The Commission presented this report pursuant to Regulation (EU) 236/2014 laying down common rules and procedures for the implementation of the European Union's instruments for financing external action (the Common Implementing Regulation) which requires a mid-term review report on several EU external financing instruments.

As a reminder, the Common Implementing Regulation applies to the following:

Development Cooperation Instrument ; European Instrument for Human Rights and Democracy ; European Neighbourhood Instrument ; Instrument contributing to Stability and Peace ; Instrument for Pre-Accession Assistance ; Partnership Instrument for Cooperation with third countries .

Other instruments that follow the requirements set out in the Common Implementing Regulation and have therefore been included in this report are:

Instrument for Nuclear Safety Cooperation ; and the Greenland Decision .

Since this report provides an overview of the instruments, it also includes the 11th European Development Fund (EDF). The 11th EDF refers to a performance review that needs to be carried out by the end of 2018. The performance review is similar to the mid-term review provided in the Common Implementing Regulation. The Decision on the association of the overseas countries and territories was included in the performance review of the 11th EDF. This mid-term review report therefore covers nine instruments as well as the Common Implementation Review itself.

In line with the requirements of the Common Implementation Regulation, this report covers the period from 1 January 2014 to 30 June 2017 .

In particular, it assesses whether these instruments are still fit for purpose, so as to ensure the effective implementation of the EU's assistance. It will inform decisions on the renewal, amendment or suspension of the types of actions implemented under the set of instruments.

It also analyses whether the objectives have been met, focusing on the results, their efficiency, added-value, the scope for simplification, internal and external coherence including complementarity and synergies, the continued relevance of all objectives, their contribution to a consistent EU external action and where relevant to the EU priorities for smart, sustainable and inclusive growth, and the leverage effect achieved.

Summary of conclusions : the report concluded that the current set of instruments is still relevant and has proved to be sufficiently enabling . At this stage there is therefore no need to amend them through legislative proposals or delegated acts.

However, the staff working documents linked to this report point to some aspects deserving attention in the future , with a view to improving the implementation of the EU's external action and drawing lessons for the next generation of instruments.

While there is evidence of coherence among instruments, this could be enhanced by streamlining their number . This would help to ensure better interactions at the operational level, in particular between geographic and thematic instruments and programmes that can intervene in the same areas.

PURPOSE: to establish common rules and procedures for the implementation of the Union's instruments for external action.

LEGISLATIVE ACT: Regulation (EU) No 236/2014 of the European Parliament and of the Council laying down common rules and procedures for the implementation of the Union's instruments for financing external action.

BACKGROUND: this Regulation forms part of the new Multiannual Financial Framework (MFF) 2014-2020 in the field of the Union’s external relations and cooperation with third countries. The relevant instruments are as follows:

· Financing instrument for development cooperation

· Partnership instrument for cooperation with third countries

· Instrument for Pre-accession Assistance (IPA II)

· European Neighbourhood Instrument (ENI)

· Instrument for nuclear safety cooperation

· Instrument for Stability

· Financing instrument for the promotion of democracy and human rights worldwide

All the procedures applicable to the implementation of these financial instruments will be governed by this single Regulation.

CONTENT: this Regulation lays down the rules and conditions for the provision by the Union of financial assistance to actions, including action programmes and other measures, under the above-mentioned instruments for financing external action for the period from 2014 to 2020.

Democratic principles : the Union's action on the international scene is to be guided by the principles which have inspired its own creation, development and enlargement, and which it seeks to advance in the wider world, namely democracy, the rule of law, the universality and indivisibility of human rights and fundamental freedoms, respect for human dignity, the principle of equality and solidarity, and respect for the principles of the United Nations Charter and international law.

Adoption of action programmes, individual measures and special measures : the Regulation contains provisions on such measures and actions. These will be adopted in accordance with the examination procedure except for:

· individual measures for which the Union's financial assistance does not exceed EUR 5 million;

· special measures for which the Union's financial assistance does not exceed EUR 10 million;

· technical amendments to action programmes, individual measures and special measures.

Support measures : union financing may cover expenditure for the implementation of the Instruments and for the achievement of their objectives, including administrative support associated with the preparation, follow-up, monitoring, audit and evaluation activities directly necessary for such implementation.

