Re-examined proposal for a COUNCIL REGULATION (EC) on the implementation of the EC Investment Partners financial instrument for the countries of Latin America, Asia, the Mediterranean Region and South Africa
Date: 1995-12-20
Institutions: European Commission
Subjects: Asia, EU financial instrument, Latin America, Mediterranean region (EU), South Africa, small and medium-sized enterprises

* 

ft 

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

Brussels, 20  12.1995 

COM(95) 686  final 

. 

94/0190  (SYN) 

Re-examined  proposal  for  a 

COUNCIL  REGULATION  (EC) 

on the implementation  of  the EC  Investment  Partners  financial  instrument 
for the countries of  Latin  America,  Asia, the Mediterranean  region 
and South  Africa 

(presented by the Commission  pursuant  to  Article  189 c (d) 
of  the  EC  Treaty) 

- 

s\ 

-

I. 

BACKGROUND. 

On  22nd  September  1994  the  Commission  proposed  by  means  of  a  Council  Regulation  to 
reinforce  and continue the EC Investment Partners  financial  instrument  for  investment  promotion 
in Asia, Latin America, the Mediterranean  and South  Africa.  The text of the proposed  regulation 
maintains  the essential  characteristics  of the existing  Council  Regulation  (319/92)  and  proposes 
improvements  in the conditions of finance  available  under  all  of  the  facilities.  The  Commission 
proposal  also  includes  specific  provisions  for  reinforcement  of  the  Commission's  management, 
control  and audit  of  funds,  of its ongoing monitoring  of  actions  financed  and  of  its co-ordination 
of  ECBP with  other  EC  instruments  for  economic  co-operation.  A strengthened  and  obligatory 
anti-fraud  reimbursement  clause is proposed  for  all ECIP Framework Agreements. 

On 28th  October  1994 the European  Parliament  approved  in First  Reading (Doct  N° A4-0036/94 
published  in  O.J.  N°  323  of  21st  November  1994)  making  amendments.  On  22nd  May  1995, 
(Published  in  O.J.  N°  C160  of  26th  June  1995)  the  Council  gave  its  Common  Position  which 
approves  the  essentials  of  the Commission's  proposal  with  certain  specific  amendments.  In  its 
Communication  to  the  Parliament  dated  10th  July  1995  (SEC(95)  1171  final)  the  Commission 
accepted  many  of  the  Council's  amendments  but  maintained  two  substantial  reserves  on  the 
Council's  two  amendments  as regards  the period  of  validity  of  the  regulation,  and  the  Council's 
"Financial  Reference  Amount".  While the Commission  had proposed  an open-ended  validity  for 
the  Regulation,  the  Council,  in  agreement  with  the  Parliament,  has  proposed  only  a  five  year 
validity  1995-99.  After  over  7  years  operations  of  ECEP on  a  pilot  and  then  a  trial  basis  the 
Commission  maintains  its  proposal  for  an  open-ended  Regulation.  The  Council  has  inserted  a 
financial  reference  amount  into  the  Regulation.  Since  the  matter  is  not  subject  to  co-decision, 
the  Commission  rejects  this  provision  and  declares  that  the  amount  inserted  is  only  of  an 
illustrative nature. 

While  expressing  its  two  substantial  reserves  on  (i)  the  five  year  period,  and  (ii)  the  financial 
reference  amount,  the  Commission  proposes  to  the  Council  to  adopt  the  text  of  the  Council's 
Common  Position  published  on  26th  June  1995  and  the  Commission  communicates  to  the 
Parliament  and Council  its rejection  of the seven  Second  Reading Amendments of the  Parliament 
which were already  rejected  at First Reading. 

- 2 -

II. 

COMMISSION  OPINION  ON  EUROPEAN  PARLIAMENTS  SECOND 
READING  AMENDMENTS. 

Already  during  the  previous  discussions  in  cooperation  procedure  with  the  Parliament  and  the 
Council  since  1994 the Commission  has accepted  verbatim  or incorporated  into the substance of 
the texts many of the Parliament's substantive  First  Reading amendments  so that they are now in 
the  Council's  Common  Position. 
In  particular,  firstly,  the  Parliament's  wishes  to  take  more 
explicitly  into  account  human  rights,  working  conditions,  women's  working  conditions  and 
exclusion  of  unacceptable  working  practices  are  included  in  the  preamble.  Secondly,  the 
Council  has  incorporated  into  its Common  position  "the five  year  period  1995-99  for  ECIP",  as 
recommended  by  the  Parliament  -  although  the  Commission  does  not  agree.  Thirdly,  the 
Commission  and Council  have accepted  to include  "the good repute" of  promoters, as  requested 
by  the  Parliament,  into  the  ECIP  appraisal  criteria.  Fourth,  the  Commission  has  accepted  to 
report  annually  on  "... the economic  impact,  total  investment,  and  the  number  of joint  ventures 
created".  Fifth,  the Commission  has accepted  that the independent  appraisers  will assess  "... the 
principles of good financial  management, economy  and cots/benefit  analysis". 

However,  the  seven  amendments  still  proposed  by  the  Parliament  in  Second  Reading  would 
make the ECIP procedures more cumbersome and complex (the Parliament had already  proposed 
them  at  its  First  Reading  Approval  of  28th  October  1994  and  they  were  rejected  by  the, 
Commission  at that stage).  They are as follows,  followed  by the Commission's  Position  (which 
is unchanged from the Commission's reply to the First Reading) :-

AMENDMENT N° 2 

Article 6. para 2 

The  Parliament  wants  to add  "without  neglecting  democracy  and  human  rights  and  taking  into 
consideration  the necessity to improve working conditions". 

