Position (EU) No 1/2011 of the Council at first Reading with a view to the adoption of a Regulation of the European Parliament and of the Council amending Council Regulation (EC) No 1934/2006 establishing a financing instrument for cooperation with industrialised and other high-income countries and territories Adopted by the Council on 10 December 2010
Date: 2010-12-10
Institutions: Council of the European Union
Subjects: EU financing, action programme, cooperation policy, industrialised country








CE2011007EN.01000101.xml










12.1.2011   


EN


Official Journal of the European Union


CE 7/1





POSITION (EU) No 1/2011 OF THE COUNCIL AT FIRST READING
with a view to the adoption of a Regulation of the European Parliament and of the Council amending Council Regulation (EC) No 1934/2006 establishing a financing instrument for cooperation with industrialised and other high-income countries and territories
Adopted by the Council on 10 December 2010
2011/C 7 E/01
THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 207(2) and 209(1) thereof,
Having regard to the proposal from the European Commission,
Acting in accordance with the ordinary legislative procedure (1),
Whereas:






(1)


Since 2007 the Community has streamlined its geographical cooperation with developing countries in Asia, Central Asia, and Latin America and with Iraq, Iran, Yemen, and South Africa under Regulation (EC) No 1905/2006 of the European Parliament and of the Council of 18 December 2006 establishing a financing instrument for development cooperation (2).










(2)


The primary and overarching objective of Regulation (EC) No 1905/2006 is the eradication of poverty through the pursuit of the Millennium Development Goals. The scope of cooperation for the geographic programmes with developing countries, territories and regions established under that Regulation is furthermore limited materially to financing measures designed to fulfil the criteria for Official Development Assistance (ODA criteria) established by the Development Assistance Committee of the Organisation for Economic Cooperation and Development (OECD/DAC).










(3)


It is in the Union’s interests to further deepen its relations with the developing countries concerned, which are important bilateral partners and players in multilateral fora and in global governance. The Union has a strategic interest in promoting diversified links with those countries, in particular in areas such as economic, commercial, academic, business and scientific exchanges. It therefore needs a financial instrument that allows the financing of such measures which, in principle, do not qualify as ODA under the ODA criteria but which are crucially important in terms of consolidating relations and which make an important contribution to promoting the progress of the developing countries concerned.










(4)


For that purpose, four Preparatory Actions were set up in the 2007 and 2008 budget procedures to initiate such enhanced cooperation in accordance with point (b) of Article 49(6) of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (3). Those four Preparatory Actions are: business and scientific exchanges with India; business and scientific exchanges with China; cooperation with middle-income group countries in Asia; and cooperation with middle-income group countries in Latin America. Under that Article the legislative procedure further to Preparatory Actions must be concluded before the end of the third financial year.










(5)


The objectives and provisions of Regulation (EC) No 1934/2006 (4) are appropriate to pursue such enhanced cooperation with countries falling under Regulation (EC) No 1905/2006. For that purpose, it is necessary to extend the geographical scope of Regulation (EC) No 1934/2006 and to provide for a financial envelope to cover cooperation with those developing countries.










(6)


Extending the geographical scope of Regulation (EC) No 1934/2006 brings the developing countries concerned within the scope of two different external action financial instruments. Care should be taken to ensure that these two financial instruments are kept strictly separate from each other. Measures which fulfil the ODA criteria will be financed under Regulation (EC) No 1905/2006, whereas Regulation (EC) No 1934/2006 will apply exclusively to measures which, in principle, do not fulfil those criteria. It is also necessary to ensure that the countries previously falling within the scope of Regulation (EC) No 1934/2006 — industrialised and other high-income countries and territories — are not placed at a disadvantage, particularly in financial terms, by the extension of that Regulation’s geographical scope.










(7)


Since the economic crisis has placed budgets under extreme strain throughout the Union and the proposed extension embraces countries which sometimes demonstrate a similar level of competitiveness to that of the Union and have attained an average standard of living which approaches that of some Member States, the Union’s cooperation should take into consideration efforts made by the recipient countries to comply with the International Labour Organisation international agreements and to participate in the general objectives of greenhouse gas emissions reduction.










(8)


The review of implementation of the external action financial instruments has identified inconsistencies in the provisions that exclude costs relating to taxes, duties or other charges as ineligible. For the sake of consistency, it is proposed to bring those provisions into line with the other instruments.










(9)


Regulation (EC) No 1934/2006 should therefore be amended accordingly,




HAVE ADOPTED THIS REGULATION:
Article 1
Regulation (EC) No 1934/2006 is hereby amended as follows:






1.


the title of the Regulation is replaced by the following:










2.


Articles 1 to 4 are replaced by the following:
‘Article 1
Objective
1.   For the purpose of this Regulation, “industrialised and other high-income countries and territories” shall comprise countries and territories listed in Annex I to this Regulation and “developing countries” shall comprise countries falling under Regulation (EC) No 1905/2006 of the European Parliament and of the Council of 18 December 2006 establishing a financing instrument for development cooperation (5) and listed in Annex II to this Regulation. They are together hereinafter referred to as “partner countries”.
Union financing under this Regulation shall support economic, financial, technical, cultural and academic cooperation with partner countries in the areas set out in Article 4, falling within its spheres of competence. This Regulation shall serve to finance measures which, in principle, do not fulfil the criteria for Official Development Assistance (ODA criteria) established by the Development Assistance Committee of the Organisation for Economic Cooperation and Development (OECD/DAC).
2.   The primary objective of cooperation with partner countries shall be 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 and transparent environment for the development of relations between the Union and partner countries in accordance with the principles guiding the Union’s external action as laid down in the Treaty. This refers amongst others to the promotion of democracy, respect for human rights and fundamental freedoms, the rule of law, as well as decent work, good governance, and the preservation of the environment, in order to contribute to progress and sustainable development processes in the partner countries.
Article 2
Scope
1.   Cooperation shall be aimed at engaging with partner countries in order to enhance dialogue and rapprochement and to share and promote similar political, economic and institutional structures and values. The Union shall also aim at increasing cooperation and exchanges with established or increasingly important bilateral partners and players in multilateral fora and in global governance. The cooperation also covers partners with which the Union has a strategic interest in promoting links and its values as laid down in the Treaty.
2.   In duly justified circumstances and in order to ensure the coherence and effectiveness of Union financing and to foster regional cooperation, the Commission may decide when adopting annual action programmes referred to in Article 6 that countries not listed in the Annexes are eligible for measures under this Regulation, where the project or programme to be implemented is of a regional or cross-border nature. Provisions shall be made for this in the multiannual cooperation programmes referred to in Article 5.
3.   The Commission shall amend the lists in Annexes I and II following the regular OECD/DAC reviews of its list of developing countries, and shall inform the European Parliament and the Council thereof.
4.   For Union financing under this Regulation, particular attention shall be paid where appropriate to the compliance of the partner countries with the core labour standards of the International Labour Organisation and to their efforts to pursue reductions of greenhouse gas emissions.
5.   In relation to countries listed in Annex II to this Regulation, policy coherence with measures financed under Regulation (EC) No 1905/2006 and Regulation (EC) No 1337/2008 of the European Parliament and of the Council of 16 December 2008 establishing a facility for rapid response to soaring food prices in developing countries (6) shall be strictly observed.
Article 3
General principles
1.   The Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms and the rule of law and seeks to promote, develop and consolidate commitment to those principles in partner countries through dialogue and cooperation.
2.   In the implementation of this Regulation a differentiated approach in designing cooperation with partner countries shall be pursued, where appropriate, to take account of their economic, social and political contexts as well as of the Union’s specific interests, strategies and priorities.
3.   Measures financed under this Regulation shall be consistent with and cover areas of cooperation set out notably in the instruments, agreements, declarations and action plans between the Union and the partner countries, as well as areas pertaining to the Union’s specific interests and priorities.
4.   For measures financed under this Regulation, the Union shall aim to ensure coherence with other areas of its external action as well as with other relevant Union policies, in particular development cooperation. This shall be ensured by formulating policy, strategic planning and the programming and implementation of measures.
5.   Measures financed under this Regulation shall complement and bring added value to the efforts undertaken by Member States and Union public bodies in the area of commercial relations and cultural, academic and scientific exchanges.
6.   The Commission shall inform and have regular exchanges of views with the European Parliament.
Article 4
Areas of cooperation
Union financing shall support cooperation actions in accordance with Article 1 and shall be consistent with the overall purpose, scope, objectives and general principles of this Regulation. Union financing shall cover actions that, in principle, do not fulfil the ODA criteria, and which may include a regional dimension, in the following areas of cooperation:






1.


the promotion of cooperation, partnerships and joint undertakings between economic, social, cultural, academic and scientific actors in the Union and partner countries;










2.


the stimulation of bilateral trade, investment flows and economic partnerships, including a focus on small and medium-sized enterprises;










3.


the promotion of dialogues between political, economic, social and cultural actors and other non-governmental organisations in relevant sectors in the Union and partner countries;










4.


the promotion of people-to-people links, education and training programmes and intellectual exchanges and the enhancement of mutual understanding between cultures, particularly at the family level, including measures to ensure and increase Union participation in Erasmus Mundus and participation in European education fairs;










5.


the promotion of cooperative projects in areas such as research, science and technology, sports and culture, energy (in particular renewable energy), transport, environmental matters (including climate change), customs, financial, legal and human rights issues, and any other matter of mutual interest between the Union and the partner countries;










6.


the enhancement of awareness about and understanding of the European Union and of its visibility in partner countries;










7.


support for specific initiatives, including research work, studies, pilot schemes or joint projects destined to respond in an effective and flexible manner to cooperation objectives arising from developments in the Union’s bilateral relationship with the partner countries or aiming to provide impetus to the further deepening and broadening of bilateral relationships with them.














3.


in Article 5, paragraph 2 is replaced by the following:
‘2.   Multiannual cooperation programmes shall cover no more than the period of validity of this Regulation. They shall set out the Union’s specific interests and priorities, the general objectives and the expected results. In particular with regard to Erasmus Mundus, programmes shall aim for the most balanced geographical coverage possible. They shall also set out the areas selected for financing by the Union and outline the indicative financial allocation of funds, overall, per priority area and per partner country or group of partner countries for the period concerned. Where appropriate, this may be given in the form of a range. Multiannual cooperation programmes shall be reviewed at mid-term, or ad hoc if necessary.’;










4.


in Article 6, paragraph 1 is replaced by the following:
‘1.   The Commission shall adopt annual action programmes based on the multiannual cooperation programmes referred to in Article 5 and shall transmit them simultaneously to the European Parliament and to the Council.’;










5.


Article 7 is amended as follows:






(a)


the first paragraph becomes paragraph 1;










(b)


points (e) and (f) of paragraph 1 are replaced by the following:






‘(e)


joint bodies set up by the partner countries and regions and the Union;










(f)


Union institutions and bodies, in so far as they implement support measures specified in Article 9;’;














(c)


the following paragraphs are added:
‘2.   Measures covered by Council Regulation (EC) No 1257/96 of 20 June 1996 concerning humanitarian aid (7), Regulation (EC) No 1717/2006 of the European Parliament and of the Council of 15 November 2006 establishing an Instrument for Stability (8) or Regulation (EC) No 1905/2006, and eligible for funding thereunder shall not be funded under this Regulation.
3.   Union financing under this Regulation shall not be used to finance the procurement of arms or ammunition, nor operations having military or defence implications.














6.


in Article 8, paragraph 3 is replaced by the following:
‘3.   Union financing shall, in principle, not be used for paying taxes, duties or charges in the partner countries.’;










7.


Article 9 is amended as follows:






(a)


paragraph 1 is replaced by the following:
‘1.   Union financing may cover expenditure associated with the preparation, follow up, monitoring, audit and evaluation activities directly necessary for the implementation of this Regulation and the achievement of its objectives, and any other administrative or technical assistance expenditure that the Commission, including its Delegations in the partner countries, may incur for the management of operations financed under this Regulation.’;










(b)


paragraph 3 is replaced by the following:
‘3.   The Commission shall adopt support measures not covered by the multi-annual cooperation programmes and shall transmit them simultaneously to the European Parliament and to the Council.’;














8.


Article 12 is amended as follows:






(a)


the title is replaced by the following:
‘Protecting the Union’s financial interests’;










(b)


paragraphs 1 and 2 are replaced by the following:
‘1.   Any agreements resulting from this Regulation shall contain provisions ensuring the protection of the Union’s financial interests, in particular with respect to irregularities, fraud, corruption and any other illegal activity, in accordance with Council Regulations (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities financial interests (9) and (Euratom, EC) No 2185/96 of 11 November 1996 concerning on-the-spot checks and inspections carried out by the Commission in order to protect the European Communities’ financial interests against fraud and other irregularities (10) and Regulation (EC) No 1073/1999 of the European Parliament and of the Council of 25 May 1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) (11).
2.   Agreements shall expressly entitle the Commission and the Court of Auditors to perform audits, including document audits or on-the-spot audits of any contractor or subcontractor who has received Union funds. They shall also expressly authorise the Commission to carry out on-the-spot checks and inspections in accordance with Regulation (Euratom, EC) No 2185/96.














