Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation of the European Parliament and of the Council on the access to Community External Assistance’(COM(2004) 313 final — 2004/0099 (COD))
Date: 2004-12-15
Institutions: European Economic and Social Committee
Subjects: EU aid, EU policy, developing countries, development aid, terms for aid

28.6.2005

EN

Official Journal of the European Union

C 157/99

Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation of the
European Parliament and of the Council on the access to Community External Assistance’

(COM(2004) 313 final — 2004/0099 (COD))

(2005/C 157/18)

On 15 August 2004, the Council decided to consult the European Economic and Social Committee, under
Article 262 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for External Relations, which was responsible for preparing the Committee's work on the
subject, adopted its opinion on 9 November 2004. The rapporteur was Mr Zufiaur Narvaiza.

At its 413th plenary session on 15 and 16 December 2004 (meeting of 15 December 2004), the European
Economic and Social Committee adopted the following opinion by 145 votes in favour with five absten-
tions.

1. Introduction

1.1
The aim of making development aid more effective by
reducing the transaction costs involved has prompted the
donor community to engage in a constant process of adjust-
ment. This is reflected in the positions of the Development
Assistance Committee (DAC) of the Organisation for Economic
Co-operation and Development (OECD), a body which brings
donors together and attempts to harmonise their policies.

the DAC recommendation on untying developing aid to the
least developed countries, while maintaining the existing
system of price preference under the EU-ACP framework. The
(Report on the
Council, and subsequently the Parliament
Communication from the Commission to the Council and to
the European Parliament on Untying: Enhancing the effective-
ness of aid COM(2002) 639 final — 2002/2284 (INI) A5-
0190/2003) support untying on the basis of three conditions
to be met: regional and interregional integration, institutional
and capacity building in the recipient countries and avoidance
of distortion of competition between donor and recipient coun-
tries. To this must be added the principles of reciprocity and
cooperation with international organisations.

A clear

consensus has

1.2
emerged following several
decades of experience that the practice of directly or indirectly
tying aid to the purchase of goods or services from the donor
is not only inconsistent with the objectives of promoting devel-
opment, but also reduces its effectiveness. The obligation to
buy goods or services from public or private enterprises in the
donor country, with the obvious lack of competition, entailed
higher costs and also encouraged corruption. Such practices
gave rise to a series of internal market distortions and infringed
EU rules on competition, mainly with regard to the principles
of equal treatment and non-discrimination.

subsequent communications

This position has been progressively fleshed out in a
1.5
number of
from Community
bodies, which are cited in the draft regulation. It still remained
to establish and give more practical form to the conditions for
access to the various Community external assistance instru-
ments. The present proposal comes in response to this need.

1.3
As a result, this concern has been on the donor agenda
over recent years, leading to the adoption by the OECD/DAC
in March 2001 of a recommendation to untie aid to the least
developed countries, which has since become a benchmark in
the field. The underlying purpose of the DAC recommendation
is to cut aid transaction costs by 15-30 %. According to World
Bank data, complete untying of aid could reduce these costs by
25 %.

1.4
In the Community context, this approach was adopted
at the March 2002 General Affairs Council held in parallel with
the Barcelona European Council
the
Monterrey international conference on financing for develop-
ment. It concluded that the European Union would implement

in preparation for

1.6
Since the instruments under the European Development
Fund (EDF) and the Community budget are still of differing
legal natures, it seems logical to establish two parallel processes.
The Commission's recent Communication on Building our
common future: Policy challenges and budgetary means in the
enlarged Union 2007-2013 (1) provides the framework for the
present proposal for a regulation. It must, however, be borne
in mind that the EDF budgeting procedure will have a future
impact, should the fund come under the EC budget. Therefore,
this present proposal for a regulation only covers the scope of
the instruments within the EC budget. When the EDF is
included in the EC budget,
it too will be governed by the
present draft regulation (2).

(1) COM(2004) 101 final of 10.2.2004.
(2) It is currently difficult to predict when the process through which
the EDF would become part of the EC budget could be completed.

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Official Journal of the European Union

28.6.2005

1.7
The proposal for a regulation on access to Community
external assistance therefore appears both relevant and fully
justified, on the grounds of both the commitments of the Com-
munity institutions referred to above and the criteria of subsi-
diarity and proportionality cited in the explanatory memor-
andum to the draft regulation.

transparency, consistency and proportionality. The expression
‘to the maximum extent’ with regard to the beneficiary coun-
tries in paragraph 5 undermines this. The EESC would propose
including a reference to the partnership principle, which is a
basic pillar of Community development policy, as well as of
the DAC, in order to underscore the importance of beneficiary
country involvement.

2. Specific comments

Article 1 — Scope

Article 6 — Derogations from the rules of eligibility and origin

2.1
The EESC has no objection to make. The scope of the
regulation is appropriate, it being clear that certain instruments,
such as budgetary support, are excluded from it. The list
contained in Annex I is accurate.

2.6
In the EESC's view, it is reasonable for a regulation of
this type to contain exceptions in order to allow the necessary
flexibility in application. This is justified on the grounds given
in the regulation — urgency, or unavailability on the market of
certain products and services — in duly substantiated cases.

Article 2 — Definition

The EESC agrees with the position set out in the regu-
2.2
lation, that it should be interpreted on the basis of the financial
regulation and the other instruments applicable to the general
budget of the European Communities.