Commission  Position:  No.  The  Council  has  proposed  a  text  for  the  preamble  (the  thirteenth 
"whereas") which covers the Parliament's wishes and the Commission accepts the Council's text. 

AMENDMENT N° 3 

Article 9. para 2 

As regards  Comitology  the Commission  proposed,  as  in  the existing  regulation  (319/92), to use 
the  existing  ALAMED  committees  (Type  III  A)  and  used  the  same  text  as  in  the  previous 
regulation  to  explain  their  operating  procedures.  The  Council  agreed  unanimously.  The 
Parliament  has  proposed  a  Consultative  Committee  of  Type  I,  as  foreseen  in  Article  2  of  the 
Council's  Decision  N°  87/373  (establishing  the  procedures  for  exercising  the  responsibilities 
given to the Commission). 

Commission  Position: The Commission  appreciates  the  Parliament's  proposal  but  does  not  alter 
its own proposal since the existing committee works well  in practice. 

AMENDMENT N° 4 

Article 9. para 3. introduction 

The  Commission's  proposed  text,  carried  over  from  the  previous  regulation'  referred  to  the 
procedures for the committee while the Parliament's text refers to its responsibilities. 

Commission  Position:  No.  But  the  Commission  "could"  accept  this  amendment  if  it  were 
slightly  rephrased  to say quote  "the Committee referred  to in the above paragraph  sh.all assist the 
Commission  with regard to the following  ..." unquote. 

AMENDMENT N° 5 

Article 9. para 4 

As regards Comitology  the Commission  proposed,  as in the existing  regulation  (319/92),  to  use 
the  existing  ALAMED  committees  (Type  III  A)  and  used  the  same  text  as  in  the  previous 
regulation  to  explain  their  operating  procedures.  The  Council  agreed  unanimously.  The 
Parliament  has  proposed  a  Consultative  Committee  of  Type  I,  as  foreseen  in  Article  2  of  the 
Council's  Decision  N°  87/373  (establishing  the  procedure  for  exercising  the  responsibilities 
given to the Commission). 

Commission  Position: The Commission  appreciates the Parliament's  proposal  but  does  not  alter 
its proposal. 

AMENDMENT N° 6 

Article 9. para 6 

The Commission  proposed: 

"In  order  to  ensure  consistency  of  co-operation  and  to  improve  complementarity,  between 
operations,  the  Commission  and  the  European  Investment  Bank  shall  exchange  any  relevant 
information  on financing  that they envisage granting." 

and the Parliament  request  that the Commission  and EEB "... shall  inform  the budgetary  authority 
thereof." 

Commission  Position: No.  The Commission  rejects  this amendment. 

Such  a prior  information  mechanism  would  render ECIP unmanageable.  Also  the matters  to be 
dealt  with  are often  a banking and  a commercial  confidentiality  (especially  as  regards  the  EIB) 
and highly technical. 

Appropriate  (non-confidential)  information  on  these  matters  will  be  provided  to  the  Parliament 
ex post in the Annual  Reports provided  for at Article  10.1. 

AMENDMENT N° 7 

Article  10. para 1 

The  Parliament  requests  that  the  Annual  Report  on  ECIP  "...  be  accompanied  by  an  up-dated 
financial  statement." 

Commentary: these financial  statements are established: 

a) 

b) 

in  the context  of  the  proposals  for  new  policies  in  order  to  estimate  the costs  foreseen 
(see Annex VI to the Commission's Proposal  for ECIP); and 
annually  in the framework  of the proposal  and negotiation  of the annual budget. 

Commission  Position:  No,  the  Commission  rejects  this  amendment. 
It  does  not  think  it  is 
appropriate  to  "update"  these  financial  statements  in  April  each  year.  The  Commission  does, 
however, assure the Parliament  and the Council  that  it will annex  to the Annual  Reports  a copy 
of the financial  statement  established  in the budgetary  procedure  for  the year when the report  is 
presented. 

AMENDMENT N° 8 

Article  10. para 4 

The Parliament  asks that the costs of this technical  assistance  "... be estimated each year  within 
the framework  of the budgetary procedure." 

Commission  Position:  No.  The Commission  rejects  this  amendment.  The  technical  assistance 
proposed by the Commission is essential to the continuity and sound financial management of the 
instrument.  Any  risk  in  the  framework  of  the  annual  budgetary  procedure  of  the  non-
continuation of this technical assistance is unacceptable.  It is proposed to allocate a maximum of 
5% of the ECIP credits to the financing  of these  items, on condition  that the actions financed  be 
directly  linked  to  the  special  nature  of  the  ECIP  instrument  and  that  they  are  of  benefit  to  the 
ALAMEDSA countries.  AH these actions will be financed  after  tender procedures following  the 
usual and required Community procedures.  The figure of 5% featuring  in the Article is a ceiling. 
The costs in question  will be real costs which  can  only  be precisely communicated  at the end of 
each year.  The Commission will at the request of the Council and the Parliament, provide" in its 
annual  reports (Article  10.1) detailed  information  on the credits allocated  for these actions  in the 
Annual Budget, but the Commission  is not in a position  to accept this amendment. 

III. 

TWO  MAJOR  CHANGES  INTRODUCED  BY  THE  COUNCIL  AND  THE 
EUROPEAN  PARLIAMENT  AND  THE  COMMISSION'S  POSITION  ON 
THEM. 

