Communication from the Commission to the European Parliament pursuant to the second subparagraph of Article 251(2) of the EC Treaty concerning the common position of the Council on the adoption of a Regulation of the European Parliament and of the Council establishing a financing instrument for development cooperation
Date: 2006-10-24
Institutions: European Commission
Subjects: EU financing, aid policy, cooperation policy, development aid, interinstitutional relations (EU), operation of the Institutions

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 24.10.2006 
COM(2006) 628 final 

2004/0220 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to the second subparagraph of Article 251(2) of the EC Treaty 

concerning the 

common position of the Council on the adoption of a Regulation of the European 
Parliament and of the Council establishing a financing instrument  
for development cooperation 

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2004/0220 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to the second subparagraph of Article 251(2) of the EC Treaty 

concerning the 

common position of the Council on the adoption of a Regulation of the European 
Parliament and of the Council establishing a financing instrument  
for development cooperation  

1. 

BACKGROUND 

Date of transmission of the proposal to the EP and the Council 
(document COM(2004)629 final -2004/0220(COD), 
as amended COM(2004)629 final/2): 

1 October 2004  

Date of the opinion of the European Parliament, first reading: 

18 May 2006 

Date of transmission of the amended proposal: 

24 May 2006 

Date of adoption of the common position: 

16 October 2006 

2. 

OBJECTIVE OF THE COMMISSION PROPOSAL 

The initial Commission proposal for a Development Cooperation and Economic Cooperation 
Instrument  (DCECI),  which  embraced  geographic  and  thematic  aspects  of  cooperation  with 
developing  countries,  including  ACP  countries,  and  industrialised  countries,  was  not 
acceptable  to  Parliament,  which  adopted  a  large  number  of  amendments  at  first  reading  in 
May 2006. After the vote at first reading, intensive discussions between the three institutions 
took place in order to find a solution as early as possible.  

An exchange of letters between President Barroso and President Borrell in June 2006 paved 
the  way  for  an  overall  agreement  on  the  package  of  external  instruments:  first  reading 
agreement  on  the  European  Neighbourhood  and  Partnership  Instrument  (ENPI),  the 
Instrument  for  Stability  (IfS)  and  an  agreement  on  the  Instrument  for  Pre-Accession 
Assistance  (IPA)  on  the  condition  of  a  separate  Human  Rights  Instrument  and  a  new 
architecture  involving  a  maximum  of  three  instruments  out  of  the  DCECI  (Industrialised 
Countries  Instrument  (ICI),  a  geographic  Development  Cooperation  Instrument  (DCI)  and 
possibly a thematic DCI). President Barroso’s letter made it clear that the Commission could 
accept splitting the DCECI, provided that a broad definition of development cooperation was 
ensured.  

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The Presidency proposed that the Regulation of the European Parliament and of the Council 
establishing  a  financing  instrument  for  development  cooperation (DCI)  should  cover  both 
geographic cooperation with developing countries as well as thematic programmes and should 
be based on a single legal basis (Art. 179 TEC). Unlike the initial proposal, the DCI would 
contain  an  indicative  financial  breakdown  as  well  as  increased  policy  content  regarding 
geographic and thematic programmes to address Parliament’s main concern that its powers as 
co-legislator should be fully respected. The Commission could agree to the changes related to 
the structure of the DCI in order to achieve a global compromise on the overall architecture of 
the external action instruments. 

After  further  intensive  tripartite  discussions  between  the  Parliament’s  DEVE  committee 
negotiating  team,  the  Presidency  and  the  Commission  in  August  and  September  2006,  an 
agreement  was  reached  on  a  negotiated  common  position.  In  particular,  a  compromise  was 
reached  on  the  outstanding  issues,  which  have  previously  been  defined  by  Parliament  as 
‘breaking  points’  and  relate  to  eligibility  of  assistance  as  Official  Development  Assistance 
(ODA), sectoral spending targets, the structure of the thematic programmes and the dialogue 
with the Parliament on the draft programming documents (see below under point 3.3). 

This  negotiated  common  position,  which  was  adopted  by  the  Council  on  16  October  2006, 
was  approved  by  Parliament’s  DEVE  committee  on  3  October  where  it  confirmed  that  it 
would  support  the  adoption  of  the  negotiated  common  position  by  Parliament  in  an  early 
second reading without further amendments.  

