The "Outline of Envisaged Rights and Obligations of the Czech Republic in the Field of Foreign Development Aid after the Accesssion to the European Union" was submitted to the Government of the Czech Republic in January 2002.

1. Introduction

In its resolution 908/2001 the Government of the Czech Republic urged the drafting of envisaged rights and obligations of the Czech Republic in the field of foreign development aid after the country's entry into the European Union. Following a debate at the level of ministries and other institutions involved, held, inter alia, during a coordination session in November 2001, the Deputy Prime Minister and Minister of Foreign Affairs presents the draft as the coordinator of Czech Republic's foreign aid. The material is to give an outline of the EU development cooperation policy and the legislative, financial, institutional and organizational aspects of the preparation of the Czech Republic for membership of the EU in this field. The aims, priorities, instruments, organization and financing of foreign development aid, forming an integral part of the foreign policy of the Czech Republic are dealt with in detail in the Czech Republic's Foreign Development Aid Concept for the 2002 - 2007 Period presented at the same time.

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Outline I: European Union and development aid

The European Union and the advanced democratic countries it associates are aware of their co- responsibility for the development of less developed parts of the world and traditionally participate in international development cooperation. In 1999, foreign aid provided by the EU totalled USD 31,700 million which is 55 per cent of official development aid provided worldwide. About one-fifth of this amount are programmes and projects controlled by the bodies of the European Communities - the so-called Community aid, while most of the aid is provided directly by the EU member countries. The EU/EC development cooperation policy therefore is of complementary nature, i.e. does not exclude development activities of individual member countries.

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2. Legislative aspects

2.1. Legislative framework for development aid in the European Union

The basic legislative framework for EU/EC development cooperation policy is provided in Articles 177 - 181 of the Treaty establishing the European Economic Community incorporated into the EC primary legislation within the Maastricht Treaty of 1993. It sets out for the first time common objectives for EC external assistance in relation to the developing countries aimed above all at promoting in these countries: sustainable economic and social development, integration into the world economy, the fight against poverty and the development and consolidation of democracy, the rule of law and the observance of human rights. The new emphasis is to increase the coordination and complementarity of the aid programmes of the Community and the member countries. The EC bodies and member countries coordinate their approaches to the development policy and harmonize their programmes of assistance, including their positions in international organizations and at international conferences. They can also take joint measures. Member countries contribute, as appropriate, to the implementation of Community assistance programmes.

The instruments through which the EU meets the objectives set in this field include a number of regional treaties (e.g. with countries of Africa, the Caribbean and the Pacific, countries of the Mediterranean or countries and grouping in Asia and Latin America - ASEAN, Mercosur etc.) and measures taken at world level (Generalized System of Preferences, humanitarian and food aid). The most important place in the Community development policy has cooperation between the EU and countries of Africa, the Caribbean and the Pacific (the so-called ACP countries). The ACP-EU Partnership Agreement setting the principles and objectives of cooperation between the EU and 78 ACP countries was signed in Cotonou, Benin, on June 23, 2000. The Agreement was concluded for twenty years, with a clause allowing for revision every five years, and a financial protocol for each five-year period. The Agreement is based on five interdependent pillars:

• strengthening of the EU - ACP political dimension;

• promotion of participatory approaches to ensure the involvement of civil society and private sector in development aid;

• a strengthened focus on poverty reduction;

• a new framework for cooperation in the economic and trade fields;

• rationalization of financial and planning instruments.

2.2. Implications for Czech Republic's development aid

The Czech Republic has pledged to adopt and apply EC primary legislation in the field of development aid policy as of the date of its entry into the EU without exceptions and transitional periods. This means in particular the adoption of the obligation to coordinate its policy in the field of development cooperation and to harmonize its programmes of foreign aid with the EU and the member countries, including coordinated approach in international organizations and conferences, and the assumption of the obligation to contribute to the realization of Community assistance programmes. The provisions of the Maastricht Treaty related to development aid do not affect the authority of the member states to independently act in international bodies and to conclude international agreements. The opportunity of the Czech Republic to provide development and humanitarian aid on both bilateral and multilateral basis will not therefore be affected. On the contrary, the Czech Republic intends to maintain and further strengthen the traditional Czech foreign aid programme even after its entry into the EU and to make use of the synergy and complementarity of the Community assistance programmes.

The EC secondary legislation regulates the financing and provision of foreign aid (including humanitarian or food aid) both in the developing countries and the countries of Central and Eastern Europe. The legislation of the EC covers also such specific fields as is e.g. the environment. Proceeding from the negotiations on the entry of the Czech Republic into the EU, the Czech Republic will assume the secondary legislation of EU development policy as of the date of accession of the Czech Republic to the EU. Case law relating to development aid has not yet been examined.

3. Financial aspects

3.1. Financial framework for development aid in the European Union

The special nature of EU - ACP cooperation is accentuated by a separate way of financing development programmes and projects of assistance from the European Development Fund, working on a long-term basis and operating outside the EC budget (broader reform debates however include a discussion on including the EDF into the EC budget).Development aid provided to other development countries and countries in transition (i.e. with the exception of the ACP) as well as other forms of EU external relations (humanitarian and food aid) are financed from the EC regular budget. Part of the programmes of EU external aid is also covered from the funds of the European Investment Bank created in 1958 under the Treaty of Rome as an autonomous financial institution. It is owned by the member states which subscribe its capital and is financially independent of the EC budget.

The 9th EDF for the 2000 - 2005 period envisages aid to the ACP countries totalling Euro 13,500 million. Of this amount, Euro 10,000 million are earmarked for long-term projects, Euro 1,300 million for regional projects and Euro 2,200 million for investment activities. The amount of contribution of each member country to the EDF is specified in financial protocols and is subject to negotiations at two levels. The first includes talks of the member states on the overall amount of aid to be offered by the EU to the ACP countries. The second are talks by the member states on the key to defining their participation in the EDF. The talks are held as long as the overall amount is subscribed by the individual member countries. Under a rule applied, the share of a country in the overall amount of the EDF determines the share of its votes. There exist considerable differences between countries and their shares in the EDF (e.g. Ireland contributed to the 9th EDF only 0.62 per cent compared to France with 24.3 per cent).

3.2. Implications for the Czech Republic's development aid

As already mentioned, the main sources of EU development aid are the budgets of the EC, EDF and EIB. Aid financed from the EC budget is shared by the member countries within their overall contribution to the EC budget. No additional financial means have therefore to be taken into account within the participation of the Czech Republic in the Community development aid - by contrast to the contribution to the EDF. Just for illustration, the EC (including the EDF) development aid represented in 1999 some USD 5,000 million. The table which is part of Enclosure 1 shows the shares of individual member countries, including an estimate of the anticipated share of the Czech Republic in proportion to its GDP. Compared with demographically and economically comparable countries (Greece, Portugal, Ireland), the share of the Czech Republic in EU development aid can be estimated at about USD 30 million annually of which about 40 per cent are usually contributions to the EDF (see Enclosure 1).

Participation of the member countries in the EDF is not only an unwritten obligation but also a political commitment of the EU member countries. Participating in the implementation of development projects and other activities financed from the EDF may only entities from countries contributing to this fund. Under previous EDF, all EDF financial means had to be used. Unused financial means were transferred to the following EDF cycle. In harmony with the Cotonou Agreement, a date will be fixed for the 9th EDF after which the unused financial means will no longer be available. The financial means are used gradually - countries do not pay the financial sum subscribed immediately but only after the call to pay. The European Commission requests such subscribed means always once in six months in connection with their use for a concrete project. The individual countries subsequently indicate how much financial means they will allocate from the sum subscribed to concrete projects.

There is about a two-year period between the assumption of obligations towards the EDF and the practical payment. Moreover, Sweden, Finland and Austria did not contribute retroactively into the 7th EDF and began to effect factual payments only into the 8th EDF after the use of the 7th EDF (although they entered into the EU as early as in 1995). This experience shows that the Czech Republic is not likely to be burdened with payments into the EDF immediately upon its accession to the EU since there exists about a two-year period between the assumption of commitments and practical use of financial means. The Czech Republic is also not likely to have the duty to pay its contribution to the 9th EDF which, at the time of the Czech Republic's entry, will be nearing exhaustion.

The concrete level of accession of the Czech Republic to the Cotonou Agreement will be set by the Community legislation valid at the time of the Czech Republic's accession to the EU and influenced by possible changes in the mechanism of providing development assistance. Another important factor will be the result of bilateral political negotiations between the Czech Republic and the EU which are to proceed in particular from the economic weight of the Czech Republic in the EU after the Union's enlargement and from the traditional interest of the Czech Republic in providing development assistance. On the other hand, at negotiations on its contribution to the EDF, the Czech Republic should press for an amount adequate to the capacities of its state budget (e.g. the contribution of demographically and economically comparable Portugal to the 8th EDF totals 0.97 per cent, i.e. Euro 130 million).

The most important accession talks on the financial aspects of EU development policy are expected within Chapter 29 - Financial and Budgetary Provisions. They are to be held in the first half of 2002 during the Spanish presidency and are most likely to include the negotiation of the amount of contributions required within EU membership, above all the amount of the contribution of the Czech Republic to the EC budget, to the EDF, and also e.g. talks on the entry of the Czech Republic into the EIB. The negotiated amounts should reflect the economic levels of the candidate countries. A considerable increase of financial means from the state budget earmarked for development aid of both Community and bilateral nature is however expected. Otherwise the Czech Republic would have to declare that it is not prepared for EU membership due to the country's inability to assume financial obligations arising from membership.

4. Institutional and organizational aspects

4.1. Institutional and organizational management of EC development aid

EC development cooperation issues involve also other Community policies and activities such as the Common Foreign and Security Policy (CFSP), common commercial policy (e.g. the unified customs tariff and the system of customs preferences for developing countries) and the association and cooperation policy (a number of treaties on association or cooperation with third countries). Also within the organizational structure, relations between the EU and developing countries fall within the responsibilities of different commissioners and directorates general (DG). At present, Commissioner Nielson is responsible for development and humanitarian aid (Development Directorate General), Commissioner Patten for external relations in general (External Relations Directorate General), Commissioner Lamy for trade related issues (Trade Directorate General), Commissioner Verheugen for EU enlargement (Enlargement Directorate General) and High Commissioner Solana for the CFSP.

In 1998, a specific mandate was given to the European Commission to improve the coherence and to take into account the objectives of development cooperation in the implementation of other policies related to developing countries. The problem has to date been dealt with in several materials published by the European Commission and Council. They define problematic fields (e.g. duplicities or counterproductive activities). No complex document on the issue has however been thus far presented. In order to achieve better coordination and consistency of EU development activities, a unified EuropAid (AIDCO) body has been established to deal with programmes and projects of EU assistance to developing countries (pre-accession assistance to countries in transition and humanitarian activities do not fall within its competence). EuropAid is responsible for all phases of implementation of development programmes and projects (the so- called project-cycle management).

4.2. Implications for development aid provided by the Czech Republic

Apart from obligations of legislative and financial nature binding on the Czech Republic upon its entry into the EU, there exists a set of principles and rules in the field of EU development aid which the Czech Republic should reflect as a future EU member country. Though the Community development aid is only of complementary nature and does not exclude independent development activities by member countries, the development cooperation policies of the EC and the member states should be coordinated. To this end the EC can make any initiative (see Article 180 of the Treaty of Rome). The importance of coordinated action in the field of development assistance is underlined by the commitments of member countries within the United Nations as well as within their membership of the OECD Development Aid Committee (the European Commission also being a member).

External development and humanitarian assistance forms an integral part of Czech foreign policy. Apart from its participation in the Community development policy, the Czech Republic intends to continue to provide development aid independently on both bilateral and multilateral levels. To this end the country has to make more effective its system of providing foreign aid, with the preparation for EU membership being a suitable means of achieving this aim. The Czech Republic has been continuously harmonizing the objectives and principles of its external aid with the updated policies of the EU and its member countries, including the stress put on the economic and social dimension of development aid and its importance in poverty reduction. Joint positions of the Czech Republic and the EU on important world fora, including the United Nations, are part of these activities. Besides, the Czech Republic is already today gradually assuming the unified methodology of preparation, implementation and evaluation of development projects, development of cooperation with non-governmental organizations and other traditional elements of development aid provided by the EU and its member countries. The experience of the EU countries also shows that the institutional and financial mechanism of Czech external aid must provide for better coordination and consistency in planning, preparing, implementing, monitoring and evaluating development projects, including the possibility of financing over several years. These and other issues are the subject of the Czech Republic's Foreign Development Aid Concept for the 2002 - 2007 Period.

