Source: EURLEX
Language: en
Format: md

**Council of the**
**European Union**

**Interinstitutional File:**

**2018/0244 (CNS)**

**PROPOSAL**

**Brussels, 15 June 2018**
**(OR. en)**

**10150/18**

**CADREFIN 109**
**FIN 472**
**POLGEN 96**
**ACP 54**
**PTOM 19**
**GROENLAND 1**
**COEST 123**
**PECHE 233**
**ENV 444**
**EEE 34**
**RELEX 557**

From: Secretary-General of the European Commission,
signed by Mr Jordi AYET PUIGARNAU, Director

date of receipt: 14 June 2018

To: Mr Jeppe TRANHOLM-MIKKELSEN, Secretary-General of the Council of
the European Union

No. Cion doc.: COM(2018) 461 final

Subject: Proposal for a COUNCIL DECISION on the Association of the Overseas
Countries and Territories with the European Union including relations
between the European Union on the one hand, and Greenland and the
Kingdom of Denmark on the other ('Overseas Association Decision')

Delegations will find attached document COM(2018) 461 final.

Encl.: COM(2018) 461 final

10150/18 AL/br

## DG C1B EN

EUROPEAN

COMMISSION

Brussels, 14.6.2018
COM(2018) 461 final

2018/0244 (CNS)

Proposal for a

**COUNCIL DECISION**

**on the Association of the Overseas Countries and Territories with the European Union**

**including relations between the European Union on the one hand, and Greenland and**

**the Kingdom of Denmark on the other**

**('Overseas Association Decision')**

{SWD(2018) 337 final} - {SEC(2018) 310 final}

# **EN EN**

**EXPLANATORY MEMORANDUM**

**1.** **CONTEXT** **OF** **THE** **PROPOSAL**

**•** **Reasons for and objectives of the proposal**

This proposal comes in the context of the 2021-2027 Multiannual Financial Framework
outlined in the Communications from the Commission to the European Parliament, the
European Council and the Council, the European Economic and Social Committee and the
Committee of the Regions on a Modern Budget for a Union that Protects, Empowers and
Defends [1] . The Communications set the main priorities and overall budgetary framework for
EU external action programmes under the heading ‘Neighbourhood and the World’. One such
priority is a Council Decision on the Association of the Overseas Countries and Territories
with the European Union, including relations between the European Union on the one hand,
and Greenland and the Kingdom of Denmark on the other.

Overseas Countries and Territories (OCTs) have been associated with the European Union
(EU) since the entry into force of the Treaty of Rome. These 25 islands located in the
Atlantic, Antarctic, Arctic, Caribbean, Indian Ocean and Pacific regions [2] are not sovereign
countries, but depend on four EU Member States: Denmark, France, the United Kingdom and
the Netherlands.

This proposal provides for a date of application as of 1 January 2021 and is presented for a
Union of 27 Member States, in line with the notification by the United Kingdom of its
intention to withdraw from the European Union and Euratom based on Article 50 of the
Treaty on European Union received by the European Council on 29 March 2017. It therefore
does not apply to the 12 OCTs linked to the United Kingdom. The association of the 13
remaining OCTs with the Union flows from the constitutional relations that these countries
and territories have with the three Member States: Denmark, France, and the Netherlands.

In general, OCTs have wide-ranging autonomy, covering areas such as economic affairs,
employment market, public health, home affairs and customs. Defence and foreign affairs
usually remain within the remit of the Member States. The OCTs are not part of the Union’s
customs territory and are outside the internal market. Union legislation therefore does not
apply. As nationals of European Union Member States to which their countries and territories
are constitutionally linked, OCTs inhabitants hold EU citizenship.

Council Decision EU/2013/755 [3]     - the Overseas Association Decision - covers relations
between the OCTs (including Greenland), the Member States to which they are linked and the
European Union. It outlines the special relationship that OCTs have with the EU as part of the
‘EU family’ and the specific legal framework which applies to them. The main financial
source of the current Overseas Association Decision is the 11 [th] European Development Fund
(EDF), covering the programming and funding of territorial and regional programmes for
OCTs other than Greenland, for which there is a specific decision funded from the EU budget.

Prior to 1982 Greenland was considered part of the EU through Denmark, meaning that EU
vessels could fish in Greenlandic waters. Subsequently, Greenland withdrew from the EU and

1 COM (2018) 98 final, 14.2.2018; COM (2018) 321 final, 2.5.2018.
2 Annex II Treaty on the Functioning of the European Union.
3 Decision (EU) No 2013/755 of 25 November 2013 on the association of the overseas countries and
territories with the European Union ('Overseas Association Decision'), OJ L 344, p. 1, 19.12.2013.

# EN 1 EN

became associated as an OCT through the Greenland Treaty [4] . The Treaty emphasised the
need to maintain the close relationship between the EU and Greenland, notably in terms of
Greenland’s development needs and EU fishing rights.

A fisheries agreement [5] was signed on 13 March 1984. Following the mid-term review of the
fourth fisheries protocol, in 2003 the European Council concluded that an arrangement should
take into account the importance of fisheries and the structural development problems in
Greenland. The 2006 Joint Declaration [6] between the Union, Greenland and Denmark set out
the common objectives of a new partnership. It formed the political basis for Council
Decision 2006/526/EC [7], which defined the framework for cooperation for 2007-2013. The
Council Decision 2014/137/EU [8] now covers the period 2014 to 2020 and is in line with the
subsequent 2015 Joint Declaration between the EU, Greenland and Denmark, which reaffirms
the close relations between the parties.

The current Greenland Decision complements the Overseas Association Decision but outlines
some features specific to relations with Greenland.

The mid-term review report (December 2017) [9] on 10 external financing instruments,
including the Greenland Decision [10] and the 11 [th] EDF, which includes the programming for
the other OCTs, concluded that the external financing instruments were ‘fit for purpose’.
However, both the report and the consultations conducted highlighted the need for increased
flexibility, simplification, coherence and performance. This has led to a proposal for a future
Neighbourhood, Development and International Cooperation Instrument, which will draw on
lessons learned to help streamline the Union’s external action architecture.

The Overseas Association Decision and the Greenland Decision cannot be included in the
new Neighbourhood, Development and International Cooperation Instrument or in any other
legal act subject to the ordinary legislative procedure. This is because they both have a
specific adoption procedure: a Council Decision by unanimity, following consultation of the
European Parliament [11] . However, to streamline the number of programmes it is proposed that
both Decisions be merged into a single Decision regrouping all OCTs, including Greenland.

Moreover, Article 203 in the Treaty on the Functioning of the European Union (TFEU) is the
legal basis for the Overseas Association Decision and for the Greenland Decision. Following
the proposal to budgetise the EDF, the financing both for Greenland and for the other

4 Treaty amending, with regard to Greenland, the Treaties establishing the European Communities, OJ L
29, 1.2.1985, p. 1.
5 Agreement on fisheries between the European Economic Community, on one hand, and the
Government of Denmark and the local Government of Greenland, on the other, OJ L 29, 1.1.1985, p. 9.
6 Joint declaration by the European Community, on the one hand, and the Home Rule Government of
Greenland and the Government of Denmark, on the other, on partnership between the European
Community and Greenland, OJ L 208, 29.7.2006, p. 32.
7 Decision (EC) 2006/526 of 17 July 2006 on relations between the European Community on the one
hand, and Greenland and the Kingdom of Denmark on the other, OJ L 208, 29.7.2006, p.28.
8 Decision (EU) 2014/137 of 14 March 2014 on relations between the European Union on the one hand,
and Greenland and the Kingdom of Denmark on the other ('Greenland Decision'), OJ L 76, p. 1,
15.3.2014.
9 The mid-term review report was based on 10 staff working documents, one per instrument (list in link
below), which in turn were based on 10 independent evaluations. All the documents can be found at:
[https://ec.europa.eu/europeaid/public-consultation-external-financing-instruments-european-union_en.](https://ec.europa.eu/europeaid/public-consultation-external-financing-instruments-european-union_en)
10 OJ L 76, 15.3.2014, p. 1.
11 Article 203 of the Treaty on the Functioning of the European Union (OJ C 326, 26.10.2012, p. 1).

# EN 2 EN

Overseas Countries and Territories should come from the new budget heading 6
'Neighbourhood and the World'.

A new legislative act for all OCTs that covers the political and legal framework and with how
cooperation is implemented will deliver:

        - unity of management — having all the OCTs under the same source of
financing (the EU budget) will create synergies in programming and
implementation;

        - consolidation of shared objectives;

        - simplification and coherence in the legal framework;

        - higher profile for the OCTs as a group.

As both decisions have been deemed ‘fit for purpose’, the guiding principle is to preserve
what works well, while improving what hinders the partners’ ability to deliver effectively on
their policies and priorities. On the other hand, the Member States concerned have firmly
insisted on retaining the structure and _acquis_ of the current Overseas Association Decision.

**•** **Consistency with existing policy provisions in the policy area**

The current rules and procedures of the EU-OCT association are laid down in Decision
2013/755/EU of 25 November 2013 [12] on the association of the OCTs with the European
Union. Those concerning the relations with Greenland are laid down in Decision
2014/137/EU of 14 March 2014 [13] on relations between the European Union on the one hand,
and Greenland and the Kingdom of Denmark on the other.

**•** **Consistency with other Union policies**

‘Europe 2030’ [14] provides a benchmark for consistency across all policy areas as regards
energy efficiency and its contribution to energy security and to the 2030 Framework for
climate and energy policy. Coherence with the Paris Agreement on Climate Change will also
be ensured.

The integrated European Union policy for the Arctic [15] reflects the Union’s strategic interest in
playing a key role in the Arctic region. Building on previous initiatives, it sets out the case for
a Union policy that focuses on advancing international cooperation in responding to the
impacts of the climate change on the Arctic’s fragile environment, and on promoting and
contributing to sustainable development, particularly in the European part of the Arctic.
Greenland plays an important part in the vision of this policy as part of the Kingdom of
Denmark.

Actions funded under this proposal should be coherent with those carried out under the
Common Foreign and Security Policy and the newly proposed European Peace Facility.

12 OJ L 344, 19.12.2013, p. 1.
13 OJ L 76, 15.3.2014, p. 1.
14 Communication from the Commission to the European Parliament and the Council on energy efficiency
and its contribution to energy security and the 2030 Framework for climate and energy policy, COM
(2014) 520 final.
15 JOIN (2016) 21.

# EN 3 EN

Humanitarian actions should not be funded under this proposal as they will continue to be
funded through the Humanitarian Aid instrument [16] .

The Commission proposal for the 2021-2027 Multiannual Financial Framework set a more
ambitious goal for climate mainstreaming across all EU programmes, with an overall target of
25% of EU expenditure contributing to climate objectives. Actions under this Programme are
expected to contribute 20 % of the overall financial envelope of the Programme to climate
objectives. The contribution of this Programme to the achievement of this overall target will
be tracked through an EU climate marker system at an appropriate level of disaggregation,
including the use of more precise methodologies where these are available. The Commission
will continue to present the information annually in terms of commitment appropriations in
the context of the annual draft budget.

To support the full utilisation of the potential of the programme to contribute to climate
objectives, the Commission will seek to identify relevant actions throughout the programme
preparation, implementation, review and evaluation processes.

**2.** **LEGAL** **BASIS,** **SUBSIDIARITY** **AND** **PROPORTIONALITY**

**•** **Legal basis**

The Overseas Association Decision is based on Part Four of the TFEU. The detailed rules and
procedures of the association are laid down in Council decisions based on Article 203 of the
TFEU, under which such acts are adopted through a special legislative procedure.

Articles 198-204 of the TFEU apply to Greenland, subject to the specific provisions set out in
the Protocol No 34 on special arrangements for Greenland annexed to the TFEU.

**•** **Subsidiarity (for non-exclusive competence)**

The detailed arrangements of the provisions in Part Four of the TFEU have to be made at
Union level, as the purpose of the association — social and economic development and close
economic ties between the OCTs and the Union as a whole — cannot be achieved via action
at Member State level. Moreover, Member States would not be able to take action with regard
to the OCT trade regime, as the EU alone is responsible for common commercial policy (Part
Five, Title II of the TFEU).

The approach towards cooperation with the OCTs contained in the Commission’s legislative
proposal respects the principles of partnership, complementarity and subsidiarity. It proposes
that the EU financial assistance to OCTs be based on programming documents, for which the
competent OCT authorities and the Commission would be jointly responsible and which
would define the cooperation strategies between the Union and the OCTs. These cooperation
strategies would be based on the development objectives, strategies and priorities adopted by
the competent OCT authorities. The Commission, the OCTs and their Member States would
work closely together to decide on activities, with full respect for each partner’s institutional,
legal and financial powers.

Without prejudice to the Commission’s prerogatives, the OCT authorities would have primary
responsibility for implementing the operations agreed on under the cooperation strategy. The
Commission would be responsible for establishing the general rules and conditions for these
programmes and projects.

The partnership between the European Union, Greenland and Denmark will facilitate
consultations and policy dialogue on the objectives and areas of cooperation established

16 To be updated.

# EN 4 EN

through this Decision. In particular, it will define the framework providing the basis for broad
cooperation and dialogue in areas of mutual interest.

**•** **Proportionality**

Under Articles 198 and 199 of the TFEU, the association will continue to provide a
comprehensive partnership comprising an institutional framework and trade arrangements and
covering many areas of cooperation, as well as the basic principles governing Union financial
assistance to OCTs.

Considering the specificities of the OCTs and their special relationship with the EU, a new
legislative act for all OCTs that covers the political and legal framework and how cooperation
should be implemented will ensure effectiveness, consolidation of shared objectives and
coherence, as well as more visibility for the OCTs as a group. This proposal puts forward an
approach that is flexible and tailored to the situation of each OCT.

For the sake of consistency and effectiveness, and unless otherwise specified, the proposed
Decision will apply the implementation, evaluation and monitoring provisions of the
Neighbourhood, Development and International Cooperation Instrument (NDICI). [17]

**3.** **RESULTS** **OF** **EX-POST** **EVALUATIONS,** **STAKEHOLDER**
**CONSULTATIONS** **AND** **IMPACT** **ASSESSMENTS**

**•** **Retrospective evaluations/fitness checks of existing legislation**

Article 7 of the Greenland Decision on implementation requires a mid-term evaluation report
at the latest by June 2018 to inform future work on the Decision and its actions. The 11 [th] EDF,
which includes the programming of the other OCTs, refers to the need for a performance
review by the end of 2018. Therefore, the Greenland Decision (2014/137/EU) and the 11 [th]
EDF were included in an evaluation with eight other external financing instruments, all of
which, based on Article 17 of the Common Implementing Regulation [18], required a mid-term
review report by the end of 2017.

The report, adopted by the Commission in December 2017 [19], assessed whether these 10
instruments remained fit for purpose, with a view to ensuring the effective implementation of
EU assistance. It consisted of an overall analysis and 10 individual Staff Working Documents,
which assessed each financing instrument based on evaluations conducted by external
consultants during 2016-2017.

The Staff Working Document on the Greenland Decision [20] concluded that its main objective
— preserving the close and lasting links between the parties, while supporting sustainable
development in Greenland — has been and is being achieved. The strong partnership and
cooperation with the European Union has enabled Greenland to increase capacity-building, to
develop stronger governance and financial systems, and to strengthen its education system —
and, as a result, its workforce.

17 [NDICI Regulation]
18 Regulation (EU) No 236/2014 of the European Parliament and of the Council of 11 March 2014, OJ L
77, 14.3.2014, p. 95.
19 The mid-term review report was based on 10 staff working documents, one per instrument (list in link
below), which in turn were based on 10 independent evaluations. All the documents can be found at:
[https://ec.europa.eu/europeaid/public-consultation-external-financing-instruments-european-union_en.](https://ec.europa.eu/europeaid/public-consultation-external-financing-instruments-european-union_en)
20 [https://ec.europa.eu/europeaid/mid-term-review-report-external-financing-instruments_en](https://ec.europa.eu/europeaid/mid-term-review-report-external-financing-instruments_en)

# EN 5 EN

The Greenland Decision was designed in such a way as to cover and better deliver on the
wider political aims of the partnership with the European Union. As such, it can continue to
deliver on its objectives towards 2020.

The Staff Working Document on the 11 [th] EDF [21] concluded that it was relevant. It was an
efficient mechanism overall, with proven added value and satisfactory internal coherence.
Some inefficiencies in implementation procedures for the OCTs were found to have
consequences on the effectiveness of cooperation.

Overall, the mid-term review report concluded that the external financing instruments were fit
for purpose, relevant, largely in line with EU objectives and partner countries’ needs and
flexible enough to support and enable implementation of an evolving policy framework.
However, the multiplicity of instruments and processes was found to be undermining the
overall coherence and visibility of EU external action, with synergies and complementarities
not fully exploited.

To respond to the policy and operational challenges set out in the evaluations, the EU
budget’s external action heading will need to increase its focus on four key cross-cutting
issues: flexibility, simplification, coherence and performance.

The Greenland Decision is integrated into the Overseas Association Decision, which also
covers Greenland, and the financial resources for both Greenland and the other OCTs will
now come from the same EU budget heading. Merging the two decisions will therefore make
for simplification, flexibility and coherence, as the political relations with all OCTs and the
financial resources will be brought together under a single instrument. This will underline and
strengthen the OCTs’ special status and further sharpen the focus on the specificities of the
OCTs as opposed to other development partners and highlight that the focus in the
cooperation with OCTs is their sustainable development.

**•** **Stakeholder consultations**

Relations with the OCTs, including Greenland, were discussed at a thematic session on post2020 during the 16 [th] EU-OCT Forum in Brussels on 23 February 2018 and in a background
paper on the post-2020 debate and its implications for OCTs [22], commissioned by the OCTs
Association (OCTA).

Furthermore, during the external evaluation of the external financing instruments, including
the Greenland Decision and the 11 [th] EDF, an open public consultation took place over 12
weeks, closing on 3 May 2017 [23] . The consultation also gathered preliminary inputs for future
external financing instruments. The consultation took the shape of (i) an online survey, which
included some guiding questions to facilitate feedback, and (ii) face-to-face meetings with key
stakeholders.

The following issues were highlighted during this consultation:

The background paper commissioned by OCTA outlined how, in general, the OCTs consider
the current Overseas Association Decision to have brought them much progress and to be a
good legal tool in no need of significant modification. Future OCT-EU cooperation would
gain from focusing on achieving the Sustainable Development Goals. Future relations could
operate through a stand-alone, in-budget OCT instrument, with appropriate rules, allowing for

21 [https://ec.europa.eu/europeaid/mid-term-review-report-external-financing-instruments_en](https://ec.europa.eu/europeaid/mid-term-review-report-external-financing-instruments_en)
22 The report is not yet public but is approved by the Commission.
23 [https://ec.europa.eu/europeaid/public-consultation-external-financing-instruments-european-union_en](https://ec.europa.eu/europeaid/public-consultation-external-financing-instruments-european-union_en)

# EN 6 EN

simple, flexible and fluid programming. Incorporating the EDF into the EU budget would be
welcomed, if certain EDF flexibility features could be maintained. Some OCTs called for
increased financial support in recognition of their specific geographical features and of their
belonging to the EU family.

This view was supported by the Member States, which consider that the Overseas Association
Decision provided the right basis for OCT-EU cooperation, even though significant changes
in implementation were expected. The background paper also found that the Member States
were open to a specific in-budget instrument as long as the attached provisions remained
appropriate, and more specifically that the budget support modality and the multiannual
principle are preserved.

During the public consultation on the evaluation of the Greenland Decision there was overall
agreement that the Decision had proven relevant and effective in pursuing and fulfilling its
general and specific objectives and in reflecting its general principles as regards facilitating
policy dialogue on global and Arctic issues. When considering financial assistance post-2020,
the procedures for programming and implementing financial assistance for Greenland could
usefully be compared with the EDF procedures available to other OCTs. The Greenland
Decision was seen as a valuable instrument for maintaining and strengthening the strong ties
between Greenland and the Union. The political aspects of the relationship had very much
evolved over the years.

**•** **External expertise**

The external evaluation of the Greenland Decision and of the 11 [th] EDF was used as the basis
for the mid-term review report and its accompanying Staff Working Documents. In addition, a
background paper on the post-2020 debate and its implications for OCTs was commissioned
by the OCTs and conducted externally.

**•** **Impact assessment**

In 2018 the Commission carried out an impact assessment covering all instruments under the
‘Global Europe’ heading of the 2014-2020 Multiannual Financial Framework (MFF). The
impact assessment focused on the major changes proposed for external action in the 20212027 MFF. These changes included the streamlining of several instruments into one broad
instrument and the integration of the EDF into the EU budget.

The analysis concluded that the advantages of integrating the EDF in the budget would
outweigh the disadvantages as long as certain pre-conditions could be met. For instance, the
amount allocated to external action should not be less than the sum of the EDF and the other

external instruments combined; the flexibilities of the EDF should be transferred to the extent
possible; and the military operations financed under the EDF’s African Peace Facility should
continue through another off-budget mechanism.

The impact assessment also concluded that most instruments, aside from those with a very
specific legal basis or objectives, could be merged. The instruments that could be merged
included the Development Cooperation Instrument, the European Development Fund, the
European Neighbourhood Instrument, the European Instrument for Democracy and Human
Rights, the Instrument contributing to Stability and Peace and the Partnership Instrument.
Those that should remain separate include: Humanitarian Aid; the common foreign and
security policy budget; part of the Instrument for Nuclear Safety Cooperation; Overseas
Countries and Territories, including Greenland; Union Civil Protection Mechanism;

# EN 7 EN

Instrument for Pre-accession Assistance; the EU aid volunteers scheme; support to the
Turkish Cypriot community; the Emergency Aid Reserve and the European Peace Facility.

As noted by the Commission [24] and supported by feedback from partners during the public
consultation, the current architecture of the external financing instruments is too complex.
Streamlining a number of instruments into a broad instrument would provide an opportunity
to rationalise their management and oversight systems, thereby reducing the administrative
burden on EU institutions and Member States. Having a simplified oversight system would
allow the relevant institutions to have a better, more comprehensive view of EU external
expenditure.

On 25 April 2018 the impact assessment was examined by the Regulatory Scrutiny Board and
received a positive opinion with comments.

**•** **Simplification**

In terms of simplification, the streamlining of the legal architecture aims to reduce the
administrative burden compared to the current instruments. Currently, the relations with
OCTs and their financial resources (including programming and implementing rules) are
covered by four instruments: (i) the Overseas Association Decision, (ii) the 11 [th] EDF
regulation, (iii) the Greenland Decision and (iv) the Common Implementing Regulation.

The proposed Decision offers a single instrument which covers both the political aspects and
the specific relations between the Union and the OCTs. It includes specific provisions where
required guiding the relationship with Greenland, the financial resources consolidated under
one heading of the EU budget and implementing rules, which will largely follow the
Neighbourhood, Development and International Cooperation Instrument ensuring coherence
and simplification. Where necessary, the proposed Decision will provide for the specific,
simplified rules for OCTs, as in matter of programming.

Furthermore, the transfer (to the extent possible) of EDF features such as the multiannual
principle will provide for even simpler and more flexible procedures that were previously
unavailable to Greenland. Thus, the proposed Decision will simplify the management and
oversight architecture of the current set of instruments.

**4.** **BUDGETARY** **IMPLICATIONS**

The financial resources for Greenland will come from budget heading 6 of the EU budget:
‘Neighbourhood and the World’. Given the intention to transfer some features of the EDF
such as the multiannual principle to the EU budget, this will simplify the current procedures
for allocating funds to Greenland.

Concerning the other OCTs, their financial allocations will be moved from the EDF to the
‘Neighbourhood and the World’ budget heading.

With the Commission Communications on a modern budget for a Union that protects,
empowers and defends [25], under the ‘Neighbourhood and the World’ heading EUR 500
million is earmarked for cooperation with the OCTs.

24 In particular the reflection paper on the future of EU finances (June 2017) and the Communication from
the Commission to the European Parliament and the Council; COM (2018) 98 final 14.2.2018.
25 COM (2018) 98 final, 14.2.2018; COM (2018) 321 final, 2.5.2018.

# EN 8 EN

This Decision provides for a total amount of EUR 500 000 000 (in current prices) to be
allocated to the association with the OCTs. Of this amount, EUR 225 000 000 is to be
allocated to Greenland, EUR 225 000 000 for other OCTs, which comprise EUR 159 000 000
for territorial programmes and for EUR 66 000 000 to regional programmes. In addition an
intra-regional financial envelope of EUR 15 000 000 is open to all the OCTs, including
Greenland. Moreover an amount of EUR 22 000 000 for technical assistance is foreseen in

accordance with the new Decision as well as a non-allocated amount of EUR 13 000 000.

**5.** **OTHER** **ELEMENTS**

**•** **Implementation plans and monitoring, evaluation and reporting arrangements**

The implementation, the monitoring, evaluation and reporting arrangements will follow the
rules set out in the Neighbourhood, Development and International Cooperation Instrument,
unless otherwise specified in the Decision.

**•** **Detailed explanation of the specific provisions in the draft Decision**

As the Overseas Association Decision and the Greenland Decision will be merged, all areas
which are similar or have synergies are merged. The structure of the current Overseas
Association Decision and most provisions in it will be maintained, where needed, the
specificities of the Union’s relations and cooperation with Greenland will be highlighted, such
as the aim of preserving the close and lasting links between the Union, Greenland and
Denmark; the acknowledgement of the geostrategic position of Greenland; policy dialogue
and potential cooperation on Arctic issues; and food security. As a result, the positive
achievements of the Greenland Decision will be maintained.

The new Overseas Association Decision should consist of the same structure with the same
political, trade and cooperation pillars as the current Decision. The main changes include:

        - The proposed Decision will take into account the consequences of the
withdrawal of the United Kingdom of Great Britain and Northern Ireland from
the European Union and the fact that the special regime set out in Part Four of
the TFEU would no longer apply to the 12 British OCTs.

        - From a formal point of view, a general updating of the text and its annexes is
undertaken, notably to take into account the latest changes in taxation and trade
legislation.

        - With the EDF being integrated into the EU budget, Annexes IV and V of the
_current_ Decision will be repealed. Moreover, Annex I on isolated OCT has
been integrated in the Decision. Annex III on EIB own resources management
will be repealed.

        - Addition and updating of provisions reflecting the state of play of relations
with Greenland under Article 3 (objectives, principles and values), Article 5
(mutual interests, complementarity and priorities), Article 13 (guiding
principles for dialogue), Article 23 (new article on raw materials), Article 31
(cooperation in research and innovation), and Article 35 (public health and
food security).

# EN 9 EN

        - Part IV on Financing Cooperation includes a dedicated financial envelope
under the budget heading 6 ''Neighbourhood and the World" for the OCTs. It
provides also:

           - A general referral clause to the Neighbourhood, Development and
International Cooperation Instrument for implementing the financial
cooperation of the proposed Decision. Nevertheless, the proposed
Decision will continue to provide for a specific and simplified
programming exercise for the OCTs;

           - The OCTs will also remain eligible under the next Multiannual Financial
Framework to participate in Union programmes as a matter of principle.
They will be eligible for the thematic programmes and rapid response
actions of the Neighbourhood, Development and International
Cooperation Instrument.

           - A specific provision/facility allows the Commission to promote in an
active way intra-regional projects between OCTs, ACP and non ACP
States or territories, and the Union’s outermost regions.

# EN 10 EN

2018/0244 (CNS)

Proposal for a

**COUNCIL DECISION**

**on the Association of the Overseas Countries and Territories with the European Union including**
**relations between the European Union on the one hand, and Greenland and the Kingdom of**
**Denmark on the other**

**('Overseas Association Decision')**

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 203
thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national Parliaments,

Having regard to the opinion of the European Parliament [26],

Acting in accordance with a special legislative procedure,

Whereas:

(1) This Decision establishes the rules and the procedure for the association of the EU with
Overseas Countries and Territories (OCTs), including Greenland, and replaces Council
Decision 2013/755/EU [27] ('Overseas Association Decision') and Council Decision
2014/137/EU [28] ('Greenland Decision').

(2) Pursuant to Article 204 of the Treaty on the Functioning of the European Union (TFEU), the
provisions of Articles 198 to 203 TFEU apply to Greenland, subject to the specific provisions
set out in Protocol No 34 to the TFEU on special arrangements for Greenland. In accordance
with the Greenland Treaty [29], the relations between the Union on the one hand, and Greenland
and the Kingdom of Denmark on the other are governed by Council Decision 2014/137/EU [30]
that highlights the close historical, political, economic and cultural connections between the
Union and Greenland and defines a specific partnership and cooperation. Decision
2014/137/EU expires on 31 December 2020.

(3) From 1 January 2021, the Union assistance to OCTs previously financed by the European
Development Fund (EDF) should be financed from the general budget of the Union.

(4) In order to streamline the number of External Financing Instruments and their performance, the
relations with all OCTs, including Greenland, should be regrouped by replacing the Overseas
Association Decision and the Greenland Decision by a single Decision.

26 Opinion of xx/xx/xxxx (not yet published in the Official Journal).
27 Decision No 2013/755/EU of 25 November 2013 on the association of the overseas countries and territories with
the European Union ('Overseas Association Decision'), OJ L 344, 19.12.2013, p. 1.
28 Decision No 2014/137/EU of 14 March 2014 on relations between the European Union on the one hand, and
Greenland and the Kingdom of Denmark on the other ('Greenland Decision'), OJ L 76, 15.3.2014, p. 1.
29 Treaty amending, with regard to Greenland, the Treaties establishing the European Communities, OJ L 29,
1.2.1985, p. 1.
30 OJ L 76, 15.3.2014, p. 1.

# EN 1 EN

(5) The partnership pursuant to this Decision should allow for the continuation of strong relations
between the Union on the one hand, and all the OCTs on the other.

(6) This new Decision should highlight the specificities concerning the cooperation with
Greenland, such as the objective to preserve the close and lasting links between the Union,
Greenland and Denmark, the acknowledgement of the geostrategic position of Greenland, the
importance of policy dialogue between Greenland and the Union, the existence of a Fisheries
Partnership Agreement between the Union and Greenland and the potential cooperation on
Arctic issues. It should respond to the global challenges allowing for the development of a
proactive agenda and the pursuit of mutual interests, in particular, the increasing impact of
climate change on human activity and the environment, maritime transport, natural resources,
including raw materials and fish stocks, as well as research and innovation.

(7) The TFEU and its secondary legislation do not automatically apply to the OCTs, with the
exception of a number of provisions which explicitly provide for the contrary. Although not
third countries, the OCTs do not form part of the single market and must comply with the
obligations imposed on third countries in respect of trade, particularly rules of origin, health
and plant health standards and safeguard measures.

(8) The special relationship between the Union and the OCTs is moving from a development
cooperation approach to a reciprocal partnership to support the OCTs’ sustainable
development. Moreover, the solidarity between the Union and the OCTs should be based on
their unique relationship and their belonging to the same European family.

(9) The 2030 Agenda for Sustainable Development ('2030 Agenda'), adopted by the United
Nations in September 2015, is the international community's response to global challenges and
trends in relation to sustainable development. With the Sustainable Development Goals
('SDGs'), the Paris Agreement on Climate Change and the Addis Ababa Action Agenda – at its
core, the 2030 Agenda is a transformative framework to eradicate poverty and achieve
sustainable development globally. It is universal in scope, providing a comprehensive shared
framework for action that applies both to the Union and to its partners. It balances the
economic, social, and environmental dimensions of sustainable development, recognising the
essential interlinkages between its goals and targets. The 2030 Agenda aims to leave no one
behind. Its implementation will be closely coordinated with other international commitments.
Actions implemented under this Decision will pay particular attention to interlinkages between
SDGs and to integrated actions that can create co-benefits and meet multiple objectives in a
coherent way.

(10) The association between the Union and the OCTs should continue to be based on the three key
pillars of enhancing competitiveness, strengthening resilience and reducing vulnerability, and
promoting cooperation and integration between the OCTs and other partners and neighbouring
regions.

(11) Union financial assistance allocated through the partnership should bring a European
perspective to the development of OCTs and should contribute to the strengthening of the close
and long lasting ties with it, while strengthening the position of OCTs as advanced outposts of
the Union, based on the common values and history which link the partners.

(12) Given the OCTs’ geographical position, and despite the different status vis-à-vis Union law of
each actor in a given geographical area, cooperation between them and their neighbours should
be pursued in the interests of all sides with a particular focus on areas of common interest and
the promotion of the Union’s values and standards.

(13) Many OCTs are neighbours to outermost regions, referred to in Article 349 TFEU and to
African, Caribbean and Pacific (ACP) States and other third territories and countries and share

# EN 2 EN

common needs with their neighbours from climate change adaptation and mitigation and the
preservation of biodiversity to oceans-related issues, economic diversification and disaster risk
reduction.

(14) The Commission Communication of 24 October 2017 ‘A stronger and renewed strategic
partnership with the Union's outermost regions’ [31], the Conclusions of the 15 [th] and 16 [th] OCTEU Forums and the Commission recommendations for the negotiations on a Partnership
Agreement between the European Union and ACP countries [32] call for a reinforcement of
regional cooperation programmes involving OCTs and their neighbours.

(15) The OCTs are host to wide terrestrial and marine biodiversity. Climate change is impacting on
OCTs’ natural environment and constitutes a threat undermining their sustainable development.
Actions in the fields of conservation of biodiversity and ecosystem services, disaster risk
reduction, sustainable management of natural resources and promotion of sustainable energy
contributes to adaptation and mitigation of climate change in the OCTs. The association should
aim at ensuring the conservation, restoration and sustainable use of biological diversity and
ecosystem services as a key element for the achievement of sustainable development.

(16) Reflecting the importance of tackling climate change in line with the Union's commitments to
implement the Paris Agreement and the United Nations Sustainable Development Goals, this
Programme will contribute to mainstream climate action in the Union's policies and to the
achievement of an overall target of 25 % of the Union´s budget expenditures supporting climate
objectives. Actions under this Programme are expected to contribute 20 % of the overall
financial envelope of the Programme to climate objectives. Relevant actions will be identified
during the Programme's implementation and reassessed in the context of its mid-term
evaluation and review processes.

(17) The significant role which OCTs could play in contributing to the EU’s commitments under
Multilateral Environmental Agreements should be recognised in the relations between the
Union and the OCTs.

(18) The Union and the OCTs recognise the special importance of education and vocational training
as a lever for the OCTs’ sustainable development.

(19) The association between the Union and the OCTs should take into account and contribute to the
preservation of the cultural diversity and identity of OCTs _._

(20) Trade and trade-related cooperation between the Union and the OCTs should contribute to the
objective of sustainable economic development, social development and environmental
protection.

(21) This Decision should provide for more flexible rules of origin, including new possibilities of
cumulation of origin. Cumulation should be possible not only with OCTs and Economic
Partnership Agreement (EPA) countries, but under certain conditions also for products
originating in countries with which the Union is applying a free trade agreement as well as for
products entering the Union duty-free and quota-free under the Union’s General System of
Preferences, also subject to conditions. These conditions are necessary to prevent trade
circumvention and ensure the proper functioning of the cumulation arrangements.

(22) The procedures for certification of OCT origin should be updated, in the interests of the
operators and administrations concerned in the OCTs. Provisions on administrative cooperation
between the Union and the OCTs should also be updated accordingly.

31 COM (2017) 623 final, 24.10.2017
32 COM (2017) 763 final, 12.12.2017

# EN 3 EN

(23) In addition, sufficiently detailed safeguard and surveillance provisions should be laid down.
This would allow OCTs' and Union competent authorities as well as economic operators to rely
on clear and transparent rules and procedures. Finally, it is a matter of common interest to
ensure the proper application of the procedures and arrangements that allow the OCTs to export
goods to the Union duty-free and quota-free.

(24) Taking into account the aims of integration and the developments of global trade in the area of
services and establishment, it is necessary to support the development of services markets and
investment possibilities by improving the market access of OCTs' services and investment to
the Union market. In this regard the Union should offer to OCTs the best possible treatment
offered to any other trading partner through comprehensive most favoured nation clauses, while
ensuring more flexible possibilities for trade relations for OCTs by limiting the treatment
offered by OCTs to the Union to what has been offered to other major trading economies.

(25) Cooperation in the area of financial services between the Union and OCTs should contribute to
building a safer, sounder, more transparent financial system that is essential to enhance global
financial stability and to underpin sustainable growth. Efforts in that area should focus on
convergence with internationally agreed standards and approximation of OCTs' legislation with
Union acquis on financial services. Adequate attention should be paid to strengthening
administrative capacity of OCTs' authorities, including in the area of supervision.

(26) Union financial assistance should focus on areas where it has most impact, having regard to its
capacity to act on a global scale and to respond to global challenges such as poverty
eradication, sustainable and inclusive development or the worldwide promotion of democracy,
good governance, human rights and the rule of law, its long-term and predictable engagement
in development assistance and its role in coordinating with its Member States.

(27) In the interest of efficiency, simplification and recognition of the management capacities of the
OCTs' authorities, the financial resources granted to the OCTs should be managed on the basis
of a reciprocal partnership. Moreover, the authorities of the OCTs should assume the
responsibility for the formulation and implementation of those policies agreed upon between
the parties as cooperation strategies. The limited administrative and human resources of the
OCTs should be taken into account in the programming and implementation process.

(28) This Decision lays down a financial envelope for the association of the OCTs with the Union,
the ‘Overseas Association Decision’, which is to constitute the prime reference amount, within
the meaning of point 16 of the Interinstitutional Agreement of [ ---] between the European
Parliament, the Council and the Commission on budgetary discipline, on cooperation in
budgetary matters and on sound financial management for the European Parliament and the
Council during the annual budgetary procedure.

(29) Horizontal financial rules adopted by the European Parliament and the Council on the basis of
Article 322 of the Treaty on the Functioning of the European Union apply to this Decision.
These rules are laid down in the Financial Regulation and determine in particular the procedure
for establishing and implementing the budget through grants, procurement, prizes, indirect
implementation, and provide for checks on the responsibility of financial actors. Rules adopted
on the basis of Article 322 TFEU also concern the protection of the Union's budget in case of
generalised deficiencies as regards the rule of law in the Member States, as the respect for the
rule of law is an essential precondition for sound financial management and effective Union
funding.

(30) The types of financing and the methods of implementation under this Decision should be
chosen on the basis of their ability to achieve the specific objectives of the actions and to
deliver results, taking into account, in particular, the costs of controls, the administrative
burden, and the expected risk of non-compliance. This should include consideration of the use

# EN 4 EN

of lump sums, flat rates and unit costs, as well as financing not linked to costs as referred to in
Article 125(1) of the Financial Regulation.

(31) The Union should seek the most efficient use of available resources in order to optimise the
impact of its external action. That should be achieved through coherence and complementarity
between the Union's external financing instruments, as well as the creation of synergies with
other Union policies and Programmes. In order to maximise the impact of combined
interventions to achieve a common objective, this Decision should allow for the combination of
funding with other Union Programmes, as long as the contributions do not cover the same

costs.

(32) This Decision should make reference, where required, to [NDICI Regulation] (Neighbourhood,
Development and International Cooperation Instrument) for the purpose of the implementation
of the cooperation and thus ensuring coherence in the management across instruments.

(33) In order to take into account developments and changes in customs and trade legislation, the
power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the
European Union should be delegated to the Commission in respect of the content of Annex II,
III and IV to enable the Commission to translate into the Decision these changes. Pursuant to
paragraph 22 and 23 of the Inter-institutional agreement for Better Law-Making of 13 April
2016 [33], there is a need to evaluate this Programme on the basis of information collected
through specific monitoring requirements, while avoiding overregulation and administrative
burdens, in particular on Member States. These requirements, where appropriate, can include
measurable indicators, as a basis for evaluating the effects of the Programme on the ground. It
is of particular importance that the Commission carry out appropriate consultations during its
preparatory work, including at expert level, and that those consultations be conducted in
accordance with the principles laid down in the Interinstitutional Agreement on Better LawMaking of 13 April 2016 [34] . In particular, to ensure equal participation in the preparation of
delegated acts, the European Parliament and the Council receive all documents at the same time
as Member States' experts, and their experts systematically have access to meetings of
Commission expert groups dealing with the preparation of delegated acts.

(34) The references to the external assistance instruments in Article 9 of Council Decision
2010/427/EU [35] should be read as reference also to this Decision. The Commission should
ensure that this Decision is implemented in accordance with the role of the EEAS as provided
in that Decision.

(35) In order to ensure uniform conditions for the implementation of Article 10(6) and 16(8) of
Annex II, Article 2 of Annex III, Article 5 and 6 of Annex IV of this Decision, implementing
powers should be conferred on the Commission. Those powers should be _exercised_ in
accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council.

(36) In accordance with the Financial Regulation, Regulation (EU, Euratom) No 883/2013 of the
European Parliament and of the Council [36], Council Regulation (EC, Euratom) No 2988/95 [37],

33 Interinstitutional Agreement between the European Parliament, the Council of the European Union and the
European Commission on Better Law-Making of 13 April 2016; OJ L 123, 12.5.2016, p. 1.
34 idem
35 Council Decision 2010/427/EU of 26 July 2010 establishing the organisation and functioning of the European
External Action Service (OJ L 201, 3.8.2010, p. 30).
36 Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council of 11 September 2013
concerning investigations conducted by the European Anti-Fraud Office (OLAF) and repealing Regulation (EC)
No 1073/1999 of the European Parliament and of the Council and Council Regulation (Euratom) No 1074/1999,
OJ L248, 18.9.2013, p. 1.
37 Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities
financial interests, OJ L 312, 23.12.95, p.1.

# EN 5 EN

Council Regulation (Euratom, EC) No 2185/96 [38] and Council Regulation (EU) 2017/1939 [39],the
financial interests of the Union are to be protected through effective and proportionate
measures, including the prevention, detection, correction and investigation of irregularities,
including fraud, the recovery of funds lost, wrongly paid or incorrectly used and, where
appropriate, the imposition of administrative sanctions. In particular, in accordance with
Regulation (EU, Euratom) No 883/2013 and Regulation (Euratom, EC) No 2185/96, the
European Anti-Fraud Office (OLAF) may carry out administrative investigations, including onthe-spot checks and inspections, with a view to establishing whether there has been fraud,
corruption or any other illegal activity affecting the financial interests of the Union. In
accordance with Regulation (EU) 2017/1939, the European Public Prosecutor's Office (EPPO)
may investigate and prosecute fraud and other criminal offences affecting the financial interests
of the Union as provided for in Directive (EU) 2017/1371 of the European Parliament and of
the Council [40] . In accordance with the Financial Regulation, any person or entity receiving
Union funds is to fully cooperate in the protection of the Union’s financial interests and grant
the necessary rights and access to the Commission, OLAF, the EPPO and the European Court
of Auditors (ECA) and to ensure that any third parties involved in the implementation of Union
funds grant equivalent rights. For this reason, agreements with third countries and territories
and with international organisations, and any contract or agreement resulting from the
implementation of this Decision should contain provisions expressly empowering the
Commission, the Court of Auditors and OLAF to conduct audits, on-the-spot checks and
inspections, according to their respective competences and ensuring that any third parties
involved in the implementation of Union funding grant equivalent rights.

(37) By virtue of this Decision, the Council should be able to give an innovative response to all the
factors mentioned above, which is both consistent and tailored to the variety of situations,

HAS ADOPTED THIS DECISION

## **PART I** **GENERAL PROVISIONS OF THE ASSOCIATION OF THE** **OVERSEAS COUNTRIES AND TERRITORIES WITH THE** **UNION**

38 Regulation (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, OJ L292, 15.11.96, p.2.
39 Regulation (EU) 2017/1939 of 12 October 2017 implementing enhanced cooperation on the establishment of the
European Public Prosecutor’s Office (‘the EPPO’), OJ L283, 31.10.2017, p.1.
40 Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud
to the Union's financial interests by means of criminal law, OJ L 198, 28.7.2017, p. 29.

# EN 6 EN

### **CHAPTER 1** **GENERAL PROVISIONS**

_Article 1_

**Subject matter**

1. This Decision establishes an association of the overseas countries and territories (OCTs) with
the Union (the ‘association’), which constitutes a partnership, based on Article 198 TFEU, to
support the OCTs’ sustainable development as well as to promote the values and standards of
the Union in the wider world.

2. The partners to the association are the Union, the OCTs and the Member States to which they
are linked.

3. This Decision establishes, in its Article 73, the funding programme for the association with all
the OCTs for the period 2021 to 2027 (the ‘Programme’). It lays down the objectives of the
Programme, the forms of Union funding and the rules for providing such funding, as set out in
Annex I of this Decision.

_Article 2_

**Territorial application**

The association shall apply to the OCTs listed in Annex II to the TFEU.

_Article 3_

**Objectives, principles and values**

1. The association between the Union and the OCTs shall be based on objectives, principles and
values shared by the OCTs, the Member States to which they are linked and the Union.

2. The partners recognise each other’s rights to determine their sustainable development policies
and priorities, to establish their own levels of domestic environmental and labour protection,
and to adopt or modify accordingly the relevant laws and policies, consistently with
commitment to the internationally recognised standards and agreements. In doing so, they
shall strive to ensure high levels of environmental and labour protection

3. In implementing this Decision, the partners shall be guided by the principles of transparency,
subsidiarity and the need for efficiency and shall equally address the three pillars of OCTs’
sustainable development: economic development, social development and environmental
protection.

4. The general objective of this Decision is to promote the economic and social development of
the OCTs and to establish close economic relations between them and the Union as a whole.
The association shall pursue this general objective by the enhancing the OCTs’
competitiveness, strengthening the OCTs’ resilience, reducing their economic and
environmental vulnerability and the promoting of cooperation between them and other
partners.

5. In accordance with Articles 3(5) and 21 of the TEU, the specific objectives of this Decision
are the following:

(a) to foster and support cooperation with OCTs,

# EN 7 EN

(b) to support and to cooperate with Greenland in addressing its major challenges as the
raising of education level and to contribute to the capacity of the administration of
Greenland to formulate and implement national policies.

6. In pursuing those objectives, the association shall respect the fundamental principles of
liberty, democracy, human rights and fundamental freedoms, the rule of law, good
governance and sustainable development, all of which are common to the OCTs and the
Member States to which they are linked.

_Article 4_

**Management of the association**

Management of the association shall be conducted by the Commission and the OCTs' authorities and,
where necessary, by the Member State to which the OCT is linked, in accordance with their respective
institutional, legal and financial competences

_Article 5_

**Mutual interests, complementarity and priorities**

1. The association is the framework for policy dialogue and cooperation on issues of mutual
interest.

2. Priority shall be given to cooperation in areas of mutual interest, such as:

(a) the economic diversification of OCTs' economies, including their further integration in world
and regional economies; in the specific case of Greenland, the need to increase the skills of its
labour force.

(b) the promotion of green and blue economy;

(c) the sustainable management of natural resources, including the conservation and sustainable
use of biodiversity and ecosystem services;

(d) climate change mitigation and adaptation to the impacts of climate change;

(e) the promotion of disaster risk reduction;

(f) the promotion of research, innovation and scientific cooperation activities;

(g) the promotion of social, cultural and economic exchanges between the OCTs, their
neighbours and other partners;

(h) Arctic issues.

3. Cooperation in the areas of mutual interest shall aim at the promotion of OCTs' self-reliance
and of the development of OCTs’ capacities to formulate, implement and monitor strategies
and policies set out in paragraph 2.

_Article 6_

**Promotion of the association**

1. With an aim to strengthen their mutual relations, the Union and the OCTs shall endeavour to
make the association known among their citizens, in particular by promoting the development
of the links and cooperation between the authorities, academic community, civil society and
businesses of OCTs on the one hand and their interlocutors within the Union on the other.

2. OCTs shall make efforts to strengthen and promote their relations with the Union as a whole.
The Member States shall support these efforts.

# EN 8 EN

_Article 7_

**Regional cooperation, regional integration and cooperation with other partners**

1. Subject to Article 3 of this Decision, the association shall support the OCTs in their efforts to
take part in relevant international, regional and/or sub-regional cooperation initiatives as well
as regional or sub-regional integration processes, in line with their own aspirations and in
accordance with objectives and priorities defined by the competent OCTs' authorities.

2. To this end, the Union and the OCTs may exchange information and best practices or
establish any other form of close cooperation and coordination with other partners in the
context of the OCTs’ participation in regional and international organisations, where
appropriate by means of international agreements.

3. The association aims at supporting cooperation between the OCTs and other partners in the
areas of cooperation set out in Parts II and III of this Decision. In that respect, the objective of
the association is to promote the cooperation between the OCTs and the outermost regions,
referred to in Article 349 TFEU, their neighbouring ACP and non ACP states and territories.
In order to achieve that objective, the Union shall improve coordination and synergies
between the relevant Union programmes. The Union shall also endeavour to associate OCTs
in its instances of dialogue with their neighbouring countries, whether they are ACP or nonACP States or territories, and with the outermost regions, where appropriate.

4. The support to OCTs’ participation in relevant regional integration organisations shall focus
in particular on:

(a) capacity building of relevant regional organisations and institutions of which OCTs are
members;

(b) regional or sub-regional initiatives such as the implementation of sectoral reform policies
relating to the areas of cooperation identified in Parts II and III of this Decision;

(c) the awareness and knowledge of the OCTs on the impacts of regional integration processes in
different areas;

(d) OCTs' participation in the development of regional markets within the context of regional
integration organisations;

(e) cross-border investment between OCTs and their neighbours.

_Article 8_

**Participation in European Groupings of Territorial Cooperation**

In the application of Article 7(1), (2) and (3) of this Decision, the cooperation initiatives or other forms
of cooperation shall also mean that governmental authorities, regional and sub-regional organisations,
local authorities and, where appropriate, other public and private bodies or institutions (including
public service providers) from an OCT may participate in a European Grouping of Territorial
Cooperation (EGTC) subject to the rules and objectives of the cooperation activities of this Decision
and those of Regulation (EU) No 1302/2013 [41] and in accordance with the arrangements applicable to
the Member State to which the OCT is linked.

41 Regulation (EU) No 1302/2013 of the European Parliament and of The Council of 17 December 2013 amending
Regulation (EC) No 1082/2006 on a European grouping of territorial cooperation (EGTC) as regards the
clarification, simplification and improvement of the establishment and functioning of such groupings, OJ L 347,
20.12.2013, p. 303.

# EN 9 EN

_Article 9_

**Specific treatment**

1. The association shall take into account the diversity of the OCTs in terms of economic
development and capacity to fully benefit from regional cooperation and regional integration
referred to in Article 7.

2. A specific treatment shall be established for isolated OCTs.

3. In order to enable isolated OCTs to overcome structural and other obstacles to their
development, this specific treatment shall take account of their specific difficulties, _inter alia_,
when determining the volume of financial assistance and the conditions attached thereto.

4. The OCT which shall be considered to be isolated is St Pierre et Miquelon.

### **CHAPTER 2** **COOPERATION**

_Article 10_

**General Approach**

1. The association shall be based on a broad dialogue and consultations on issues of mutual
interest between the OCTs, the Member States to which they are linked and the Commission,
and, if appropriate, the European Investment Bank (EIB).

2. The OCTs shall organise, where appropriate, a dialogue and consultations with authorities and
bodies such as:

(a) the competent local and other public authorities;

(b) the economic and social partners;

(c) any other appropriate body representing civil society, such as, environmental partners, nongovernmental organisations, and bodies responsible for promoting equality between men and

women.

_Article 11_

**Actors of cooperation**

1. Actors of cooperation in the OCTs shall include:

(a) the OCTs' governmental authorities;

(b) the local authorities within the OCTs;

(c) public service providers and civil society organisations, such as social, business, employers’
and trade union associations, and local, national or international non-governmental
organisations;

(d) regional and sub-regional organisations.

2. The Member States to which the OCTs are linked shall inform the Commission of the
governmental and local authorities referred to in points (a) and (b) of paragraph 1.

# EN 10 EN

_Article 12_

**Responsibilities of the non-governmental actors**

1. Non-governmental actors may play a role in the exchange of information and consultations
concerning the cooperation, and in particular for the preparation and implementation of
cooperation assistance, projects or programmes. They may receive a delegation of financial
management powers for implementing such projects or programmes for the purpose of
supporting local development initiatives.

2. Non-governmental actors eligible for decentralised management of projects or programmes
shall be identified by agreement between the OCT authorities, the Commission and the
Member State to which the OCT is linked, taking into account the subject concerned, their
expertise and field of activity. The process of identification shall be conducted in each OCT
as part of the broad dialogue and consultations referred to in Article 10.

3. The association aims at contributing to the efforts of the OCTs to strengthen civil society
organisations, concerning in particular their creation and development, and the development
of the arrangements necessary for opening their involvement in the design, implementation
and evaluation of development strategies and programmes.

### **CHAPTER 3** **INSTITUTIONAL FRAMEWORK OF THE ASSOCIATION**

_Article 13_

**Guiding principles for dialogue**

1. The Union, the OCTs and the Member States to which they are linked shall regularly engage
in a comprehensive and political dialogue.

2. The dialogue shall be conducted in full compliance with the respective institutional, legal and
financial powers of the Union, of the OCTs and of the Member States to which they are
linked. The dialogue shall be conducted in a flexible manner. It may be formal or informal, at
an appropriate level or format, and shall be conducted within the framework referred to in
Article 14.

3. The dialogue shall enable the OCTs to take a full part in the implementation of the
association.

4. The dialogue shall focus, _inter alia_, on specific political issues of mutual concern or of
general significance for the attainment of the objectives of the association.

5. The dialogue with Greenland shall, in particular **,** provide the basis for broad cooperation and
dialogue in areas concerning, _inter alia_, energy, climate change and environment, natural
resources, including raw materials and fish stocks, maritime transport, research and
innovation, as well as the Arctic dimension of those issues.

_Article 14_

**Instances of the association**

1. The association shall establish the following instances of dialogue:

(a) an OCTs-EU forum for dialogue (the ‘OCT-EU Forum’), shall meet annually to bring
together OCTs' authorities, representatives of the Member States and the Commission.

# EN 11 EN

Members of the European Parliament, representatives of the EIB, and representatives of the
outermost regions shall, where appropriate, be associated with the OCTs-EU Forum;

(b) on a regular basis, the Commission, the OCTs and the Member States to which they are linked
shall hold trilateral consultations. These consultations shall be organised at least three times a
year on the initiative of the Commission or at the request of the OCTs and of the Member
States to which they are linked;

(c) in agreement between the OCTs, the Member States to which they are linked and the
Commission, working parties, acting in an advisory capacity, shall be set up to follow the
implementation of the association, in a form appropriate to the issues to be addressed. These
working parties may be convened at the request of the Commission, of a Member State or of
an OCT. They shall provide for technical discussions on matters which are of specific concern
to the OCTs and the Member States to which they are linked, complementing the work that is
being done in the OCTs-EU Forum and/or in the trilateral consultations.

2. The Commission shall chair the OCTs-EU Forum, the trilateral consultations and the working
parties and shall provide their secretariat.

# EN 12 EN

## **PART II** **AREAS OF COOPERATION FOR SUSTAINABLE** **DEVELOPMENT IN THE FRAMEWORK OF THE** **ASSOCIATION**

### **CHAPTER 1** **ENVIRONMENTAL ISSUES, CLIMATE CHANGE, OCEANS AND** **DISASTER REDUCTION**

_Article 15_

**General principles**

In the context of the association, cooperation in the field of environment, climate change and disaster
risk reduction may concern:

(a) support to the OCTs' efforts to define and implement policies, strategies, action plans and

measures;

(b) support to the OCTs’ efforts to integrate in regional networks and initiatives;

(c) the promotion of sustainable resource use and resource efficiency, and encouragement to the
decoupling of economic growth from environmental degradation; and;

(d) support to the OCTs’ efforts to act as regional hubs and centres of excellence.

_Article 16_

**Sustainable management and conservation of biodiversity and ecosystem services**

In the context of the association, cooperation in the field of sustainable management and conservation
of biodiversity, and ecosystem services may concern:

(a) the promotion of the establishment and effective management of marine and terrestrial
protected areas and improved management of existing protected areas;

(b) the encouragement of sustainable management of marine and terrestrial resources, which
contribute to protecting species, habitats and ecosystem functions outside protected areas, in
particular, endangered, vulnerable and rare species;

(c) the strengthening of conservation and sustainable use of marine and terrestrial biodiversity
and ecosystems by:

(i) addressing the wider ecosystem challenge of climate change by maintaining healthy,
resilient ecosystems and fostering green and blue infrastructure and ecosystem-based
approaches to climate change adaptation and mitigation which often bring multiple benefits;

(ii) strengthening capacities at a local, regional and/or international scale, by promoting
exchange of information, knowledge and best practice amongst all stakeholders including
public authorities, landowners, private sector, researchers and civil society;

# EN 13 EN

(iii) strengthening existing nature conservation programmes and related efforts within and
outside conservation areas;

(iv) broadening the knowledge base and filling the knowledge gaps, including quantifying
the value of ecosystem functions and services;

(d) the encouragement and facilitation of regional cooperation in order to address issues such as
invasive alien species or the impacts of climate change;

(e) the development of mechanisms to lever resources including payments for ecosystem
services.

_Article 17_

**Sustainable forest management**

In the context of the association, cooperation in the field of sustainable forest management may
concern the promotion of the conservation and sustainable management of forests, including their role
in the conservation of the environment from erosion and desertification control, afforestation and
management of timber exports.

_Article 18_

**Integrated coastal zone management**

In the context of the association, cooperation in the field of integrated coastal zone management may

concern:

(a) the support to the efforts of the OCTs towards an effective sustainable management of marine
and coastal zones in defining strategic and integrated approaches to marine and coastal zone
planning and management;

(b) conciliation of economic and social activities such as fisheries and aquaculture, tourism,
maritime transports and agriculture with the potential of marine and coastal zones in terms of
renewable energy, raw materials, whilst taking into account impacts of climate change and
human activities.

_Article 19_

**Oceans**

1. In the context of the association, cooperation in the field of international ocean governance

may concern:

(a) the strengthening of the dialogue on issues of common interest in that field;

(b) the promotion of marine knowledge and biotechnology, ocean energy, maritime surveillance,
coastal zone management and an ecosystem-based management;

(c) the promotion of integrated approaches at international level;

(d) the active promotion of good governance, best practices and responsible fisheries
management in the conservation and sustainable management of fish stocks, including fish
stocks of common interest and those managed by regional fisheries management
organisations;

(e) dialogue and cooperation regarding the conservation of fish stocks including measures to fight
illegal, unreported and unregulated fishing and effectively cooperating with and within
regional fisheries management organisations. Dialogue and cooperation shall include control

# EN 14 EN

and inspection schemes, incentives and obligations for a more effective management of
fisheries and coastal environments in the long term.

2. In the context of the association, and while ensuring consistency and complementarity with
existing Fisheries Partnership Agreements, cooperation referred to in paragraph 1 (d) and (e)
shall be based on the following principles:

(a) commitment to responsible fisheries management and fishing practices;

(b) refraining from measures or activities that are inconsistent with the principles of sustainable
exploitation of fisheries resources;

(c) taking into account existing or possible future bilateral Fisheries Partnership Agreements
between the Union and the OCTs, the Union and the OCTs shall aim to regularly consult each
other on the conservation and management of the living marine resources and to exchange
information on the ongoing state of resources within the context of the relevant instances of
the association provided for in Article 14.

_Article 20_

**Sustainable water management**

1. In the context of the association, the Union and the OCTs may cooperate in the area of
sustainable water management through water policy and institution building, protecting water
resources, water supplies in rural and urban areas for domestic, industrial or agricultural
purposes, storage, distribution and management of water resources and waste water
management.

2. In the field of water supply and sanitation sector, particular attention shall be given to access
in under-served areas to drinking water supply and sanitation services and those particularly
exposed to natural disasters, which contribute directly to human resources development by
improving the state of health and increasing productivity.

3. Cooperation in these areas shall be guided by the principle that the continuing need to extend
the provision of basic services in water and sanitation to both urban and rural populations
must be addressed in environmentally sustainable ways.

_Article 21_

**Waste management**

In the context of the association, cooperation in the field of waste management may concern the
promotion of the use of the best environmental practice in all operations related to waste management,
including the reduction of waste, recycling or other processes of recovery, e.g. energy recovery and
waste disposal.

_Article 22_

**Energy**

In the context of the association, cooperation in the field of sustainable energy may concern:

(a) sustainable energy production, distribution and access, in particular the development,
promotion, use and storage of sustainable low-carbon energy from renewable energy sources;

(b) energy policies and regulations, in particular the formulation of policies and adoption of
regulations guaranteeing affordable and sustainable energy tariffs;

(c) energy efficiency, in particular the development and introduction of energy efficiency
standards and implementation of energy efficiency measures in different sectors (industrial,

# EN 15 EN

commercial, public and households), as well as accompanying educational and awareness
activities;

(d) transport, in particular the development, promotion and use of more environmentally friendly
public and private transport means such as hybrid, electric or hydrogen vehicles, carpooling
and cycling schemes;

(e) town planning and construction, in particular the promotion and introduction of high
environment quality standards and high energy performance in urban planning and
construction; and

(f) tourism, in particular the promotion of energy self-sufficient (renewable energy based) and/or
green tourism infrastructures.

_Article 23_

**Raw materials**

In the context of the association, cooperation in the field of raw materials, including rare earths may
concern the promotion of a raw material sector which is sustainable in respect of all operations related
to mining, and which aims at:

(a) a resources efficiency;

(b) the promotion of recycling;

(c) the development and strengthening of environmental protection;

(d) environmentally friendly handling and exploitation;

(e) the strengthening of capacities, training, innovation, research and business measures for raw
material exploitation and extraction on a local, regional and national level.

_Article 24_

**Climate change**

In the context of the association, cooperation in the field of climate change shall aim to support the
initiatives of the OCTs concerning climate change mitigation and adaptation to the adverse effects of
climate change, and may cover:

(a) the development of evidence; identification of key risks and territorial, regional and/or
international actions, plans, or measures in view of adapting to climate change or mitigating
its adverse effects;

(b) contributing to partners countries' efforts to pursue their commitments on climate change in
line with the Paris Agreement on Climate Change

(c) the integration of adaptation to climate change and its mitigation in public policies and
strategies;

(d) the elaboration and identification of statistical data and indicators, essential tools for policy
making and implementation; and

(e) the promotion of the participation of the OCTs in regional and international dialogue in order
to foster cooperation, including exchange of knowledge and experience.

_Article 25_

**Disaster risk reduction**

In the context of the association, cooperation in the field of disaster risk reduction may concern:

# EN 16 EN

(a) the development or perfection of systems, including infrastructures, for disaster prevention
and preparedness, including prediction and early-warning systems, with a view to reducing
the consequences of disasters;

(b) the development of detailed knowledge of the exposure to the disasters and the current
response capacities in the OCTs and in the regions where they are located;

(c) the strengthening of existing measures of disaster prevention and preparation at local, national
and regional levels;

(d) the improvement of response capacities of the actors concerned, to render them more
coordinated, effective and efficient;

(e) the improvement of awareness-raising and information to the population regarding the
exposure to risks, prevention, preparation and the response in the event of disaster, with due
attention to the specific needs of persons with disabilities;

(f) the strengthening of collaboration between key actors involved in civil protection; and

(g) the promotion of the participation of the OCTs in regional, European and/or international
instances in order to allow a more regular exchange of information and a closer cooperation
among the different partners in the event of disaster.

### **CHAPTER 2** **ACCESSIBILITY**

_Article 26_

**General objectives**

1. In the context of the association, cooperation in the field of accessibility shall aim to:

(a) ensure greater access of OCTs to global transport networks; and

(b) ensure greater access of OCTs to information and communication technologies and services.

2. Cooperation in the context referred to in paragraph 1 may encompass:

(a) policy and institution building;

(b) transport by road, rail, air, sea or inland waterway; and

(c) storage facilities in sea- and airports.

_Article 27_

**Maritime transport**

1. In the context of the association, cooperation in the field of maritime transport shall aim to the
development and promotion of cost-effective and efficient maritime transport services in the
OCTs and may concern:

(a) the promotion of efficient shipments of cargo at economically and commercially viable rates;

(b) the facilitation of greater participation of the OCTs in international shipping services;

(c) the encouragement of regional programmes;

(d) the support to local private sector involvement in shipping activities; and

# EN 17 EN

(e) the development of infrastructure.

2. The Union and the OCTs shall promote shipping safety, security of crews and the prevention
of pollution.

3. The Union and the OCTs shall promote maritime safety and security, protection of the marine
environment, living-working conditions on board in line with the relevant international
conventions and EU legislative framework.

_Article 28_

**Air transport**

In the context of the association, cooperation in the field of air transport may concern:

(a) the reform and modernisation of the OCTs' air transport industries;

(b) the promotion of the commercial viability and competitiveness of the OCTs’ air transport
industries;

(c) the facilitation of private sector investment and participation; and

(d) the promotion of exchange of knowledge and good business practice.

_Article 29_

**Air transport safety and security**

In the context of the association, cooperation in the fields of air transport safety and security shall aim
to support the OCTs in their efforts to comply with the relevant EU and international standards and
may cover _inter alia_ :

(a) the implementation of the EU aviation safety system, and of international standards where
relevant;

(b) the implementation of airport security and strengthening of the capacity of civil aviation
authorities to manage all aspects of operational security placed under their control; and

(c) the development of infrastructures and human resources.

_Article 30_

**Information and communication technologies services**

In the context of the association, cooperation in the field of information and communication
technology (ICT) services shall aim to spur, in the OCTs, innovation, economic growth and
improvements in daily life for both citizens and businesses, including the promotion of accessibility
for persons with disabilities. Cooperation shall, in particular, be directed at enhancing OCTs’
regulatory capacity and may support the expansion of ICT networks and services through the
following measures:

(a) creation of a predictable regulatory environment that keeps pace with technological
developments, stimulates growth and innovation and fosters competition and consumer
protection;

(b) dialogue on the various policy aspects regarding the promotion and monitoring of the
information society;

(c) exchange of information on standards and interoperability issues;

(d) promotion of cooperation in the field of ICT research and in the field of ICT-based research
infrastructures;

# EN 18 EN

(e) development of services and applications in domains of high societal impact.

### **CHAPTER 3** **RESEARCH AND INNOVATION**

_Article 31_

_**Cooperation in research and innovation**_

In the context of the association, cooperation in the field of research and innovation may cover science,
energy, climate change, disaster resilience, natural resources including raw materials, and sustainable
use of living resources.

It may also cover technology, including information and communication technologies, with the aim of
contributing to the OCTs’ sustainable development and to promoting the OCTs’ role as regional hubs
and centres of excellence as well as their industrial competitiveness. In particular, cooperation may

concern:

(a) dialogue, coordination and creation of synergies between OCTs and Union policies and
initiatives with regard to science, technology and innovation;

(b) policy and institutional building within OCTs and concerted actions at local, national or
regional level, with a view to developing science, technology and innovation activities and
their application;

(c) cooperation between legal entities from the OCTs, the Union, the Member States and the third
countries;

(d) participation of individual OCTs researchers, research bodies and legal entities from OCTs in
the European Framework Programmes for Research and Innovation and the Programme for
the Competitiveness of Enterprises and small and medium size enterprises (COSME), also
linking them to already supported activities of these programmes with the aim to ensure
complementarity of activities; and

(e) training and international mobility of OCTs researchers and exchange.

### **CHAPTER 4** **YOUTH, EDUCATION, TRAINING, HEALTH, EMPLOYMENT,** **SOCIAL SECURITY, FOOD SAFETY AND FOOD SECURITY**

_Article 32_

_**Youth**_

1. The Union shall ensure that natural persons from OCTs, as defined in Article 50, can
participate in initiatives of the Union concerning youth on the same basis as nationals of
Member States.

2. The association aims at strengthening the ties between young people living in the OCTs and
the Union, among others by promoting learning mobility of OCTs youth and by fostering
mutual understanding between young people.

# EN 19 EN

_Article 33_

**Education and training**

1. In the context of the association, cooperation in the field of education and training may cover:

(a) the provision of high quality, inclusive education at primary, secondary and higher education
level and in the area of vocational education and training; and

(b) the support to the OCTs in defining and implementing education and vocational training
policies.

2. The Union shall ensure that natural persons from the OCTs, as defined in Article 50, can
participate in education and vocational training initiatives of the Union on the same basis as
nationals of Member States.

3. The Union shall that ensure that educational bodies and institutes from OCTs can take part in
education related cooperation initiatives of the Union on the same basis as the educational and
vocational training bodies and institutes of the Member States.

_Article 34_

**Employment and social policy**

1. The Union and the OCTs shall maintain dialogue in the area of employment and social policy
in order to contribute to the economic and social development of the OCTs and the promotion
of decent work in the OCTs and regions where they are located. Such a dialogue shall also
aim at supporting the efforts of the OCTs’ authorities to develop policies and legislation in
this area.

2. The dialogue shall mainly consist of exchange of information and best practices relating to
policies and legislation in the area of employment and social policy that are of mutual interest
to the Union and the OCTs. In this regard, areas such as skills development, social protection,
social dialogue, equal opportunities, non-discrimination and accessibility for persons with
disabilities, health and safety at work and other labour standards shall be taken into
consideration.

_Article 35_

**Public health, food safety and food security**

In the context of the association, cooperation in the field of public health and food safety shall aim,
_inter alia_, to reduce the burden of communicable and non-communicable diseases and, in particular, to
develop, strengthen, and maintain the OCTs’ capacity for epidemiological surveillance, monitoring,
early warning, risk assessment and response to serious cross-border health threats through measures
including:

(a) actions to strengthen preparedness and response planning against health emergencies such as
outbreaks of communicable diseases including through the implementation of the
International Health Regulations, ensure interoperability between the health sector and other
sectors, and continuous delivery of critical services and products;

(b) capacity building through strengthening public health networks at regional level, facilitating
exchange of information among experts and promoting adequate training, including in the
field of food safety;

(c) development of tools and communication platforms, including rapid alert systems, as well as
e-learning programs adapted to OCTs’ particular needs;

# EN 20 EN

(d) actions to prevent and reduce food related outbreaks and address food safety and food security
issues;

(e) actions to reduce the burden of non-communicable diseases in the framework of achieving the
sustainable development goals.

### **CHAPTER 5** **CULTURE AND TOURISM**

_Article 36_

**Cultural exchanges and dialogue**

1. In the context of the association, cooperation in the field of cultural exchanges and dialogue

may concern:

(a) the self-reliant development of the OCTs, this being a process centred on people themselves
and rooted in each people’s culture;

(b) the support to the policies and measures adopted by the competent authorities of OCTs to
enhance their human resources, increase their own creative capacities and promote their
cultural identities;

(c) the participation by the population in the process of development;

(d) the development of a common understanding and enhanced exchange of information on
cultural and audio-visual matters through dialogue.

2. Through their cooperation the Union and the OCTs shall seek to stimulate cultural exchanges
between each other through:

(a) cooperation between the cultural and creative sectors of all partners;

(b) promotion of the circulation of cultural and creative works and operators between them;

(c) policy cooperation in order to foster policy development, innovation, audience building and
new business models.

_Article 37_

**Audio-visual cooperation**

1. In the context of the association, cooperation in the audio-visual field aims at promoting each
other’s audio-visual productions and may cover the following actions:

(a) cooperation and exchange between the respective broadcasting industries;

(b) encouraging exchange of audio-visual works;

(c) exchange of information and views on audio-visual and broadcasting policy and regulatory
framework between competent authorities;

(d) encouraging visits to and participation in international events held in each other’s territory as
well as in third countries.

2. Co-produced audio-visual works shall be entitled to benefit from any scheme for the
promotion of local or regional cultural content set up in the Union, the OCTs and the Member
States to which they are linked

# EN 21 EN

_Article 38_

**Performing arts**

In the context of the association, cooperation in the field of performing arts may concern:

(a) the facilitation of increased contacts between practitioners of performing arts in areas such as
professional exchanges and training including participation in auditions, development of
networks and promotion of networking;

(b) the encouragement of joint productions between producers of one or several Member States of
the Union and one or several OCTs; and

(c) the encouragement of the development of international theatre technology standards and the
use of theatre stage signs, including through appropriate standardisation bodies.

_Article 39_

**Protection of cultural heritage and historic monuments**

In the context of the association, cooperation in the field of tangible and intangible cultural heritage
and historic monuments aims at allowing the promotion of exchanges of expertise and best practices
through:

(a) the facilitation of exchanges of experts;

(b) the collaboration on professional training;

(c) the awareness of the local public; and

(d) the counselling on the protection of the historic monuments and protected spaces and on the
legislation and implementation of measures related to heritage, in particular its integration
into local life.

_Article 40_

**Tourism**

In the context of the association, cooperation in the field of tourism may include:

(a) measures aiming at defining, adapting and developing sustainable tourism policies;

(b) measures and operations to develop and support sustainable tourism;

(c) measures aiming at integrating sustainable tourism into the social, cultural and economic life
of OCTs citizens.

### **CHAPTER 6** **FIGHT AGAINST ORGANISED CRIME**

_Article 41_

**Fight against organised crime, trafficking in human beings, child sexual abuse and sexual**
**exploitation, terrorism and corruption**

1. In the context of the association, cooperation in the field of organised crime may include:

(a) the development of innovative and effective means of police and judicial cooperation,
including cooperation with other stakeholders such as civil society, in the prevention of and

# EN 22 EN

fight against organised crime, trafficking in human beings, child sexual abuse and sexual
exploitation, terrorism and corruption; and

(b) support in order to increase the efficiency of OCTs’ policies to prevent and fight against
organised crime, trafficking in human beings, child sexual abuse and sexual exploitation,
terrorism and corruption, as well as the production, distribution and trafficking of all kinds of
narcotic drugs and psychotropic substances, preventing and reducing drug use and drugrelated harms, taking into account work carried out in these areas by international bodies,
through _inter alia_ :

(i) training and capacity building in preventing and fighting organised crime, including
trafficking in human beings, child sexual abuse and sexual exploitation, terrorism and
corruption;

(ii) prevention including training, education and health promotion, treatment and
rehabilitation of dependent drug users, including projects for the reintegration of dependent
drug users into work and social environments;

(iii) development of effective enforcement measures;

(iv) technical, financial and administrative assistance on the development of effective
policies and legislation on trafficking in human beings, in particular awareness raising
campaigns, referral mechanisms and victim protection systems, involving all relevant
stakeholders and civil society;

(v) technical, financial and administrative assistance relating to the prevention, treatment
and reduction of harms related to drug use;

(vi) technical assistance to support the development of legislation and of policy against
child sexual abuse and sexual exploitation; and

(vii) technical assistance and training to support capacity building and encourage compliance
with international anti-corruption standards notably those set out in the UN Convention
against Corruption.

2. In the context of the association, the OCTs shall cooperate with the Union as regards
combatting money laundering and the financing of terrorism in accordance with Article 70.

# EN 23 EN

## **PART III** **TRADE AND TRADE RELATED COOPERATION**

### **TITLE I** **GENERAL PROVISIONS**

_Article 42_

**Specific objectives**

The general objectives of the trade and trade-related cooperation between the Union and the OCTs are

to:

(a) promote the economic and social development of the OCTs by establishing close economic
relations between them and the Union as a whole;

(b) stimulate the OCTs’ effective integration in the regional and world economies and the
development of trade in goods and services;

(c) support OCTs in creating a favourable investment climate to support social and economic
development of OCTs;

(d) promote the stability, integrity and transparency of the global financial system, and good
governance in the tax area;

(e) support the process of diversification of OCTs economies;

(f) support OCTs capacities to formulate and implement policies necessary for the development
of their trade in goods and services;

(g) support the OCTs’ export and trading capacities;

(h) support OCTs’ efforts to align or converge their local legislation with Union legislation,
where relevant;

(i) provide possibilities for targeted cooperation and dialogue with the Union on trade and traderelated areas.

### **TITLE II** **ARRANGEMENTS FOR TRADE IN GOODS AND SERVICES AND** **ESTABLISHMENT** **CHAPTER 1** **ARRANGEMENTS FOR TRADE IN GOODS**

_Article 43_

**Free access for originating goods**

1. Products originating in the OCTs shall be imported into the Union free of import duty.

2. The definition of originating products and the methods of administrative cooperation relating
thereto are laid down in Annex II.

# EN 24 EN

_Article 44_

**Quantitative restrictions and measures having equivalent effect**

1. The Union shall not apply to imports of products originating in the OCTs any quantitative
restrictions or measures having equivalent effect

2. Paragraph 1 shall not preclude prohibitions or restrictions on imports, exports or goods in
transit justified on grounds of public morality or public policy, the protection of health and
life of humans, animals and plants, the protection of national treasures possessing artistic,
historic or archaeological value, the conservation of exhaustible natural resources or the
protection of industrial and commercial property.

3. Prohibitions or restrictions referred to in the first subparagraph shall in no case constitute a
means of arbitrary or unjustifiable discrimination or a disguised restriction of trade generally.

_Article 45_

**Measures adopted by the OCTs**

1. The authorities of the OCTs may retain or introduce, in respect of imports of products
originating in the Union, such customs duties or quantitative restrictions as they consider
necessary in view of their respective development needs.

2. For the fields covered by this Chapter, the OCTs shall grant to the Union a treatment no less
favourable than the most favourable treatment applicable to any major trading economy as
defined in paragraph 4.

3. Paragraph 2 shall not preclude an OCT from granting certain other OCTs or other developing
countries more favourable treatment than that accorded to the Union.

4. For the purposes of this Title, a ‘major trading economy’ means any developed country, or
any country accounting for a share of world merchandise exports above one per cent, or,
without prejudice to paragraph 3, any group of countries acting individually, collectively or
through an economic integration agreement accounting collectively for a share of world
merchandise exports above 1,5 %. For this calculation, the latest available official data by the
WTO on leading exporters in world merchandise trade (excluding intra-Union trade) shall be
used.

5. The authorities of the OCTs shall communicate to the Commission the customs tariffs and
lists of quantitative restrictions which they apply in compliance with this Decision. The
authorities of the OCTs shall also communicate to the Commission any subsequent
amendments to such measures as and when they are adopted.

_Article 46_

**Non-discrimination**

1. The Union shall not discriminate between OCTs and the OCTs shall not discriminate between

Member States.

2. In compliance with Article 64, the implementation of the specific provisions in this Decision
and in particular its Article 44(2), Articles 45 and 48, 49 and 51 and Article 58 (3) shall not be
deemed to constitute a discrimination.

# EN 25 EN

_Article 47_

**Conditions for movements of waste**

1. Movements of waste between the Member States and the OCTs shall be controlled in
accordance with international law, in particular the Basel Convention [42], and Union law. The
Union shall support the establishment and development of effective international cooperation
in this area with a view to protecting the environment and public health.

2. As regards those OCTs, which, due to their constitutional status, are not Party to the Basel
Convention, their relevant authorities shall expedite adoption of the necessary internal
legislation and administrative regulations to implement the provisions of the Basel
Convention in those OCTs.

3. The Member States to which OCTs are linked shall promote the adoption by the OCTs of the
necessary internal legislation and administrative regulations to implement relevant Union law
concerning waste and waste shipments.

4. An OCT and the Member State to which it is linked may apply their own procedures to export
of waste from the OCT to that Member State.  In such cases, the Member State to which the
OCT is linked shall notify to the Commission of the applicable legislation as well as any
subsequent amendments to such legislation.

_Article 48_

**Temporary withdrawal of preferences**

Where the Commission considers that there are sufficient grounds to question whether this Decision is
being correctly implemented, the Commission shall enter into consultations with the OCT and the
Member State with which the OCT has special relations, in order to ensure the proper implementation
of this Decision. In case the consultations do not lead to a mutually acceptable way of implementing
this Decision, the Union may temporarily withdraw preferences from the OCT concerned in
accordance with Annex III.

_Article 49_

**Safeguard and surveillance measures**

In order to ensure the proper implementation of this Decision, the Union may take the safeguard and
surveillance measures set out in Annex IV.

### **CHAPTER 2** **ARRANGEMENTS FOR TRADE IN SERVICES AND FOR** **ESTABLISHMENT**

_Article 50_

**Definitions**

For the purposes of this Chapter:

42 Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, signed
on 22 March 1989.

# EN 26 EN

(a) ‘natural person from an OCT’ means a natural person ordinarily resident in an OCT who is a
national of a Member State or who enjoys a legal status specific to an OCT. This definition is
without prejudice to the rights conferred by citizenship of the Union within the meaning of the
TFEU;

(b) ‘legal person of an OCT’ means a legal person of the OCT set up in accordance with the laws
applicable in a given OCT, and having its registered office, its central administration, or its
principal place of business in the territory in this OCT. Should the legal person have only its
registered office or central administration in the OCT, it shall not be considered as a legal
person of the OCT, unless it engages in an activity which has a real and continuous link with
the economy of that country or territory;

(c) the respective definitions laid down in the economic integration agreements referred to in
Article 51 (1) shall apply to the treatment accorded between the Union and the OCTs.

_Article 51_

**Most favourable treatment**

1. With respect to any measures affecting trade in services and establishment in economic
activities:

(a) the Union shall accord to natural and legal persons of the OCTs a treatment no less favourable
than the most favourable treatment applicable to like natural and legal persons of any third
country with whom the Union concludes or has concluded an economic integration
agreement;

(b) an OCT shall accord to the natural and legal persons of the Union a treatment no less
favourable than the most favourable treatment applicable to like natural and legal persons of
any major trading economy with whom it has concluded an economic integration agreement
after 1 January 2014.

2. The obligations provided for in paragraph 1 of this Article shall not apply to treatment
granted:

(a) in the framework of an internal market or economic integration agreement requiring the
parties thereto to significantly approximate their legislation with a view to removing nondiscriminatory obstacles to establishment and to trade in services;

(b) under measures providing for recognition of qualifications or licences. This is without
prejudice to OCTs specific measures under this Article;

(c) under any international agreement or arrangement relating wholly or mainly to taxation;

(d) under measures benefiting from the coverage of a most-favoured nation exemption listed in
accordance with Article II.2 of the GATS.

3. Nothing in this Decision shall prevent either the Union or the OCTs from adopting or
maintaining measures for prudential reasons, including for:

(a) the protection of investors, depositors, policy-holders or persons to whom a fiduciary duty is
owed by a financial service supplier; or

(b) to ensure the integrity and stability of a Party's financial system.

4. The authorities of an OCT may with a view to promoting or supporting local employment,
adopt regulations to aid their natural persons and local activities. In this event, the OCT
authorities shall notify the Commission of the regulations they adopt so that it may inform the
Member States thereof.

# EN 27 EN

### **TITLE III** **TRADE RELATED AREAS** **CHAPTER 1** **TRADE AND SUSTAINABLE DEVELOPMENT**

_Article 52_

**General approach**

Trade and trade-related cooperation under the association aims at contributing to sustainable
development in its economic, social and environmental dimensions. In this context, the domestic
environmental or labour laws and regulations of OCTs shall not be lowered in order to encourage trade
or investment.

_Article 53_

**Environmental and climate change standards in trade**

1. Trade and trade-related cooperation under the association aims at enhancing the mutual
supportiveness between trade and environmental policies and obligations. For those purposes,
trade-related cooperation under the association shall take into account the principles of
international environmental governance and multilateral environmental agreements.

2. Trade-related cooperation shall aim to support the ultimate objectives of the United Nations
Framework Convention on Climate Change (UNFCCC) and the implementation of the Paris
Agreement. It may also extend to cooperation on other trade related multilateral
environmental agreements, such as the Convention on Trade in Endangered Species.

_Article 54_

**Labour standards in trade**

1. The association aims at promoting trade in such a way that it is conducive to full and
productive employment and decent work for all.

2. The internationally recognised core labour standards, as defined by the relevant International
Labour Organisation Conventions, shall be respected and implemented in law and practice.
Such labour standards include in particular respect for freedom of association, right to
collective bargaining, abolition of all forms of forced or compulsory labour, elimination of the
worst forms of child labour, the minimum age for admission to employment and nondiscrimination in respect to employment. The OCTs shall ensure effective labour inspection,
effective measures for occupational safety and health, consistent with relevant ILO
Conventions and decent working conditions for all, with regard to, inter alia, wages and
earnings, working hours and other conditions of work.

# EN 28 EN

_Article 55_

**Sustainable trade in fisheries products**

The association may include cooperation to promote the sustainable management of fish stocks, as
well as to combat illegal, unreported and unregulated fishing and related trade. Cooperation in this
field should aim at:

(a) facilitating cooperation between OCTs and regional fisheries management organisations, in
particular with respect to the development and effective implementation of control and
inspection schemes, incentives and measures for effective long term management of fisheries
and marine ecosystems;

(b) promoting the implementation of measures to combat illegal, unreported and unregulated
fishing and related trade in OCTs.

_Article 56_

**Sustainable timber trade**

In the context of the association, cooperation in the field of timber trade aims at promoting trade in
legally harvested timber. Such cooperation may include dialogue on regulatory measures as well as
exchange of information on market-based or voluntary measures such as forest certification or green
procurement policies

_Article 57_

**Trade and sustainable development**

1. In the context of the association, cooperation in the field of trade and sustainable development
may be pursued by:

(a) facilitating and promoting trade and investment in environmental goods and services
including through the elaboration and implementation of local legislation, as well as in those
goods that contribute to the improvement of social conditions in OCTs;

(b) facilitating the removal of obstacles to trade or investment regarding goods and services of
particular relevance for climate change mitigation, such as sustainable renewable energy and
energy efficient products and services, including through the adoption of policy frameworks
conducive to the deployment of best available technologies and through the promotion of
standards that respond to environmental and economic needs and minimise technical obstacles
to trade;

(c) promoting trade in goods that contribute to enhanced social conditions and environmentally
sound practices, including goods that are the subject of voluntary sustainability assurance
schemes such as fair and ethical trade schemes, eco-labels, and certification schemes for
natural resource-based products;

(d) promoting internationally recognised principles and guidelines in the area of responsible
business conduct and corporate social responsibility, encouraging companies operating in the
territory of OCTs to implement them and exchanging information and best practices.

2. In the design and implementation of measures aimed at protecting the environment or labour
conditions that may affect trade or investment, the Union and the OCTs shall take account of
available scientific and technical information, and relevant international standards, guidelines
or recommendations, including the precautionary principle.

# EN 29 EN

3. The Union and the OCTs shall develop, introduce and implement in a transparent manner
measures aimed at protecting the environment and labour conditions to promote trade or
investment.

### **CHAPTER 2** **OTHER TRADE RELATED ISSUES**

_Article 58_

**Current payments and capital movements**

1. No restrictions shall be imposed on any payments in freely convertible currency on the
current account of balance of payments between residents of the Union and of the OCTs.

2. With regard to transactions on the capital account of balance of payments, the Member States
and the OCTs authorities shall ensure free movement of capital relating to direct investments
in companies formed in accordance with the laws of the host Member State, country or
territory and shall ensure that the assets formed by such investment and any profit stemming
therefrom can be realised and repatriated.

3. The Union and the OCTs shall be entitled to take the measures referred to in Articles 64, 65,
66, 75, 143, 144 and 215 TFEU in accordance with the conditions laid down therein _mutatis_
_mutandis_ .

4. The OCT authorities, the Member State concerned or the Union shall inform one another
immediately of any such measures and submit a timetable for their elimination as soon as
possible.

_Article 59_

**Competition policies**

The OCTs shall adopt or maintain a competition law which applies to all undertakings in all sectors of
the economy and which addresses, in an effective manner, all of the following practices:

1. horizontal and vertical agreements between undertakings, decisions by associations of
undertakings and concerted practices which have as their object or effect the prevention,
restriction or distortion of competition;

2. abuses by one or more undertakings of a dominant position;

3. concentrations between undertakings which would significantly impede effective competition,
in particular as a result of the creation or strengthening of a dominant position; and

4. aid granted through state resources by an OCT which distorts or threatens to distort
competition by favouring certain undertakings in so far as it has a significant negative effect
on trade or investment.

_Article 60_

**Protection of intellectual property rights**

1. An adequate and effective level of protection of intellectual property rights, including means
for enforcing such rights, shall be ensured in line with the highest international standards,
where appropriate, with a view to reducing distortions and impediments to bilateral trade.

# EN 30 EN

2. In the context of the association, cooperation in this field may concern the preparation of laws
and regulations for the protection and enforcement of intellectual property rights, the
prevention of the abuse of such rights by right holders and of the infringement of such rights
by competitors and support for regional intellectual property organisations involved in
enforcement and protection, including the training of personnel.

_Article 61_

**Technical barriers to trade**

The association may include cooperation in the fields of technical regulation for goods,
standardisation, conformity assessment, accreditation, market surveillance and quality assurance with a
view to removing unnecessary technical barriers to trade between the Union and the OCTs and to
reduce differences in those areas.

_Article 62_

**Consumer policy, consumer health protection and trade**

In the context of the association, cooperation in the field of consumer policy, consumer health
protection and trade may include the preparation of laws and regulations in the area of consumer
policy and consumer health protection, with a view to avoiding unnecessary barriers to trade.

_Article 63_

**Sanitary and phyto-sanitary measures**

In the context of the association, cooperation in the field of sanitary and phyto-sanitary measures aims

at:

(a) facilitating trade between the Union and the OCTs as a whole and between OCTs and third
countries, whilst safeguarding human, animal and plant health or life in accordance with the
WTO Agreement on the Application of Sanitary and Phytosanitary Measures (the ‘WTO SPS
Agreement’);

(b) addressing trade-related issues arising from sanitary and phyto-sanitary measures;

(c) ensuring transparency as regards sanitary and phyto-sanitary measures applicable to trade
between the Union and the OCTs;

(d) promoting the harmonisation of measures with international standards, in accordance with the
WTO SPS Agreement;

(e) supporting the effective participation of OCTs in organisations that set international sanitary
and phyto-sanitary standards;

(f) promoting consultation and exchanges between OCTs and European institutes and
laboratories

(g) establishing and enhancing OCTs technical capacity to implement and monitor sanitary and
phyto-sanitary measures;

(h) promoting technology transfer and rapid exchange of information in the area of sanitary and
phyto-sanitary measures.

# EN 31 EN

_Article 64_

**Prohibition of protectionist measures**

The provisions of Chapters 1 and of this Chapter shall not be used as a means of arbitrary
discrimination or a disguised restriction on trade.

### **CHAPTER 3** **MONETARY AND TAX MATTERS**

_Article 65_

**Tax carve out**

1. Without prejudice to the provisions of Article 66, the most favoured nation treatment granted
in accordance with this Decision shall not apply to tax advantages which the Member States
or OCTs authorities are providing or may provide in the future on the basis of agreements to
avoid double taxation or other tax arrangements, or domestic tax legislation in force.

2. Nothing in this Decision may be construed so as to prevent the adoption or enforcement of
any measure aimed at preventing tax fraud or avoidance or evasion of taxes pursuant to the
tax provisions of agreements to avoid double taxation or other tax arrangements, or domestic
tax legislation in force.

3. Nothing in this Decision shall be construed so as to prevent the respective competent
authorities from distinguishing, in the application of the relevant provisions of their tax
legislation, between taxpayers who are not in the same situation, in particular with regard to
their place of residence, or with regard to the place where their capital is invested.

_Article 66_

**Tax and customs arrangements for Union funded contracts**

1. The OCTs shall apply to contracts funded by the Union tax and customs arrangements no less
favourable than those applied by them to the Member State to which the OCT is linked or to
the states to which the most-favoured nation treatment is granted, or to international
development organisations with which they have relations, whichever treatment is the most
favourable.

2. Without prejudice to paragraph 1, the following arrangements shall apply to contracts
financed by the Union:

(a) the contract shall not be subject in the beneficiary OCT to stamp or registration duties or to
fiscal charges having equivalent effect, whether such charges already exist or are to be
instituted in the future; however, such contracts shall be registered in accordance with the
laws in force in the OCTs and a fee corresponding to the service rendered may be charged for
it;

(b) profits and/or income arising from the performance of contracts shall be taxable according to
the internal fiscal arrangements of the beneficiary OCT, provided that the natural persons or
legal persons who realise such profit and/or income have a permanent place of business in that
OCT, or that the performance of the contract takes longer than six months;

# EN 32 EN

(c) enterprises which must import equipment in order to carry out works contracts shall, if they so
request, benefit from the system of temporary admission as laid down by the legislation of the
beneficiary OCT in respect of that equipment;

(d) professional equipment necessary for carrying out tasks defined in a service contract shall be
temporarily admitted into the beneficiary OCT free of fiscal, import and customs duties and of
other charges having equivalent effect where these duties and charges do not constitute
remuneration for services rendered;

(e) imports under supply contracts shall be admitted into the beneficiary OCT without customs
duties, import duties, taxes or fiscal charges having equivalent effect. The contract for
supplies originating in the OCT concerned shall be concluded on the basis of the ex-works
price of the supplies, to which may be added such internal fiscal charges as may be applicable
to those supplies in the OCT;

(f) fuels, lubricants and hydrocarbon binders and all materials used in the performance of works
contracts shall be deemed to have been purchased on the local market and shall be subject to
fiscal rules applicable under the legislation in force in the beneficiary OCT;

(g) personal and household effects imported for use by natural persons, other than those recruited
locally, engaged in carrying out tasks defined in a service contract and members of their
families, shall be exempt from customs or import duties, taxes and other fiscal charges having
equivalent effect, within the limits of the legislation in force in the beneficiary OCT.

3. Any contractual matter not covered by paragraphs 1 and 2 shall remain subject to the
legislation of the OCT concerned.

### **CHAPTER 4** **TRADE CAPACITY DEVELOPMENT**

_Article 67_

**General approach**

With a view to ensuring that OCTs derive the maximum benefit from the provisions of this Decision
and that they may participate under the best possible conditions in the Union’s internal market as well
as regional, sub-regional and international markets, the association aims at contributing to the
development of the OCTs’ trade capacities by:

(a) increasing the OCTs’ competitiveness, self-reliance and economic resilience, through
diversifying the range and increasing the value and volume of OCTs trade in goods and
services and by strengthening the OCTs’ ability to attract private investments in various
sectors of economic activity;

(b) improving cooperation in trade in goods, services and establishment between the OCTs and
neighbouring countries.

_Article 68_

**Trade dialogue, cooperation and capacity development**

In the context of the association, trade dialogue, cooperation and capacity development initiatives may
include:

# EN 33 EN

(a) strengthening the OCTs’ capacities to define and implement policies necessary for the
development of trade in goods and services;

(b) encouraging the efforts of OCTs to put into place appropriate legal, regulatory and
institutional frameworks as well as the necessary administrative procedures;

(c) promoting private sector development, in particular SMEs;

(d) facilitating market and product development, including product quality improvement;

(e) contributing to the development of human resources and professional skills relevant to trade
in goods and services;

(f) enhancing the capacity of business intermediaries to provide OCTs enterprises services
pertinent to their exporting activities, such as market intelligence;

(g) contributing to the creation of a business climate conducive to investment.

### **CHAPTER 5** **COOPERATION IN THE AREA OF FINANCIAL SERVICES** **AND TAXATION MATTERS**

_Article 69_

**Cooperation on international financial services**

With a view to promoting the stability, integrity and transparency of the global financial system, the
association may include cooperation on international financial services. Such cooperation may

concern:

(a) the provision of effective and adequate protection of investors and other consumers of
financial services;

(b) the prevention and combat of money laundering and financing of terrorism;

(c) the promotion of cooperation between different actors of the financial system, including
regulators and supervisors;

(d) the setup of independent and effective mechanisms for supervision of financial services.

_Article 70_

**International standards in financial services**

The Union and the OCTs shall make their best endeavours to ensure that internationally agreed
standards for regulation and supervision in the financial services sector and for the fight against tax
evasion and avoidance are implemented and applied in their territory. Such internationally agreed
standards are, inter alia, the Basel Committee’s ‘Core Principle for Effective Banking Supervision’, the
International Association of Insurance Supervisors’ ‘Insurance Core Principles’, the International
Organisation of Securities Commissions’ ‘Objectives and Principles of Securities Regulation’, the
OECD’s ‘Agreement on exchange of information on tax matters’, the G20 ‘Statement on Transparency
and exchange of information for tax purposes’, the Financial Stability Board’s ‘Key Attributes of
Effective Resolution Regimes for Financial Institutions.

The OCTs shall adopt or maintain a legal framework for the prevention of the use of their financial
systems for the purpose of money laundering and financing of terrorism, taking particular account of

# EN 34 EN

the instruments of international bodies active in this field, such as the Financial Action Task Force’s
‘International Standards on Combating Money Laundering and the Financing of Terrorism and
Proliferation - the FATF Recommendations’.

Where the European Commission issues Decisions authorising a Member State to conclude an
agreement with an OCT for transfer of funds between this OCT and the Member State to which it is
linked, this transfer shall be treated as a transfer of funds within the Union under the Funds Transfer
Regulation (EU) 2015/847 and this OCT shall comply with the terms of that Regulation.

This Article shall be without prejudice to Article 155 of the Financial Regulation.

_Article 71_

**Cooperation in taxation matters**

The Union and the OCTs shall recognise and commit themselves to effectively implement the
principles of good governance in the tax area, including the global standards on transparency and
exchange of information, fair taxation and the minimum standards against Base Erosion and Profit
Shifting. They will promote good governance in tax matters, improve international cooperation in the
tax area and facilitate the collection of tax revenues.

# EN 35 EN

## **PART IV**

### **FINANCIAL COOPERATION** **CHAPTER 1** **PRINCIPLES**

_Article 72_

**Financial resources**

The Union shall contribute to the achievement of the association’s overall objectives through the
provision of:

(a) adequate financial resources and appropriate technical assistance aimed at strengthening the
OCTs’ capacities to formulate and implement strategic and regulatory frameworks;

(b) long term financing to promote private sector growth;

(c) where appropriate, other Union Programmes may contribute to actions established under this
Decision, provided that the contributions do not cover the same costs. This Decision may also
contribute to measures established under other Union Programmes, provided that the
contributions do not cover the same costs. In such cases, the work programme covering those
actions shall establish which set of rules shall be applicable.

_Article 73_

**Budget**

1. The financial envelope for the Programme for the period 2021-2027 shall be set at
EUR 500 000 000 in current prices.

2. The indicative distribution of the amount referred to in paragraph 1 shall be detailed in
Annex I.

3. The amount referred to in paragraph 1 is without prejudice to the application of provisions
providing for flexibility in Regulation [the new Multiannual Financial Framework
Regulation], [Regulation (EU) No. […] and the Financial Regulation.

_Article 74_

**Definitions**

For the purposes of this Part, the following definitions shall apply:

(a) ‘programmable aid’ means the non-repayable aid allocated to the OCTs in order to finance
territorial, regional and intra-regional strategies and priorities set out in programming
documents;

(b) 'programming’ means the process of organisation, decision-making and allocation of
indicative financial resources intended to implement, on a multi-annual basis, in an area
referred to in Part II of this Decision, the action to achieve the association’s objectives for the
sustainable development of the OCTs;

# EN 36 EN

(c) ‘programming document’ means the document which sets out the OCT’s strategy, priorities
and arrangements and translates the objectives and targets of the OCT for its sustainable
development in an effective and efficient way to pursue the objectives of the association;

(d) 'development plans’ means a coherent set of operations defined and financed exclusively by
the OCTs in the framework of their own policies and strategies of development, and those
agreed upon between an OCT and the Member State to which it is linked;

(e) ‘territorial allocation’ means the amount allocated to individual OCTs for the programmable
aid in order to finance territorial strategies and priorities set out in programming documents;

(f) ‘regional allocation’ means the amount allocated for the programmable aid in order to finance
regional cooperation strategies or priorities common to several OCTs and set out in
programming documents;

(g) ‘intra-regional allocation’ means an amount - within the regional allocation - allocated for the
programmable aid in order to finance intra-regional cooperation strategies and priorities
involving at least one OCT and one or more outermost regions referred to in Article 349
TFEU and/or one or more ACP States and/or one or more non-ACP States or territories.

_Article 75_

**Principles of financial cooperation**

1. Union financial assistance shall be based on the principles of partnership, ownership,
alignment on territorial systems, complementarity and subsidiarity.

2. Operations funded within the framework of this Decision can take the form of programmable
or non-programmable aid.

3. Union financial assistance shall:

(a) be implemented with due regard to the OCTs respective geographical, social and cultural
characteristics, as well as their specific potential;

(b) ensure that resource flows are accorded on a predictable and regular basis;

(c) be flexible and tailored to the situation in each OCT; and

(d) be conducted in full compliance with the respective institutional, legal and financial powers of
each of the partners.

4. The authorities of the OCT concerned shall be responsible for implementing operations
without prejudice to the powers of the Commission to ensure sound financial management in
the use of Union funds.

### **CHAPTER 2** **SPECIFIC PROVISIONS FOR THE FINANCIAL COOPERATION**

_Article 76_

**Subject-matter and scope**

Within the framework of the strategy and priorities established by the OCT concerned at local or
regional level, financial support may be given to the following:

(a) sector policies and reforms as well as projects that are in coherence with them;

# EN 37 EN

(b) institutional development, capacity building and integration of environmental aspects;

(c) technical assistance.

_Article 77_

**Capacity development**

1. Financial assistance may contribute to, among other things, supporting the OCTs with
developing the necessary capacities to define, implement and monitor territorial and/or
regional strategies and actions in view of achieving the general objectives for the areas of
cooperation mentioned in Parts II and III.

2. The Union shall support the efforts of the OCTs in developing reliable statistical data
regarding those areas.

3. The Union may support OCTs in their efforts to improve comparability of their
macroeconomic indicators.

_Article 78_

**Technical assistance**

1. On the initiative of the Commission, Union financing may cover support expenditure for the
implementation of the Decision and for the achievement of its objectives, including
administrative support associated with the preparation, follow-up, monitoring, control, audit
and evaluation activities necessary for such implementation, as well as expenditure at
headquarters and Union delegations for the administrative support needed for
the programme, and to manage operations financed under this Decision, including
information and communication actions, and corporate information and technology systems.

2. On the initiative of the OCTs, studies or technical assistance measures may be financed in
relation to the implementation of the activities scheduled in the programming documents. The
Commission may decide to finance such action either from the programmable aid or from the
envelope earmarked for technical cooperation measures.

### **CHAPTER 3** **IMPLEMENTATION OF THE FINANCIAL COOPERATION**

_Article 79_

**General principle**

Unless otherwise specified in this Decision, Union financial assistance shall be implemented in
accordance with the objectives and principles of this Decision, the Financial Regulation, and [NDICI
Regulation] in particular, Title II, Chapter I with the exception of Articles 13, 14(1), 14(4), and 15,
Chapter III with the exception of Articles 21(1), 21(2) (a) and (b) and 21(3), and Chapter V with the
exception of Articles 31(1), 31(4), 31(6), 31(9) and 32(3). The procedure laid down in Article 80 of
this Decision shall not apply to the cases referred to in Article 21 (2) (c) of [NDICI Regulation].

# EN 38 EN

_Article 80_

**Adoption of multiannual indicative programmes, action plans and measures**

The Commission shall adopt, under this Decision, in the form of ‘single programming documents’,
multiannual indicative programmes as referred to in Article 12 of [NDICI Regulation] together with
the corresponding action plans and measures referred to in Article 19 of [NDICI Regulation] in
accordance with the examination procedure referred to in Article 88(5) of this Decision. That
procedure shall also apply to reviews referred to in Article 14 (3) of [NDICI Regulation] which have
the effect of significantly modifying the content of the multiannual indicative programme.

In the case of Greenland, action plans and measures as referred to in article 19 of [NDICI Regulation]
may be adopted separately from the multiannual indicative programmes.

_Article 81_

**Eligibility for territorial financing**

1. The OCTs public authorities shall be eligible for financial support provided for in this
Decision.

2. Subject to the agreement of the authorities of the OCTs concerned, the following entities or
bodies shall also be eligible for financial support provided for in this Decision:

(a) local, national and/or regional public or semi-public agencies, departments or local authorities
of the OCTs and in particular their financial institutions and development banks;

(b) companies and firms of the OCTs and of regional groups;

(c) companies and firms of a Member State, so as to enable them, in addition to their own
contribution, to undertake productive projects in the territory of an OCT;

(d) OCTs or Union financial intermediaries promoting and financing private investments in the
OCTs; and

(e) actors of decentralised cooperation and other non-governmental actors from OCTs and from
the Union, to enable them to undertake economic, cultural, social and educational projects and
programmes in the OCTs in the framework of decentralised cooperation, as referred to in
Article 12 of this Decision.

_Article 82_

**Eligibility for regional financing**

1. A regional allocation may be used for operations benefiting and involving:

(a) two or more OCTs regardless of their location;

(b) the OCTs and the Union as a whole;

(c) two or more OCTs regardless of their location and at least one of the following:

(i) one or more outermost regions referred to in Article 349 TFEU;

(ii) one or more ACP States and/or one or more non-ACP States or territories;

(iii) one or more regional bodies of which OCTs are members;

(v) one or more entities, authorities or other bodies from at least one OCT, being members
of an EGTC in accordance with Article 8 of this Decision, one or more outermost
regions and one or more neighbouring ACP and/or non-ACP States or territories.

# EN 39 EN

2. Within the regional allocation mentioned in Article 74, an intra-regional allocation may be
used for operations benefitting and involving:

(a) one or more OCTs and one or more outermost regions referred to in Article 349 TFEU;

(b) one or more OCTs and one or more neighbouring ACP and/or non-ACP States or territories;

(c) one or more OCTs, one or more outermost regions and one or more ACP and/or non-ACP
States or territories;

(d) two or more regional bodies of which OCTs are members;

(e) one or more entities, authorities or other bodies from at least one OCT, being members of an
EGTC in accordance with Article 8 of this Decision, one or more outermost regions and one
or more neighbouring ACP and/or non-ACP States or territories.

3. The funding to enable participation of the ACP States, outermost regions and other countries
and territories to OCT regional cooperation programmes shall be additional to funds allocated
to the OCTs under this Decision.

4. The participation of ACP States, outermost regions and other countries to programmes
established pursuant to this Decision shall be envisaged only to the extent that:

(a) equivalent provisions exist in the framework of relevant Union’s programmes or in the
relevant funding programmes of the third countries and territories not covered by Union
programmes; and

(b) the principle of proportionality is respected.

_Article 83_

**Eligibility for other Union programmes**

1. Natural persons from an OCT, as defined in Article 50, and, where applicable, the relevant
public and/or private bodies and institutions in an OCT, shall be eligible for participation in
and funding from Union programmes, subject to the rules and objectives of the programmes
and possible arrangements applicable to the Member State to which the OCT is linked.

2. OCTs shall also be eligible for support under programmes and instruments of the Union for
cooperation with other countries, such as [NDICI Regulation], subject to the rules, objectives
and arrangements of those programmes.

3. The OCTs shall report to the Commission on this participation in the Union programmes,
every year starting in 2022.

_Article 84_

**Reporting**

The Commission shall examine the progress made in implementing the financial assistance provided to
the OCTs under this Decision and shall submit a report to the Council every year starting in 2022 on
the implementation and results of that financial cooperation. The report shall be sent to the European
Parliament, the European Economic and Social Committee and the Committee of the Regions.

_Article 85_

**Financial controls**

1. OCTs shall bear primary responsibility for the financial supervision of the Union funds. This
shall be carried out, where appropriate, in coordination with the Member State to which the OCT is
linked in accordance with the applicable national legislation.

# EN 40 EN

2. The Commission shall be responsible for:

(a) ensuring that management and control systems exist and function properly in the OCTs
concerned so as to ensure that the Union funds are used correctly and effectively; and

(b) in the event of irregularities, sending recommendations or requests for corrective measures to
remedy those irregularities and rectify any management shortcomings found.

3. The Commission, the OCTs and, where appropriate, the Member State to which they are
linked, shall cooperate on the basis of administrative arrangements at annual or biannual meetings to
coordinate programmes, methodologies and the implementation of controls.

4. With regard to financial corrections:

(a) the OCTs concerned shall be responsible in the first instance for detecting and correcting
financial irregularities;

(b) however, in the event of shortcomings by the OCT concerned, if the OCT fails to remedy the
situation and attempts at conciliation are unsuccessful, the Commission shall take action to reduce or
withdraw the balance of the overall allocation corresponding to the financing decision of the
Programming Document.

# EN 41 EN

## **PART V** **FINAL PROVISIONS**

_Article 86_

**Delegation of powers to the Commission**

The Commission shall be empowered to adopt delegated acts in accordance with Article 87 in order to
amend Annexes II, III and IV for the purpose of taking into account technological development and
changes in customs and trade legislation.

To ensure effective assessment of progress of this Decision towards the achievement of its objectives,
the Commission shall be empowered to adopt delegated acts in accordance with Article 87 in order to
amend Article 3 of Annex I to review or complement the indicators where considered necessary and to
supplement this Decision with provisions on the establishment of a monitoring and evaluation
framework.

_Article 87_

**Exercise of the delegation**

1. The power to adopt delegated acts is conferred on the Commission subject to the conditions
laid down in this Article.

2. The power to adopt delegated acts referred to in Article 86 shall be conferred on the
Commission for a period of five years from 1 January 2021. The Commission shall draw up a
report in respect of the delegation of power not later than nine months before the end of the
five-year period. The delegation of power shall be tacitly extended for periods of an identical
duration, unless the Council opposes such extension not later than three months before the end
of each period.

3. The delegation of power referred to in Article 86 may be revoked at any time by the Council.
A decision to revoke shall put an end to the delegation of power specified in that Decision. It
shall take effect on the day following the publication of the decision in the _Official Journal of_
_the European Union_ or at a later date specified therein. It shall not affect the validity of any
delegated acts already in force.

4. As soon as it adopts a delegated act, the Commission shall notify it to the Council.

5. A delegated act adopted pursuant to Article 86 shall enter into force only if no objection has
been expressed by the Council within a period of two months of notification of the act to the
Council or if, before the expiry of that period, the Council has informed the Commission that
it will not object. That period shall be extended by two months at the initiative of the Council.

_Article 88_

**Committee procedure**

1. The Commission shall be assisted by a committee (the ‘OCT Committee’). That committee
shall be a committee within the meaning of Regulation (EU) No 182/2011 [43] .

43 Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down
the rules and general principles concerning mechanisms for control by Member States of the Commission’s
exercise of implementing powers, OJ L 55, 28.2.2011, p. 13.

# EN 42 EN

2. For the purpose of Articles 10(6) and 16(8) of Annex II, the Commission shall be assisted by
the Customs Code Committee established by Article 285(1) of Regulation (EU) No 952/2013
of the European Parliament and of the Council [44] . That committee shall be a committee within
the meaning of Regulation (EU) No 182/2011.

3. For the purpose of Article 2 of Annex III and Article 5 and 6 of Annex IV, the Commission
shall be assisted by the Committee established by Article 4(1) of Council Regulation (EC)
No 260/2009 [45] . That committee shall be a committee within the meaning of Regulation (EU)
No 182/2011.

4. Where reference is made to this paragraph, Article 4 of Regulation (EU) No 182/2011 shall
apply.

5. Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall
apply.

6. Where reference is made to this paragraph, Article 8 of Regulation (EU) No 182/2011, in
conjunction with Article 4 thereof, shall apply.

7. Where the opinion of the committee is to be obtained by a written procedure, the procedure
shall be terminated without result when, within the time limit for delivery of the opinion, the
chair of the committee so decides or a simple majority of committee members so requests.

_Article 89_

**Information, communication and publicity**

1. The recipients of Union funding under this Decision shall acknowledge the origin and ensure
the visibility of the Union funding, in particular when promoting the actions and their results
by providing coherent, effective and proportionate targeted information to multiple audiences,
including the media and the public.

2. The Commission shall implement information and communication actions relating to the
Programme, and its actions and results. Financial resources allocated to the Programme shall
also contribute to the corporate communication of the political priorities of the Union, as far
as they are related to the objectives referred to in Article 3.

_Article 90_

**European External Action Service clause**

This Decision shall apply in accordance with Council Decision 2010/427/EU [46] .

_Article 91_

**Repeal and transitional provisions**

1. Council Decision 2013/755/EU is hereby repealed with effect from 1 January 2021.

2. This Decision shall not affect the continuation or modification of the actions concerned, until
their closure, under Council Decision 2013/755/EU which shall continue to apply to the
actions concerned until their closure.

44 Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the
Union Customs Code, OJ L 269, 10.10.2013, p. 1.
45 [Council Regulation (EC) No 260/2009 of 26 February 2009 on the common rules for imports, OJ L 84, 31.3.2009,](http://eur-lex.europa.eu/legal-content/EN/AUTO/?uri=OJ:L:2009:084:TOC)
p. 1.
46 Council Decision 2010/427/EU of 26 July 2010 establishing the organisation and functioning of the European
External Action Service, OJ L 201, 3.8.2010, p. 30.

# EN 43 EN

3. The financial envelope for the Programme may also cover technical and administrative
assistance expenses necessary to ensure the transition between the Programme and the
measures adopted under its predecessor, the Council Decision 2013/755/EU.

4. If necessary, appropriations may be entered in the budget beyond 2027 to cover the expenses
provided for in Article 78 to enable the management of actions not completed by 31
December 2027.

_Article 92_

**Entry into force**

This Decision shall enter into force on the twentieth day following its publication in the _Official_
_Journal of the European Union_ .

It shall apply from 1 January 2021.

Done at Brussels,

_For the Council_

_The President_

# EN 44 EN

**LEGISLATIVE FINANCIAL STATEMENT**

**1.** **FRAMEWORK** **OF** **THE** **PROPOSAL/INITIATIVE**

1.1. Title of the proposal/initiative

1.2. Policy area(s) concerned _(programme cluster)_

1.3. Nature of the proposal/initiative

1.4. Grounds for the proposal/initiative

1.5. Duration and financial impact

1.6. Management mode(s) planned

**2.** **MANAGEMENT** **MEASURES**

2.1. Monitoring and reporting rules

2.2. Management and control system

2.3. Measures to prevent fraud and irregularities

**3.** **ESTIMATED** **FINANCIAL** **IMPACT** **OF** **THE** **PROPOSAL/INITIATIVE**

3.1. Heading(s) of the multiannual financial framework and expenditure budget line(s)
affected

3.2. Estimated impact on expenditure

_3.2.1. Summary of estimated impact on expenditure_

_3.2.2. Estimated impact on appropriations of an administrative nature_

_3.2.3. Third-party contributions_

3.3. Estimated impact on revenue

# EN 1 EN

**LEGISLATIVE FINANCIAL STATEMENT**

**1.** **FRAMEWORK** **OF** **THE** **PROPOSAL/INITIATIVE**

**1.1.** **Title of the proposal/initiative**

Decision on the association of the Overseas Countries and Territories with the
European Union including the relations between the European Union on one hand
and Greenland and the Kingdom of Denmark on the other ('Overseas Association
Decision')

**1.2.** **Policy area(s) concerned** _**(Programme cluster)**_

The Decision is a merger of the current Overseas Association Decision
(2013/755/EU) and of the current Greenland Decision (2014/137/EU).

The policy area is the following:

15. External Action

15.05. Overseas Countries and Territories (including Greenland).

**1.3.** **The proposal/initiative relates to:**

 a new action

 a new action following a pilot project/preparatory action [47]

 the extension of an existing action

 a merger or redirection of one or more actions towards another/a new action

**1.4.** **Grounds for the proposal/initiative**

_1.4.1._ _Requirement(s) to be met in the short or long term including a detailed timeline for_
_roll-out of the implementation of the initiative_

The long-term objective of the Instrument is to promote the economic and social
development of the OCTs and to establish close economic relations between them
and the Union as a whole. The association shall pursue this in the short term by the
enhancement of the OCTs’ competitiveness, the strengthening of the OCTs’
resilience, the reduction of their economic and environmental vulnerability and the
promotion of cooperation between them and other partners.

_1.4.2._ _Added value of Union involvement (it may result from different factors, e.g._
_coordination gains, legal certainty, greater effectiveness or complementarities). For_
_the purposes of this point 'added value of Union involvement' is the value resulting_
_from Union intervention which is additional to the value that would have been_
_otherwise created by Member States alone._

Reasons for action at European level (ex-ante)

Overseas Countries and Territories (OCTs) have been associated with the European
Union since the entry into force in 1958 of the Treaty of Rome. The association of
the OCTs with the Union flows from the constitutional relations that these countries
and territories have with three Member States. The OCTs are not part of the Union's
customs territory and are outside the Internal Market. In addition, most of the OCTs
face particular challenges due to their size, location, remoteness and narrow
economic base. On this background, the EU has funded EDF territorial and regional

47 As referred to in Article 58(2)(a) or (b) of the Financial Regulation.

# EN 2 EN

programmes in OCTs in the past decades, the most recent financial support being
channeled through the 11 [th] EDF and should further continue providing such.

With regard to Greenland, following a referendum, it exited from the EU in 1985 to
become an OCT. As part of the exit agreement with Denmark and Greenland
(Greenland Treaty), the latter received a compensation for the loss of EU funding via
a Fisheries Agreement. In 2006 the Council decided to establish a dedicated
instrument to support the development of Greenland, besides the Fisheries
Agreement, after the financial compensation for the latter was reduced.

The EU approach for the future steps on a reciprocal relation focused on mutually
beneficial cooperation with the OCTs and Greenland and places special emphasis on
priorities which are relevant to them, such as the enhancement of their
competitiveness, the strengthening of their resilience and reduction of their
vulnerability, and promotion of the cooperation between OCTs and their regional,
European and international partners.

The EU can provide added value based on the amount of resources channelled
through its instruments, the relatively flexible modes of management and the
predictability of resources over the MFF period.

The EU has significant expertise in key areas of need and interest for the OCTs (for
instance, regional cohesion, economic integration, climate change), including from
its successful policies (such as the expertise in food security gained through the
Common Agricultural Policy). In some areas where Member States have decided not
to act or are impeded, the EU remains the main or sometimes the only actor to
intervene.

The EU has a global presence through its delegations, which ensures a vast network
of information on the developments experienced by countries and regions worldwide.
This allows the EU to be constantly aware of new needs and problems and, therefore,
to re-allocate resources accordingly. Complementarities between the EU action and
the actions carried out by the Member States exist and are increasing. This enhances
the political dialogue and the cooperation, which is increasingly channelled through
joint programming with Member States.

The EU is also able to complement Member States activities in dealing with
potentially dangerous situations or in case of particularly costly interventions, such
as crisis due to climate change to which the OCTs are frequently exposed.

Expected generated Union added value (ex-post):

The expected value added generated by the new Overseas Association Decision
should follow from the findings of the mid-term review of the external financing
instruments. In the case of OCTs and Greenland concluded that both instruments
were fit for purpose and that the association with OCTs and the partnership with
Greenland delivered on the different parameters evaluated (efficiency, etc.). It is
expected that the proposed Instrument will continue favouring this positive trend.

More specifically and considering the specificities of the OCTs and their special
relationship with the EU, a new financial instrument covering all OCTs will ensure:

unity of management - having all the OCTs under the same source of financing (the
Budget) will create synergies in programming and implementation;

consolidation of shared objectives;

# EN 3 EN

simplification and coherence in the legal framework;

increased visibility for the OCTs as a group.

The proposed instrument takes account of the exit of the United Kingdom of Great
Britain from the European Union on 29 March 2019 effective with the expiration of
the transition period on 1 January 2021 and thus does not apply to British OCTs.

_1.4.3._ _Lessons learned from similar experiences in the past_

**Mid-term review of the 11** **[th]** **EDF and the Greenland Decision:**

**11** **[th]** **EDF-OCT:** during 2014-2020 and as per the Overseas Association Decision,
OCTs have access to three funding sources: the 11th EDF, the EU budget (principle
of eligibility to all EU programmes and instruments including e.g. the thematic ‘leg’
of the DCI) and the EIB. Under the 11th EDF, OCTs benefit from EUR 364,5
million;

The financial support to OCTs is not limited to the EDF broad objective of poverty
eradication as the objective of the association between the OCTs and the EU is to
“promote the economic and social development of the countries and territories and to
establish close economic relations between them and the Union as a whole.” The
sectors supported in OCTs under the 11th EDF cover a large spectrum of policies
with a particular focus on environment/biodiversity/climate adaptation and
mitigation, renewable energies, education, telecommunications/digital connectivity
and tourism. The 11th EDF was found to be a relevant and effective instrument to
support the objectives of the association EU-OCTs. Nevertheless, some of the OCTs
regularly advocate for simpler programming and implementation procedures arguing
that their administrative capacities are limited. In addition, existing provisions
favouring regional cooperation among the different categories of regional actors
(OCTs, ACP countries and their neighbouring Outermost Regions/OR and non-ACP
developing countries) have not sufficiently been used until now.

**The Greenland Decision:** The Decision 2014-2020 allocates EUR 217.8 million to
the underlying Budget Support Programme, the equivalent of EUR 31 million per
year, is the EU's main financing instrument and regulative framework within the EU
budget forming the basis for the relations between the EU and Greenland. It is
complementary to the Overseas Association Decision. The Greenland Decision is
further complementary to the Fisheries Partnership Agreement and the 2014 Joint
Declaration on relations between the EU and Greenland. The aim of the Greenland
Decision is to preserve the close and lasting links between the partners, while
supporting the sustainable development of Greenland. The two main objectives are to
support Greenland in addressing its major challenges (especially the diversification
of its economy) and to contribute to the capacity of its administration to formulate
and implement national policies. The underlying Programming Document for the
Sustainable Development of Greenland 2014-2020 supports the Greenland Decision
objectives by creating smart growth through investments in education and research,
and inclusive growth through provision of qualifying education to a larger part of the
population in order to secure jobs, reduce poverty and create a sustainable basis for
economic growth.

The Budget Support Programme for Education shows positive progress as the
majority of targets (74.12 %) were either met or exceeded in 2016. However,
measuring the impact of the economic objectives of the Greenland Decision has
proven being more complicated as they are long-term and therefore not immediately

# EN 4 EN

visible. Nevertheless, there are positive trends emerging in terms of the development
of new sectors (e.g. opening of mines), rising completion rates in education and the
increased capacity of the Government in formulating long term policies.
Furthermore, the continuous formal and informal policy dialogue has promoted a
mutual understanding between the partners and a strong cooperation in important
areas such as the Arctic, where Greenland is a part of the 2016 EU Arctic Policy and
supports the EU's application for an observer seat in the Arctic Council. Such trends
are expected to continue post-2020 and even develop further.

The Greenland Decision provides a “fit for purpose” instrument for the EU and
Greenland to continue deepening the relations and cooperation post-2020.

The objectives of the association with OCTs, including Greenland, as mentioned in
Articles 198 and 199 TFEU, call for a comprehensive partnership, which comprises
an institutional framework and trade arrangements and covers many areas of
cooperation as well as the basic principles governing Union financial assistance to
OCTs. This calls for a wide ranging and far reaching legal instrument.

Considering the specificities of the OCTs and their special relationship with the EU,
a new financial instrument covering all OCTs both concerning the political and legal
framework as well as the implementation of the cooperation will ensure
effectiveness, consolidation of the shared objectives and coherence as well as more
visibility for the OCTs as a group. The proposal puts forward an approach that is
flexible and tailored to the situation of each OCT.

_1.4.4._ _Compatibility and possible synergy with other appropriate instruments_

The updated Overseas Association Decision (OAD) aims at ensuring full
complementarity with the most relevant post-2020 legislative acts particularly:

The Neighbourhood, Development and International Cooperation Instrument
(NDICI): In order to ensure coherence and effectiveness, the Decision will, unless
otherwise specified, apply the implementation, evaluation and monitoring provisions
of the NDICI. The draft regulation foresees that OCTs will be eligible to thematic
programmes under this regulation and to pillar 3 of the rapid response actions. The
NDICI regulation and updated OAD also include a provision giving the possibility of
establishing intra-regional initiatives between OCTs, partner countries and EU
outermost regions.

Regional policy regulations: the updated OAD and the proposed regional policy
regulations have been drafted with the aim of reinforcing provisions favouring the
establishment of intra-regional initiatives involving OCTs, partner countries and EU
outermost regions.

Other EU policies and programmes: OCTs will remain eligible to all EU policies and
programmes except if stated otherwise in relevant regulations. They shall therefore
be eligible to ERASMUS +, Horizon 2020, COSME, etc.

# EN 5 EN

**1.5.** **Duration and financial impact**

 **limited duration**

 in effect from [DD/MM]YYYY to [DD/MM]YYYY

 Financial impact from YYYY to YYYY for commitment appropriations and from
YYYY to YYYY for payment appropriations.

 **unlimited duration**

Implementation with a start-up period from 2021 onwards

**1.6.** **Management mode(s) planned** **[48 ]**

 **Direct management** by the Commission

 by its departments, including by its staff in the Union delegations;

 by the executive agencies

 **Shared management** with the Member States

 **Indirect management** by entrusting budget implementation tasks to:

 third countries or the bodies they have designated;

 international organisations and their agencies (to be specified);

 the EIB and the European Investment Fund;

 bodies referred to in Articles 70 and 71 of the Financial Regulation;

 public law bodies;

 bodies governed by private law with a public service mission to the extent that
they provide adequate financial guarantees;

 bodies governed by the private law of a Member State that are entrusted with the
implementation of a public-private partnership and that provide adequate financial
guarantees;

 persons entrusted with the implementation of specific actions in the CFSP
pursuant to Title V of the Treaty on European Union, and identified in the
relevant basic act.

_If more than one management mode is indicated, please provide details in the ‘Comments’ section._

Comments

External expenditure requires the ability to use all foreseen management modes, as relevant
and decided during the implementation

48 Details of management modes and references to the Financial Regulation may be found on the
BudgWeb site:
[https://myintracomm.ec.europa.eu/budgweb/EN/man/budgmanag/Pages/budgmanag.aspx](https://myintracomm.ec.europa.eu/budgweb/EN/man/budgmanag/Pages/budgmanag.aspx)

# EN 6 EN

**2.** **MANAGEMENT** **MEASURES**

**2.1.** **Monitoring and reporting rules**

_Specify frequency and conditions._

The Commission's monitoring and evaluation systems are increasingly focussed on
results. They involve internal staff as well as implementing partners and external
expertise.

Task Managers in Delegations and Headquarters continuously monitor the
implementation of projects and programmes, using the information provided by
implementing partners as part of their regular reporting and including wherever
possible through field visits. Internal monitoring provides valuable information on
progress; it helps managers to identify actual and potential bottlenecks, and to take
corrective action.

In addition, external independent experts are contracted to assess the performance of
EU external actions through three different systems. These assessments contribute to
accountability, and to the improvement of ongoing interventions; they also draw
lessons from past experience to inform future policies and actions.

The monitoring and reporting rules proposed in the NDICI regulation will be used in
the context of the OCT instrument (New OAD, article 84).

The Commission shall examine the progress made in implementing the measures of
the Union external funding and, from 2021 onwards, shall submit to the European
Parliament and to the Council an annual report on the implementation of the actions
financed and that report shall also be submitted to the European Economic and Social
Committee and to the Committee of the Regions.

In addition, all internal monitoring (e.g. ROM), evaluation and reporting tools of the
Commission will be applicable to the updated OAD post-2020.

**2.2.** **Management and control system(s)**

_2.2.1._ _Justification of the management mode(s), the funding implementation mechanism(s),_
_the payment modalities and the control strategy proposed_

Methods of implementation:

Regarding the management modes, there are no fundamental changes are foreseen
and the experience acquired by the Commission services and implementing actors
under the predecessor programmes will contribute to better results in the future.