This approach will allow for the entry into force of the DCI in January 2007, thereby avoiding 
any gap in the legal framework for the delivery of assistance. 

3. 

COMMENTS ON THE COMMON POSITION 

3.1. 

General comments on the common position 

The Commission supports the negotiated common position which is the outcome of intensive 
negotiations  between  the  three  institutions.  It  is  in  line  with  the  essential  objectives  and  the 
underlying approach of the Commission’s initial proposal. The chair of the DEVE committee 
has  already  confirmed  in  a  letter  that  she  would  recommend  to  the  members  of  the  DEVE 
committee and to the Plenary that the updated common position be approved before the end of 
2006 without amendments in Parliament’s second reading. 

3.2. 

Main characteristics of the negotiated common position  

The negotiated common position reflects the following key elements: 

•  A separate instrument for democracy and human rights: The thematic programme on 
human  rights  and  democracy  is  no  longer  included  in  the  DCI.  A  new  Commission 
proposal  for  a  Regulation  on  establishing  a  financing  instrument  for  the  promotion  of 
democracy  and  human  rights  was  adopted  by  the  Commission  on  26  June  2006 
(COM(2006)354). 

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•  A  separate  instrument  for  cooperation  with  industrialised  countries:  The  Presidency 
proposal for a Regulation on cooperation with industrialised countries was presented in the 
Council COASI working group for the first time on 19 July 2006 and has been forwarded 
to Parliament for its opinion. 

•  A single legal basis, Article 179: Even though the Commission considers that a double legal 
basis,  Article  179  and  Article  181A,  would  guarantee  legal  certainty,  it  can  accept  a  DCI 
based  on  the  single  legal  basis  Article  179  TEC,  as  a  broad  definition  of  development 
cooperation  and  the  wide  scope  of  possible  action  under  geographic  and  thematic 
programmes  are  ensured  in  the  common  position  and  will  be  maintained  in  the  final 
Regulation.  This  is  also  in  accordance  with  the  so-called  “centre  of  gravity”  principle 
developed by the case-law of the Court of Justice.  

•  Recitals: A number of recitals have been added to provide further explanations in relation 

to the content of the DCI.  

•  Increased  focus  on  development  of  objectives  and  principles:  Article  2  sets  out  the 
general  objectives  of  development  cooperation  in  line  with  Title  XX  of  the  Treaty 
establishing  the  European  Community  and  the  European  Consensus  on  Development. 
Article 3 concerns the general principles on which the Community is founded as well as 
the mainstreaming of cross-cutting issues and policy coherence and reflects the most recent 
commitments  on  aid  effectiveness,  such  as  donor  coordination.  Paragraphs  9  and  10  of 
Article 3 state that the Commission shall inform and have regular exchanges of views with 
the Parliament and that it shall seek regular exchanges of information with civil society. The 
two  articles  present  the  general  framework  for  geographic  cooperation  and  for  thematic 
programmes. 

•  Articles 5- 10, geographic cooperation: These articles have been included to add policy 
content  to  geographic  cooperation  in  response  to  Parliament’s  request  for  policy  setting 
regulations.  In  particular,  the  horizontal  Article  5  applies  to  all  geographic  articles  and 
outlines  actions  in  areas  of  cooperation  which  correspond  to  the  areas  for  Community 
action  in  the  European  Consensus  on  Development.  The  other  articles  on  geographic 
cooperation  focus  on  the  specific  situation  in  the  geographical  region/country.  The 
different  regions/countries  are:  Latin  America  (Article  6),  Asia  (Article  7),  Central  Asia 
(Article 8), Middle East (Article 9) and South Africa (Article 10). Each article on specific 
cooperation  has  a  cross  reference  to  the  horizontal  Article  5,  making  it  clear  that  the 
actions mentioned in Article 5 apply to all regions while others mentioned under Articles 6 
to 10 are additional.  