The Commission  has accepted  many of the Council's and Parliament's amendments but maintains 
its  substantial  reserves  on  the  two  major  amendments  in  the  Council's  Common  Position  as 
regards:  (a)  the  period  of  validity  of  the  regulation,  and  (b)  the  Council's  "Financial  Reference 
Amount". 

- 

•> -

(a)  While the Commission  proposed  an open-ended  validity  for the  Regulation  the Council, 
in agreement  with  the Parliament,  has proposed only a five year validity  1995-99.  After 
over  seven  years  operations  of  ECIP  on  a  pilot  and  then  a  trial  basis  the  Commission 
maintains its proposal  for an open-ended  Regulation. 

(b) 
The  Council  has  inserted  a  financial  reference  amount  into  the  Regulation.'  Since  the 
matter  is  not  subject  to  co-decision,  the  Commission  regrets  this  provision  and  declares  that 
quote: 

"The  Commission  remarks  that  according  to  the  terms  of  the  joint 
declaration  by the European  Parliament, the Council and  Commission 
of  6th  March  1995, 
legislative  acts  concerning  multiannual 
programmes  which  are  not  subject  to  co-decision  do  not  carry  an 
estimated  necessary  amount. 

The  Commission's  proposal  regarding  the  continuation  of  ECIP 
(COM(94) 358 final  94/0190  SYN) does  not provide for  a financial 
reference amount.  The insertion of a financial reference amount is the 
Council's  responsibility  and does not  affect  the responsibilities  of  the 
budgetary authority." unquote. 

and that the financial  reference amount inserted is only of an illustrative nature. 

IV. 

CONCLUSION. 

While  expressing  the  above  two  substantial  reserves  the  Commission  accepts  the  text  of  the 
Council's  unanimous  Common  Position  published  26th  June  1995  and  communicates  to  the 
Council and Parliament its rejection  of the seven amendments tabled by the European  Parliament 
in Second Reading. 

.. 

. 

Annex: 
1. 

2. 

Comparative table showing Commission's Proposal, Parliament First Reading 
Amendments, Council Common Position, Parliament's Second Reading 
Amendments and Common Position  thereon. 
Council  common  position  (EC)  N°  6/95  of  22nd  May  1995,  published  in  the  Official 
Journal on 26th June  1995 (N° C160). 

Reference documents : 

1. 

2. 

3. 

4. 

Commission's proposal : 
22nd  September  1994, COM(94)358 final - 94/0190 (SYN) published  in O.J. N° C287 of 
15th October  1994 pages 7 to 10. 
European  Parliament's first reading approval : 
28th  October  1994 approval  document  N° A-0036/94  published  in O.J.  N° C323  of  21st 
November  1994 pages 494 to 497. 
Communication  from  the Commission to the European Parliament (SEC(95)1171  final 
10 July  1995) on the Council's Common position (EC) N° 6/95 on ECIP. 
Decision of the European Parliament on the Common Position of the Council: 
26th October  1995, reference  PE 165.548. 

ECIP 
PROPOSITION  DE  REGLEMENT 

Amendments in 2nd Reading adopted 26th October  1995 
by the European Parliament 

N°<» 

2 

Amendments (Pit) 
2nd  Reading 

Considering 
Article*2) 

Financing decisions to respect 
considerations  of democracy  and 
human  rights 

6(2) 

Pit  1st Reading 
Amendments 
Financing decisions to 
respect  considerations 
of democracy and 
human rights 

Revised 
Proposition 
Not accepted  here, 
because new  11 th 
preamble covers this 
matter. 

Common  Position 
Council 

Not accepted  here, 
because  new  11th 
preamble covers this 
matter. 

3 

COMITOLOGY 
Parliament proposes a type I 
Consultative  Committee 

9(2) 

COMITOLOGY 
Parliament proposed a 
type I Consultative 
Committee 

Not  accepted. 

The Commission 
originally  proposed, as 
in the existing 
regulation  (319/92), lo 
use the existing 
ALAMED committees 
(Type III A) and used 
the same text as in the 
previous regulation  to 
explain their operating 
procedures.  Since in 
prncticc this works well 
the Commission  does 
not alter its position. 

Proposed  Commission 
Position 

No.  While the substance is 
accepted  in principle since this 
matter is now dealt with in a new 
11th preamble to the common 
position  which covers these 
questions so the Commission 
does not accept this text in 
Article 6(2). 
No.  The Commission  originally 
proposed, as in the existing 
regulation  (319/92), to use the 
existing ALAMED committees 
(Type  III A) and used the same 
text as in the previous regulation 
to explain  their operating 
procedures.  Since in practice 
this works well the Commission 
does not alter its position. 

G> 

(l> Numbering of amendments according to EP document "Decision of the European Parliament in Seconal Reading" document  PE 165.548, 26th October 
<2) Numbering of articles according to Council's Common Position of 22 May  1995, OJ N° C160 of 26.6.95. 

1995. 

N°c) 

4 

5 

6 

Amendments (Pit) 
2nd  Reading 
Parliament's amended  text "The 
Committee  referred  to in the 
above paragraph  shall be 
responsible  for  the  following:". 

Considering 
Articled 

9(3) 

*• 

Parliament  requests deletion of 
this article. 

9(4) 

The Parliament requests  that the 
Commission  "shall  inform  the 
budgetary  authority" of its 
coordination  with  the  European 
Investment  Bank. 

9(6) 

Pit  1st Reading 
Amendments 
Parliament's amended 
text "The Committee 
referred  to in the above 
paragraph  shall be 
responsible for the 
following:" 

Parliament  requested 
deletion  of this article. 

