CELEX: 51995PC0686
Language: en
Date: 1995-12-20
Title: Re-examined proposal for a COUNCIL REGULATION (EC) on the implementation of the EC Investment Partners financial instrument for the countries of Latin America, Asia, the Mediterranean Region and South Africa

COMMISSION OF THE EUROPEAN COMMUNITIES
*   ft
                                                Brussels, 20 12.1995
                                                COM(95) 686 final  .
                                                94/0190 (SYN)
                          Re-examined proposal for a
                       COUNCIL REGULATION (EC)
  on the implementation of the EC Investment Partners financial instrument
       for the countries of Latin America, Asia, the Mediterranean region
                                 and South Africa
          (presented by the Commission pursuant to Article 189 c (d)
                               of the EC Treaty)
 ---pagebreak---  ---pagebreak---                                                 -    s\  -
I.        BACKGROUND.
On 22nd September 1994 the Commission proposed by means of a Council Regulation to
reinforce and continue the EC Investment Partners financial instrument for investment promotion
in Asia, Latin America, the Mediterranean and South Africa. The text of the proposed regulation
maintains the essential characteristics of the existing Council Regulation (319/92) and proposes
improvements in the conditions of finance available under all of the facilities. The Commission
proposal also includes specific provisions for reinforcement of the Commission's management,
control and audit of funds, of its ongoing monitoring of actions financed and of its co-ordination
of ECBP with other EC instruments for economic co-operation. A strengthened and obligatory
anti-fraud reimbursement clause is proposed for all ECIP Framework Agreements.
On 28th October 1994 the European Parliament approved in First Reading (Doct N° A4-0036/94
published in O.J. N° 323 of 21st November 1994) making amendments. On 22nd May 1995,
(Published in O.J. N° C160 of 26th June 1995) the Council gave its Common Position which
approves the essentials of the Commission's proposal with certain specific amendments. In its
Communication to the Parliament dated 10th July 1995 (SEC(95) 1171 final) the Commission
accepted many of the Council's amendments but maintained two substantial reserves on the
Council's two amendments as regards the period of validity of the regulation, and the Council's
"Financial Reference Amount". While the Commission had proposed an open-ended validity for
the Regulation, the Council, in agreement with the Parliament, has proposed only a five year
validity 1995-99. After over 7 years operations of ECEP on a pilot and then a trial basis the
Commission maintains its proposal for an open-ended Regulation. The Council has inserted a
financial reference amount into the Regulation. Since the matter is not subject to co-decision,
the Commission rejects this provision and declares that the amount inserted is only of an
illustrative nature.
While expressing its two substantial reserves on (i) the five year period, and (ii) the financial
reference amount, the Commission proposes to the Council to adopt the text of the Council's
Common Position published on 26th June 1995 and the Commission communicates to the
Parliament and Council its rejection of the seven Second Reading Amendments of the Parliament
which were already rejected at First Reading.
 ---pagebreak---                                                  -2-
II.      COMMISSION OPINION ON EUROPEAN PARLIAMENTS SECOND
         READING AMENDMENTS.
Already during the previous discussions in cooperation procedure with the Parliament and the
Council since 1994 the Commission has accepted verbatim or incorporated into the substance of
the texts many of the Parliament's substantive First Reading amendments so that they are now in
the Council's Common Position. In particular, firstly, the Parliament's wishes to take more
explicitly into account human rights, working conditions, women's working conditions and
exclusion of unacceptable working practices are included in the preamble. Secondly, the
Council has incorporated into its Common position "the five year period 1995-99 for ECIP", as
recommended by the Parliament - although the Commission does not agree. Thirdly, the
Commission and Council have accepted to include "the good repute" of promoters, as requested
by the Parliament, into the ECIP appraisal criteria. Fourth, the Commission has accepted to
report annually on "... the economic impact, total investment, and the number of joint ventures
created". Fifth, the Commission has accepted that the independent appraisers will assess "... the
principles of good financial management, economy and cots/benefit analysis".
However, the seven amendments still proposed by the Parliament in Second Reading would
make the ECIP procedures more cumbersome and complex (the Parliament had already proposed
them at its First Reading Approval of 28th October 1994 and they were rejected by the,
Commission at that stage). They are as follows, followed by the Commission's Position (which
is unchanged from the Commission's reply to the First Reading) :-
AMENDMENT N° 2
Article 6. para 2
The Parliament wants to add "without neglecting democracy and human rights and taking into
consideration the necessity to improve working conditions".
Commission Position: No. The Council has proposed a text for the preamble (the thirteenth
"whereas") which covers the Parliament's wishes and the Commission accepts the Council's text.
AMENDMENT N° 3
Article 9. para 2
As regards Comitology the Commission proposed, as in the existing regulation (319/92), to use
the existing ALAMED committees (Type III A) and used the same text as in the previous
regulation to explain their operating procedures. The Council agreed unanimously. The
Parliament has proposed a Consultative Committee of Type I, as foreseen in Article 2 of the
Council's Decision N° 87/373 (establishing the procedures for exercising the responsibilities
given to the Commission).
Commission Position: The Commission appreciates the Parliament's proposal but does not alter
its own proposal since the existing committee works well in practice.
 ---pagebreak--- AMENDMENT N° 4
Article 9. para 3. introduction
The Commission's proposed text, carried over from the previous regulation' referred to the
procedures for the committee while the Parliament's text refers to its responsibilities.
Commission Position: No. But the Commission "could" accept this amendment if it were
slightly rephrased to say quote "the Committee referred to in the above paragraph sh.all assist the
Commission with regard to the following ..." unquote.
AMENDMENT N° 5
Article 9. para 4
As regards Comitology the Commission proposed, as in the existing regulation (319/92), to use
the existing ALAMED committees (Type III A) and used the same text as in the previous
regulation to explain their operating procedures. The Council agreed unanimously. The
Parliament has proposed a Consultative Committee of Type I, as foreseen in Article 2 of the
Council's Decision N° 87/373 (establishing the procedure for exercising the responsibilities
given to the Commission).
Commission Position: The Commission appreciates the Parliament's proposal but does not alter
its proposal.
AMENDMENT N° 6
Article 9. para 6
The Commission proposed:
"In order to ensure consistency of co-operation and to improve complementarity, between
operations, the Commission and the European Investment Bank shall exchange any relevant
information on financing that they envisage granting."
and the Parliament request that the Commission and EEB "... shall inform the budgetary authority
thereof."
Commission Position: No. The Commission rejects this amendment.
Such a prior information mechanism would render ECIP unmanageable. Also the matters to be
dealt with are often a banking and a commercial confidentiality (especially as regards the EIB)
and highly technical.
Appropriate (non-confidential) information on these matters will be provided to the Parliament
ex post in the Annual Reports provided for at Article 10.1.
 ---pagebreak--- AMENDMENT N° 7
Article 10. para 1
The Parliament requests that the Annual Report on ECIP "... be accompanied by an up-dated
financial statement."
Commentary: these financial statements are established:
a)       in the context of the proposals for new policies in order to estimate the costs foreseen
         (see Annex VI to the Commission's Proposal for ECIP); and
b)       annually in the framework of the proposal and negotiation of the annual budget.
Commission Position: No, the Commission rejects this amendment. It does not think it is
appropriate to "update" these financial statements in April each year. The Commission does,
however, assure the Parliament and the Council that it will annex to the Annual Reports a copy
of the financial statement established in the budgetary procedure for the year when the report is
presented.
AMENDMENT N° 8
Article 10. para 4
The Parliament asks that the costs of this technical assistance "... be estimated each year within
the framework of the budgetary procedure."
Commission Position: No. The Commission rejects this amendment. The technical assistance
proposed by the Commission is essential to the continuity and sound financial management of the
instrument. Any risk in the framework of the annual budgetary procedure of the non-
continuation of this technical assistance is unacceptable. It is proposed to allocate a maximum of
5% of the ECIP credits to the financing of these items, on condition that the actions financed be
directly linked to the special nature of the ECIP instrument and that they are of benefit to the
ALAMEDSA countries. AH these actions will be financed after tender procedures following the
usual and required Community procedures. The figure of 5% featuring in the Article is a ceiling.
The costs in question will be real costs which can only be precisely communicated at the end of
each year. The Commission will at the request of the Council and the Parliament, provide" in its
annual reports (Article 10.1) detailed information on the credits allocated for these actions in the
Annual Budget, but the Commission is not in a position to accept this amendment.
III.     TWO MAJOR CHANGES INTRODUCED BY THE COUNCIL AND THE
         EUROPEAN PARLIAMENT AND THE COMMISSION'S POSITION ON
         THEM.
The Commission has accepted many of the Council's and Parliament's amendments but maintains
its substantial reserves on the two major amendments in the Council's Common Position as
regards: (a) the period of validity of the regulation, and (b) the Council's "Financial Reference
Amount".