•  Articles  11-16,  thematic  programmes:  These  articles  have  been  incorporated  to  add 
policy content in response to Parliament’s request for better defined policy priorities in the 
form  of  policy  setting  regulations.  The  horizontal  Article  11  defines  the  relationship 
between  thematic  programmes  and  geographic  cooperation  and  describes  the  area  of 
actions  in  which  thematic  programmes  add  value  to  the  geographic  cooperation.  The 
the  corresponding 
thematic  programmes  have  been  prepared  on 
communications from the Commission to the Council and the European Parliament and are 
designed  to  respond  to  future  challenges.  They  are  based  on  the  existing  thematic 
regulations,  but  go  beyond  them  in  order  to  address  new  priorities  which  have  evolved 
over  the  last  few  years,  and  which  have  been  set  out  in  the  ‘European  Consensus  on 
Development’.  The  different  thematic  programmes  are:  Article  12,  Investing  in  people; 

the  basis  of 

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Article  13,  environment  and  sustainable  management  of  natural  resources,  including 
energy;  Article  14,  non-state  actors  and  local  authorities;  Article  15,  food  security  and 
Article 16, migration and asylum.  

•  Article  17,  Sugar  Protocol  ACP  countries:  This  article  reflects  the  existing  Regulation 
266/2006 establishing accompanying measures for Sugar Protocol countries affected by the 
reform  of  the  EU  sugar  regime.  It  is  accompanied  by  a  Commission  declaration  which 
stresses the transitional character of the accompanying measures, which are due to expire 
in 2013 (see declaration on Article 17 in Annex). 

•  Articles 18-33: These articles include detailed provisions with regard to programming and 

the allocation of funds.  

•  Articles  33  and  34,  reporting  and  evaluation:  Evaluation  and  reporting  will  have  an 
increased focus on social sectors and on progress made towards achieving the MDGs. The 
implementation of geographic and thematic programmes will be evaluated where appropriate 
by means of independent external evaluations. As regards the latter, it is stated in Article 33 
that proposals by the Parliament or the Council for independent external evaluations will be 
taken into due account.  

•  Expiry and review clauses: Article 40 contains a review clause, including for the financial 

breakdown, and Article 41 includes an expiry clause. 

through 

•  Financial  reference  amount:  Article  38  in  combination  with  Annex  4  of  the  Council’s 
common position provides an indicative financial breakdown. Account has been taken of the 
European  Council  decision  of  16  December  2005  to  maintain  an  intergovernmental 
European Development Fund (EDF), which will finance geographical cooperation with the 
African, Caribbean and Pacific countries (ACP), except South Africa. The relevant articles 
have  been  modified  accordingly 
the  amended  proposal  of  24.5.2006 
(COM(2004)629 final/2). Consequently, the financial reference amount for the DCI, over 
the  period  2007-2013,  is  16  897  Euro  million  as  indicated  in  the  common  position.  This 
corresponds  to  the  amount  for  the  earlier  DCECI  (17  053  million  Euro)  from  which  the 
reference  amounts  for  the  new  Human  Rights  Instrument  (449  million  Euro)  and  for  the 
new Instrument on Cooperation with Industrialised Countries (172 million Euro) have been 
deducted and the indicative amount of 465 million Euro, which in the initial proposal was 
included  in  ENPI,  has  now  been  added  in  the  total  for  thematic  programmes,  to  finance 
activities  that  benefit  ENPI  countries.  The  indicative  amounts  allocated  to  each 
geographical  region  and  to  each  thematic  programme  are  laid  down  in  Annex  4,  which 
forms an integral part of the Regulation (see also Commission declaration on Article 38).  

3.3. 

Specific issues:  

The  following  issues  were  the  subject  of  protracted  negotiations  which  resulted  in  finely 
balanced compromises between the three institutions:  

•  Structure  and  scope  of  the  thematic  programmes:  While  preserving  the  integrated 
approach of the thematic programmes (TP) ‘Investing in people’ and ‘Non-state actors and 
local  authorities’,  the  TP  ‘Investing  in  people’  was  reshuffled  in  line  with  subheadings 
proposed  by  the  Parliament  (“good  health  for  all”;  “education,  knowledge  and  skills”; 
“gender  equality”;  and  “other  aspects  of  human  and  social  development”).  A  percentage 
was introduced in the TP ‘Non-state actors and local authorities’, according to which “at 

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least 85% of the funding foreseen under this thematic programme will be allocated to non-
state  actors.”  It  was  agreed  not  to  include  percentages  in  the  TP  ‘Investing  in  people’, 
since the Commission introduced a benchmark on  health and  education in its declaration 
concerning Article 5 (see below under ‘spending targets/ benchmarking’).  

