompany the OCTs in the programming process, in line with Article 81 OAD. Situation in 2020

a)Territorial cooperation under the 11th EDF Thanks to the common engagement of all parties concerned, progress has been made in the programming of the 11th EDF in 2020 through enhanced coordination and dialogue. With the adoption of the Programming Documents for Sint Maarten and Curaçao in 2020, all 16 OCTs with an EDF allocation have finalized their programming . In terms of effective financial support, during 2020, EUR 53.67 million were disbursed to OCTs under the 11th EDF (see Annex). As regards implementation during 2020: The COVID-19 pandemic had important consequences on OCTs. It led to an unprecedented strain on their economies, many of which depend on tourism. They also suffered from disrupted global supply chains (with negative effects on their imports, especially food) and price & demand fluctuations for their main exports. Limited fiscal margin created additional strain, as it was accompanied by a drop in domestic demand and remittances. As a result, structural socio-economic challenges (inequality, weak social structures) are likely to deepen, exposing the fragility of the most vulnerable groups. As part of the EU global response to COVID-19, OCTs benefited in 2020 from refocusing of on-going EU programmes, front-loading of EU budget support operations and mobilisation of all remaining funds from the EU B-envelope (emergency assistance), for a total amount of some EUR 74 million under the EDF. Against this backdrop, the implementation of the 11th EDF in 2020 is the following: Caribbean region: ·In the education sector, the budget support programme for Anguilla supported the sustainable financing plan for the sector, the national qualification framework and six individual school development plans (with the disbursement of the fourth fixed tranche of EUR 2.85 million as part of the COVID-19 response). Aruba started the implementation of its programme on education (EUR 13.05 million), aiming to increase technical skills for innovative sustainable development with the collaboration of the Leuven University. Turks and Caicos continued the rollout of its programme (with the disbursement, as part of the COVID-19 response, of the third fixed tranche of EUR 1 million and the second variable tranche of EUR 3.72 million) aiming to improve the adaptation of technical and vocational education and training to the needs of the labour market. ·Progress was also noticeable on sustainable growth through the ongoing budget support programme for Montserrat with the disbursement, as part of the COVID-19 response, of the third fixed tranche (EUR 2.9 million) and the second variable tranche (EUR 2 million). This budget support programme fosters development in areas such as renewable energy and tourism, with the latter currently penalised by the COVID-19 pandemic. ·The youth budget support programme for Bonaire (EUR 3.95 million) started its implementation well. It will contribute to make youth healthier and more employable and to offer improved living standards. Pacific region:

·Regarding sustainable tourism, French Polynesia has been facing important challenges due to the COVID-19 pandemic. However, it made progress on its sectoral policy, allowing the disbursement of the third fixed tranche of its budget support programme (EUR 12.4 million) as part of the COVID-19 response. Pitcairn also continued the roll out of its Strategic Development Plan by promoting tourism and benefitted, as part of the COVID-19 response, from the second fixed tranche (EUR 0.8 million) and variable tranche (EUR 0.55 million), thus finalising the programme. ·In the employment sector, New Caledonia continued its efforts to widen the access to training programs and increase its employment and training rates. The fourth fixed tranche of its budget support programme (EUR 8.84 million) was disbursed as part of the COVID-19 response. ·On digital development, Wallis and Futuna progressed in the implementation of its digital strategy and in the deployment of services linked to the Tui-Samoa broadband cable , delivering high-speed broadband connectivity. The second tranche (EUR 2 million) and, as part of the COVID-19 response, the third fixed tranche (EUR 3.5 million) were disbursed in 2020. Other OCTs: ·Falkland Islands benefit from a connectivity programme under the 11th EDF. In 2020, satisfactory progress continued in the implementation of their National Infrastructure Plan. The third fixed tranche was disbursed (EUR 1.52 million, as part of the COVID-19 response) as well as the second variable tranche (EUR 0.64 million). Saint Helena, also benefiting from connectivity programme under the 11th EDF, showed significant progress in the implementation of its digital strategy during 2020. The second fixed tranche (EUR 3.5 million) and, as part of the COVID-19 response, the third fixed tranche (EUR 5.65 million) were disbursed. ·Regarding tourism, the budget support programme in Saint-Pierre et Miquelon was completed in 2019 with a total cumulative disbursement of EUR 26 million. In 2020, a COVID-19 tranche of EUR 1.1 million was committed, to be disbursed early 2021. Progress in tourism and maritime transport sectors were illustrated by an important increase of accommodation capacity and the strengthening of the maritime services between Saint-Pierre, Miquelon and Terre Neuve, Canada. Generally and all along the year, the budget support programmes have led to regular policy dialogues with partner OCTs on the macroeconomic situation, public financial management and sector policies. The year 2020 saw the continued mobilisation of Technical Assistance (TA) to support Territorial and Regional Authorising Officers in the programming process. A new Technical Cooperation Facility IV (EUR 2 million) was adopted. A total amount of EUR 1,876,946 was disbursed in 2020 under the 11th EDF Technical Cooperation Facilities II and III. This covered TA contracts or studies to help defining OCTs’ programming and sectoral strategies or to establish OCTs’ eligibility for budget support. b)Regional cooperation under the 11th EDF In 2020, significant progress was achieved concerning Regional OCT Programmes:

·In the Pacific, the Regional Programme ‘PROTEGE’ (Projet régional océanien des territoires pour la gestion durable des écosystèmes, EUR 36 million), supports sustainable and resilient development in the region by protecting biodiversity and renewable natural resources. It builds on the 10th EDF regional programme ‘INTEGRE’ (Initiative des territoires pour la gestion régionale de l’environnement, EUR 12 million), that supported integrated coastal management and reinforced regional cooperation on sustainable development. The second payment (EUR 9.44 million) was made in April 2020, bringing the total of disbursements so far to EUR 16.28 million. A second steering committee took place in April 2020. ·In the Caribbean, the ‘RESEMBID’ Programme (Resilience, Sustainable Energy and Marine Biodiversity Regional, EUR 42.67 million) was topped up with EUR 2.67 million for the Caribbean OCTs from the B-envelope as COVID-19 support, increasing the initial allocation of EUR 40 million. RESEMBID aims at strengthening environmentally sustainable economic development by focusing on resilience, sustainable energy and marine biodiversity. The objective is to upgrade outdated infrastructure and increase its energy efficiency, improve protection and sustainable management of marine biodiversity and increase resilience to extreme and recurrent natural events. EUR 3.62 million have been disbursed so far. A first steering committee took place in September 2020. To support Caribbean OCTs in their recovery, a COVID-19 Resilience Response Facility was established in March 2020 as integral part of RESEMBID, at the onset of the pandemic. ·The Indian Ocean Regional Programme (Projet de Restauration des Ecosystèmes Insulaires de l’Océan Indien, EUR 4 million) aims to restore island ecosystems in the French Southern and Antarctic Lands for the benefit of regional biodiversity. A Delegation Agreement with the Agence Française de Développement (AFD) was signed in July 2019 and a total of EUR 2.28 million have been disbursed until December 2020. A first steering committee took place in November 2020. ·The 11th EDF all-OCTs thematic programme (EUR 17.8 million), newly branded as the GO –Green Overseas programme, aims at supporting the sustainable economic, social and environmental development of the OCTs, focusing on low carbon, sustainable energy economies. Resilience to climate change and the COVID 19 pandemic were selected as sub-components. A contract with Expertise France, the selected implementing agency, was signed in August 2020. The first disbursement (EUR 1.66 million) took place subsequently in 2020. Finally, in 2020, the EU supported the Overseas Countries and Territories Association (OCTA) through an operating grant (EUR 550,000). It improved the Association’s capacity to fulfil its mandate, in particular to coordinate OCT partners to facilitate dialogue with the EU, promote the partnership and support the collective work of its members in several areas of mutual interest within the EU-OCT Association. c)Institutional Dialogue Three instances of dialogue are defined in the Association: OCT-EU Forum The 18th EU-OCT Forum took place in December 2020 in Brussels by videoconference, due to COVID-19 restrictions chaired by European Commissioner for International Partnerships Jutta Urpilainen, with high-level representatives of the OCTs and the Member States to which they are linked. Curaçao participated as the outgoing OCTA Chair and New Caledonia as the incoming one. At the Forum, the EU, the OCTs and the Member States to which the OCTs are linked acknowledged that 2020 had been a decisive juncture for the future of the OCT-EU relations, considering the negotiations of the new association decision, the 2021-2027 EU Multiannual Financial Framework, the Brexit process and the Post-Cotonou framework.

The Commission appreciated the strong recognition by the OCTs and by the Member States to which they are linked of the EU COVID response in support of OCTs. The Forum allowed for first high-level exchanges on the new programming and priorities of future cooperation, and for the EU to articulate its priorities in this regard: the Green Deal, digital, and jobs & growth were all high on the agenda. The Commission heard the OCTs’ message that regional cooperation was very welcome, including with non-OCT neighbours, for which the new association decision sets aside a dedicated amount for the first time (to be confirmed in final negotiations). Given the logistical limitations of an online event with participants from various time zones around the globe, the trilateral meetings at political level usually held in the Forum’s margins between the Member States’ representatives, relevant Heads of Delegation and the Commissioner, could not take place. Trilateral consultations (tripartite meetings) Two tripartite meetings between the Commission (chair), OCT representatives and the Member States to which they are linked were organised in 2020 in Brussels (one in February, and one online in November due to COVID-19 circumstances). They offered a platform for dialogue to exchange relevant information, reflect on priority topics of common interest – including the COVID-19 situation and response measures – and monitor progress on the implementation of the association Decision. d)European Investment Bank The OAD provides financial assistance to the OCTs through financial mechanisms managed by the European Investment Bank (EIB) over the period 2014-2020, under the 3rd Financial Protocol. These mechanisms are: the OCT Investment Facility (current endowment EUR 48.5 million), the funding for interest rate subsidies and technical assistance (EUR 5 million) and the EIB’s Own Resources (up to EUR 100 million). No new operations were signed in 2020 under the EIB OCT Investment Facility. Previously signed operations are ongoing, totalling EUR 85.39 million (of which EUR 51.52 million disbursed) at end 2020. This sum exceeds the initial capital endowment because the fund is revolving and some reflows have been lent out again. Regarding the EUR 5 million envelope for interest rate subsidies and technical assistance, in 2020 the EIB signed EUR 750,000 as interest rate subsidies for the Pacific OCTs COVID-19 Financial Sector Facility. This envelope has now been committed in full. Under the EIB Own Resources envelope for OCTs (EUR 100 million total), in December 2020 the EIB signed EUR 20 million of the remaining EUR 35.02 million for the COVID-19 Financial Sector Facility operation in New Caledonia.