Committee on Development Ordinary meeting Workshop
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DEVE European Parliament
Follow its sittingsSpeaker 4
And it's very clear that we cannot protect Europe and the citizens from a pandemic. If we only focus on what's going on in Europe. In your draft amendment, you suggest having stronger cooperation with international organizations and global health initiatives. And we do have today, under this MFF, some very good partnerships. Today, under Horizon Europe and U4S, but it's our intention to continue this partnership under the program.
Thank you very much for this. We have all this partnership to help third countries to quickly detect, identify pathogens, allow for quick development, local production whenever possible, and deployment of medical countermeasures. To limit the spread of these threats. Very important to continue doing this.
So, yeah. Thank you very much for this, and looking forward to the discussion and the report. Thank you.
Barry Andrews
Excellent. Thank you for joining us this afternoon. And look, just by way of conclusion, thank you to the co-rapporteurs for your presence here today. And we can finish on this point.
And just to let you know that following a request from the shadow operators, the deadline for amendments will be the twenty second of April and not the 16. So a little bit extra time to reflect at 6PM, to reflect on the insights that we heard today.
So with that, we will take a brief pause before we go on to the next item.
Let's. Go.
Barry Andrews
This is great. Yeah. I'm really excited about this now. Look. Okay, folks.
So, dear colleagues, we reached the final item on our agenda today, item 15. And let's get going then. At the January, our coordinators decided to request a workshop accompanied by papers that would provide us with a better appreciation of two specific aspects of the Global Europe proposal. To take a closer look at European preference, and what that might mean for us, and just to understand it a little bit better.
The eligibility restrictions. Which already applies in Ukraine, I think. Very full. Yeah. So, but because we need to consider what opportunities and challenges these new provisions in the proposal present for development cooperation.
So we hear a lot about this. Let's get into the detail. On the one hand, we've been very vocal that the taxpayers' money should be benefiting contractors from Europe.
But this begins to look a little bit like Tide Aid, and there's quite a lot of evidence that Tide Aid is ineffective. Well, is less efficient than untied age. So we have to be careful if we embark upon this road. The other issue we want to discuss is related to another novelty that Global Europe proposes, a more direct role for EU member state export credit agencies. And this should enlarge the EU toolbox, but we want to understand how consistent such an approach is with the primary aim of our policy, which is poverty eradication. So is there a promotion of investments a task compatible with official development assistance.
A really crucial question for us using the tools that we have available for development assistance to achieve other objectives is that something that we can reconcile in practice? In the context of the next MFF? So to deal with these trade-offs, we have with us today the two authors, the authors of the two briefings.
And I would like to point out that the briefings have not been published yet, and members only received preliminary findings. So we still chose to have the workshop today, because it can feed into our positioning.
On global Europe. So let's start then with Anna Maria La Cimia, who is a professor at the University of Nottingham in the United Kingdom. And, we will give you the floor first of all, Anna Maria, for 8 minutes.
Thank you very much.
Anna Maria La Cimia
Thank you, honorable members, for giving me the opportunity to speak today and my findings on the eligibility restriction rules present in the European Commission proposal for a global European instrument. The proposal presents an article 20 selective eligibility criteria which restrict access to EU funded procurement opportunity to certain suppliers only. The possibility is also foreseen, in certain circumstances, to limit access to European goods only.
So to buy Europe restriction by way of a derogation of the general rules. The Global Europe instrument consists of six different pillars. With different eligibility requirements for each pillar. This results in a patchy framework of eligibility rules which makes access to EU funded procurement opportunities quite complex and selective. Different rules apply to each of the pillars under the scheme.
And the situation is especially problematic because of the presence of a broad exception in paragraph 10 of article 20, which allows to restrict the eligibility requirements further. The scope of the exception is broad, and its governance system is unclear at the moment. So in a it's not very clear how eligibility will be risked restricted once, and if the exception is invoked. And there the scope is very broad and the governance system is unclear.
So, basically, it's not clear who will invoke the exception. Will it be the European Commission? Will it be the manager unit that deals with the procurement? Who will access be restricted to? Will it be the European member states country only, or will it be EEI members? Will the recipient be included in the restriction? Will it be open to all least developing countries?
This is not specified in the current exception, how it is framed. And this is problematic. Why? Because it could be open to abuse. It could be misuse. It could basically be invoked, as it seems at the moment, by any entity, any unit that manages EU funds without clear restriction.
Even the justification for calling the a are broad because simply European interests are mentioned without clear definition of what these interests are. Now is this bad? Well, yes, because it will lead to the aid being essentially tied.
And tying aid has been proven that leads to an increase of the cost by between 50-1530%. It will lead to a lack of ownership of the aid of recipient countries. And most importantly, it leads to lack of coordination between donors and incoherence of the UAE.
Besides the lack of competition, the results from these restrictions being imposed on the participation of the eligibility requirement means that there will be fewer suppliers applying, and therefore, it means that it's more likely the aid and the procurement opportunity to be prone to abuse and corruption, further limiting the effectiveness of EU aid.
Now you might think if aid is open to all EU suppliers, there will be at least suppliers from all 27 member states participating. Well, in fact, this is not necessarily the case. Why? Because aid-funded procurement is different from normal procurement within the member states.
Aid is delivered abroad. Aid is delivered in remote areas, in remote countries. Not all companies in all the member states will be capable to participate in the procurement process.
So who will benefit from this time of aid? Only companies from member states with long ties with recipient countries. Political ties, economic ties, historical ties, even colonial ties. So while all member states will actually pay the price for the increase of the cost of time and for the aid.
Besides implementing eligibility rules, it's not as easy as it might seem. Why? Because, well, for example, foreign companies could buy shares of local companies. So unless we also impose the disclosure of beneficiary ownership, we won't really know who lies behind the supplier. And at the moment, the current proposal does not envision the disclosure of beneficial ownership.
By Europe restrictions, also quite difficult to implement in foreign countries because, well, labels could be easily contrafact without any real supervision from the EU. Because European requirements in a third country require cooperation of custom unions from different third countries.
So how this will be implemented in Prague is quite difficult to predict. Now it needs to be acknowledged of our ability that while the EU proposal to restrict access to EU-funded procurement is not to core endorsement of tidade. The problems are limited to how the exception is framed.
We also need to recognize that the EU decision is motivated by the fact that many other donors tie aid. However, there are recommendations that could be implemented that would make the provisions more aligned with the international commitment because the way the exceptions work and the way it is framed, it could lead to an overall implementation of tide aid, which would breach international commitments that the EU has endorsed to anti aid, such as, for example, the OECD recommendation on anti aid which was endorsed in 2001 and has been renewed and reformed in 2006 by all OECD countries.
So the question is not does that you want to lead in the question is whether the EU wants to lead in ensuring that international commitments are respected or whether it wants to follow in bridging international commitment, following other donors who are currently not respecting the effectiveness policy commitments that have been endorsed at the international level.
What can be done then to ensure the new proposal is aligned? Well, clarify the scope of the exceptions, restrict the scope to well-defined cases. For example, one thing that could be done is to limit the application of the exception to cases where harm has been proved to the EU economy, for example, under internal instruments such as the European procurement instrument and the foreign subsidy regulation.
If we align global Europe to those instruments, we ensure coherence of internal and external action of the EU. We could insert mitigating measures to protect recipient countries, for example, in ensuring the recipient country suppliers could participate at least as subcontractor. Another important measure would be to ensure that those restrictions only apply to grants as opposed to grants and soft loans. Because soft loans go to increase the debt of recipient countries. Therefore, they are even more harmful to the recipient countries.
So, the parliament could, for example, suggest that the eligibility of suppliers for EU funds be linked to knowledge sharing and transfer of skills and technology with developing countries. And finally, one important element would be to clarify the governance of the exception.
So how and when will the exception apply, and by whom especially will it be applied? What are the criteria that will be used for ensuring that at the institutional level, there are safeguards? To be implemented when the exception is applied.
Thank you.