•  Spending  targets/  benchmarking: Throughout the negotiations on the DCI, the Council 
and  Commission  made  clear  that  spending  targets  were  not  acceptable  for  them  (against 
the  principle  of  ownership  and  donor  coordination).  The  Parliament’s  Development 
Committee  favours  spending  targets  to  encourage  increased  allocations  to  social  sectors 
with a particular focus on basic health and education. It was agreed that Parliament would 
no  longer  insist  on  spending  targets  in  the  legal  text  if  the  Commission  proposed  in  a 
declaration  an  enlarged  benchmark  of  20%  for  basic  and  secondary  education  and  basic 
health in relation to country programmes covered by the DCI as a whole. The existing 35% 
benchmark on social infrastructure and services would be dropped. In the declaration, the 
Commission also prioritises basic health and education, and social cohesion as a whole in 
its programming and implementation role for country programmes. It will also include an 
MDG  profile  in  the  programming  document,  and  will  encourage  partner  countries  to 
prioritise  social  sectors  in  their  development  strategies.  Finally,  the  Commission  will 
ensure increased monitoring, evaluation and reporting on these objectives, with particular 
attention to social sectors and MDGs (see declaration on Article 5 in Annex). 

•  ODA-eligibility  and  non-developing  ENPI  countries:  It  was  agreed  that  Article  2  (4), 
should  specify  the  percentage  of  the  thematic  programmes  which  would  be  reported  as 
Official  Development  Assistance  (ODA),  namely  90%.  The  non-developing  ENPI 
countries (Russia and Israel) will be excluded ex officio, i.e. financial assistance to these 
countries will not count against the 10% which is not ODA. The margin of 10% gives the 
Commission the necessary flexibility to implement the TPs on migration and environment, 
which provide for  actions  that are not reportable  as ODA. Consequently, the current text 
strikes a fine balance between full ODA eligibility and the necessary margin of flexibility. 
The Commission, in a declaration attached to the Regulation, will confirm its commitment 
that  all  the  geographic  measures  and  the  overwhelming  majority  of  thematic  actions 
financed  under  the  DCI  will  be  eligible  for  ODA  and  that  it  does  not  intend  to  derogate 
from this practice (see declaration on Article 2 (4) in Annex).  

•  Dialogue  with  Parliament  on  draft  programming  documents:  A  number  of 
amendments related to Parliament’s participation in the programming process, which were 
not compatible with the Comitology decision (Council Decision 1999/468 of 28 June 1999, 
as  amended  by  Council  Decision  2006/512  of  17  July  2006),  which  sets  out  the  general 
framework for the exercise of implementing powers conferred on the Commission. It was 
agreed that a joint letter from Commissioners Michel and Ferrero-Waldner would be sent 
to Mr Mitchell and Mrs Morgantini, in which the Commission confirms its commitment to 
enter  into  a  regular  dialogue  with  Parliament  as  laid  down  in  the  declarations  on 
democratic  scrutiny  attached  to  the  Interinstitutional  Agreement.  In  addition,  a  new 
paragraph  9  has  been  included  in  Article  3,  according  to  which  the  Commission  shall 
inform and have regular exchanges of views with the Parliament. 

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4. 

CONCLUSION 

As  explained  above,  the  negotiated  common  position  reflects  to  a  very  large  extent 
Parliament’s requests and amendments at first reading as well as the understanding achieved 
between the institutions in their intensive discussions.  

The Commission can therefore support the negotiated common position.  

5. 

STATEMENTS BY THE COMMISSION 

The  following  declarations  entered  in  the  minutes  of  the  Council  formally  adopting  the 
common position of the Council (see Annex). 

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Commission Declaration on ODA-eligibility Art. 2 (4): 

ANNEX  

L'éligibilité  à  l'aide  publique  au  développement  telle  que  définie  par  le  Comité  d'aide  au 
développement  à  l'OCDE  continuera  à  être  la  règle  générale  pour  les  mesures  de  la 
Communauté finançant les programmes géographiques avec les pays en développement et les 
programmes  thématiques.  Pour  les  programmes  géographiques,  la  Commission  s'engage  à 
respecter l'obligation de moyens figurant dans le premier alinéa de l'article 2 (4) du projet de 
règlement.  Pour  les  programmes  thématiques,  l'immense  majorité  des  mesures  a  été  par  le 
passé  éligible  à  l'aide  publique  au  développement,  et  la  Commission  confirme  son 
engagement à poursuivre cette tendance.  