Article 3 — Rules of eligibility

instruments

logical. The

2.3
The establishment of different categories according to
specification
seems
the various
regarding instruments of geographical scope is also appropriate
as a means of strengthening regional integration and capacity-
building. In view of what is a decades-old tradition in the area
of tied aid and the inertia it has produced, the EESC would
emphasise the need to foster the involvement of natural and
legal persons from the developing or
transition countries
appearing on the OECD/DAC lists. Application of the principle
of non-tied aid and the opening up of public procurement
must not be prejudicial to countries receiving Community assis-
tance.

Article 4 — Rules of origin

2.4
In keeping with the previous article, the EESC welcomes
all clarification concerning supply of materials and rules of
origin. The EESC would highlight
the need for very strict
compliance with all internationally-approved labour, environ-
mental and human rights rules and standards, as it has done
previously (1). Untying aid and opening up markets must be
compatible with high standards of social and environmental
protection.

Article 5 — Reciprocity with third countries

The EESC fully supports the approach taken by the
2.5
article in appreciating real, and not only official, reciprocity.
Previous experience in this area argues in favour of this basic
precaution and of granting reciprocity according to criteria of

(1) See the EESC Opinion on Human rights in the Workplace. Rappor-
teurs: Mr Putzhammer and Mr Gafo Fernandez, DOC 260 of 17/09/
2001, p. 79-85. Also see the EESC Opinion on Generalised system of
preferences (GSP). Rapporteur: Mr. Pezzini, OJ C 112, 30.4.2004.

Article 7 — Operations involving international institutions or third
countries

2.7
A reference of this kind is made necessary by the fact
that a large proportion of assistance is channelled through
multilateral or other mechanisms, and that many operations
are co-financed. It is therefore appropriate. Care must be taken,
especially in such cases, to ensure equal treatment of between
donors, and reciprocity.

Article 8 — Humanitarian aid

2.8
The particular nature of humanitarian aid, of increasing
importance in the international arena, explains why a number
of derogations from Community legislation were acknowledged
as far back as Regulation 1257/96. The new framework part-
nership contract which the Humanitarian Aid Office (ECHO)
enters into with financial bodies maintains this approach. This
seems right,
in the interests of speed and effectiveness in
responding to emergencies; and it also seems appropriate that
the present regulation should apply in cases where the award
of procurement contracts is required.

Article 9 — Rapid Reaction Mechanism

As in the previous article,

2.9
mechanisms
criteria. The article amended is 6(4)(b).

should contain exceptional procedures

it is reasonable that such
and

Article 10 — Implementation of the regulation

2.10
In pursuit of its aim, the regulation amends specific
parts of the earlier regulations set out in the Annex. This
specific action is justified in view of the proliferation of regula-
tions in the 1990s and the diversity of the instruments created
by them. However, the expression ‘from time to time’ does not
seem right.

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C 157/101

Article 11 — Entry into force

2.11

No comment.

3. General comments

3.1
The present proposal for a regulation on access to Com-
munity external assistance follows the established doctrine of
donor organisations and the previous positions taken by the
Community institutions and the Member States. Consequently,
the EESC sees nothing inappropriate or prejudicial
to the
Union's development cooperation or external action. On the
contrary, it considers that it will help enhance the effectiveness
of Community cooperation and its famous ‘three Cs’: coherence
— complementarity — coordination.

3.2
The EESC would however wish to emphasise certain key
ideas and recommend a number of aspects where the regu-
lation could be more rigorous and precise:

3.3
There should be greater insistence on the pro-active role
which the recipient countries ought to play as key actors in
development. Untying must not be detrimental to their inter-
ests, and greater involvement of these countries must be facili-
tated, as recommended in the above-mentioned international
documents and the positions of the Community institutions
themselves. The EESC would nevertheless recommend to reci-
pient countries that they adopt and apply the principles of
transparency, equality, reciprocal recognition and proportion-
ality in their procurement procedures, as well as good govern-
ance practices which will enable them to progress politically as
well as economically and socially.

Brussels, 15 December 2004.

3.4
In the interests of more effective and efficient applica-
tion of the present regulation, aspects of the Community aid
process such as supply costs, real transport costs or deployment
of resources need to be analysed in depth, so as to locate more
accurately any bottlenecks and inefficiencies in the system.
Although both in letter and in spirit, the thrust of the regu-
lation seems to be for simplification and improvement, the
EESC is concerned that new and rigid rules may be introduced
leading to more red tape and preventing aid from being
supplied rapidly.

3.5
The entire regulation should be geared to complying
with international socio-occupational and environmental stan-
dards, and care must be taken to ensure that nothing in it facili-
tates labour, social or environmental dumping practices. While
respecting the active role of partners in the Community aid
recipient countries, and fostering the principle of association,
compliance with other labour, environmental or social stan-
dards must not be overlooked. Article 4 of the regulation
should contain an explicit statement to this effect.

3.6
The dead weight of tied assistance is universally consid-
ered as one of the constraints imposed by the prevailing model
of development cooperation, reducing its effectiveness and
undermining its credibility by giving priority to ‘donor’ goods
and services. Untying is not an end in itself; it is to be seen as a
tool, a means for achieving greater impact at lower cost. From
this point of view, more involvement on the part of the benefi-
ciary countries is vital if they are to take charge of their own
development by fostering the participation of a wide range of
social, labour and business organisations in the process.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND