Explanatory Memorandum to COM(2004)627 - Instrument for Pre-Accession Assistance (IPA)

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dossier COM(2004)627 - Instrument for Pre-Accession Assistance (IPA).
source COM(2004)627 EN
date 29-09-2004
1. General Introduction

This draft has to be seen in the context of the revision of the External Aid framework for the forthcoming financial perspective from 2007 to 2013, which is currently ongoing. While the purpose of this exercise is to harmonise (as far as possible) the Community's external aid instruments, it should also be understood that pre-accession aid operates in a very specific framework:

* assistance provided by this instrument is driven by the pre-accession process (European Partnerships, Accession Partnerships, negotiation by chapters, Regular Reports etc.) and its specific requirements, in particular a need for a flexible approach in order to be able to accommodate new priorities quickly

* due to the fact that accession is at least a medium term goal for the beneficiaries, the assistance also operates in a medium term perspective, and not in a long-term one like for traditional development aid;

* one of the main characteristics of pre-accession aid is its bridging function, i.e. apart from assisting development, more importantly its task is to prepare countries for the time after accession;

The draft Regulation constitutes a framework regulation, establishing a unified instrument for pre-accession assistance. As such, it will replace not only the Phare Regulation, but also - among others - the SAPARD, ISPA, Phare CBC and Co-ordination Regulations, as well as the Turkey and CARDS Regulations. It will be supported by substantial implementing rules, defining more closely the areas of activity identified in the framework Regulation.

Beneficiary countries will be divided into two categories, depending on their status as either Candidate Countries or potential Candidate Countries. Potential Candidate Countries are listed in Annex I of the Regulation, Candidate Countries in Annex II.

Potential Candidate Countries will continue to receive assistance along the lines currently laid down in the CARDS-Regulation: Institution Building and Democratisation, Economic and Social Development, Regional and Cross-Border Co-operation and some alignment with the acquis communautaire, in particular where this is in the mutual interest of the EU and the beneficiary country.

Candidate Countries will receive the same kind of assistance, and will additionally receive assistance in the preparation for the implementation of Structural and Rural Development Funds after Accession, as well as concerning the full implementation of the acquis communautaire.

A country can move from Annex I to Annex II only after the decision of the Council giving it Candidate status. Such a decision would then authorise the move from Annex I to Annex II through a decision of the Council to be adopted under a 'light' procedure, provided for in Article 17 (q.v.).

One of the main characteristics of the Regulation is that, for recognised Candidate Countries, it aims at progressively adopting the rules and principles of Structural Funds/Rural Development Funds management, by making available assistance for them through three separate components (Regional Development, Rural Development and Human Resources Development). The aim of these components is to follow the Structural and Rural Development Funds' rules including their institutional framework (e.g. Comitology) as closely as possible, while at the same time laying the groundwork for a national framework promoting economic and social cohesion as well as viable agricultural structures, which is at the same time coherent with a view to European Union membership

The system of Structural and Rural Development Funds for the period after 2007 is still under discussion. For this reason, the Structural Funds-Components and the Rural Development Funds-Component of the Regulation are defined mainly through a dynamic reference to the Structural and Rural Development Funds Regulations. The Commission is given the power to adopt implementing rules for these components and to define the framework of assistance under each individual component once the new rules for Structural and Rural Development Funds are clear.

Contents

1.

In summary, the regulation is building on the main lessons learned in the context of the current pre-accession process, in particular through


* streamlining pre-accession assistance by enhancing co-ordination between the different components, through the creation of a single framework for assistance. This single framework will integrate the Phare/ISPA/SAPARD structure and complete the framework with other Structural Funds and Rural Development Funds Components. It will aim at harmonising implementation rules, where possibly taking into account the specificity of the Structural Funds and Rural Development Regulations, and create a Comitology system which will ensure a maximum of coordination among the components,

* aiming at better preparation for Structural and Rural Development Funds implementation after accession, through further enhancing emphasis on institution building as well as progressive emulation of Structural Funds rules in the run-up to accession.

2.

2. Comments on specific provisions


3.

2.1. Legal Basis


The legal basis of the proposal is Art. 181 (a) TEC, and not Art. 179 TEC, despite the fact that a number of the beneficiary countries listed in the Annexes are considered developing countries by the International community.

However, the simple fact that some of the beneficiary countries may be considered developing countries does not automatically permit the proposal to be based on Article 179. That article is used to adopt measures to promote Community policy in the area of development policy, which is not the main focus of this proposal, the aim of which is to prepare countries for accession. Art. 181 (a) is the only provision in the Treaty which makes reference to association agreements and agreements concluded with states which are candidates for accession to the Union.