Barry Andrews
Okay. Thank you very much for that, Anna Maria. A lot in that. And some very concrete recommendations are great because very often we get told what's wrong and not told how to fix it, and that's very helpful.
We might come back on the beneficial ownership question and whether that's been a problem in Ukraine so far, if we have experienced any of that practice as an issue. So let me now go to Lucas Schlugl, who is the senior researcher at the Austrian Foundation.
For development research. In Austria. So, Lucas, you also have the floor for 8 minutes.
Lucas Schlugl
Thank you, Chair. Honorable members, thank you very much for the invitation. So the companion paper by Annabel looked at mainly procurement and eligibility restrictions, our paper focuses on the support side channels mainly in Article 23 and related provisions.
Especially direct support to union-based private entities and the possible role of export credit agencies, ECAs. And I will echo some concerns just raised by Annabella. So I think that the central question is how far the global Europe instrument can move towards a European preference and strategic competitiveness without weakening development effectiveness.
So. These are, as you can see on this slide, in our view, the provisions that matter most for that question. Article 20 three (four) is the clearest novelty. It would allow direct grants without a call to private law entities effectively established in member states, where this is considered and duly justified, and where the investment is seen as being in the strategic interest of the union.
Recital 70 shows that the intended direction of travel, which is critical raw materials, climate resilience, digital infrastructure, and other strategic sectors, often in integrated packages. Article 20.37 keeps a strong European center of gravity in implementation.
Article 20 five-three matters for the ECA route because it widens the room for private law bodies to implement financial instruments or to manage guarantees. And Recital 56 places this more broadly in the Team Europe logic.
Next slide, please. So we consider three sets of constraints and areas of commitment. First, EU primary and secondary law. Article 208 TF EU makes poverty reduction the primary objective of development cooperation, and Article 21 TEU placed development policy within the wider external action goals.
Second, and that is quite important in this context, the OECD framework. The arrangement on officially supported export credits discipline tied eight. Relatively tightly. The key idea here is that tight eight should not be used for commercially viable projects. And in the EU, the content of the arrangement is binding law.
The DAC recommendation on untying ODA is softer in legal terms, but it is still politically important and it pushes in the direction of broad untying, greater transparency, more scope for local and regional procurement.
So here, the EU is monitored against DACP review practices. Third, there's the wider development effectiveness agenda: Paris, Accra, Bausanne. Those commitments are not hard law either, but they remain an important benchmark. And here the core principles are ownership, results, inclusive partnerships, again, transparency, and mutual accountability.
Regarding the evidence, the most settled finding, and I'm echoing here what the chairman already said, is that Tide eight tends to raise costs. So the OECD figures cite roughly 15% to 30% on average of cost increase, and even higher figures for food aid in particular.
The deeper historical reason that aid and trade were gradually separated is because concessional public finance could otherwise be used to subsidize donor exporters and commercially viable projects, which weakens additionality and also distorts priorities and prices as well.
Next slide, please. So a quick point about current practice. EU institutions currently report very high levels of untied in ODA. So almost all EU ODA is untied. At the same time, we should also note that a substantial share of external action spending already runs through indirect management and through European or multilateral implementing partners. So the status quo is already a world with at least some de facto European preference.
The issue is that the proposal would widen the channels through which preference can operate. And here we don't talk about procurement in the sense, but about direct awards in direct management, project preparation, and also financial intermediation upstream.
Next slide, please. So this is where the ECAS entered the picture. The Commission's impact assessment presents a large role for ECAAS as part of a toolbox for mobilizing private finance. And making funding possible in more difficult conditions. This is the envisaged role.
The harder question we think is where this is realistic and on what terms. The first difficulty is that export credit logic and development logic are not the same. ICAs are designed to support exporters competing abroad. They're not DFIs in the ordinary sense. They can be quite risk averse. They don't follow the classical ODA logic. Second difficulty is one of additionality. In commercially attractive sectors, it can be hard to show that public support is addressing a genuine gap rather than subsidizing activity that should have or would have happened anyway.