The Parliament 
requests that the 
Commission  "shall 
inform  the budgetary 
authority" of its 
coordination  with the 
European  Investment 
Bank 

Revised 
Proposition 

Common  Position 
Council 

Not revised. 

Not  accepted. 

Not  accepted. 

Not  accepted. 

Not  accepted. 

Not  accepted. 

Proposed  Commission 
Position 
The Commission  "could" accept 
this amendment  if it were slightly 
rephrased  lo say quote: "the 
Committee  referred  to in the 
above paragraph shall assist the 
Commission  with regard  to the 
following  ..." unquote. 
No.  On this matter, the 
Commission  and the  Parliament 
agree on the substance, but the 
Commission's  text  is more 
explicit as regards the operating 
modalities of the Committee and 
should  be maintained. 
No - Such a prior  information 
mechanism  would  render ECIP 
unmanageable.  Also the matters 
to be dealt  with are often  a 
banking and a commercial 
confidentiality  (especially as 
regards the EIB) and highly 
technical. 

Appropriate  (non-confidential) 
information  on these matters will -
be provided  to the Parliament ex 
post  in the Annual  Reports 
provided  for  at Article  10.1. 

(1) Numbering  of amendments  according  to EP document "Decision  of the European  Parliament  in Second  Reading" document  PE  165.548, 26th  October  1995.. 
[2)  Numbering of articles according  to Council's Common  Position  of 22 May  1995, OJ N° CI60 of 26.6.95. 

N°(') 

7 

Amendments  (Pit) 
2nd  Reading 
The  Parliament  requests that the 
Annual  Report  on ECIP "... be 
accompanied  by an  up-dated 
financial  statement." 

Considering 
Article*2) 

10(1) 

8 

The Parliament  asks that the costs 
of this technical  assistance  "... be 
estimated  each year within the 
framework  of the budgetary 
procedure." 

10(4) 

Pit  1st Reading 
Amendments 

The Parliament 
requests that the 
Annual  Report on 
ECIP "... be 
accompanied  by an up 
dated  financial 
statement." 

t 

The Parliament  asks 
that  the costs of this 
technical  assistance  "... 
be estimated  each year 
within the  framework 
of the budgetary 
procedure." 

Revised 
Proposition 

Common  Position 
Council 

Proposed  Commission 
Position 

Not  accepted. 

Not  accepted. 

Not accepted. 

Not  accepted. 

No - These statements are 
established  in the  framework  of 
the annual  budget.  The 
Commission  does not think  it is 
appropriate  to "update" these 
financial  statements  in April each 
year.  The Commission does, 
however, assure the Parliament 
and  the Council  that  it will annex 
to the Annual  Reports a copy of 
the financial  statement 
established  in the budgetary 
procedure  for the year when the 
report  is presented. 
No - The Commission  rejects  this 
amendment.  It can provide the 
Parliament and the Council 
information  cxpost  in the Annual. 
Report (10.1) on credits  affected 
lo these actions. 

&Z 

<l) Numbering of amendments according to EP document  "Decision of the European" Parliament in Second Reading!' document  PE  165.548, 26th  October  1995. 
(2> Numbering  of articles according to Council's Common Position of 22 May  1995, OJ N° C160 of 26.6.95. 

No  C  160/8 

Official  J o u r n al  of  the  European  Communities 

.26.  6.  95 

9 

C O M M ON  POSITION  (EC)  No  6/95 

adopted  by  the  Council  on  22  May  1995 

with  a  view  to  adopting  Regulation  (EC)  No  ..  795  on  the  implementation  of  the  'European 
Communities  Investment  Partners  Financial  Instrument'  for  the  countries  of  Latin  America, 
Asia,  the  Mediterranean  region  and  South  Africa 

(95/C  160/02) 

THE  COUNCIL  OF  THE  EUROPEAN  UNION, 

Having  regard  to  the  Treaty  establishing  the  European 
Community,  and  in  particular  Article  130w  thereof, 

Having  regard  to  the  proposal  from  the  Commission  ('), 

Acting  in  accordance  with  the  procedure  of  Article  189c 
of  the  Treaty (2), 

the  Community 

Whereas 
financial, 
is 
technical  and  economic  cooperation  with  the  developing 
countries  of  Latin  America,  Asia  and  the  Mediterranean 
region,  and  with  South  Africa; 

implementing 

Whereas  in  order  to  strengthen  such  cooperation,  it  is 
necessary,  inter  alia,  to  encourage  mutually  beneficial 
investment,  particularly  by  - small  and  .  medium-sized 
enterprises  (SMEs); 

Whereas  the  Council  has/reached  a  consensus  on  die 
importance  of  die  role  of  the  private  sector 
the 
development  process; 

in 

Whereas  joint  ventures  and  investment  by  Community 
undertakings  in  developing  countries  can  bring  certain 
benefits  for. these  countries,  including  the  transfer  of 
capital,  know-how,  employment,  ûie  transfer  of  training 
and  expertise,  increased  export  possibilities  and 
the 
meeting  of  local  needs; 

Whereas  a  three-year  pilot  scheme  was  launched  in  1988 
to  promote,  via  a  European  Communities  Investment 
Partners  (ECIP)  financial  instrument,  the  creation  of  joint 
ventures  between  the  Community  and  countries  of  Latin 
America,  Asia  and  the  Mediterranean  region  and  was 
trial 
continued  and  extended  for  a  further 
(EEC) 
period 
No'319/92  ('); 

from  1  January  1992  by  Regulation 

three-year 

(')  OJ  No  C  2S7,  15.  10.  1994,  p.  7. 
(;)  Opinion  of  the  European  Parliament  of  28  October  1994  (OJ 
No  C  323, 2 1.  11.  1994,  p. 497),  Council  Common  Position 
the  Official  Journal)  and 
in 
of 
(not  yet 
Decision  ol 
the  European  Parliament  of 
published  in  the  Official  Journal) 

(not  yet  published 

(')  OJ  No  L 35,  12.  2.  1992,  p.  1. 