It must therefore be considered as the correct legal base for a regulation which deals exclusively with countries with association agreements in place or under preparation, in particular since these countries have been given a membership perspective, as is the case for the beneficiary countries listed in the annexes to this Regulation.

4.

2.2. Title 1: Objectives and Principles


5.

2.2.1. Article 1: Beneficiaries and overall objective


Art. 1 states the overall objective - approximation to the European Union, with membership as a potential final goal. Annex I lists countries which are in a state of pre-candidateship, whereas Annex II lists those countries which have been officially recognised as candidates according to Art. 49 TEU. The official acceptance of a country as a Candidate Country will entail a change of the Regulation, moving the country from Annex 1 to Annex 2. This system seems appropriate, given the fact that both Council and Parliament have repeatedly confirmed the potential membership perspective for Western Balkan countries. Countries should, however, be kept separate according to their status, so that they can each be judged on their individual merits.

6.

2.2.2. Article 2: Scope


Article 2 sets down, in a non-finite matter, the target areas for assistance. These target areas are set up in a way to ensure coherence with earlier Community assistance, allocated either under the CARDS or the Turkey Regulations by globally targeting the same objectives set down in these two Regulations. The target areas listed in lit. paragraph i (a) - (f) are identical for both groups of beneficiary countries, addressing in particular the situation of countries emerging from a period of civil war and internal unrest (support for democracy, rule of law, public administration reform, economic reform, respect for human and minority rights, civil society, reconciliation in the widest sense. Lit. (g) - also identical for both groups of beneficiary countries - addresses the various forms of regional cooperation existing in the wider European framework.

However, a split of objectives takes place in paragraphs i and i: For Candidate Countries, assistance shall target the full implementation of the acquis communautaire (see Art. 2 i (a)), whereas for countries which are not yet candidates, the mandate is more limited, and oriented towards the general interests of the Community and the beneficiary country, without presupposing full membership (see Art. 2 i (a)). Art. 2 i (b) targets, for countries which are not Candidate Countries, economic and social development in a generic fashion, whereas for Candidate Countries, Art. 2 i (b) is strongly oriented towards the support for implementation of the Community's agricultural and cohesion policy after accession.

7.

2.2.3. Article 3: Components


Art. 3 sets up five Components, under which the different areas of intervention will be dealt with: Transition and Institution Building, Regional and Cross-Border Co-operation, Regional Development, Human Resources Development and Rural Development. The article also gives the Commission the authority to adopt implementing rules for each Component as appropriate. For the adoption of these implementing rules, a Comitology procedure (Management Committee) is foreseen.

Due to the framework character of the present Regulation, Commission Regulations/Decisions will have to set down the detailed rules for the implementation of assistance. Where this is necessary in the interest of efficient and effective management of Community funds, implementing rules may differ from one Component to the other.

8.

2.2.4. Article 4: Framework for Assistance and Allocation of Funds


Assistance will be allocated by the Commission on the basis of a multi-annual indicative framework per component and country. The basic policy document for setting down the priorities for programming the assistance will be the Partnerships (Accession Partnerships with the Candidate Countries, European Partnerships with the potential Candidate countries in Annex 1).

9.

2.3. Title II: Components


Title II of the Regulation is dedicated to the definition of the Components set up in Art. 3. The logic of the Components follows the lessons learned from the current pre-accession process, which has shown a substantial need for support of wide-ranging Institution Building measures, including the investment associated therewith, and a definite need to vigorously support Candidate Countries in their preparation for the implementation of the Community's structural and cohesion policy. Candidate Countries will have access to all five Components, whereas potential Candidate Countries will be limited to the first and second component (Transition Assistance/Institution Building and Regional/Cross-Border Co-operation).

The rationale of three separate Components tackling Regional, Rural and Human Development is that Candidate Countries will be confronted with exactly this situation in the Community's agricultural and cohesion policy after accession.

As the current enlargement process has shown, the early familiarisation with this complex system is of primary importance for the proper implementation and management of Structural and Rural Development Funds after accession, and mastering it requires an intensive and sustained learning process. Candidate Countries will thus be given the opportunity to 'practise' the Community's rural and cohesion policies by applying rules as closely as possible to the Structural and Rural Development Funds before accession.

10.

