PURPOSE : to establish rules for access of interested parties to Community external assistance instruments financed by the EU budget, and to make provision for the untying of aid.

LEGISLATIVE ACT : Regulation 2110/2005/EC of the European Parliament and of the Council on access to Community external assistance.

CONTENT : This Regulation aims to apply the principle of untying of aid to the main Community instruments for external assistance (thematic or geographical). The purpose is to end the practice of tying aid, which involves linking the granting of aid to the purchase of goods and services in the donor country. The practice of tying the granting of aid, directly or indirectly, to the purchase of goods and services procured by means of that aid in the donor country reduces its effectiveness and is not coherent with a pro-poor development policy. The untying of aid must be used as a tool to cross-fertilise other elements in the fight against poverty, such as ownership, regional integration and capacity building, with a focus on empowering local and regional suppliers of goods and services in developing countries.

At the same time as untying aid for developing countries, the Regulation presents one single regulation defining the access to all Community aid to be implemented in all basics acts governing external assistance that fall under the EC budget. In the future, all instruments will contain a simple reference to this regulation. All the modifications to the basic acts concerned are listed in Annex I to this Regulation. Amendments are made to:

Community instruments with a thematic scope, such as the Regulation on the fight against HIV/AIDS in developing countries; Community instruments with a geographical scope such as the Regulation regarding the implementation of measures to promote economic and social development in Turkey, and the Regulation on operations to aid uprooted people in Asia and Latin American developing countries.

In order to define access to Community external assistance, several elements are addressed:

rules of eligibility determining the access of persons; rules on the engagement of experts (who may be of any nationality, bearing in mind the principle of reciprocity); rules of origin defining the access of supplies and materials purchased by eligible persons; access of a specific category of persons under the condition of reciprocity; definition and modalities for the implementation of reciprocity; derogations (in duly substantiated exceptional cases, the Commission may extend eligibility to legal persons from a country not normally eligible, or may allow the purchase of supplies and materials originating from a country not eligible, which may be justified on the basis of the unavailability of products and services in the markets of the countries concerned); provisions concerning operations financed through an international organisation; provisions for the purposes of humanitarian aid and NGOs.

Concerning nationals of developing and transition countries:

instruments with a thematic scope are open for all developing and transition countries in addition to those already mentioned in the specific instruments. They are listed in Annex I, Part A; instruments with a geographical scope are open only to the nationals of countries of the region as defined on the instruments, as one of the objective of those instrument is to strengthen regional integration and capacity building in a regional context. They are listed in Annex I, Part B.

In addition, the Regulation offers unrestricted access to its programs to suppliers from other donor countries, including the USA and Japan. Access will be based on reciprocity. With the adoption of the regulation the EU will take the lead in the international efforts to end the practice of tying aid to the delivery of supplies from the donor country.

Instruments are open to nationals from Member States from candidate countries and from countries of EEA (Norway, Iceland and Liechtenstein). For nationals of all other donor countries (such as USA, Japan and Canada and Australia) instruments will be accessible based on reciprocity.

There are also provisions which clarify the situation with regard to operations involving international or regional organisations or operations co-financed with a third country. As far as food aid operations are concerned, the application of the provisions is limited to emergency operations.

The Regulation contains a clause on humanitarian aid and NGOs, in order to take account of the special characteristics of humanitarian crises. Due to amendments by the European Parliament, the provisions do not apply to the Rapid Reaction Mechanism.

Finally, due to amendments by Parliament, the Regulation provides that, w hen awarding tenders under a Community instrument, special consideration will be given:

to respect for internationally agreed core labour standards of the International Labour Organisation (ILO), e.g. the conventions on freedom of association and collective bargaining, elimination of forced and compulsory labour, elimination of discrimination in respect of employment and occupation, and the abolition of child labour; to respect for the following internationally agreed environmental conventions: the Convention on Biological Diversity of 1992, the Cartagena Protocol on Biosafety of 2000 and the Kyoto Protocol to the United Nations Framework Convention on Climate Change of 1997.