9.


Articles 13 and 14 are replaced by the following:
‘Article 13
Evaluation
1.   The Commission shall regularly evaluate the actions and programmes financed under this Regulation, where appropriate or at the request of the European Parliament or the Council, by means of independent external evaluations, in order to ascertain whether the objectives have been met and to enable it to formulate recommendations with a view to improving future operations. The results shall feed back into programme design and resource allocation.
2.   The Commission shall send the evaluation reports referred to in paragraph 1 to the European Parliament and to the Committee referred to in Article 15(1) for information.
3.   The Commission shall associate relevant stakeholders, including non-State actors, in the evaluation phase of the Union cooperation provided for under this Regulation.
Article 14
Annual report
The Commission shall examine the progress made on implementing the measures taken under this Regulation and shall submit to the European Parliament and the Council a detailed annual report on the implementation of this Regulation. The report shall set out the results of implementation of the budget and present all the actions and programmes financed, and as far as possible, set out the main outcomes and impacts of the cooperation actions and programmes.’;










10.


Article 16 is replaced by the following:
‘Article 16
Financial provisions
The financial reference amount for the implementation of this Regulation for the period from 2007 to 2013 shall be EUR 172 million for countries listed in Annex I and EUR 176 million for countries listed in Annex II. The annual appropriations shall be authorised by the budgetary authority within the limits of the financial framework.’;










11.


in the Annex, the title is replaced by the following:

List of industrialised and other high-income countries and territories covered by this Regulation’;










12.


a new Annex II, the text of which is set out in the Annex to this Regulation, is added.




Article 2
Entry into force
This Regulation shall enter into force on the day following its publication in the Official Journal of the European Union.

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


For the European Parliament


The President

…



For the Council


The President

…




(1)  Position of the European Parliament of 21 October 2010 (not yet published in the Official Journal) and position of the Council at first reading of 10 December 2010.

(2)  OJ L 378, 27.12.2006, p. 41.

(3)  OJ L 248, 16.9.2002, p. 1.

(4)  OJ L 405, 30.12.2006, p. 41.

(5)  OJ L 378, 27.12.2006, p. 41.

(6)  OJ L 354, 31.12.2008, p. 62.’;

(7)  OJ L 163, 2.7.1996. p. 1.

(8)  OJ L 327, 24.11.2006, p. 1.’;

(9)  OJ L 312, 23.12.1995, p. 1.

(10)  OJ L 292, 15.11.1996, p. 2.

(11)  OJ L 136, 31.5.1999, p. 1.’;


ANNEX


‘ANNEX II

List of developing countries covered by this Regulation


Latin America







1.


Argentina










2.


Bolivia










3.


Brazil










4.


Chile










5.


Colombia










6.


Costa Rica










7.


Cuba










8.


Ecuador










9.


El Salvador










10.


Guatemala










11.


Honduras










12.


Mexico










13.


Nicaragua










14.


Panama










15.


Paraguay










16.


Peru










17.


Uruguay










18.


Venezuela





Asia







19.


Afghanistan










20.


Bangladesh










21.


Bhutan










22.


Burma/Myanmar










23.


Cambodia










24.


China










25.


India










26.


Indonesia










27.


Democratic People’s Republic of Korea










28.


Laos










29.


Malaysia










30.


Maldives










31.


Mongolia










32.


Nepal










33.


Pakistan










34.


Philippines










35.


Sri Lanka










36.


Thailand










37.


Vietnam





Central Asia







38.


Kazakhstan










39.


Kyrgyz Republic










40.


Tajikistan










41.


Turkmenistan










42.


Uzbekistan





Middle East







43.


Iran










44.


Iraq










45.


Yemen





South Africa







46.