 ---pagebreak---                                                 - •> -
(a)      While the Commission proposed an open-ended validity for the Regulation the Council,
         in agreement with the Parliament, has proposed only a five year validity 1995-99. After
         over seven years operations of ECIP on a pilot and then a trial basis the Commission
         maintains its proposal for an open-ended Regulation.
(b)      The Council has inserted a financial reference amount into the Regulation.' Since the
matter is not subject to co-decision, the Commission regrets this provision and declares that
quote:
              "The Commission remarks that according to the terms of the joint
              declaration by the European Parliament, the Council and Commission
              of 6th March 1995, legislative acts concerning multiannual
              programmes which are not subject to co-decision do not carry an
              estimated necessary amount.
              The Commission's proposal regarding the continuation of ECIP
              (COM(94) 358 final 94/0190 SYN) does not provide for a financial
              reference amount. The insertion of a financial reference amount is the
              Council's responsibility and does not affect the responsibilities of the
              budgetary authority." unquote.
and that the financial reference amount inserted is only of an illustrative nature.
IV.       CONCLUSION.
While expressing the above two substantial reserves the Commission accepts the text of the
Council's unanimous Common Position published 26th June 1995 and communicates to the
Council and Parliament its rejection of the seven amendments tabled by the European Parliament
in Second Reading.             . ..
Annex:
1.     Comparative table showing Commission's Proposal, Parliament First Reading
       Amendments, Council Common Position, Parliament's Second Reading
       Amendments and Common Position thereon.
2.     Council common position (EC) N° 6/95 of 22nd May 1995, published in the Official
       Journal on 26th June 1995 (N° C160).
Reference documents :
1.     Commission's proposal :
       22nd September 1994, COM(94)358 final - 94/0190 (SYN) published in O.J. N° C287 of
        15th October 1994 pages 7 to 10.
2.     European Parliament's first reading approval :
       28th October 1994 approval document N° A-0036/94 published in O.J. N° C323 of 21st
       November 1994 pages 494 to 497.
3.     Communication from the Commission to the European Parliament (SEC(95)1171 final
        10 July 1995) on the Council's Common position (EC) N° 6/95 on ECIP.
4.     Decision of the European Parliament on the Common Position of the Council:
       26th October 1995, reference PE 165.548.
 ---pagebreak---                                                                                        ECIP
                                                                    PROPOSITION DE REGLEMENT
                                                         Amendments in 2nd Reading adopted 26th October 1995
                                                                          by the European Parliament
N°<»          Amendments (Pit)                     Considering            Pit 1st Reading             Revised           Common Position           Proposed Commission
                  2nd Reading                       Article*2)             Amendments              Proposition                 Council                     Position
2       Financing decisions to respect        6(2)                     Financing decisions to Not accepted here,       Not accepted here,     No. While the substance is
        considerations of democracy and                                respect considerations because new 11 th        because new 11th       accepted in principle since this
        human rights                                                   of democracy and       preamble covers this     preamble covers this   matter is now dealt with in a new
                                                                       human rights           matter.                  matter.                11th preamble to the common
                                                                                                                                              position which covers these
                                                                                                                                              questions so the Commission
                                                                                                                                              does not accept this text in
                                                                                                                                              Article 6(2).
3       COMITOLOGY                            9(2)                     COMITOLOGY             The Commission           Not accepted.          No. The Commission originally
        Parliament proposes a type I                                   Parliament proposed a  originally proposed, as                         proposed, as in the existing
        Consultative Committee                                         type I Consultative    in the existing                                 regulation (319/92), to use the
                                                                       Committee              regulation (319/92), lo                         existing ALAMED committees
                                                                                              use the existing                                (Type III A) and used the same
                                                                                              ALAMED committees                               text as in the previous regulation
                                                                                              (Type III A) and used                           to explain their operating
                                                                                              the same text as in the                         procedures. Since in practice
                                                                                              previous regulation to                          this works well the Commission
                                                                                              explain their operating                         does not alter its position.
                                                                                              procedures. Since in
                                                                                              prncticc this works well
                                                                                              the Commission does
                                                                                              not alter its position.
                                                                                                                                                                                 G>
(l
  > Numbering of amendments according to EP document "Decision of the European Parliament in Seconal Reading" document PE 165.548, 26th October 1995.
<2) Numbering of articles according to Council's Common Position of 22 May 1995, OJ N° C160 of 26.6.95.