Governance is also an issue because ECAs differ strongly across member states' mandate, risk appetite, and so on. Benefits would also accrue unevenly within the EU. That's a point that Annabel mentioned.
Next slide, please. The current landscape underlines that point. Aggregate portfolios are large. But they are also concentrated in large, capital-intensive sectors where European firms already have strong positions. And the institutional landscape is relatively heterogeneous.
Next slide, please. So this brings me to the main trade-off. There are clearly possible gains. The proposal could allow faster project preparation. It could provide for a tighter packaging of grants, guarantees, and technical assistance.
And stronger delivery capacity, arguably in strategic sectors. The development effectiveness risks are also clear, partner country ownership can weaken if union strategic priorities shape the project pipeline. Additionality becomes harder to prove in commercially attractive sectors, and local firms, civil society actors, and non-European partners can lose influence upstream. Scrutiny can also become more difficult.
So for David, the question becomes, one, we argue of proportionality and safeguards. Final slide, please. Let me close with a few ideas for policy options, which we set out in the paper. The first is one of proportionality. We argue that softer tools are available before moving to country-based preference or direct support for preselected firms, quality criteria.
ESG criteria or the general call and tender design can do a part, a large part, or even all of this work. Second, direct awards, we argue, should remain exceptional. The Article 20 three-4E could be tightened, could also be kept as the court of auditors, for instance, suggests. Third, transparency and audit could be strengthened.
If these channels remain in the text, parliament could insist on detailed reporting and explicit Court of Auditor rights. Fourth, ECA involvement could stay selective and justified, and should arguably not become the privileged default implementation route for ODA. Fifth, that's also an important point, we think, compatibility with multilateral development banks and consortial financing co-financing should be protected.
Because large infrastructure and transition projects often depend exactly on that wider ecosystem. Sixth, the broader economic and ecological effects should be tested, we think, before strategic preferences widen further. There's a real risk of higher costs. There's also a risk of feeding subsidy raises.
And finally, seventh, parliament should not, we think, assume an automatic political payoff for aid from these changes. That claim should be evidenced at least, and one could argue for the regulation including a review clause. In that regard. So the overall direction we would recommend is cautious, keeping the instrument structurally open, allowing departures from that default only in narrowly defined and reviewable cases.
Thanks very much. I look forward to the discussion.
Barry Andrews
Great. Okay. So it's very complicated. And, it's not easy to fully understand. All of this to get it all in one.
And it shows how complex our global Europe discussions are going to be. In the next few months. We don't have an ACA in Ireland, for example. So for political reasons, we abandoned the idea because of the, you know, controversies that happened in Ireland. And we don't have a DFI, and so you know, the problem is that we end up with privileging certain member states, who have these kind of infrastructure.
And all of the concerns that you've raised. I personally think that it is something we need to do because we're not delivering with the current global gateway model. I think we have to be more creative in, but it is a trade finance answer to a development problem. And this is all very new.
And as a committee, we really need your help to ensure that we insert safeguards into the instrument. We need much greater clarity on, you know, what these recommendations amount to.
We are very worried about commercially viable projects being funded by development aid. It's a really, real big issue for us, and these are projects that would have gone ahead anyway. But, we were using money that's designed, you know, very, very scarce money in times of increased needs. To provide investment protection, and that is really a worry for us and something we have to be very careful about, particularly on the governance side.
So, look. There's been a very useful paper. I mentioned to you that I have to go at this point. I'm gonna ask Isabella to take over the chair if she doesn't mind. So just to, I you know, to while Isabella comes up to say that I am broadly supportive of the idea of using export credit agencies, but we need a huge amount more assistance.
I think the last point that you left us with, don't assume that aid is going to deliver politically for us in the circumstances. I think that's something very, very important.
The eligibility rules, you know, in your first presentation, Anna Maria, I think we need to strengthen that. Get much greater clarity around governance issues. So look, I'm gonna hand the chair to Isabella, and I thank you again. If that's okay.
We're. At the point where we give the floor to members.
Speaker 8
Okay. Thank you very much, Barry. Thank you also to the expert presentations.