ENTRY INTO FORCE : 28/12/2005.

Regulation 2005/2110
OJ L 344 27.12.2005, p. 0001-0014

03642/1/2005

SP(2005)2882

The European Parliament adopted a resolution drafted by Michael GAHLER (EPP-ED, DE) making some amendments to the Commission’s text. (Please see the document dated 06/06/2005.) In addition, Parliament introduced reciprocity, imposing on the third countries allowed to compete for tenders for EU external assistance a reciprocal obligation to open markets for procurement of goods and services to the beneficiary countries of this external assistance.

T6-0256/2005
OJ C 133 08.06.2006, p. 0030-0116 E

Results of vote in Parliament

The European Parliament adopted a resolution drafted by Michael GAHLER (EPP-ED, DE) making some amendments to the Commission’s text. (Please see the document dated 06/06/2005.) In addition, Parliament introduced reciprocity, imposing on the third countries allowed to compete for tenders for EU external assistance a reciprocal obligation to open markets for procurement of goods and services to the beneficiary countries of this external assistance.

T6-0256/2005

A6-0182/2005

A6-0182/2005

The committee adopted the report by Michael GAHLER ( EPP-ED , DE ) amending the proposal under the 1st reading of the codecision procedure:

- MEPs introduced a new Article 9a with the aim of developing local markets through local and regional procurement in partner countries. Moreover, participation in an invitation to tender should be linked to the bidder's formal adherence to a set of internationally agreed core labour standards, including the conventions on freedom of association and collective bargaining, elimination of forced and compulsory labour, elimination of discrimination with respect to employment and occupation, and abolition of child labour. The new article also specified that "access by developing countries to Community external assistance shall be enabled by all technical assistance deemed appropriate";

- the list of "eligible" candidates should be limited to developing countries and access should be denied to countries in transition, in order to avoid 'social dumping';

- the Rapid Reaction Mechanism should be excluded from the scope of the proposed regulation, as it is not an instrument with a specific development objective;

- Parliament should be kept duly informed of the comitology procedures applied for granting access to third countries to Community external assistance.

PE359.895

PE349.865

On 7 April 2004, the Commission sent a draft Regulation on EU external assistance to the European Parliament and the Council. This proposal is based on Articles 179 and 181A of the EC Treaty and must be adopted by the codecision procedure provided for in Article 251 of the Treaty.

The Working Party on Development Cooperation examined the proposal at its meetings in May and June 2004, under the Irish Presidency, then again in July and September 2004, under the Dutch Presidency. At these meetings, the need to split the initial proposal due to different legal basis which characterised the acts which it aimed to amend was highlighted.

At its last exchange of views in September 2004, the Working Party decided to interrupt the examination of the proposal pending the presentation of the Commission’s new external action instruments due out in October 2004 in which an Article should be included on the untying of external assistance from the Community .

In January 2005, in light of the incertitude of the adoption of the new financial perspectives and the need to continue with the fundamental questions of this proposal, the Working Party decided to continue with the examination of the proposal with a view to its adoption at first reading in June or July 2005.

At its meetings in January, February and March 2005, the Party continued with the examination of proposal COD/2004/0099 and informed the Parliament of the state of its initial comments concerning the most appropriate procedure with a view to the adoption of this proposal. On 14 April 2005, the Working Party agreed to split the proposal into two separate proposals and informed the Parliament by letter.

The initial proposal COD/2004/0099, which aims to amend 25 existing regulations in the area of external assistance, is subject to the splitting process and follows the following legal basis:

- 15 of the 25 regulations to be amended shall be based on Article 179 (formerly 130W) of the EC Treaty and shall be adopted by codecision;

- the remaining 10 shall be based on Article 181A (legal basis provided by the Nice Treaty). This is the legal basis used for proposed Regulation (CNS/2005/0806).

The two sets of Regulations have distinct legal instruments each with different scopes. Each Regulation shall be adopted separately but with identical measures (in as far is possible) and they should be adopted simultaneously.