 ---pagebreak---  N°c)           Amendments (Pit)                    Considering           Pit 1st Reading               Revised       Common Position            Proposed Commission
                   2nd Reading                       Articled               Amendments                Proposition          Council                        Position
4       Parliament's amended text "The         9(3)                    Parliament's amended      Not revised.        Not accepted.           The Commission "could" accept
        Committee referred to in the                                   text "The Committee                                                   this amendment if it were slightly
        above paragraph shall be                                       referred to in the above                                              rephrased lo say quote: "the
        responsible for the following:".                               paragraph shall be                                                    Committee referred to in the
                                                                       responsible for the                                                   above paragraph shall assist the
                                    * •
                                                                       following:"                                                           Commission with regard to the
                                                                                                                                             following ..." unquote.
5       Parliament requests deletion of        9(4)                    Parliament requested      Not accepted.      Not accepted.            No. On this matter, the
        this article.                                                  deletion of this article.                                             Commission and the Parliament
                                                                                                                                             agree on the substance, but the
                                                                                                                                             Commission's text is more
                                                                                                                                             explicit as regards the operating
                                                                                                                                             modalities of the Committee and
                                                                                                                                             should be maintained.
6       The Parliament requests that the       9(6)                    The Parliament            Not accepted.      Not accepted.            No - Such a prior information
        Commission "shall inform the                                   requests that the                                                     mechanism would render ECIP
        budgetary authority" of its                                    Commission "shall                                                     unmanageable. Also the matters
        coordination with the European                                 inform the budgetary                                                  to be dealt with are often a
        Investment Bank.                                               authority" of its                                                     banking and a commercial
                                                                       coordination with the                                                 confidentiality (especially as
                                                                       European Investment                                                   regards the EIB) and highly
                                                                       Bank                                                                  technical.
                                                                                                                                             Appropriate (non-confidential)
                                                                                                                                             information on these matters will -
                                                                                                                                             be provided to the Parliament ex
                                                                                                                                             post in the Annual Reports
                                                                                                                                             provided for at Article 10.1.
(1)
    Numbering of amendments according to EP document "Decision of the European Parliament in Second Reading" document PE 165.548, 26th October 1995..
[2)
    Numbering of articles according to Council's Common Position of 22 May 1995, OJ N° CI60 of 26.6.95.
 ---pagebreak--- N°(')          Amendments (Pit)                    Considering             Pit 1st Reading              Revised         Common Position             Proposed Commission
                   2nd Reading                       Article*2)             Amendments                Proposition            Council                         Position
7       The Parliament requests that the       10(1)                   The Parliament             Not accepted.        Not accepted.            No - These statements are
        Annual Report on ECIP "... be                                  requests that the                                                        established in the framework of
        accompanied by an up-dated                                     Annual Report on                                                         the annual budget. The
        financial statement."                                          ECIP "... be                                                             Commission does not think it is
                                                                       accompanied by an up-                                                    appropriate to "update" these
                                                                       dated financial                                                          financial statements in April each
                                                                       statement."                                                              year. The Commission does,
                                                                                                                                                however, assure the Parliament
                                                                                                                                                and the Council that it will annex
                                                                                                                                                to the Annual Reports a copy of
                                                                 t                                                                              the financial statement
                                                                                                                                                established in the budgetary
                                                                                                                                                procedure for the year when the
                                                                                                                                                report is presented.
8       The Parliament asks that the costs     10(4)                   The Parliament asks        Not accepted.        Not accepted.            No - The Commission rejects this
        of this technical assistance "... be                           that the costs of this                                                   amendment. It can provide the
        estimated each year within the                                  technical assistance "...                                               Parliament and the Council
         framework of the budgetary                                     be estimated each year                                                  information cxpost in the Annual.
         procedure."                                                    within the framework                                                    Report (10.1) on credits affected
                                                                        of the budgetary                                                        lo these actions.
                                                                        procedure."
                                                                                                                                                                                   &Z
 <l) Numbering of amendments according to EP document "Decision of the European" Parliament in Second Reading!' document PE 165.548, 26th October 1995.
 (2
   > Numbering of articles according to Council's Common Position of 22 May 1995, OJ N° C160 of 26.6.95.