Commission Declaration concerning Article 5 DCI: 

The Commission reaffirms that the eradication of poverty and the pursuit of the Millennium 
Development Goals are at the core of the primary objective of its development assistance. 

It  recalls  that  it  reached  an  understanding  in  2002  with  the  European  Parliament  on  a 
benchmark  of  35%  of  assistance  to  developing  countries  to  be  allocated  to  social 
infrastructure and services, recognising that the EU contribution must be seen as part of the 
overall donor support to the social sectors and that a degree of flexibility must be the norm. 

Since  then,  as  a  result  of  translation  of  development  policy  into  country  programmes  and 
subsequently into commitments, support for social infrastructure has risen to more than 35%, 
and  the  European  Parliament  has  been  fully  informed  of  progress.  Though  this  specific 
benchmark  has  been  overtaken,  the  Commission  will  continue  to  report  annually  on  these 
figures. 

Pursuant  to  the  request  of  the  European  Parliament,  the  Commission  now  commits  to  the 
following  objectives,  while  stressing  that  they  have  to  be  pursued  in  the  setting  of  the 
principles  of  aid  effectiveness,  in  particular  the  partnership  with  recipient  countries,  their 
ownership and the complementarity with other donors, as set out in the “European Consensus 
on Development” adopted jointly by the Council and the representatives of the governments 
of  the  member  States  meeting  within  the  Council,  the  European  Parliament  and  the 
Commission on 20 December 2005. 

First, the Commission commits to prioritise basic health and education, and social cohesion as 
a whole in its programming and implementation role for country programmes covered by the 
DCI,  and  to  include  an  MDG  profile  in  the  programming  documents.  In  the  dialogue  with 
partner countries, the Commission will also encourage them to prioritise social sectors in their 
own development strategies. 

Moreover, the Commission will endeavour to ensure that a benchmark of 20% of its allocated 
assistance  under  country  programmes  covered  by  the  DCI  will  be  dedicated,  by  the  year  of 
review 2009, to basic and secondary education and basic health, through project, programme 
or budget support linked to these sectors, taking an average across all geographical areas and 
recognising that a degree of flexibility must be the norm, such as exceptional assistance. 

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Finally, to ensure the accountability of the Commission towards these objectives, it commits 
to increased monitoring, evaluation and reporting, whereby particular attention shall be given 
to social sectors and to progress made towards achieving the Millennium Development Goals. 

Commission Declaration on Sugar Art. 17: 

It has been decided to assist the sugar Protocol ACP countries to adapt to the new conditions 
which will follow the reform of the EU common agricultural policy for sugar.  

As Sugar Protocol countries are in a very diverse situation, the scheme will support country 
specific adaptation strategies.  

The  commitment  and  spending  schedule  will  follow  the  gradual  achievement  of  these 
strategies and be consistent with the transitional nature of the scheme due to end in 2013. 

Joint  Council  and  Commission  Declaration  to  Art.  28(2)  on  the  transfer  of  implementation 
tasks:  

In  relation  to  budget  implementation  tasks,  the  Commission  has  made  a  proposal  for  the 
revision  of  Council  Regulation  No  1605/2002,  which  will  be  adopted  by  the  Council, 
establishing the conditions required for entrusting such budget implementation tasks to bodies 
referred to in Article 27 (1) a), b), c) of this Regulation.  

Commission Declaration on committees Art. 35:  

Meetings will be organised in such a way that opinions to be delivered and exchanges of view 
held  are  pooled  according  to  each  geographic  (Latin  America,  Asia,  Middle  East,  Central 
Asia,  South  Africa)  and  thematic  (migration,  non  state  actors,  environment,  investing  in 
people, food security) programme.  

Commission declaration on indicative amount for ENPI thematic programmes Art. 38 (4): 

La  Commission  s'engage,  lors  de  la  programmation  des  programmes  thématiques,  à  tenir 
compte  de  la  ventilation  géographique  initialement  proposée  par  la  Commission  entre  pays 
éligibles  sous  l'instrument  européen  de  voisinage  et  de  partenariat  [ENPI],  d'un  côté,  et 
l'instrument de coopération au développement [DCI] de l'autre.  

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