Commission staff working paper accompanying the proposal for a Council Regulation amending Regulation (EC) No 1934/2006 of 21 December 2006 establishing a financing instrument for cooperation with industrialised and other high-income countries and territories executive - Summary of the impact assessment {COM(2009)197 final} {SEC(2009)532}
Date: 2009-04-21
Institutions: European Commission
Subjects: EU financing, action programme, cooperation policy, industrialised country

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 22.4.2009 
SEC(2009) 531/2 

Corrigendum : annule et remplace les versions du 21.4.2009; concerne uniquement les 
versions FR, DE et EN 

COMMISSION STAFF WORKING PAPER 

accompanying the 
proposal for a  
COUNCIL REGULATION 

amending Regulation (EC) No 1934/2006 of 21 December 2006 establishing a financing 
instrument for cooperation with industrialised and other high-income countries and 
territories  

EXECUTIVE SUMMARY OF THE  

IMPACT ASSESSMENT 

{COM(2009)197 final} 
{SEC(2009)532} 

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INTRODUCTION 

A mid-term review (MTR) was provided for in each of the seven new external action financial 
instruments for 2007-2013: DCI, ENPI, IPA, IfS, EIDHR, INSC and ICI1. The Commission 
must  submit  a  report  evaluating  their  implementation  accompanied,  if  appropriate,  by 
legislative  amendments.  Although  the  Regulations  set  a  deadline  of  31  December  2010,  the 
Commission agreed — at the EP’s request — to present the review before the 2009 elections, 
i.e. to the same legislature which co-decided the instruments. The review was conducted by 
Commission  staff  reporting  to  the  inter-services  Group  on  the  MTR  of  the  financial 
instruments.  The  Commission  also  agreed  that  before  adopting  the  MTR  it  would  take  into 
account the views that Parliament had expressed in the process of democratic scrutiny of DCI 
programming. The main issue relates to the financing of activities which might not qualify as 
official  development  assistance  (ODA)  in  countries  covered  by  the  DCI  Regulation,  No 
1905/2006  (Latin  America,  Asia,  Central  Asia,  plus  Iraq,  Iran,  Yemen,  and  South  Africa). 
This issue relates only to countries covered by the DCI, as other instruments do not stipulate 
that  activities  must  qualify  as  ODA.  Besides  this  proposal,  the  MTR  of  the  financial 
instruments  will  also  produce  amendments  to  the  IfS  (adjusting  its  scope  as  regards  small 
arms  and  light  weapons,  on  participation  and  rules  of  origin,  and  on  the  breakdown  of  the 
financial  allocations)  and  an  amendment  to  the  DCI  and  EIDHR  regulations  to  align  the 
wording on taxes, duties, and charges with the other instruments.  

PROBLEM DEFINITION 

The limited scope of the DCI Regulation 

The  DCI  Regulation  excludes  measures  which  do  not  meet  the  Official  Development 
Assistance (ODA) criteria set by the Development Assistance Committee of the Organisation 
for  Economic  Cooperation  and  Development  (OECD/DAC).  This  limitation  is  enshrined  in 
Article  2(4)  of  the  DCI  Regulation,  which  states  that  measures  for  geographic  programmes 
must be designed to meet the criteria for ODA eligibility. Parliament identified a number of 
problematic cases during the democratic scrutiny and commitology “droit de regard” process. 
As  a  result  it  passed  a  series  of  resolutions  condemning  the  Commission  for  exceeding  its 
powers in adopting such projects under the DCI Regulation and calling for their withdrawal. 
This legal restriction has given rise to three problems: 

(1) there are no legal provisions allowing measures ineligible as ODA to be financed; 

(2)  the  Commission  and  Parliament  hold  diverging  views  on  the  eligibility  of  certain 
programmed actions; 

(3)  there  is  a  risk  of  having  to  discontinue  financing  for  activities  carried  out  under  the 
Preparatory Actions and for  the  ‘EU mobility’ component of the Erasmus Mundus  External 
Window Cooperation (EMEWC). 

The need to fill the legislative gap 

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The  Development  Cooperation  Instrument  (DCI),  the  European  Neighbourhood  and  Partnership 
Instrument (ENPI), the Instrument for Pre-accession Assistance (IPA), the Instrument for Stability (IfS), 
the  European  Instrument  for  Democracy  and  Human  Rights  (EIDHR),  the  Instrument  for  Nuclear 
Safety Cooperation (INSC), and the Instrument for Cooperation with Industrialised Countries (ICI). 