Whereas  the  Court  of  Auditors  delivered  an  opinion  in 
December  1993  pursuant  to  Article  9  (3)  of  Regulation 
(EEC)  No  319/92  on  the  implementation  of  ECIP,  which 
concluded  that  it  meets  a  real  need  of  which  the  market 
takes  no  or  only  inadequate  account,  and  made  specific 
recommendations  for  improvements  in  its  management; 

the 

the  results  of 

Whereas  the  European  Parliament  and  the  Council  have 
considered 
independent  appraisal 
forwarded  to  them  in  March  1994  in  conformity  with 
Ankle  9  (2)  of  Regulation  (EEC)  No  319/92  which 
concluded  that  ECIP  has  met  its  principal  objective  of 
promoting  mutually  beneficial  investment  by  Community 
and  local  operators  in  EC/local  joint  ventures  in  the 
countries  of  Asia,  Latin  America  and  the  Mediterranean, 
further 
instrument 
and 
continued  and  reinforced; 

should  be 

the  ECIP 

that 

to,  and  economic  cooperation  with, 

Whereas  the  Council  adopted  on  25  February  1992 
Regulation  (EEC)  No  443/92  on  financial  and  technical 
assistance 
the 
developing  countries  in  Asia  and  Latin  America  (4)  and 
on  29  June  1992  Regulation-  (EEC)  No 
1763/92 
respect  of  all 
financial  cooperation 
concerning 
Mediterranean  non-member  countries (3); 

in 

the  continuation 

and:  extension  of 

the 
Whereas 
instrument  is  therefore  necessary  in  order  that  full  use 
may  be  made  of  the  possibilities  of  mutually  beneficial 
action  in  the  countries  of  Latin  America,  Asia  and  the 
Mediterranean  region; 

Whereas  the  Council  on  19  April  1994  concluded  that  to 
encourage  Community  investments  in  SMEs  in.  South 
its 
Africa,  advantages  equivalent 
follow-up  instrument  could  be  granted  to  South  Africa, 
and  that  specific  financing  of  this  instrument  would  be 
provided  to  that  end; 

the  ECIP  or 

to 

Whereas  it  is necessary  to 'take  account  of  democracy  and 
human  rights  issues,  and  to  promote  investments  which 
improve  working  conditions,  in  particular  for  women,  do 

H  OJ  No  L 5 2,  27.  2.  1992,  p.  1. 
(*)  OJ  No  L  181,  1.  7.  1992,  p.  5.  Regulation  as  amended  by 
Regulation  (EC)  No  1735/94  (OJ  No  L  1S2,  16.  7.  1994, 
p.  o). 

26.  6.  95 

EN 

Official  Journal-of "the  European  Communities 

No  C  160/9 

not  exploit  employees  and  exclude  unacceptable  practices 
such  as  forced  labour  and  slavery; 

2. 

the 

Whereas 
undertakings 
encouraged; 

broadest 

possible 

in 

all  Member 

participation 
should 

States 

by 
be 

Whereas  all  the  Member  States  should  be  encouraged  to 
participate  in  the  promotion  of  their  investments  in  the 
the  Mediterranean 
countries  of  Latin  America,  Asia, 
region  and  South  Africa  through  financial 
institutions 
specializing  in  development; 

financial 

reference  amount,  within 

Whereas  a 
the 
meaning  of  point  2  of  the  Statement .of  6  March  1995  by 
the  European  Parliament,  Council  and  Commission  has 
been  inserted  in  this  Regulation  for  the  entire  duration  of 
the  programme,  without  the  budget  authority's  powers  as 
defined  in  the  Treaty  being  thereby  affected, 

HAS ADOPTED THIS  REGULATION: 

Article  1 

its  economic  cooperation  with 

1.  As  part  of 
the 
countries  of  Latin  America,  Asia,  the  Mediterranean 
region,  and  South  Africa,  the  Community  shall  operate 
for  the  period  1995—-1999  special  cooperation  schemes 
aimed  at  promoting  mutually  beneficial  investment  by 
Community  operators,  particularly  in  the  form  of  joint 
ventures  with  local  operators  in  the  countries  eligible 
including  tripartite  operations  with  other  developing 
countries  to  promote  regional  integration. 

2.  Account  being  taken  of  their  respective  possibilities 
and  needs,  SMEs  will  receive  priority^in  application  of 
the  scheme,  while  large  multinational  undertakings  will 
be  ineligible. 