 ---pagebreak---                                                                          9
No C 160/8                                 Official J o u r n a l of the European Communities                                  .26. 6. 95
                                                C O M M O N POSITION (EC) No 6/95
                                             adopted by the Council on 22 May 1995
               with a view to adopting Regulation (EC) No . . 795 on the implementation of the 'European
               Communities Investment Partners Financial Instrument' for the countries of Latin America,
                                          Asia, the Mediterranean region and South Africa
                                                                  (95/C 160/02)
THE COUNCIL OF THE EUROPEAN UNION,                                          Whereas the Court of Auditors delivered an opinion in
                                                                            December 1993 pursuant to Article 9 (3) of Regulation
                                                                            (EEC) No 319/92 on the implementation of ECIP, which
Having regard to the Treaty establishing the European                       concluded that it meets a real need of which the market
Community, and in particular Article 130w thereof,                          takes no or only inadequate account, and made specific
                                                                            recommendations for improvements in its management;
Having regard to the proposal from the Commission ('),
                                                                            Whereas the European Parliament and the Council have
Acting in accordance with the procedure of Article 189c                     considered the results of the independent appraisal
of the Treaty (2),                                                          forwarded to them in March 1994 in conformity with
                                                                            Ankle 9 (2) of Regulation (EEC) No 319/92 which
                                                                            concluded that ECIP has met its principal objective of
Whereas the Community is implementing financial,                            promoting mutually beneficial investment by Community
technical and economic cooperation with the developing                      and local operators in EC/local joint ventures in the
countries of Latin America, Asia and the Mediterranean                      countries of Asia, Latin America and the Mediterranean,
region, and with South Africa;                                              and that the ECIP instrument should be further
                                                                            continued and reinforced;
Whereas in order to strengthen such cooperation, it is
necessary, inter alia, to encourage mutually beneficial                     Whereas the Council adopted on 25 February 1992
investment, particularly by - small and . medium-sized                      Regulation (EEC) No 443/92 on financial and technical
enterprises (SMEs);                                                         assistance to, and economic cooperation with, the
                                                                            developing countries in Asia and Latin America (4) and
                                                                            on 29 June 1992 Regulation- (EEC) N o 1763/92
Whereas the Council has/reached a consensus on die                          concerning financial cooperation in respect of all
 importance of die role of the private sector in the                        Mediterranean non-member countries (3);
 development process;
 Whereas joint ventures and investment by Community                          Whereas the continuation and: extension of the
 undertakings in developing countries can bring certain                      instrument is therefore necessary in order that full use
 benefits for. these countries, including the transfer of                    may be made of the possibilities of mutually beneficial
 capital, know-how, employment, ûie transfer of training                     action in the countries of Latin America, Asia and the
 and expertise, increased export possibilities and the                       Mediterranean region;
 meeting of local needs;
                                                                             Whereas the Council on 19 April 1994 concluded that to
 Whereas a three-year pilot scheme was launched in 1988                      encourage Community investments in SMEs in. South
 to promote, via a European Communities Investment                           Africa, advantages equivalent to the ECIP or its
 Partners (ECIP) financial instrument, the creation of joint                 follow-up instrument could be granted to South Africa,
 ventures between the Community and countries of Latin                       and that specific financing of this instrument would be
 America, Asia and the Mediterranean region and was                          provided to that end;
 continued and extended for a further three-year trial
 period from 1 January 1992 by Regulation (EEC)
  No'319/92 (');
                                                                             Whereas it is necessary to 'take account of democracy and
                                                                              human rights issues, and to promote investments which
  (') OJ No C 2S7, 15. 10. 1994, p. 7.                                        improve working conditions, in particular for women, do
  (;) Opinion of the European Parliament of 28 October 1994 (OJ
      No C 323, 2 1 . 11. 1994, p. 497), Council Common Position
      of      (not yet published in the Official Journal) and                 H OJ No L 5 2 , 27. 2. 1992, p. 1.
      Decision ol the European Parliament of                 (not yet         (*) OJ No L 181, 1. 7. 1992, p. 5. Regulation as amended by
      published in the Official Journal)                                          Regulation (EC) No 1735/94 (OJ No L 1S2, 16. 7. 1994,
  (') OJ No L 35, 12. 2. 1992, p. 1.                                              p. o).