I think they were really interesting and gave us a lot of very concrete advice and very precise observations on where the weak spots are. And I think that's exactly what we need to have, to have debate that is founded on facts and experience.
And from my side, I think it's really important to highlight the Paris agenda and aid effectiveness and all these experiences that we've learned from many years' experience of what is actually effective development cooperation.
Now I will follow the script. And now it's time for the members, right? And then we give the floor to the commission. So we'll start with the members. And who would like to take the floor? So Pedro Robert.
Robert Biedroń
Thank you very much, sir, and thank you very much to both of our excellent experts for this presentation.
Which is not an easy one. It needs expertise, but you made it available for average member and average listener to understand. The topic, and it's very important for us to understand, so the insights are very helpful for us.
I'm the dev Apporteur for Global Europe. And together with my colleague from Afed, who is a co-operator on that. We just finalized the work on the draft report on Global Europe. So your input is still crucial. It's not the end of our work.
It's just the beginning. So it's just a proposal. So we will collect, of course, your input and then we will collect the input of our colleagues. And their amendments. But just to assure you, we will also table together amendments on some issues.
So your import is very important. Just another point of information to clarify is that we agreed this is a joint work between Deve AFFID and the budget committee. We agreed that exclusive competence on some of the articles is only to our budget colleagues and the budget committee.
So on articles you mentioned 23, 24, and 25, which are very important, of course, in the discussion we have on and referring to some of the policy options you have proposed, this is an exclusive competence of our colleagues in the budget. But nevertheless, of course, for our dev committee issues and recommendations, for example, on article 20, are very important, and there are clarifications on that, of course, is very important.
I also like your observations on the role of export credit agencies. I share your concerns, mister Schugel has raised some of these concerns on the concession of public finance could subsidize donor exporters and commercial viable projects. It is an issue we need to address and discuss.
I just want to reveal some backside information that in the draft position of the parliament, we have introduced stronger wording on additionality. It will be addressed in the need for the commission to demonstrate in its financing instruments. So we will propose some improvements on that.
So, I thank you. So we're talking about EUR 200000000000. I share your concerns on the competitiveness of the member states. That it will be an issue. Some member states have expertise, have some historical past capacities, which others do not have and will need to also address and assess.
But my question would be on the LF de facto elephant in the room, which is, of course, this geopolitical context of excluding some of the countries from taking part in finance, in participating in the projects financed by EU, especially one of these countries, which is very active on global area. So my question would be, what would be your answer for those who are concerned about that it will de facto increase the cost if we exclude this competitiveness.
It's not that I defend the country. I think the opposite. But there are concerns, some of our colleagues using this argument that this will raise the cost and the effectiveness of the financial effectiveness of delivering now that.
So what would be your answer to these concerns? I congratulate you for your report, and I look forward to the final presentation of that. Thank you.
Charles Goerens
Thank you. You. I'm just wondering how in the future we can have respected the idea of non-bound aid. It's different from 2001, where we were able to agree in the OECD. To ensure that this principle was respected by all the members.
And you said this when you initially took the floor, madam. What's changed is that we have different interests with regards to trade policy. Development aid policy. What is our interest? Is it that of our comp companies or is it to do with our supplies for energy, rare metals, or to be more competitive in Africa? We can see between the Chinese, the jumping from the Chinese and what's happening with the Americans as well. So everything is just foggy, and I don't really see clearly. And I don't think it's going to be easy for the European Parliament.
To monitor all of this in an opportune way with the possible abuse of it. Everything really rests on how much sway we have with the governance of global Europe in the future.
Now when it comes to investment in a developing country under the Global Gateway, we can be informed on the intentions, the number of projects, but we're not privy immediately to this information. It the decisions are taken at another level.
In the process of cometology. Where everything was controlled by the member states. Of course, age should not be conditional, should not be bound, on the one hand, but then this is what the economic spheres in those countries are looking for, and they're defending European interests.
So I think that we're taking a chance with regards to the possibility of having respect for this principle. In the future. I'm not certain. I think it's going to be very difficult for us to have a very clear picture of how we can ensure that this principle is complied with.