Article  2 

The  European  Communities  Investment  Partners  (ECIP) 
the 
financial 
'instrument',  shall  offer  four  kinds  of  financing  facility 
covering: 

instrument,  hereinafter 

referred 

to  as 

1.  grants  for  the  identification  of  projects  and  partners, 
not  exceeding  50%  of  the  cost  of  the  operation  up  to 
a  ceiling  of  ECU  100 000;  however,  where 
the 
operation  relates  to  the  preparation  of  a  privatization, 
or  a  'Build,  Operate  and  Transfer'  (BOT)  or  a  'Build, 
Operate  and  Own'  (BOO)  scheme  in  infrastructure, 
utilities  or  environmental  services  where  an  eligible-
country  government  or  public 
the 
beneficiary  this  facility  may  be  increased  to  100%  of 
the  cost  of  the  operation  up  to  a  ceiling  of  ECU 
200  000  (Facility  No  1); 

agency 

is 

interest-free  advances  for  feasibility  studies  and  other 
action  by  operators  intending  to  set  up  joint,ventures 
or  to  invest,  not  exceeding  5 0%  of  the  cost  up  to  a 
ceiling  of  ECU  250 000,  within  which  prc-fcasibility 
travel  costs  of  ECU  10 000  'maximum  may  be 
financed  by  grant  (Facility  No  2); 

3.  capital  requirements  of  a  joint  venture  or  a  local 
company  with  iicensing  agreements,  in  order  to  meet 
investment  risks  peculiar 
to  developing  countries, 
through  participation  in.the  provision  of  equity  or  by 
equity  loans  not  exceeding  2 0%  of  the  joint  venture's 
capital  up  to  a  ceiling  of  ECU  1  million  (Facilitv 
No  3); 

4. 

interest-free  advances  and  grants  not  exceeding  50 % 
of  the  cost  up  to  a  ceiling  of  ECU  250  000,  for 
training,  technical  assistance  or  management  expertise 
of  an  existing  joint  venture,  or  joint  venture  about  to 
be  set  up,  or  of  a  local  company  with  a  licensing 
agreement  (Facility  No  4). 

The  aggregate  amount  made  available  under  Facilities 
'Nos  2,  3  and  4  may  not  exceed  ECU  1  million  per 
project. 

Article  3 

The  financial  institutions  shall  be  selected  by  the 

- 1. 
Commission,  further  to  the  opinion  of  the  Committee, • 
defined 
commercial  banks,  merchant  banks  and 
promotion  bodies. 

in  Article  9,  from  among  development  banks, 
investment 

Financial 

institutions  which 

2. 
proposals 
Article 
arrangements  to  be  determined  by  the  Commission. 

in  accordance  with 
fees 

submitted 
in 
accordance  with 

the  criteria  defined 

'6  will 

receive 

have 

in 

Article  4 

1.  With  regard  to  Facility  No  1  set  out  in  Article  2, 
financing  applications  may  be  submitted  either  directly  to 
the  Commission  by  the  institution,  association  or  body 
carrying  out  the  identification  of  partners  and  projects,  or 
through  a  financial  institution. 

In  the  case  of  Facilities  Nos  2,  3  and  4  set  out  in 
2. 
the 
Article  2,  applications  may  be 
undertakings  concerned  solely 
financial 
institutions  defined  in  Article  3.  Community  funds  for  the 
participating  undertakings  shall  be  applied 
for  and 
provided  exclusively  through  the  financial  institution. 

submitted  by 
the 

through 

3.  With  regard  to  Facility  No  2  set  out  in  Article  2, 
the 
institutions  and  undertakings  shall  be 
required  to  share  the  project  risk;  where  the  action  is 

financial 

No  C  160/10 

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26.  6.  95 

/7^1 

successful,  however,  the  Community  contribution  may  be 
more  than  5 0%  and  up  to  100%  of  the  cost  for  SMEs. 

In  the case  of  Facility  No  3  set  out  in  Article  2,  the 
4. 
financial  institutions  shall  provide  financing  at  least  equal 
to  that  provided  by  the  Community.  This  facility  shall  be 
reserved,  where  the  Community  is  concerned,  for  SMEs; 
exceptions  will  be  possible  in  cases  for  which  specific 
justification  is  provided  having  particular  significance  for 
development  policy,  for  instance  technology  transfer. 

of 

costs 

training, 

5. 
In  the  case  of  Facility  No  4  set  out  in  Article  2, 
interest-free  advance  finance  will  be  provided  as  regards 
the 
and 
management  expertise,  and,  for  SMEs  only,  the  costs  of 
training,  technical  assistance  and  management  expertise 
provided  by  external  sources  or  by  the  European  partner 
to  the  joint  venture  shall  be  eligible  for  grant  finance 
under  this  facility. 

assistance 

technical 

6. 
Framework  agreements  signed  by  the  Commission 
with  the  financial  institutions  shall  explicitly  stipulate 
that  the  Court  of  Auditors  has  the  power,  in  accordance 
with  Article  188c  of  the  Treaty,  to  audit  the  operations 
of  these  institutions  with  respect  to  financial  projects 
funded 
the  European 
Communities. 

the  general  budget  of 

by 

'. 

be 

shall 

For  Facility  No  2  set  out  in  Article  2,  interest-free 
2. 
advances 
the 
reimbursed 
arrangements  to  be  determined  by  the  Commission,  on 
the  understanding  that  the  final  repayment  periods  are  to 
be  as  short  as  possible  and  shall  in  no  instance  exceed 
five  years.  Such  advances  shall  not  be  refundable  where 
the  actions  have  produced  negative  results. 

according  "to 

For  Facility  No  3  set  out  in  Article  2,  participations 
3. 
by  virtue  of  this  instrument  shall  be  disposed  of  at  the 
earliest  opportunity  once  the  project  becomes  viable, 
having  regard 
rules  of  sound 
the  Community's 
financial  management. 

to 

4. 
Equity  loan  and  advance  repayments,  the  realization 
of  participations,  and  interest  and  dividend  payments  will 
be  accounted  for  by  recovery  orders  and  paid  back  to  the 
general  budget  of  the  European  Communities.  This  will 
be  done  on  an  annual  basis  after 
the  annual  audit 
provided  for  in  Article  10  (3),  in  reconciliation  with  the 
budget  accounts  as  at  31  December  of  that  year,  and  the 
amounts  involved  will  be  reported  in  the  progress  report 
for  that  year  provided  for  at  Article  10  (1).  All  assets 
held  by the  financial  institution  are  to  be paid  back  to  the 
Community  if  the  institution  ceases  to  be  associated  with 
the  instrument  or  if  the  instrument  ceases  to  operate. 