 ---pagebreak--- 26. 6. 95               EN               Official Journal-of "the European Communities                               No C 160/9
not exploit employees and exclude unacceptable practices             2. interest-free advances for feasibility studies and other
such as forced labour and slavery;                                       action by operators intending to set up joint,ventures
                                                                         or to invest, not exceeding 5 0 % of the cost up to a
                                                                         ceiling of ECU 250 000, within which prc-fcasibility
Whereas the broadest possible participation                by
                                                                         travel costs of ECU 10 000 'maximum may be
undertakings in all Member States should                    be
                                                                         financed by grant (Facility No 2);
encouraged;
                                                                     3. capital requirements of a joint venture or a local
Whereas all the Member States should be encouraged to
                                                                         company with iicensing agreements, in order to meet
participate in the promotion of their investments in the
                                                                         investment risks peculiar to developing countries,
countries of Latin America, Asia, the Mediterranean
                                                                         through participation in.the provision of equity or by
region and South Africa through financial institutions
                                                                         equity loans not exceeding 2 0 % of the joint venture's
specializing in development;
                                                                         capital up to a ceiling of ECU 1 million (Facilitv
                                                                         No 3);
Whereas a financial reference amount, within the
meaning of point 2 of the Statement .of 6 March 1995 by              4. interest-free advances and grants not exceeding 50 %
the European Parliament, Council and Commission has                      of the cost up to a ceiling of ECU 250 000, for
been inserted in this Regulation for the entire duration of              training, technical assistance or management expertise
the programme, without the budget authority's powers as                  of an existing joint venture, or joint venture about to
defined in the Treaty being thereby affected,                            be set up, or of a local company with a licensing
                                                                         agreement (Facility No 4).
                                                                     The aggregate amount made available under Facilities
 HAS ADOPTED THIS REGULATION:                                       'Nos 2, 3 and 4 may not exceed ECU 1 million per
                                                                     project.
                             Article 1
                                                                                               Article 3
 1.     As part of its economic cooperation with the
countries of Latin America, Asia, the Mediterranean
 region, and South Africa, the Community shall operate              -1.    The financial institutions shall be selected by the
 for the period 1995—-1999 special cooperation schemes               Commission, further to the opinion of the Committee, •
 aimed at promoting mutually beneficial investment by                defined in Article 9, from among development banks,
 Community operators, particularly in the form of joint              commercial banks, merchant banks and investment
 ventures with local operators in the countries eligible             promotion bodies.
 including tripartite operations with other developing
 countries to promote regional integration.
                                                                     2.    Financial institutions which have submitted
                                                                     proposals in accordance with the criteria defined in
 2.     Account being taken of their respective possibilities        Article '6 will receive fees in accordance with
 and needs, SMEs will receive priority^in application of             arrangements to be determined by the Commission.
 the scheme, while large multinational undertakings will
 be ineligible.
                                                                                               Article 4
                             Article 2
                                                                     1.    With regard to Facility No 1 set out in Article 2,
 The European Communities Investment Partners (ECIP)                 financing applications may be submitted either directly to
  financial instrument, hereinafter referred to as the               the Commission by the institution, association or body
 'instrument', shall offer four kinds of financing facility          carrying out the identification of partners and projects, or
 covering:                                                           through a financial institution.
  1. grants for the identification of projects and partners,
                                                                     2.     In the case of Facilities Nos 2, 3 and 4 set out in
      not exceeding 50% of the cost of the operation up to
                                                                     Article 2, applications may be submitted by the
      a ceiling of ECU 100 000; however, where the
                                                                     undertakings concerned solely through the financial
      operation relates to the preparation of a privatization,
                                                                     institutions defined in Article 3. Community funds for the
      or a 'Build, Operate and Transfer' (BOT) or a 'Build,
                                                                     participating undertakings shall be applied for and
      Operate and Own' (BOO) scheme in infrastructure,
                                                                     provided exclusively through the financial institution.
      utilities or environmental services where an eligible-
      country government or public agency is the
      beneficiary this facility may be increased to 100% of          3.    With regard to Facility No 2 set out in Article 2,
      the cost of the operation up to a ceiling of ECU               the financial institutions and undertakings shall be
      200 000 (Facility No 1);                                       required to share the project risk; where the action is
 ---pagebreak---                                                                 /7^1
No C 160/10             EN               Official Journal of the European Communities                                   26. 6. 95
successful, however, the Community contribution may be              2.     For Facility No 2 set out in Article 2, interest-free
more than 5 0 % and up to 100% of the cost for SMEs.                advances shall be reimbursed according "to the
                                                                    arrangements to be determined by the Commission, on
4.     In the case of Facility No 3 set out in Article 2, the       the understanding that the final repayment periods are to
financial institutions shall provide financing at least equal       be as short as possible and shall in no instance exceed
to that provided by the Community. This facility shall be           five years. Such advances shall not be refundable where
reserved, where the Community is concerned, for SMEs;               the actions have produced negative results.
exceptions will be possible in cases for which specific
justification is provided having particular significance for        3.     For Facility No 3 set out in Article 2, participations
development policy, for instance technology transfer.               by virtue of this instrument shall be disposed of at the
                                                                    earliest opportunity once the project becomes viable,
5.     In the case of Facility No 4 set out in Article 2,           having regard to the Community's rules of sound
interest-free advance finance will be provided as regards           financial management.