2.3.1. Article 5: Transition Assistance and Institution Building Component


This can be considered the crucial component in charge of all Institution Building matters, as well as the Transition Assistance made available to the countries listed in Annex 1. It is also in charge of all co-operation measures which are not covered by the other Components. In keeping with this logic, it is also the Component which will co-ordinate the assistance through its Committee (see Art. 11 (2)). This subsidiary catch-all function will enable rapid reaction and adaptation to changing needs and newly emerging priorities.

In practise, the functioning of the first Component as a default will be limited through the fact that activities falling under "the preparation for the implementation and management, and the policy development, of the Community's Common Agricultural and Cohesion Policies" are covered by Components III, IV and V (see Art. 7 i, 8 i and 9 (1)).

In areas normally covered by Components III, IV and V, the first Component will therefore be active only where there are no corresponding activities taking place under Components III to V in a given country.

Given the above, in the case of potential Candidate Countries, Component I would cover the entire range of target areas defined in Art. 2 i with the exception of lit. (g) (regional and cross-border co-operation), the latter being addressed by the Component II (defined in Art.

6). Its range is thus similar to the one of Phare, including the Economic and Social Cohesion aspect of Phare, but without Phare CBC.

For Candidate Countries, Component I would normally address the target areas listed in Art. 2 i (a) - (f) and 2 i (a). It can thus be said to correspond to Phare, with a particular emphasis on the post-conflict scenario, but without Economic and Social Cohesion and CBC.

For both groups of countries, the assistance under Art. 5 will cover institution building measures and the investments associated with them.

Component I would also cover beneficiary countries' participation in Community Programmes, which form an important aspect of the acquis communautaire. Moreover, the participation in Community Programmes already before accession can be considered as an institution building measure sui generis, because it is conducive to the establishment of administrative structures enabling the population of the beneficiary country in question to start reaping the full benefit of these Programmes from accession at the latest.

11.

2.3.2. Article 6: Cross-Border and Regional Co-operation


This Component will be open to both groups of beneficiary countries. It will support cross-border activities among beneficiary countries and between beneficiary countries and Member States. It would also support beneficiary countries' participation in transnational and interregional programmes including both Member States and third countries managed by other instruments (e.g. the ENPI). In the Western Balkans, the component will continue to support Regional Co-operation previously supported under CARDS.

12.

2.3.3. Article 7: Regional Development Component


Component III, which is accessible only to Candidate Countries would be expected to emulate, to the maximum extent possible, the ERDF and Cohesion Fund, thereby giving the beneficiary countries the highest possible approximation to Structural and Rural Development Funds practises under External Aid rules.

This will, on the one hand, create efficiency gains because in their move from the pre-accession to post accession phase, Candidate Countries will not have to change procedures and criteria more than absolutely necessary to comply with the Financial Regulation. On the other hand it will give them the best possible preparation for the implementation of the European Regional Development Fund and the Cohesion Fund after accession. By submitting the measures under Component III to the same Comitology rules (including the definition of measures to be submitted to the Committee) that apply for the ERDF and the Cohesion Fund (see Art. 11 i (b)), it will be ensured that the shadowing process is as complete as possible.

13.

2.3.4. Article 8: Human Resources Development Component


The purpose of Component IV, which is also accessible only to Candidate Countries, is to prepare them for the programming, implementation and management of the European Social Fund, in the framework of the European Employment Strategy. Hereby the objectives of the Community in the fields of social inclusion, education and training and equality between men and women are to be taken into account. The Component will focus on the setting up of adequate structures and systems for policy and programming design, management and delivery, and in the implementation of ESF-type activities, in line with the agreed policy priorities.

14.

2.3.5. Article 9: Rural Development Component


As is the case for Components III and IV, the administrative objective is to help the countries prepare for post-accession EU-funded rural development programmes by implementing pre-accession assistance through systems which are as similar as possible to those required post-accession.

In order to achieve the operational objective of contributing to the sustainable adaptation of the agricultural sector and rural areas, the range of actions supported (to be specified in the Implementing Regulation) may not include all those eligible under the Rural Development Regulation for Member States. Furthermore, some rural development measures no longer considered relevant within EU Member States may still be important within countries whose agricultural and rural sectors are less well developed and should therefore be eligible under the IPA.

15.

2.4. Title III: Management and Implementation


This title sets up the institutional balance between the Council as primary legislator in the field of Art. 181 (a) TEC, and the Commission, which is acting in the executive function attributed to it by the Council according to Art. 202 (3rd indent) and 211 (4th indent) TEC.

16.