The entry of the Czech Republic into the EU and its development policy will imply also obligations in the institutional field. The Czech Republic will have to actively participate in the work of individual committees directly related to the EU development policy. Active participation in the work of these committees involves also the ability of the state administration (Ministry of Foreign Affairs, potential Development Agencies etc.) to react adequately and within given time limits to proposals presented by the European Commission or Council. In most cases the work in these committees proceeds from the principle of the so-called tacit agreement. In practice this means that a country which does not respond to a proposal within the set time limit is considered a country agreeing with such proposal. Later revocations of decisions are not accepted. This will require the creation of sufficient and qualified national administrative background capable of proceeding along the said scheme. EU membership will also facilitate the participation of Czech experts in the respective Directorates General of the European Commission or directly in the field implementation of concrete development projects (e.g. consultations, voluntary services etc.).

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Outline II: negotiations on development aid chapter

During the multilateral and bilateral screening of Chapter 26 - External Relations which took place in Brussels in September 1998, the representatives of the Czech Republic confirmed having been acquainted with the acquis relating to external development aid. They informed EC representatives that the Czech Republic provided development aid preferably to countries on the road towards building or strengthening democracy and human rights or market economy. Unlike the EU, the Czech Republic has no specific legislation regulating development cooperation with individual regions of the world (Asia, Africa, Latin America). The Czech Republic is however aware that part of these issues is also the European Development Fund (EDF) established within the Cotonou Agreement. It has studied the system of functioning of the fund and is prepared for talks on participation in the Fund.

In its Position Paper (CONF-CZ 5/99 of February 1, 1999) on Chapter 26 - External Relations, the Czech Republic informed the EU that it followed with due attention the main principles of the EU development policy and humanitarian assistance and was ready to implement the relevant acquis upon its entry into the EU. The amount of the Czech contribution to the EDF is to be agreed.

On April 4, 2000, additional multilateral screening of Chapter 26 - External Relations took place in Brussels where the representatives of the European Commission briefly characterized the new EU - ACP Agreement signed in the same year and confirmed that the new European Development Fund would be based, like the previous ones, on national contributions by individual member countries. Concrete contributions of the candidate countries to the EDF are to be negotiated after their entry into the EU.

In its Common Position (CONF-CZ 58/00 of May 24, 2000) the European Union confirmed that the conditions of the Czech contribution to the European Development Fund would be confirmed by the EU Council in conformity with the Internal Treaty Establishing the European Development Fund after the accession of the Czech Republic to the EU. Chapter 26 - External Relations was provisionally closed at the Intergovernmental Conference on June 14, 2000 (under Portuguese presidency).

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5. Conclusion

On the date of its accession to the EU, the Czech Republic will have to join the EU system of providing development aid. This will apply in particular to the accession to the Cotonou Agreement, participation in financing the European Development Fund and the harmonization of customs preferences granted to the developing countries (the so-called Generalized System of Preferences). This will have financial, institutional and organizational impacts on the Czech Republic. With a view to the procedure and timetable of the negotiations on the financial contribution of the Czech Republic to the EC regular budget and the Czech contribution to the EDF, just as with a view to routine changes in the system of providing development aid within the EU, the impacts of the accession in the field of development aid on the Czech Republic's state budget cannot be estimated at present (estimates range between CZK hundreds of millions and thousands of millions annually).

The opportunities the Czech Republic will have after joining the EU development aid system will include above all its appropriate influence on directing this aid to territories corresponding with the foreign policy priorities of the Czech Republic. By properly ensuring the organizational part of bilateral and multilateral development aid, targeted appropriation of the two components of the aid ("Czech" and "Community") can well complement each other and thus guarantee greater effectiveness. After the accession of the first candidate countries this will apply also to financial means until then earmarked for these countries. These will be redeployed to other external EU programmes (category 4 of EC budget). Entities in the Czech Republic will also have the opportunity to participate in the implementation of development projects and other business activities financed from the EDF.