Perhaps only the commission and only part of the commission actually wants the foundation of principles, conventions, and agreements, international agreements when it comes to the development aid policy. And the commission has said we should have this and we hope that the commission will have the authority to ensure that these principles are respected.
But outside beyond this house, when you go to the Place De Luxembourg, when you talk about trade policy, development policy, people don't believe have the same ideas as we do. They think we're very strange when we're asking to respect all these principles, and the complexity that you've just referred to is something people don't understand, and lots of people in this house don't understand it.
So, I am not fully convinced. I would like to see these principles really sustained, but little by little, the way things are evolving, I think this is going to be very difficult.
Last point on restrictions. I think we should come up with a document, where we have a guidance on how principles can be respected. Obviously, the global situation has changed. This has been said.
Today, commonly accepted law is not applied by all countries, power is what counts. We see this in Africa as well. So if a country has to develop its communication system, for example, in a particular country.
Well, the Global Engagement has been designed for that, and there are strategies within it that fall under development aid, certain aspects, guarantees, will then require verification you put in place or communication system in a given country.
Then you have China, that can supply this much more cheaply but also with the possibility of full access to data. You go and look at the African Union building in Addis Ababa, there are listening devices in all the walls. So China knows everything that's going on in there.
That this is not how Europe works. So if we have more costly projects, favoring European companies with a guarantee for conformity and compliance with our principles, then if we want to also export our way of handling business, is that therefore conditional bound aid, or isn't it? And I think we need to clarify this confusion. And I am unable to say how things will move forward.
Thank you.
Speaker 8
Thank you. I see no other member on the floor. So I will make a short intervention myself from the Green Group. I think the idea that we should have private companies and, you know, investing in developing countries is fantastic. And of course, they should do that.
What we hear from the industries themselves or different companies is that the primary thing that they need to do is legal certainty. So rule of law, you have a stable country, you have the conditions for investments. And the security of investments. And I think, in my view, what development cooperation should be aimed at is to prioritize institution building and rule of law and making the enabling environment for investments.
And I'd like to hear your view on that. When it comes to Tide eight, it's been proven many times, and you also highlighted that that is not the most effective way of doing development cooperation, that the aim of development cooperation is poverty reduction or poverty eradication. It's not promoting your own interests in another country. Because that is received mostly in a negative way.
And if the real need is for schools or health care, and then you come and say, yes, but we should start a mine. Here, mining operation. It's not exactly promoting good ownership or good relations with that country.
So that's my experience. And also, on the export credit agencies, I'd like to ask you if there's a way to involve those without using the development budget. I mean, of course, it's good to use it in a way where there might be risks involved, but not using it from our development budget.
Before I give the floor back to the researchers, I will give the floor to the commission. First, to DG Inpa, Nicolas Stutzler, who is the Deputy Head of Unit for Coordination and Oversight of Financing Instruments. The floor is yours for 4 minutes.
Nicolas Stutzler
Yes, good afternoon, and thank you very much for the opportunity to exchange today. I mean, maybe to start I mean, I fully agree that it's a very complex issue. It's very technical. And especially this article 20 is quite heavy to digest. Maybe to explain, I mean, the proposed approach for eligibility under Global Europe, and we tried to really have a balanced approach, will allow the European Union to pursue and protect its strategic interests and at the same time, respect the constraints of implementing partners and the realities on the ground.
Generally, while the eligibility route of Endicke and EPAR 3 have been broadly maintained, commission, as you said, will now be able to restrict the eligibility route for the implementation of Global Europe Funds on a case-by-case basis. Such restrictions are warranted, for example, when they're in the strategic interest of the union.
What is important, implementing partners in indirect management will, by default, continue to apply the eligibility rules in addition to commission rules. But again, restrictions can be imposed, and that's actually a big change compared to the recently adopted facility for Ukraine. Moreover, and Western Balkans, which were actually more restrictive and more towards tight end. And so actually, what we're seeing in Global Europe is actually a step in the other direction, more towards underlying when you compare to the facilities.