2.4.1. Article 10: Management of Assistance


According to Art. 211 of the TEC, the Commission exercises implementation powers conferred to it by the Council. Art. 10 i therefore sets down that, vis-à-vis the Council, the Commission is responsible for the implementation of the assistance, subject to a Comitology procedure set up in Art. 11. This also confirms the Commission's responsibility for the implementation of the budget set down in Art. 48 of the Financial Regulation.

According to Art. 10 i, implementation shall take place according to the rules of External Aid as set down in the Financial Regulation. This provision gives sufficient flexibility to the implementation process, because it makes a whole continuum of implementation methods available for the execution of the tasks at hand. The Commission may thus resort for example to centralised direct management, centralised indirect management (including agencies, Community bodies and national public-sector bodies/bodies with a public service mission), various stages of decentralised management and joint management with international organisations. According to the purposes they pursue, different Components may apply different implementation methods where this is justified. In order to co-ordinate cross-border cooperation actions with those taking place under the European Neighbourhood Instrument, the possibility to delegate implementation to Member States has been opened. Such assistance could then also be implemented through shared management.

Art. 10 i enables the Commission to manage funds put at its disposal by other donors, e.g. Member States or third countries, which will be earmarked in the budget in accordance with Art. 18 of the Financial Regulation as assigned revenue.

Art. 10 i foresees the possibility of split commitments. The possibility of using such split commitments is intended for programmes that have a close link to other EU programmes which also work with split commitments.

The Council's authorisation towards the Commission to implement the measure is counterbalanced through the introduction of a Comitology system as well as the Commission's obligation to annually report to Council and Parliament, which is contained in Art. 10 i.

17.

2.4.2. Article 11: Committees


Art. 11 sets down a Comitology system, making use of five already existing Committees:

* For Components I and II: a Transition Assistance and Institution Building Committee (the successor of the Phare Committee),

* For Components III and V: the Committees set up in Art. 47 of Regulation 1260/1999, and in addition to that, for Component V, also the Committee set up in Art. 11 of Council Regulation 1258/1999, and

* For Component IV: the ESF Committee set up by Art. 147 of the Treaty.

The procedure for the successor of the Phare Committee is set up in detail, as this Committee will lose its legal basis pursuant to the final provisions contained in Art. 19 i of the Regulation.

The procedures for the other Committees follow what is already in place for Structural and Regional Development Funds, although some adaptations, e.g. of the Rules of Procedure might have to be set down in the implementing rules for the individual component.

For assistance in the area of agricultural and cohesion policy, Candidate Countries will thus be confronted with the same Committees which will assess such measures after accession. The involvement of these Committees will enable them to reap the full benefits of this learning experience. This approach will also ensure as close as possible an alignment with Structural and Rural Development Funds before accession.

The article also sets down the co-ordination function of the Committee in charge of Component I, and mentions the other standard provisions for Comitology.

18.

2.4.3. Article 12: Types of Assistance


Art. 12 lists, in a non-finite way, the types of assistance and the instruments in use therefore.

Art. 12 i reiterates Art. 231 of the Implementing Rules of the Financial Regulation, which list certain actions which may be financed.

Article 12 i clarifies that certain successful tools which were developed to help Candidate Countries in the adoption and implementation of the acquis communautaire, notably Twinning and TAIEX, will continue to be used for the beneficiaries of this regulation.

Art. 13 gives a non-finite list of supporting activities to be financed from the operational budget, listing in particular expenses which could be covered under the no longer existing BA-line. It also aims at covering the range of supporting activities set down in the Structural and Rural Development Funds Regulations, to enable further alignment of actions and eligibility, in particular for Components III to V.

19.

2.4.4. Article 14: Implementation of Assistance


The basis for this provision is the framework for External Actions as set down in Title 4 of part II of the Financial Regulation, in particular Art. 163, Art. 166 and 167 i.

Consequently, Art. 14 sets down a general framework for the relations between the Commission and the beneficiary country. It will form the basis for the implementation of Community assistance. Detailed provisions in this respect should be left to the implementing rules. Standardised framework agreements containing general rules for the implementation should be concluded at the beginning of the relationship, setting down the basic structures and rules. (e.g. implementing bodies, financial flows, anti-fraud measures etc.) Rules should be harmonised as far as possible for all Components, but should also leave open the possibility of concluding agreements including specific rules for individual components, where this is necessary, e.g to allow for the various degrees of decentralisation foreseen by the different Components.

20.