the costs of training, technical assistance and
management expertise, and, for SMEs only, the costs of
training, technical assistance and management expertise             4.     Equity loan and advance repayments, the realization
provided by external sources or by the European partner             of participations, and interest and dividend payments will
to the joint venture shall be eligible for grant finance            be accounted for by recovery orders and paid back to the
 under this facility.                                               general budget of the European Communities. This will
                                                                    be done on an annual basis after the annual audit
                                                                    provided for in Article 10 (3), in reconciliation with the
6.     Framework agreements signed by the Commission                budget accounts as at 31 December of that year, and the
with the financial institutions shall explicitly stipulate          amounts involved will be reported in the progress report
that the Court of Auditors has the power, in accordance             for that year provided for at Article 10 (1). All assets
with Article 188c of the Treaty, to audit the operations            held by the financial institution are to be paid back to the
of these institutions with respect to financial projects            Community if the institution ceases to be associated with
 funded by the general budget of the European                       the instrument or if the instrument ceases to operate.
 Communities.                                       '.
                           Article 5                                                           Article 6
 1.    Contributions awarded under the instrument shall,             1. Projects shall be.selected by the financial institution
 depending upon the circumstances and pursuant to                   or, in the case of Facility N o 1 set out in Article 2, by the
 Article 2, be either grants or interest-free advances, or          Commission and the financial institution, in the light of
 participations in the provision of equity or equity loans.         the appropriations adopted by the budget authority and
                                                                    on the basis of the following criteria:
 Participation in the equity or equity loans shall in
 principle .be acquired or provided by the financial                 (a) the anticipated soundness of the investment and the
 institutions on their own behalf. However, in exceptional                quality and good repute of the promoters;
 cases,
                                                                     (b). the contribution to development, in particular in
 — where the financial institution cannot intervene in its
                                                                          terms of:
     own name for regulatory or legal reasons or because
     of its statutes, or                                                  — impact on the local economy,
 — where the Community's direct financial participation                   —. creation of added value,
     is necessary to reinforce in a decisive manner the
     capacity of the promoters to raise other financial                   — promotion of local entrepreneurs,
     resources which could not normally be mobilized due
     to the particular political situation or to specific legal           — transfer of technology and know-how                and
     obstacles in the host country of the joint venture, -                    development of the techniques used,
                                                                          — acquisition of training and expertise by managers
 the Commission may authorize a financial institution to
                                                                              and local staff,
 hold a direct participation on the Community's behalf.
                                                                          — implications for women and improvement of
 Only projects with a particular development or                               their working conditions,
 environmental impact or significance for technology
 transfer shall qualify for such direct participation.                    — creation of local jobs with conditions of work
                                                                              which do not involve exploiting employees.
 The commercial, industrial, investment and financial                     — impact on the balance of trade and balance of
 decisions' of the joint undertakings set up under the                        payments;
 instrument shall be taken exclusively by those
 undertakings.                                                            — impact on the environment,
 ---pagebreak---                                                                  s)Z
26. 6. 95              EN                Official Journal of the European Communities                             No C 160/11
     — manufacture and supply to the local market                   submit to the Committee a draft of the measures to be
          of products hitherto difficult to obtain or               taken. The Committee shall deliver its opinion on the
          substandard,                                              draft within a rime limit which the Chairman may lay
                                                                    down according to the urgency of the matter. The
     — use of local raw materials and resources.                    opinion shall be delivered by the majority laid down in
                                                                    Article 148 (2) of the Treaty in the case'of decisions
2.     The final financing decision shall be taken by the           which the Council is required to adopt on a proposal
Commission, which shall verify compliance with the                  from the Commission. The votes of the representatives of
criteria set out in paragraph 1 and compatibility with              the Member States, within the Committee shall be
Community        policies, in      particular     development       weighted in the manner set out ,in that Article. • The
cooperation policy, and the mutual benefit to - the                 Chairman shall not vote.
Community and the developing country "concerned.
                                                                    The Commission shall adopt the measures envisaged
                                                                    if they are in accordance with the opinion of the
                          Article 7                                 Committee.
Countries eligible shall be the developing countries of              If the measures envisaged are not in accordance with the
Latin America, Asia and the Mediterranean regions which             opinion of the Committee, or if no opinion is delivered,
benefit from Community development cooperation                      the Commission shall, without delay, submit- to the
measures or which have concluded regional or bilateral              Council a proposal relating to the measures to be taken.
cooperation or association -agreements with the                     The Council shall act by a qualified majority.