The actions to be financed under this Decision will be implemented under direct
management by the Commission from headquarters and/or through the Union
delegations and under indirect management by any of the entities listed in article
62(1) c) of the new Financial Regulation in order to better achieve the objectives of
the Decision.

Concerning indirect management, as stated in Article 154 of the new Financial
Regulation, such entities must ensure a level of protection of the EU’s financial
interests' equivalent to the one under direct management. An ex ante pillar
assessment of the entities’ systems and procedures will be carried out, in accordance
with the principle of proportionality and with due consideration for the nature of the
action and the financial risks involved. Where the implementation requires so or
there have been reservations expressed in Activities Reports, action plans with

# EN 7 EN

specific mitigation measures will be defined and implemented. Besides, appropriate
supervisory measures imposed by the Commission may accompany the
implementation.

Internal Control architecture

The internal control / management process is designed to provide reasonable
assurance regarding the achievement of objectives in the effectiveness and efficiency
of its operations, the reliability of its financial reporting and compliance with the
relevant legislative and procedural framework.

Effectiveness and efficiency

To ensure the effectiveness and efficiency of its operations (and to mitigate the high
level of risk in its external assistance environment), in addition to all the elements of
the Commission wide Strategic Policy and Planning process, internal audit
environment and other requirements of the Commission's Internal Control
Framework, the implementing services will continue to have a tailored aid
management framework in operation under all its instruments which will include:

        - A devolved management of the majority of external assistance by Union
delegations in the field.

        - Clear and formalised lines of financial accountability (from the Delegated
Authorising officer (Director General)) by means of a subdelegation from the
Subdelegated Authorising Officer (Director) at headquarters to the Head of
Delegation;

        - Regular reporting from Union delegations to headquarters (External Assistance
Management Reports) including an annual Statement of Assurance by the Head
of Delegation;

        - Provision of a substantial programme of training for staff both at headquarters
and in delegations,

        - Significant headquarters/delegation support and guidance (including via
internet);

        - Regular supervision visits to delegations every 3 to 6 years;

        - A project and programme cycle management methodology including: quality
support tools for the design of the intervention, its delivery method, financing
mechanism, management system, assessment and selection of any
implementing partners, etc; programme and project management, monitoring
and reporting tools for effective implementation including regular external onthe-spot monitoring of projects; and significant evaluation and audit
components.

        - Simplifications will be sought by extending the use of simplified cost options
(SCOs) and cross-reliance on audit work of partner organisations. There will be
a continuation of a risk-differentiated controls approach in accordance with the
underlying risks.

Financial Reporting and Accounting

The implementing services will continue to pursue the highest standards of
accounting and financial reporting using the Commission's accruals based accounting

# EN 8 EN

system (ABAC) as well as external aid specific tools such as the Common Relex
Information System (CRIS) and its successor (OPSYS).

In relation to compliance with the relevant legislative and procedural framework,
compliance control methods are set out in section 2.3 (measures to prevent fraud and
irregularities).

_2.2.2._ _Information concerning the risks identified and the internal control system(s) set up_
_to mitigate them_

Risk environment

The operational environment of aid under this instrument is characterised by the
following risks of not achieving the instrument's objectives, suboptimal financial
management and/or of not complying with the applicable rules (legality and
regularity errors):

        - economic/political instability and/or natural disaster may lead to difficulties
and delays in the design and implementation of interventions, particularly in
fragile states;

        - lack of institutional and administrative capacity in partner countries may lead
to difficulties and delays in the design and implementation of interventions;

        - geographically dispersed projects and programmes (covering approximately
many states/territories/regions) may pose logistical/resource challenges to
monitoring - particularly any 'on-the-spot' follow-up of activities;

        - diversity of potential partners / beneficiaries with their diverse internal control
structures and capacities can fragment and therefore reduce the effectiveness
and efficiency of the Commission's available resources to support and monitor
implementation;

        - poor quality and quantity of available data on the outcomes and impact of
external aid / national development plan implementation in partner countries
may hinder the Commission's ability to report on and be accountable for
results;

_2.2.3._ _Estimation and justification of the cost-effectiveness of the controls (ratio of "control_
_costs ÷ value of the related funds managed"), and assessment of the expected levels_
_of risk of error (at payment & at closure)_

The internal control / management cost represent approximately 4 % of the estimated
annual average of EUR 12.78 billion planned for the overall (operational +
administrative) commitments on the expenditure portfolio financed by the General
Budget of the EU for the period 2021-2027. This cost of control calculation refers
only to the costs of the Commission, excluding Member States or entrusted entities.
Entrusted entities can withhold up to 7 % for the administration of funds, which
could partially be used for control purposes.

These management costs take into account all staff at headquarters and in
delegations, infrastructure, travel, training, monitoring, evaluation and audit contracts
(including those launched by beneficiaries).

The management / operational activities ratio could be reduced over time under the
improved and simplified arrangements of the new instrument, building on changes to
be introduced by the new Financial Regulation. The key benefits of these
management costs are realised in terms of meeting policy objectives, efficient and

# EN 9 EN

effective use of resources, and the exercise of robust cost-effective preventative
measures and other checks to ensure the legal and regular use of funds.

While improvements in the nature and targeting of management activities and
compliance checks in relation to the portfolio will continue to be pursued, these costs
are globally necessary to effectively and efficiently achieve the objectives of the
instruments at a minimal risk of non-compliance (below 2 % residual error). They
are significantly less than risks involved in removing or scaling back internal
controls in this high risk area.

_Expected level of risk of non-compliance with applicable rules._

The compliance objective for the Instrument is to maintain the historic level of risk
of non-compliance (error rate) which is an overall residual 'net' level of error (on a
multi-annual basis after all planned controls and corrections have been executed on
closed contracts) of less than 2 %. This has traditionally implied an estimated error
range of 2-5 % in terms of an annual randomised sample of transactions undertaken
by the European Court of Auditors for the purposes of the annual Statement of
Assurance (DAS). The Commission considers this to be the lowest risk of noncompliance achievable in relation to its high-risk environment and taking into
account the administrative burden and necessary cost effectiveness of compliance
controls. Where weaknesses are identified, targeted corrective measures will be
implemented in the light of ensuring minimum error rates.

**2.3.** **Measures to prevent fraud and irregularities**

_Specify existing or envisaged prevention and protection measures, e.g. from the Anti-Fraud Strategy._

Given the high risk environment, the systems need to anticipate a significant
occurrence of potential compliance errors (irregularities) in transactions and build in
a high level of prevention, detection and correction controls as early as possible in
the payment process. This means in practice that compliance controls will place most
reliance on significant ex-ante checks on a multi-annual basis by both external
auditors and Commission staff in the field before final project payments (while still
executing some ex-post audits), going well beyond the financial safeguards required
by the Financial Regulation. Compliance framework is made up _inter alia_ of the
following significant components:

Preventative measures:

        - Compulsory core training covering fraud issues for aid management staff and
auditors;

        - Provision of guidance (including via internet) including the Practical Guide to
Contracts, DEVCO Companion and the Financial Management Toolkit (for
implementing partners);

        - Ex-ante assessment to ensure that appropriate anti-fraud measures to prevent
and detect fraud in the management of EU funds are in place in the authorities
managing the relevant funds under joint and decentralised management);

        - Ex-ante screening of the anti-fraud mechanisms available in the partner country
as part of the assessment of the eligibility criterion of public finance
management for receiving budget support (i.e. active commitment to fight
fraud and corruption, adequate inspection authorities, sufficient judicial
capacity and efficient response and sanction mechanisms);

# EN 10 EN

        - Detective and corrective measures;

        - External audits and verifications (both mandatory and risk based) including the
European Court of Auditors;

        - Retrospective checks (on a risk basis) and recoveries;

        - Suspension of EU funding where there is a serious fraud case, including large
scale corruption, until the authorities have taken appropriate action with a view
to correcting and preventing such fraud in the future;

        - EDES (Early Detection Exclusion System);

        - Suspension/termination of contract;

        - Exclusion procedure

Anti-fraud strategies of the services concerned, which are regularly revised, will be
adapted as necessary once the Commission's new version of its anti-fraud
strategy (CAFS) will have been published in order to ensure _inter alia_ that:

Internal anti-fraud related controls are fully aligned with the CAFS;

The fraud risk management approach is geared to identify fraud risk areas and
adequate responses;

The systems used for spending EU funds in third countries enable relevant data to be
retrieved with a view to feeding this data into fraud risk management (e.g.
double funding);

Where necessary, networking groups and adequate IT tools dedicated to analysing
fraud cases related to the external aid sector could be set up.

# EN 11 EN

**3.** **ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE**

**3.1.** **Heading of the multiannual financial framework and new expenditure budget**

|3.1.|Heading of the multiannual financial line(s) proposed|l framewor|rk and new expenditure budget|Col5|Col6|Col7|
|---|---|---|---|---|---|---|
|Heading of<br>multiannual<br>financial<br>framework|Budget line|Type of <br>expenditure|Contribution|Contribution|Contribution|Contribution|
|Heading of<br>multiannual<br>financial<br>framework|Number 15 External Action<br>[VI][Heading VI]|Diff./Non-<br>diff.49|from<br>EFTA<br>countries<br>50 <br>|from<br>candidate<br>countries51 <br>|from third<br>countries|within the<br>meaning of<br>Article [21(2)(b)]<br>of the Financial<br>Regulation|
|VI|15 01 05 Support expenditure for the Overseas<br>Countries and Territories (including Greenland)|Non-diff.|NO|NO|NO|NO|
|VI|15 05 01 Overseas Countries and Territories|Diff.|NO|NO|NO|NO|
|VI|15 05 02 Greenland|Diff.|NO|NO|NO|NO|

49 Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations.
50 EFTA: European Free Trade Association.
51 Candidate countries and, where applicable, potential candidates from the Western Balkans.

# EN 12 EN

**3.2.** **Estimated impact on expenditure**

_3.2.1._ _Summary of estimated impact on expenditure_

|Col1|Col2|Col3|2021|2022|2023|2024|2025|2026|2027|Post<br>2027|TOTAL|
|---|---|---|---|---|---|---|---|---|---|---|---|
|Operational appropriations (split according to<br>the budget lines listed under 3.1)|Commitments|(1)|65,927|67,252|68,604|69,984|71,391|72,827|74,292||**490,275**|
|Operational appropriations (split according to<br>the budget lines listed under 3.1)|Payments|(2)|14,811|28,930|38,801|48,039|55,861|60,659|63,888|179,286|**490,275**|
|Appropriations of an administrative nature<br>financed from the envelope of the programme52|Commitments =<br>Payments|(3)|1,329|1,349|1,369|1,389|1,409|1,429|1,449||**9,725**|
|**TOTAL appropriations for the envelope**<br>**of the programme **|Commitments|=1+3|67,256|68,601|69,973|71,373|72,800|74,256|75,741||**500,000**|
|**TOTAL appropriations for the envelope**<br>**of the programme **|Payments|=2+3|16,140|30,279|40,170|49,429|57,270|62,089|65,338|179,286|**500,000**|

EUR million (to three decimal places)

**Heading of multiannual financial**

7 ‘Administrative expenditure’
**framework**

This section should be filled in using the 'budget data of an administrative nature' to be firstly introduced in the Annex to the Legislative
Financial Statement, which is uploaded to DECIDE for interservice consultation purposes.

52 Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research,
direct research.

# EN 13 EN

EUR million (to three decimal places)

|Col1|Col2|2021|2022|2023|2024|2025|2026|2027|Post<br>2027|TOTAL|
|---|---|---|---|---|---|---|---|---|---|---|
|Human resources|Human resources|1,712|1,712|1,712|1,712|1,712|1,712|1,712||**11,986**|
|Other administrative expenditure|Other administrative expenditure|0,116|0,116|0,116|0,116|0,116|0,116|0,116||**0,811**|
|**TOTAL appropriations under HEADING**<br>**7 of the multiannual financial framework**|(Total commitments =<br>Total payments)|**1,828**|**1,828**|**1,828**|**1,828**|**1,828**|**1,828**|**1,828**||**12,797**|

EUR million (to three decimal places)

|Col1|Col2|2021|2022|2023|2024|2025|2026|2027|Post 2027|TOTAL|
|---|---|---|---|---|---|---|---|---|---|---|
|**TOTAL appropriations** <br>**across HEADINGS** <br>of the multiannual financial framework|Commitments|69,084|70,429|71,801|73,201|74,628|76,084|77,569||**512,797**|
|**TOTAL appropriations** <br>**across HEADINGS** <br>of the multiannual financial framework|Payments|17,968|32,107|41,998|51,257|59,098|63,917|67,166|179,286|**512,797**|

# EN 14 EN

_3.2.2._ _Summary of estimated impact on appropriations of an administrative nature_

 The proposal/initiative does not require the use of appropriations of an
administrative nature

 The proposal/initiative requires the use of appropriations of an administrative
nature, as explained below:

EUR million (to three decimal places)

|HEADING 7<br>of the multiannual<br>financial framework|Col2|Col3|Col4|Col5|Col6|Col7|Col8|Col9|
|---|---|---|---|---|---|---|---|---|
|Human resources|1,712|1,712|1,712|1,712|1,712|1,712|1,712|**11,986**|
|Other administrative<br>expenditure|0,116|0,116|0,116|0,116|0,116|0,116|0,116|**0,811**|
|**Subtotal HEADING 7** <br>**of the multiannual**<br>**financial framework**|**1,828**|**1,828**|**1,828**|**1,828**|**1,828**|**1,828**|**1,828**|**12,797**|

|753<br>Outside HEADING<br>of the multiannual<br>financial framework|Col2|Col3|Col4|Col5|Col6|Col7|Col8|Col9|
|---|---|---|---|---|---|---|---|---|
|Human resources|0,829|0,829|0,829|0,829|0,829|0,829|0,829|**5,805**|
|Other expenditure <br>of an administrative<br>nature|0,500|0,520|0,540|0,560|0,580|0,600|0,620|**3,920**|
|**Subtotal** <br>**outside HEADING 7** <br>**of the multiannual**<br>**financial framework**|**1,329**|**1,349**|**1,369**|**1,389**|**1,409**|**1,429**|**1,449**|**9,725**|

53 Technical and/or administrative assistance and expenditure in support of the implementation of
EU programmes and/or actions (former ‘BA’ lines), indirect research, direct research.

# EN 15 EN

3.2.2.1. Estimated requirements of human resources

 The proposal/initiative does not require the use of human resources.

 The proposal/initiative requires the use of human resources, as explained below:

_Estimate to be expressed in full time equivalent units_

|Years|Col2|2021|2022|2023|2024|2025|2026|2027|
|---|---|---|---|---|---|---|---|---|
|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|** Establishment plan posts (officials and temporary staff)**|
|Headquarters and Commission’s<br>Representation Offices|Headquarters and Commission’s<br>Representation Offices|11|11|11|11|11|11|11|
|Delegations|Delegations|1|1|1|1|1|1|1|
|Research|Research||||||||
|** External staff (in Full Time Equivalent unit: FTE) - AC, AL, END, INT and JED** 54 <br>Heading 7|** External staff (in Full Time Equivalent unit: FTE) - AC, AL, END, INT and JED** 54 <br>Heading 7|** External staff (in Full Time Equivalent unit: FTE) - AC, AL, END, INT and JED** 54 <br>Heading 7|** External staff (in Full Time Equivalent unit: FTE) - AC, AL, END, INT and JED** 54 <br>Heading 7|** External staff (in Full Time Equivalent unit: FTE) - AC, AL, END, INT and JED** 54 <br>Heading 7|** External staff (in Full Time Equivalent unit: FTE) - AC, AL, END, INT and JED** 54 <br>Heading 7|** External staff (in Full Time Equivalent unit: FTE) - AC, AL, END, INT and JED** 54 <br>Heading 7|** External staff (in Full Time Equivalent unit: FTE) - AC, AL, END, INT and JED** 54 <br>Heading 7|** External staff (in Full Time Equivalent unit: FTE) - AC, AL, END, INT and JED** 54 <br>Heading 7|
|Financed from<br>HEADING 7 of<br>the multiannual<br>financial<br>framework|- at Headquarters|6|6|6|6|6|6|6|
|Financed from<br>HEADING 7 of<br>the multiannual<br>financial<br>framework|- in Delegations|6|6|6|6|6|6||
|Financed from the<br>envelope of the<br>programme 55|- at Headquarters||||||||
|Financed from the<br>envelope of the<br>programme 55|- in Delegations||||||||
|Research|Research||||||||
|Other (specify)|Other (specify)||||||||
|**TOTAL**|**TOTAL**|**24**|**24**|**24**|**24**|**24**|**24**|**24**|

Description of tasks to be carried out:

|Officials and temporary staff|The tasks will be the same as currently (policy, programming, finance and contracts,<br>other horizontal tasks)|
|---|---|
|External staff|The tasks will be the same as currently (policy, programming, finance and contracts,<br>other horizontal tasks)|

54 AC= Contract Staff; AL = Local Staff; END = Seconded National Expert; INT = agency staff;
JPD= Junior Professionals in Delegations.
55 Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines).

# EN 16 EN

_3.2.3._ _Third-party contributions_

The proposal/initiative:

 does not provide for co-financing by third parties

 provides for the co-financing by third parties estimated below:

Appropriations in EUR million (to three decimal places)

|Years|2021|2022|2023|2024|2025|2026|2027|TOTAL|
|---|---|---|---|---|---|---|---|---|
|Specify the co-financing<br>body|N/A|N/A|N/A|N/A|N/A|N/A|N/A|N/A|
|TOTAL appropriations<br>co-financed|N/A|N/A|N/A|N/A|N/A|N/A|N/A|N/A|

**3.3.** **Estimated impact on revenue**

 The proposal/initiative has no financial impact on revenue.

 The proposal/initiative has the following financial impact:

                -  on own resources

                -  on other revenue

please indicate, if the revenue is assigned to expenditure lines 

EUR million (to three decimal places)

|Budget revenue line:|56<br>Impact of the proposal/initiative|Col3|Col4|Col5|Col6|Col7|Col8|
|---|---|---|---|---|---|---|---|
|Budget revenue line:|**2021**|**2022**|**2023**|**2024**|**2025**|**2026**|**2027**|
|Article ………….||||||||

56 As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net
amounts, i.e. gross amounts after deduction of 20 % for collection costs.

# EN 17 EN