CES1645/2004
OJ C 157 28.06.2005, p. 0099-0101

PURPOSE : to establish rules for the access of interested parties to Community external assistance instruments financed by the general budget of the European Union.

PROPOSED ACT : Regulation of the European Parliament and of the Council.

CONTENT : the purpose of this Regulation is to establish the access to the instruments financing the Community external assistance, for persons and goods. It defines criteria, specific cases and derogations. The scope of this Regulation does not cover all Community external assistance instruments such as the macro financial assistance directly managed by the recipient country of aid. Programmes with a thematic scope will be open to suppliers from all developing countries and transition countries. Programmes with a geographic scope will be open to nationals of the region targeted by the programme in view of promoting regional integration.

The prime objective of the proposed Regulation is to define the principle and conditions for the access of persons and goods to instruments managed by the EC. It can only de facto be achieved by the Community.

The regulation should increase competitive bidding for the supply of goods and services financed by development aid thereby securing the best value for money of the EUR 3.5 billion in annual EU development aid from the EU budget.

Tying of aid is the mechanism by which the procurement of goods and services financed by development assistance is limited to suppliers from the donor country. International studies have indicated that the increased competition ensuing from the complete untying of aid could generate an efficiency gain of up to 30% of the aid.

At the European Council of Barcelona of March 2002 EU Member States agreed to untie aid to least developed countries as recommended by the OECD. Member states furthermore agreed to continue discussions of further untying bilateral aid and to consider steps towards further untying of Community aid. The Commission subsequently adopted a Communication "Untying: enhancing the effectiveness of aid" in November 2002 in which it proposed an approach, that goes far beyond the existing limited international consensus. The Council and the Parliament in 2003 endorsed the Commission's proposals related to Community aid.

Moreover, it is difficult to precisely measure the benefit of untying, the World Bank and the Development Assistance Committee of the Organisation for Economic Cooperation and Development (OECD/DAC) have produced estimations with a substantial ratio in terms of gain through better value for money.

It is important to have an understanding of the opportunities and constraints of increasing access to procurement to ensure an intelligent use of the concept. Therefore, progress towards further untying will have to be accompanied by impact assessments and studies.

A substantial part of EC aid assistance is implemented through aid modalities that are directly managed by the recipient country, such as budget support or sector support. Those instruments are de facto not subject to EC award of procurement or grant. They are not concerned by this regulation.

Due to the legal nature of the instruments falling under the European Development Fund and those falling under the EC budget, two parallel processes are necessary:

1) a mandate for introducing the relevant changes in the Cotonou agreement was presented in the package of proposed revisions to the Cotonou Agreement for 2005 and accepted by the GAERC on 23 February 2004;

2) this proposal presents one single regulation defining the access to all Community aid to be implemented in all basics acts governing external assistance that fall under the EC budget. In the future, all instruments will contain a simple reference to this regulation.

The approach with regards to further opening of Community aid presented in this regulation will also be taken into account in future proposals by the Commission on the rationalisation of its external relations into six instruments. Forthcoming proposals will come up in the framework set up by the recent Commission Communication "Building our common Future. Policy challenges and Budgetary means of the Enlarged Union 2007-2013".

In addition, the proposed Regulation offers unrestricted access to its programs to suppliers from other donor countries, including the USA and Japan. Access will be based on reciprocity. With the adoption of the regulation the EU will take the lead in the international efforts to end the practice of tying aid to the delivery of supplies from the donor country.

Instruments are open to nationals from Member States from candidate countries and from countries of EEA (Norway, Iceland and Liechtenstein). For nationals of all other donor countries (such as USA, Japan and Canada) instruments will be accessible based on reciprocity.

Lastly, the current regulation translates this political approach into practice.

The current proposal covers external assistance financed under the EU budget. A similar initiative has been taken with regards to the development assistance financed under the European Development Fund. Such an initiative would require an amendment of the Cotonou agreement that is the legal framework of EU development assistance to Africa, Caribbean and Pacific. Based on a mandate from the Council of ministers the Commission will now discuss this initiative with ACP countries.