Community, and South Africa.
                                                                     If, on the expiry of one month from the date of referral
                                                                     to the Council, the Council has not acted^ the proposed
                          Article 8                                  measures shall be adopted by the Commission.
The financial reference amount for the implementation of             5.     Furthermore, the Committee may examine, at the
this programme, for the period 1995 to 1999, is ECU                  Commission's initiative or at the request of one of
 250 million.                                                        its members, any question connected with the
                                                                     implementation of this Regulation, in particular:
 Annual appropriations shall be authorized by the
                                                                     — information on the projects funded over the previous
 budgetary authority within the limit of the financial
                                                                         year,
 perspective.
                                                                     —. the terms of reference of the independent appraisal
                                                                          provided for in Article 10,
                           Article 9
                                                                     — any other information which the Commission wants
 1.    The Commission shall implement the instrument in                   to submit to it.
 accordance with this Regulation.
                                                                      6.    In order to ensure consistency of cooperation and
 2.     In carrying out this task, the Commission shall be            to improve complementarity between operations, the
 assisted, as appropriate, by. the Committee set up under             Commission and the European Investment Bank shall
 Article 15 of Regulation (EEC) No 443/92 or by the                . exchange any relevant information on financing that they
 Committee referred to in Article 7 (1) of Regulation                 envisage granting.
 (EEC) No 1763/92, and these Committees shall also deal,
 for the purposes of ECIP, with matters related to South              7.    The Commission will ensure that due account
 Africa, in the absence of a specific Committee.                      is taken of relevant information concerning the
                                                                      implementation of ECIP as...-well as comparable
 3.     The following shall be adopted under the procedure            instruments of the Community such as JOPP, Alinvest,
 laid down in paragraph 4:                                            Medinvest, and others as appropriate, in order to
                                                                      establish a coordinated approach to promote private
 — the choice of financial institutions in the light of their         investment in developing countries.
     experience and aptitude for making a preliminary
     selection of the projects in accordance with the
     criteria set out in Article 6,                                                            Article 10
 — revision of the amounts and/or financing conditions                1.    The Commission shall send to the European
     under each facility and the aggregate amount                     Parliament and to the Council, by 30 Aprii each year at
     available under Facilities 2, 3 and 4 as laid down in            the latest, a progress report showing the projects selected
     Article 2 in a way consistent with other provisions of           and their economic impact,, notably total investment, the
     this Regulation.                                                 number of joint ventures and jobs created as well as the
                                                                      appropriations granted and the repayments to the general
 4. • With regard to the matters mentioned in                          budget of the European Communities and including
 paragraph 3, the representative of the Commission shall              annual statistics for the previous year.
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No C 160/12            EN                Official Journal of die European Communities                                26. 6. 95
2.     TIK Commission shall forward the results of an               financed is directly linked to the special nature of the
independent appraisal of the instrument to the European             ECIP instrument and is of direct' benefit to the Alamed
Parliament and the Council before* the end of 1998.                countries and South Africa. The costs of such technical
                                                                    assistance shall be limited to 5 % of the budgetary credits
This report must permit an assessment of the                        available, not including the, fees paid to the financial
implementation of the principles of good financial                  institution^ which shall be imputed to the credits
management, economy and a cost/benefit analysis of the              allocated to each individual action financed.
instrument.
                                                                                              Article 11
3.     Without prejudice to the responsibilities of the
Commission and the Court of Auditors as laid down in                This Regulation shall enter into force on the day
the Financial Regulation applicable to the General Budget           following that of its publication in the Official Journal
of the European Communities, the Commission shall                   of the European Communities and shall expire on
obtain each year an independent financial audit of the              31 December 1999.
 financial institutions and of the Facility 1 beneficiary
 organizations, as regards the ECIP funds that they have
 received. The Commission shall make specific provision             This Regulation shall be binding in its entirety and
 in the framework and specific financing agreements for             directly applicable in all Member States.
 anti-fraud measures, in particular a mechanism for the
 recover)' of advances which arc not fully justified after           Done at . . .
 such audit.
 4.     Use of external technical assistance may be made, as                                               For the Council
 appropriate, on condition that the technical assistance                                                    The President
 ---pagebreak---                                                                   ISSN 0254-1475
                                                           COM(95) 686 final
                                              DOCUMENTS
EN                                                                            11
                                     Catalogue number : CB-CO-95-702-EN-C
                                                             ISBN 92-77-97795-7
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