I thank the Vice Chairman for his introduction and the committee for the invitation to discuss with it this very important proposal for a regulation establishing an EC financing instrument for development co-operation and economic co-operation.
In February 2004, the Commission submitted a Communication on the policy challenges and budgetary means of the enlarged European Union. This signalled the opening of negotiations within the Council on the financial framework for the EU for the period 2007 to 2013, known as the financial perspectives.
Development co-operation is one component of EU activity in the external actions area. Spending on external actions has, until now, been funded from a wide variety of instruments and budget lines. In its proposal for the financial perspectives for the period 2007 to 2013, the Commission, in an important innovation, suggests that all external actions should be grouped under one financial heading. This is Heading 4, entitled "The EU as a Global Partner".
This heading contains the financing instruments for the main subject areas of EU external action. These subject areas, as defined by the Commission in its financial perspectives proposal, are pre-accession assistance; European neighbourhood and partnership; development co-operation; economic co-operation; stability; humanitarian assistance; and macro-financial assistance.
The latter two instruments are already in place in the current financial perspectives. The first four are new. They represent a streamlining of the policy instruments in the external actions area of the Community budget, replacing the existing plethora of geographical and thematic instruments. This proposal to simplify the external actions aspect of the financial perspectives has been widely welcomed as something which opens the way towards a more coherent, policy-based approach to the Union's external relations.
The Commission's proposal for a regulation establishing an instrument for development co-operation and economic co-operation is contained in document COM (2004) 629 (final) of 29 September 2004. The regulation is intended to cover all countries, territories and regions, with the exception of EU member states, overseas territories and countries eligible for assistance from the pre-accession instrument and the European neighbourhood and partnership instrument. The regulation would address all areas of co-operation relevant to the objectives set out in Articles 177 to 181a of the EC treaty. These articles concern development co-operation and economic, financial and technical co-operation with third countries.
A further important matter as regards the scope of the regulation is that the development co-operation and economic co-operation instrument to be created by the regulation would also cover the activities and funding currently being provided to the African, Caribbean and Pacific — ACP — countries under the European Development Fund. The funding for the new instrument would include the funds currently provided for the ACP countries under the EDF, which has up to now been financed through a separate agreement by member states outside of the EU budget. With the ACP funding included, the proposed financial framework for the development co-operation and economic co-operation instrument is €44.229 billion.
Consideration of the draft regulation within the Council is still at an early stage, and has focused to date mainly on its general principles. A detailed article by article examination of the draft has yet to get under way.
An important development in the area of the draft regulation was the decision in mid-March by the development committee of the European Parliament to accept a proposal from that committee's rapporteur, Deputy Gay Mitchell, MEP, that it reject the draft. Deputy Gay Mitchell, in a report submitted to the development committee in early February, outlined two key problems posed by the draft regulation, namely, that it would undermine the role and powers of the European Parliament and that it merged the two policy domains of economic co-operation and development co-operation.
Following this, and to try to forestall the possibility of an outright rejection of the draft regulation by the European Parliament in plenary session, tripartite meetings between Parliament, Commission and the Luxembourg Council Presidency have been taking place to try to resolve the differences. Deputy Gay Mitchell decided that as these discussions showed evidence of a greater willingness to address Parliament's concerns in a more positive manner, he would withdraw his report from last week's part-session of the European Parliament. The Government is hopeful there will be a successful outcome to these tripartite discussions which will enable all of the institutions to move forward with the process of negotiating the details of the draft regulation.
I would like now to give an outline of the Government's position as regards the policy content of the draft regulation. Perhaps I should begin on the positive side and say what we endorse in the draft.
The Commission, in the draft regulation, rationalises the instruments in the field of development co-operation and we very much welcome this innovation. The draft regulation incorporates a range of development best practices that have evolved during the past decade, in particular. These include multi-annual programming that would be undertaken in agreement with partner countries, partner country ownership and national development programmes, or poverty reduction strategy papers, as a basis for aid programming.
The proposal provides for a reduction of micro-management by member states, while establishing a management committee structure that allows member states to make a strategic input. It stresses the importance of good governance by means of a provision to suspend co-operation in the event that essential elements of agreements on co-operation are violated.
However, the draft regulation has major shortcomings which must be addressed. The regulation should have a clear overarching objective, to be set out in its first article, aimed at the eradication of poverty and guided by the main development objectives and principles agreed at various UN conferences — in particular, the 2000 millennium development summit and the 2002 world summit for sustainable development. It should avoid listing possible areas of intervention.
Co-operation with developing countries, under EC treaty articles 177 to 179, should be clearly separated from co-operation with industrialised countries, as set down in EC treaty Article 181a, as regards objectives, scope, policy measures and financial provisions. This can be ensured by splitting the regulation or creating separate chapters for each.
The 2000 EC development policy statement — as periodically revised — should be identified as the policy basis for implementing the regulation. Its aims and principles should guide geographic and thematic spending. This includes its strong focus on least developed and low income countries, on country ownership and on participatory approaches to development, with a clear role for civil society. Allocation of resources should be guided by standard, objective and transparent resource allocation criteria based on need and performance and universally applied to all EC external assistance. The regulation should actively promote aid effectiveness and best development practice.
The Government does not support the Commission's proposal that the European Development Fund should be integrated into the Community budget. We value and do not want to lose the EDF's strong focus on low income and least developed countries, as well as the fact that country allocations under the fund are based on need and performance criteria. Furthermore, the EDF, to a greater degree than aid delivered through the Community budget, follows best development practice, such as giving partners a voice through consultative strategies and supporting local priorities.
I will conclude by emphasising that consideration of the draft regulation within the Council has up to now taken the form of discussion of its basic principles. An article by article examination of the proposal is now required.