COM(2004)0313
EUR-Lex

PURPOSE : to establish rules for the access of interested parties to Community external assistance instruments financed by the general budget of the European Union.

PROPOSED ACT : Regulation of the European Parliament and of the Council.

CONTENT : the purpose of this Regulation is to establish the access to the instruments financing the Community external assistance, for persons and goods. It defines criteria, specific cases and derogations. The scope of this Regulation does not cover all Community external assistance instruments such as the macro financial assistance directly managed by the recipient country of aid. Programmes with a thematic scope will be open to suppliers from all developing countries and transition countries. Programmes with a geographic scope will be open to nationals of the region targeted by the programme in view of promoting regional integration.

The prime objective of the proposed Regulation is to define the principle and conditions for the access of persons and goods to instruments managed by the EC. It can only de facto be achieved by the Community.

The regulation should increase competitive bidding for the supply of goods and services financed by development aid thereby securing the best value for money of the EUR 3.5 billion in annual EU development aid from the EU budget.

Tying of aid is the mechanism by which the procurement of goods and services financed by development assistance is limited to suppliers from the donor country. International studies have indicated that the increased competition ensuing from the complete untying of aid could generate an efficiency gain of up to 30% of the aid.

At the European Council of Barcelona of March 2002 EU Member States agreed to untie aid to least developed countries as recommended by the OECD. Member states furthermore agreed to continue discussions of further untying bilateral aid and to consider steps towards further untying of Community aid. The Commission subsequently adopted a Communication "Untying: enhancing the effectiveness of aid" in November 2002 in which it proposed an approach, that goes far beyond the existing limited international consensus. The Council and the Parliament in 2003 endorsed the Commission's proposals related to Community aid.

Moreover, it is difficult to precisely measure the benefit of untying, the World Bank and the Development Assistance Committee of the Organisation for Economic Cooperation and Development (OECD/DAC) have produced estimations with a substantial ratio in terms of gain through better value for money.

It is important to have an understanding of the opportunities and constraints of increasing access to procurement to ensure an intelligent use of the concept. Therefore, progress towards further untying will have to be accompanied by impact assessments and studies.

A substantial part of EC aid assistance is implemented through aid modalities that are directly managed by the recipient country, such as budget support or sector support. Those instruments are de facto not subject to EC award of procurement or grant. They are not concerned by this regulation.

Due to the legal nature of the instruments falling under the European Development Fund and those falling under the EC budget, two parallel processes are necessary:

1) a mandate for introducing the relevant changes in the Cotonou agreement was presented in the package of proposed revisions to the Cotonou Agreement for 2005 and accepted by the GAERC on 23 February 2004;

2) this proposal presents one single regulation defining the access to all Community aid to be implemented in all basics acts governing external assistance that fall under the EC budget. In the future, all instruments will contain a simple reference to this regulation.

The approach with regards to further opening of Community aid presented in this regulation will also be taken into account in future proposals by the Commission on the rationalisation of its external relations into six instruments. Forthcoming proposals will come up in the framework set up by the recent Commission Communication "Building our common Future. Policy challenges and Budgetary means of the Enlarged Union 2007-2013".

In addition, the proposed Regulation offers unrestricted access to its programs to suppliers from other donor countries, including the USA and Japan. Access will be based on reciprocity. With the adoption of the regulation the EU will take the lead in the international efforts to end the practice of tying aid to the delivery of supplies from the donor country.

Instruments are open to nationals from Member States from candidate countries and from countries of EEA (Norway, Iceland and Liechtenstein). For nationals of all other donor countries (such as USA, Japan and Canada) instruments will be accessible based on reciprocity.

Lastly, the current regulation translates this political approach into practice.

The current proposal covers external assistance financed under the EU budget. A similar initiative has been taken with regards to the development assistance financed under the European Development Fund. Such an initiative would require an amendment of the Cotonou agreement that is the legal framework of EU development assistance to Africa, Caribbean and Pacific. Based on a mandate from the Council of ministers the Commission will now discuss this initiative with ACP countries.

COM(2004)0313
EUR-Lex