2.4.5. Article 15: Protection of the Community's financial interests


The provisions contained in Art. 15 give the Commission a mandate for concluding the necessary bilateral agreements to protect the Community's financial interests. The detailed provisions to this effect are set down in the Financial Regulation and the Implementing Rules to the Financial Regulation. They do, however, have to be subject of a special agreement with beneficiary countries, because beneficiary countries, unlike Member States, are not duty bound by the principle of Community loyalty set down in Art. 10 TEC, or the acquis communautaire derived from it.

In order to comply with the criteria of sound financial management, such framework agreements would notably have to contain provisions defining the notions of fraud and irregularity, measures in the field of financial control by the contracting authority, the Commission and the Court of Auditors, the possibility for OLAF to conduct on-the-spot checks equivalent to the ones foreseen by Regulation (EC) 2185/96, the obligation of the contracting authority to take preventive measures in the field of corruption, the procedure for the communication of cases of suspected fraud and irregularities to the Commission, the procedure for the clearance of accounts in the case of decentralised management, the application of administrative and financial sanctions (including the exclusion of non-reliable candidates and tenderers), and the enforceability of Commission decisions in the area of recovery in case of centralised management.

21.

2.4.6. Article 16: Rules of Participation and Origin, eligibility for grants


Natural and legal persons from Member States, the European Economic Area, the beneficiary countries of the IPA and ENPI Regulations as well as International organisations are eligible to participate in tenders and contracts. The issue of the origin of supplies follows the same rules. On the basis of reciprocity, participation can be opened to others. Furthermore, the possibility of derogation in duly substantiated cases is foreseen.

Art 16 i to i is a precise, if somewhat shortened, replica of the draft regulation on the Untying of Community Aid. Its principles are stated here because as yet, the mentioned regulation is not in force, and might in the end be abandoned in favour of an approach which integrates its provisions into the future External Aid instruments.

Natural persons (or groups of natural persons like NGOs) are specifically mentioned as possible recipients of grants in view of Art. 114 of the Financial Regulation, which would otherwise exclude this at least for centrally managed programmes. Seeing that programmes such as the Small Projects Programme (SPP) have been very successful tools of the pre-accession strategy in the past, it seems desirable to maintain this possibility.

Apart from this single reference, the regulation refrains from specifying potential final beneficiaries. This follows the logic of the Financial Regulation, according to which Community assistance is action-oriented, and not beneficiary-oriented, i.e. anybody can be a beneficiary of Community assistance, as long as s/he contributes to the attainment of the objective pursued by the action.

22.

2.4.7. Article 17: Suspension of Assistance


Art. 17 sets down a clausula rebus sic stantibus for the granting of Community assistance, giving the Council - on a proposal of the Commission - the competence to make the adaptations it considers necessary in case a beneficiary country violates fundamental principles of democracy, rule of law, human rights, minority right, or where progress with a view to the European Partnerships or the Accession Partnerships is insufficient. For the Western Balkan countries, it also reiterates, in paragraph 2, the special conditionality hitherto contained in Art. 5 i of Regulation 2666/2000 (CARDS Regulation).

23.

2.5. Title IV: Transitional and Final Provisions


24.

2.5.1. Art. 18: Status of Beneficiary Country


Art. 18 sets down a simplified procedure for amending the Regulation concerning the status of a beneficiary country: In case of Art. 49 TEU, where the Council has decided unanimously to grant applicant status to a beneficiary country, it can then amend the annexes to this Regulation through a simple Decision passed by qualified majority, rather than having to engage in a full-sized legislative procedure which would require formally amending this Regulation through another Regulation.

25.

2.5.2. Art. 19: Cross-Instrument Provision


Art. 19 allows, on the basis of reciprocity foreseen in the other geographic external aid instruments, participation in programmes under other legal bases, where a regional, cross-border, transnational or global approach offers an added value.

26.

2.5.3. Article 20: Transitional Provisions


Art. 20 repeals the Phare Regulation, the CBC Regulation, the Co-ordination Regulation, the ISPA-Regulation, the SAPARD-Regulation, the Cyprus/Malta Regulation and the Turkey Regulation. It is not necessary to repeal the CARDS Regulation, because it has an expiry date set at December 31, 2006. Provisions are made to ease the transition from one instrument to the other (most relevant in the cases of CARDS and Turkey), and to ensure the repealed regulations can still be used as the legal basis for ongoing assistance.

27.

2.5.4. Art. 21: Entry into force


The entry into force of this regulation is foreseen twenty days after its publication in the Official Journal, but it will only apply from January 1, 2007. The reason for this decalage is that the repealed regulations are still needed until the end of the current financial perspective, but in the meantime, the new Regulation can already serve as the legal basis for the drafting and decision of the implementing rules, which should take place as soon as possible.