Article  5 

Article  6 

Contributions  awarded  under  the  instrument  shall, 
1. 
depending  upon 
to 
Article  2,  be  either  grants  or  interest-free  advances,  or 
participations  in  the  provision  of  equity  or  equity  loans. 

the  circumstances  and  pursuant 

in  the  equity  or  equity 

in 
Participation 
principle  .be  acquired  or  provided  by 
financial 
institutions  on  their  own  behalf.  However,  in  exceptional 
cases, 

loans  shall 

the 

—  where  the  financial  institution  cannot  intervene  in  its 
own  name  for  regulatory  or  legal  reasons  or  because 
of  its  statutes,  or 

—  where  the  Community's  direct  financial  participation 
the 
is  necessary  to  reinforce  in  a  decisive  manner 
capacity  of  the  promoters  to  raise  other 
financial 
resources  which  could  not  normally  be  mobilized  due 
to  the  particular  political  situation  or  to  specific  legal 
obstacles  in  the  host  country  of  the  joint  venture,  -

the  Commission  may  authorize  a  financial  institution  to 
hold  a  direct  participation  on  the  Community's  behalf. 

Only  projects  with  a  particular 
environmental 
transfer  shall  qualify  for  such  direct  participation. 

impact  or  significance 

development 

or 
technology 

for 

industrial, 

The  commercial, 
decisions'  of  the  joint  undertakings  set  up  under 
instrument 
undertakings. 

investment  and 

exclusively 

shall  be 

financial 
the 
those 

taken 

by 

1. 
Projects  shall  be.selected  by  the  financial  institution 
or,  in the case  of  Facility No  1 set out  in  Article  2,  by  the 
Commission  and  the  financial  institution,  in  the  light  of 
the  appropriations  adopted  by  the  budget  authority  and 
on  the  basis  of  the  following  criteria: 

(a)  the  anticipated  soundness  of  the  investment  and  the 

quality  and  good  repute  of  the  promoters; 

(b).  the  contribution  to  development,  in  particular 

in 

terms  of: 

—  impact  on  the  local  economy, 

—. creation  of  added  value, 

—  promotion  of  local  entrepreneurs, 

—  transfer  of 

technology  and  know-how 

and 

development  of  the  techniques  used, 

—  acquisition  of  training  and  expertise  by  managers 

and  local  staff, 

—  implications  for  women  and 
their  working  conditions, 

improvement  of 

—  creation  of  local  jobs  with  conditions  of  work 

which  do  not  involve  exploiting  employees. 

—  impact  on  the  balance  of  trade  and  balance  of 

payments; 

—  impact  on  the  environment, 

26.  6.  95 

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Official  Journal  of  the  European  Communities 

No  C  160/11 

s)Z 

—  manufacture  and  supply 

to 

the 

of  products  hitherto  difficult 
substandard, 

local  market 
to  obtain  or 

—  use  of  local  raw  materials  and  resources. 

The  final  financing  decision  shall  be  taken  by  the 
2. 
Commission,  which  shall  verify  compliance  with 
the 
criteria  set  out  in  paragraph  1  and  compatibility  with 
development 
Community 
cooperation  policy,  and 
to  - the 
Community  and  the  developing  country "concerned. 

the  mutual  benefit 

particular 

policies, 

in 

Article  7 

Countries  eligible  shall  be  the  developing  countries  of 
Latin  America,  Asia and  the Mediterranean  regions  which 
benefit 
cooperation 
measures  or  which  have  concluded  regional  or  bilateral 
cooperation 
the 
or 
Community,  and  South  Africa. 

from  Community  development 

association  -agreements  with 

Article  8 

The  financial  reference  amount  for  the  implementation  of 
this  programme,  for  the  period  1995  to  1999,  is  ECU 
250  million. 

Annual  appropriations  shall  be  authorized  by 
the 
budgetary  authority  within  the  limit  of  the  financial 
perspective. 

Article  9 

The  Commission  shall  implement  the  instrument  in 

1. 
accordance  with  this  Regulation. 

In  carrying  out  this  task,  the  Commission  shall  be 
2. 
assisted,  as  appropriate,  by. the  Committee  set  up  under 
Article  15  of  Regulation  (EEC)  No  443/92  or  by  the 
Committee  referred  to  in  Article  7  (1)  of  Regulation 
(EEC)  No  1763/92, and  these  Committees  shall  also  deal, 
for  the  purposes  of  ECIP,  with  matters  related  to  South 
Africa,  in  the  absence  of  a  specific  Committee. 