Then I mean, of course, I mean, what we see now, the restrictions of the rules mean, those will never work unless partners' interests are integrated into the equation.
We really committed to build mutually beneficial partnerships and fostering sustainable development, I mean, as evident by the ambitious ODA target that we are proposing in Global Europe. And this will eventually enable the EU to pursue its strategic interest, demonstrating that the EU, together with its member states in a team group approach, is a partner of reference. But what is also important is clearly a clarifying in the Global Group, I mean, the union remains committed to the development effectiveness principles.
Then we also have to ask ourselves, I mean, what are the alternatives? I mean, be even more tight in the facilities. I mean, there we are facing numerous problems in implementation, in particular with our implementing partners.
On the other side, we also have to ask ourselves, mentioned, I mean, do we want to use the EU budget? Do we want to use Global Gateway? To finance Chinese companies or products? And I mean, I think there's no clear yes or no in that regard. I mean, there may be cases where we may be open, let's say, in the energy sectors, solar panels, where there is simply no European market, but there may also be cases in telecommunication infrastructure, for example, where we want to rely on European companies, on European products.
I mean, definition of strategic interest, I mean, we thought about definition, but I think that's really tricky to have a strict definition and also looking at the time frame and we about instruments that will last until 2034. So things may evolve, things may change. So what we do need in that respect, in our view, is some flexibility to apply those rules on a case-by-case basis.
Maybe one important clarification, because you mentioned that issue of beneficial ownership. I mean, indeed, article 20 by default, the default rules don't foresee obligations to disclose beneficial ownership, but paragraph 10 also allows to apply restrictions in that regard and ask for beneficial ownership.
Information or to exclude, let's say, benefit, let's say, companies who are beneficial owners from countries that we don't want to participate. Let me see. Sorry. Also, responding a bit to the second.
Maybe just to clarify, I mean, the European preference for selecting implementing partners, in our view, I mean, that's not linked to the question of tying or untying of aid because that's only the implementing through partners who implement the EU budget on our behalf.
And then do the procurement instead of the commission. So there is no direct link in that regard. When it comes to export credit agencies, I mean, also, I mean, just to clarify, I mean, they are already eligible implementing partners under Indiki, so we can already work with them. I mean, there are, work has started. I mean, there are pilot cases that have started.
But we want indeed to be more. I mean, there's a lot of work ongoing in that regard. But what is also clear, I mean, cooperation with ECAZ is there to complement the cooperation with, let's say, more traditional partners that should not replace it.
Yeah. So it's really meant as an additional modality to bring them on board, but to achieve our development policy. And I think that's also very important. And you also mentioned the financing.
I mean, what is also clear, I mean, when the purpose of an action is to promote European companies' competitiveness, it should not be financed from Europe. I mean, that would be rather for the European competitiveness fund, for example.
But nevertheless, there may be cases where we may want to finance ECA's auto through Global Europe. But then, of course, there is also a share foreseen in Global Europe that would not have to comply with ODA requirements.
Speaker 8
Thank you so much for that. I now give the floor for two minutes. To the external action service, Ms. Martina Notti. Policy offers in the division for financing instruments and international cooperation.
We're a little bit short on time now, so please stick to the time. No. No. She doesn't need it. She's not. Ah, she doesn't need it.
Okay. We gained 2 minutes. So I'll give that to our researchers. I don't know if the interpreters can stay for a few minutes. Have six minutes left.
So three minutes each. Three minutes each for you to respond to the questions.
Speaker 13
Okay. So I'll try to combine the two questions. So the first one was how do you answer concerns of those who say costs were rising certain countries are excluded? And that's a very legitimate question, and I think that that's why the commission is looking on a case by case basis to limit restriction.
I want to hope that if there are instances where the project would be unviable due to the restrictions that are imposed. Those will not go ahead. Those restrictions will not be implemented.
Anna Maria La Cimia
I mean, there is paragraph 11 of article 20 that says explicitly if the project, if the eligibility rules don't make the project viable, those could be extended. So one wants to hope that there is a mirroring provision within the exception that would not allow that.