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The Budget Authority voted to include a series of Preparatory Actions in the budget to finance 
these  ‘non-ODA  activities’  for  the  regions  and  countries  concerned  by  this  problem  (i.e. 
business  and  scientific  exchanges  with  India  and  China,  cooperation  with  middle-income-
group  countries  in  Asia  and  in  Latin  America).  Further  to  the  implementation  of  the 
Preparatory  Actions,  which  started  in  2007  and  2008,  in  the  MTR  a  clear  need  emerged  to 
follow up and to build on these Preparatory Actions in order to offer scope to fund measures 
going  beyond  ODA  in  these  countries,  particularly  in  emerging  countries.  It  should  also 
ensure  that  some  energy  projects  and  public  diplomacy  activities  that  will  not  be  ODA-
eligible (e.g. in Central Asia and in Iraq/Iran) can be financed. 

OBJECTIVES 

The general policy objective should be similar to the those set out in the ICI Regulation (No 
1934/2006)  for  the  DCI  countries,  that  is  ‘to  provide  a  specific  response  to  the  need  to 
strengthen links and to engage further with them on a bilateral, regional or multilateral basis 
in order to create a more favourable environment for the development of the relations of the 
Community  with  these  countries  and  territories  and  to  promote  dialogue  while  fostering 
Community's interests.’ 

The  proposed  regulation  will  finance  projects  which  meet  the  following  main  operational 
objectives:  

•  promotion of economic partnership and business in EU interests 

•  people to people links/education cooperation 

•  public diplomacy and outreach 

•  dialogue 

•  cooperation projects which do not meet the ODA criteria. 

It is proposed to cover the DCI countries only. The IPA and ENPI regulations are not limited 
in  the  same  way,  and  ACP  countries  are  covered  under  the  EDF.  The  overall  allocation  is 
expected to be €176 million over the 2010-2013 pe riod. Funding should come from Heading 4 
and comply with the Financial Framework for 2007-2013. Although the Preparatory Actions 
were  funded  from  the  margin  of  Heading  4  for  2007-2009,  some  redeployment  from  the 
cooperation programmes will be necessary to fund the intended activities adequately. 

The  current  initiative  aims  to  fill  a  legislative  gap  within  the  current  legal  and  budgetary 
constraints  2007-2013.  The  present  initiative  has  therefore  a  limited  scope  in  terms  of  its 
policy  content,  budgetary  implications  and  time  frame.  It  does  not  prejudge  any  future 
proposal on external cooperation financial instruments under the next financial framework.  

POLICY OPTIONS AND ASSESSMENT 

Spending programmes require a basic act. The following four options for tackling the problem 
have been considered: 

1.  No EU action: cooperation with the countries concerned remains strictly in the 

framework of the DCI regulation. 

2.  Amend  DCI  Regulation:  add  an  additional  strand  to  the  regulation  to  finance 

‘non-ODA activities’ with a ring-fenced amount.  

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3.  Amend ICI Regulation: extend the geographical scope of the regulation to DCI 

countries with a ring-fenced amount. 

4. 

Table a new instrument.  

The  different  options  have  been  analyzed  on  the  criteria  of  coherence,  efficiency  and 
effectiveness.  Option  1  is  not  considered  a  valid  option  in  view  of  the  need  to  fill  the 
legislative gap. Option 2 would be the most coherent, but it is not recommended as it would 
bring  different  objectives  under  the  same  regulation:  eradicating  poverty  and  fostering 
Community  interests.  Option  3  is  considered  the  most  appropriate  and  effective  legislative 
option in view of the major simplification of the financial instruments (replacing more than 30 
different  legal  instruments).  The  ICI  also  covers  non-ODA  purposes,  and  its  provisions  and 
legal base (Article 181a of the Treaty) are suited to covering the intended activities.  

CONCLUSION 

Taking  into  account  established  objectives  and  areas  of  cooperation,  the  third  option  is 
preferred,  ‘Amending  the  ICI  regulation’.  It  is  therefore  recommended  that  the  ICI’s 
geographical scope be extended to the DCI countries and that the legislative amendment be 
put forward in the framework of the mid-term review of the financial instruments.  

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