The  following  shall  be  adopted  under  the  procedure 

3. 
laid  down  in  paragraph  4: 

—  the  choice  of  financial  institutions  in  the  light  of  their 
experience  and  aptitude  for  making  a  preliminary 
selection  of 
the 
criteria  set  out  in  Article  6, 

in  accordance  with 

the  projects 

—  revision  of  the  amounts  and/or  financing  conditions 
under  each 
amount 
available  under  Facilities  2,  3  and  4  as  laid  down  in 
Article  2  in  a  way  consistent  with  other  provisions  of 
this  Regulation. 

the  aggregate 

facility  and 

4.  •  With 
in 
paragraph  3,  the  representative  of  the  Commission  shall 

the  matters  mentioned 

regard 

to 

submit  to  the  Committee  a  draft  of  the  measures  to  be 
taken.  The  Committee  shall  deliver  its  opinion  on  the 
draft  within  a  rime  limit  which  the  Chairman  may  lay 
the  matter.  The 
to  the  urgency  of 
down  according 
opinion  shall  be  delivered  by  the  majority  laid  down  in 
Article  148  (2)  of  the  Treaty  in  the  case'of  decisions 
which  the  Council  is  required  to  adopt  on  a  proposal 
from  the  Commission. The  votes  of  the  representatives  of 
the  Committee  shall  be 
the  Member  States,  within 
weighted  in  the  manner  set  out  ,in  that  Article. • The 
Chairman  shall  not  vote. 

The  Commission  shall  adopt  the  measures  envisaged 
the 
they  are 
if 
Committee. 

in  accordance  with 

the  opinion  of 

If  the  measures  envisaged  are  not  in  accordance  with  the 
opinion  of  the  Committee,  or  if  no  opinion  is  delivered, 
the  Commission  shall,  without  delay,  submit-  to 
the 
Council  a  proposal  relating  to  the  measures  to  be  taken. 
The  Council  shall  act  by  a  qualified  majority. 

If,  on  the  expiry  of  one  month  from  the  date  of  referral 
to  the  Council,  the  Council  has  not  acted^  the  proposed 
measures  shall  be  adopted  by  the  Commission. 

5. 
Furthermore,  the  Committee  may  examine,  at  the 
Commission's  initiative  or  at  the  request  of  one  of 
its  members, 
the 
any  question 
implementation  of  this  Regulation,  in  particular: 

connected  with 

—  information  on  the  projects  funded  over  the  previous 

year, 

—. the  terms  of  reference  of  the  independent  appraisal 

provided  for  in  Article  10, 

—  any  other  information  which  the  Commission  wants 

to  submit  to  it. 

In  order  to  ensure  consistency  of  cooperation  and 
6. 
the 
improve  complementarity  between  operations, 
to 
Commission  and  the  European  Investment  Bank  shall 
. exchange  any  relevant  information  on  financing  that  they 
envisage  granting. 

The  Commission  will  ensure 
relevant 
taken  of 

that  due  account 
7. 
the 
is 
information 
implementation  of  ECIP  as...-well 
comparable 
instruments  of  the  Community  such  as  JOPP,  Alinvest, 
Medinvest,  and  others  as  appropriate, 
to 
to  promote  private 
establish  a  coordinated  approach 
investment  in  developing  countries. 

concerning 
as 

in  order 

Article  10 

to 

The  Commission  shall  send 

1. 
the  European 
Parliament  and  to  the  Council,  by  30  Aprii  each  year  at 
the  latest,  a  progress  report  showing  the  projects  selected 
and  their  economic  impact,, notably  total  investment,  the 
number  of  joint  ventures  and  jobs  created  as  well  as  the 
appropriations  granted  and  the  repayments  to  the  general 
budget  of 
including 
the  European  Communities  and 
annual  statistics  for  the  previous  year. 

/) 3 

No  C  160/12 

EN 

Official  Journal  of  die  European  Communities 

26.  6.  95 

2. 
TIK  Commission  shall  forward  the  results  of  an 
independent  appraisal  of  the  instrument  to  the  European 
Parliament  and  the  Council  before* the  end  of  1998. 

the 
This  report  must  permit  an  assessment  of 
implementation  of 
financial 
management,  economy  and  a  cost/benefit  analysis  of  the 
instrument. 

the  principles  of  good 

3.  Without  prejudice  to  the  responsibilities  of  the 
Commission  and  the  Court  of  Auditors  as  laid  down  in 
the  Financial  Regulation applicable  to  the General  Budget 
of  the  European  Communities,  the  Commission  shall 
obtain  each  year  an  independent  financial  audit  of  the 
financial  institutions  and  of  the  Facility  1  beneficiary 
organizations,  as  regards  the  ECIP  funds  that  they  have 
received.  The  Commission  shall  make  specific  provision 
in  the  framework  and  specific  financing  agreements  for 
anti-fraud  measures,  in  particular  a  mechanism  for  the 
recover)'  of  advances  which  arc  not  fully  justified  after 
such  audit. 

4.  Use of external  technical  assistance may  be  made,  as 
appropriate,  on  condition  that  the  technical  assistance 

financed  is  directly  linked  to  the  special  nature  of  the 
ECIP  instrument  and  is  of  direct' benefit  to  the  Alamed 
countries  and  South  Africa.  The  costs  of  such  technical 
assistance shall  be limited  to  5 %  of  the  budgetary  credits 
available,  not  including  the, fees  paid  to  the  financial 
institution^  which  shall  be 
the  credits 
to 
allocated  to  each  individual  action  financed. 

imputed 

Article  11 

This  Regulation  shall  enter 
into  force  on  the  day 
following  that  of  its  publication  in  the  Official  Journal 
of 
the  European  Communities  and  shall  expire  on 
31  December  1999. 

This  Regulation  shall  be  binding  in  its  entirety  and 
directly  applicable  in  all  Member  States. 

Done  at  . .. 

For the  Council 

The  President 

ISSN 0254-1475 

COM(95) 686 final 

DOCUMENTS 

EN 

11 

Catalogue number  :  CB-CO-95-702-EN-C 

ISBN 92-77-97795-7 

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