South Africa’









STATEMENT OF THE COUNCIL’S REASONS
I.   INTRODUCTION

On 21 April 2009, the Commission adopted its proposal (1) for a Regulation amending Regulation (EC) No 1934/2006 establishing a financing instrument for cooperation with industrialised and other high-income countries and territories (ICI).
The European Parliament adopted its first reading opinion on 21 October 2010.
The Council adopted its position at first reading on 10 December 2010.
II.   OBJECTIVE

The proposal was presented as part of the mid-term review of the external action financial instruments. The main objective is to extend the scope of the initial Regulation to a number of countries covered by Regulation (EC) No 1905/2006 of 18 December 2006 establishing the Development Cooperation Instrument (DCI) and to provide a proper legislative basis to activities which, since they do not constitute Official Development Assistance as defined by the OECD, are excluded by the scope of the DCI Regulation. The amended ICI Regulation will thus allow strengthening links and engaging further with important global emerging partners with whom the European Union has a strategic interest in promoting diversified links and creating a more favourable environment for the development of the relations. It will also provide the basis for activities with middle-income countries interested in engaging in economic, commercial, academic, business and scientific exchanges with the European Union.
III.   ANALYSIS OF THE COUNCIL'S POSITION AT FIRST READING


General observations

The proposal was presented by the Commission under the provisions of the Nice Treaty, requiring the European Parliament to be consulted. With the entry into force of the Lisbon Treaty on 1st December 2009, the legal basis implied application of the ordinary legislative procedure. With these changes in mind the Council reached out to the European Parliament at an early stage of the legislative process and engaged into substantial negotiations between the institutions. This resulted in a large degree of convergence on many amendments put forward by the European Parliament in its first reading, enabling the Council to incorporate a large number of the European Parliament’s first-reading amendments into its first reading position.
However, the Council cannot follow the European Parliament in two points: the application of the procedure of the delegated acts (Article 290 TFEU) and the amendments to Article 16 regarding the financial provisions.

Specific comments

(1)   Delegated acts (Article 290 TFEU)

The European Parliament adopted several amendments which introduce the application of the procedure of the delegated acts for the adoption of multiannual cooperation programmes (multiannual strategy papers). This is not acceptable for the Council. The Council believes that the multiannual cooperation programmes, not being legally binding acts, do not constitute acts of general application, supplementing or amending the basic act. They constitute implementing measures within the meaning of Article 291 TFEU.
(2)   Article 16 on the financial provisions

The amendments adopted by the European Parliament in Article 16 are not acceptable for the Council. While similar concerns were voiced in the Council regarding the programming of financial appropriations and possible transfers between budget lines, the Council is of the opinion that these matters are to be decided by the two budgetary branches — the Council and the European Parliament — in the framework of the annual budgetary procedure and should not be part of the legislative text. The Council thus prefers the text as proposed initially by the Commission, assorted with a declaration by the Commission in which it provides reassurances as to the usage of funds. The declaration is annexed to the Council’s position in first reading.
IV.   CONCLUSION

With a view to reaching an early agreement on the amended Regulation, the Council has engaged in substantial negotiations with the European Parliament, facilitated by the European Commission. The negotiations have led to a large degree of consensus on the text. While the proposal of the Commission did not present substantial difficulties to the Council, the Council made a special effort to meet a number of concerns of the European Parliament related to the application of the amended Regulation.
The Council calls on the European Parliament to go along with this text which reflects the compromises reached in the negotiations in order to allow for the entry into force of the Regulation in 2010. This would permit that the funds already inscribed in the 2010 budget are not lost for the projects intended.


(1)  COM(2009) 197 final/2.



Commission declaration concerning Article 16
The Regulation addresses the issue of support for a number of specific non-Official Development Assistance (ODA) activities in countries covered by the Development Cooperation Instrument (DCI Regulation (EC) No 1905/2006). The Regulation is intended to be a one-off solution to this issue.
The Commission reaffirms that the eradication of poverty, including the pursuit of the Millennium Development Goals, is the primary objective of its development cooperation and remains a priority.
It recalls that the financial reference amount fixed in Article 16 for countries listed in Annex II will be implemented using dedicated budget lines which are intended for activities other than Official Development Assistance.
Furthermore, the Commission confirms its intention to respect the financial reference amount fixed in Article 38 of the Development Cooperation Instrument (Regulation (EC) No 1905/2006) for the period 2007-2013 as well as the provisions in the same Regulation regarding the fulfilment of the criteria for ODA. It recalls that on the basis of its current financial planning, this reference amount will be exceeded in 2013.
In this context, the Commission intends to propose draft budgets which ensure a progression in development assistance for Asia and Latin America under the DCI Regulation (EC) No 1905/2006 over the period until 2013 so that the currently projected ODA amounts under the DCI and the EU budget generally are not affected.