Speaker 13
Maybe this needs to be clarified a little bit and could be, you know, again, rephrased to a certain extent. But one question that I would ask back to those who question whether the cost would be too high.
Anna Maria La Cimia
Is whether those costs started increased due to violation of human rights, labor standards, sustainability rules. So this is something that we cannot go without anymore. These are externalities that need to be included and factored in when we procure.
And the OECD recommendation in each 26 version allows member states to include this consideration. So the new recommendation I tightened very much the terms for human rights standards that companies need to adhere to. And the possibility to include sustainability requirements. So including those rules would not be in breach with the international commitments that have been taken.
A further point that was raised, how can we ensure these principles are respected at times where nobody's respected? I think this is a problem that you have for the whole of international law.
How can we support international law at times where nobody is, or major players are not, where it's again an issue whether we want to lead in respect to international law, whether we want to follow by breaching it. And even if those are just policy commitments or soft law commitments, they are nonetheless rules that have been agreed.
There would be a way to support and further enhance the respect of these policies if we strengthen the OECD's work in this respect. And for example, excluding those suppliers, those countries that have not committed to any policy requirement to anti-aid, to make aid more effective, such as China who's not a member of the OECD and the DAC, I would think that this would be legitimate. But it would be more targeted as an approach than being broad and general because despite on a case by case basis, still have too broad a language, that would, you know, not allowed focus, restriction.
Thank you.
Lucas Schlugl
Thank you very much for the very interesting and challenging questions. So I think my basic sense would be that there are imbalances in the global trade system. And it is by far not perfect. And it is stalled as well in many ways. But we cannot and should not use aid to rectify these imbalances or make up for them.
I don't think it's the appropriate instrument. So, for instance, China is not part of the OECD arrangement. There was a long-standing process to try to integrate it into the arrangement or at least have some sort of similar system internationally.
There was a working group. It did not succeed. It stalled at some point. There's not general unwillingness, I think, on the part of the BRICS countries to become part of the architecture of global economic governance. The same goes for the WTO as well.
So the problem is trying with these kinds of procurement fixes to address these structural questions or tensions in the international trade system is kind of an uneasy, and perhaps also not very effective fix.
I would agree on the point of capacity building. I think that's arguably even the stronger argument for untying than the cost issue. Because it gives more ownership, and it channels money through institutions, and by that local institutions, and by that, it builds up these institutions.
Originally, the idea at the beginning of the eight effectiveness agenda was budget support directly administered to partner country governments, with come a long way sort of from that ideal, I think.
Regarding using non-ODA funds for ECOS, I think that would be the preferred source, in fact. And we did a paper for the trade committee of the European Parliament two years ago on questions of aligning eco with the EU policy goals, which is not an easy agenda.
There was at some point, I think, an idea in the commission to have a sort of European facility, even perhaps a reinsurance mechanism of some sort. These are ideas worth pursuing. They are not easy because member states are also in competition with each other in this domain. But these are chiefly questions of European industrial policy.
At the end of the day, not so much aid policy. And the point on China, I would completely agree. So the solar panels or PV is the perfect example why a sort of strong European preference in the sense of buy Europe can be very detrimental, and is actually dangerous to the goals of furthering the green transition and so on.
So I think it's not a black and white question of tied or not tied. There's a sort of shades of gray in between, but we are now on the sort of potentially slippery slope. And we should know where to stop.
And I think by Europe and meaning no Chinese photovoltaics. That would not be good.
Speaker 8
Thank you very much for those insights and especially for all these very specific recommendations, which I hope we can take forward in our decisions and discussions of the future of this policy field and the Global Europe legislation. Thank you so much. Very valuable.
And with this, I will close this item and move to the last one, which is any other business. Our next, does anyone have any other business? I don't see anyone.
So I'd like to thank all colleagues involved in this smooth running of the meeting, and also thank you to the interpreters for staying one minute extra. Thank you so much for that.
Next meeting is on Tuesday, May 5, at 9:00. Thank you very much.
With.
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