General financing provisions : a series of provisions deal with financing rules on:

· grants;

· procurement contracts for services, supplies or works;

· general or sector budget support;

· contributions to trust funds set up by the Commission;

· financial instruments such as loans, guarantees, equity or quasi-equity, investments or participations, and risk-sharing instruments regarding implementation of external policy.

General or sector budget support may only be granted after an assessment of the partner country’s commitment and progress in promoting democracy, human rights and the rule of law. The general or sector budget support shall be differentiated in such a way as to respond better to the political, economic and social context of the partner country, taking into account situations of fragility.

Visibility of EU aid : when providing the Union's financial assistance, the Commission shall, where appropriate, take all necessary measures in order to ensure the visibility of the Union's financial support.

Most efficient use of resources : the Union should seek the most efficient use of available resources in order to optimise the impact of its external action. That should be achieved through coherence and complementarity between the Union's instruments for external action, as well as the creation of synergies between the Instruments and other policies of the Union. This should further entail mutual reinforcement of the programmes devised under the Instruments, and, where appropriate, the use of financial instruments that have a leverage effect.

Specific provisions : the Union's assistance shall not generate or activate the collection of specific taxes, duties or charges. Furthermore, there are specific financing provisions regarding certain financial instruments not detailed here.

There are also provisions on:

· protection of the financial interests of the Union;

· rules on nationality and origin for public procurement, grant and other award procedures ;

· rules on eligibility for European funds for each of the instruments on external policy.

Monitoring and evaluation of actions : the Commission shall regularly monitor its actions and review progress made towards delivering expected results, covering outputs and outcomes. It shall also evaluate the impact and effectiveness of its sectoral policies and actions and the effectiveness of programming, where appropriate by means of independent external evaluations.

Annual report : the Commission shall examine the progress made in implementing the measures of the Union's external financial assistance and, from 2015 onwards, shall submit to the European Parliament and to the Council an annual report on the achievement of the objectives of each Regulation by means of indicators, measuring the results delivered and the efficiency of the relevant Instrument.

An annual estimate of the overall spending related to climate action and biodiversity shall be made on the basis of the indicative programming documents adopted.

Mid-term review : no later than 31 December 2017, a mid-term review report shall be submitted by the Commission on the implementation of each of the Instruments and of this Regulation. The report shall focus on the achievement of the objectives of each Instrument. It shall be undertaken for the specific purpose of improving the implementation of the Union's assistance. It shall inform decisions on the renewal, modification or suspension of the types of actions implemented under the Instruments. The report shall be submitted to the European Parliament and to the Council, and shall be accompanied, if appropriate, by legislative proposals.

Involvement of civil society : whenever possible and appropriate, relevant stakeholders of beneficiary countries, including civil society organisations and local authorities, must be duly consulted in particular the preparation, implementation, monitoring and evaluation of measures taken under the Regulation.

Suspension of assistance : joint declarations as well as bilateral and unilateral ones of the European institutions accompany the Regulation. A unilateral declaration by Parliament refers to the possibility of suspending assistance in cases where a beneficiary country fails to observe the basic principles of democracy, rule of law and respect for human rights. Parliament considers that any suspension of assistance under these instruments would modify the overall financial scheme agreed under the ordinary legislative procedure and it is therefore entitled to fully exercise its prerogatives in that regard in accordance with the Treaty.

ENTRY INTO FORCE : 16.03.2014. The Regulation is applicable from 01.01.2014 until 31.12.2020.

The European Parliament adopted by 613 votes to 34, with 24 abstentions, a legislative resolution on the proposal for a regulation of the European Parliament and of the Council establishing common rules and procedures for the implementation of the Union's instruments for external action.

Parliament adopted its position at first reading under the ordinary legislative procedure. The amendments adopted in plenary are the result of a compromise negotiated between the European Parliament and the Council.

Respect for democratic principles : the main underlying principles of the various 2014-2020 Union external action programmes are to

promote, develop and consolidate the principles of democracy, the rule of law and respect for human rights and fundamental freedoms on which it is founded, on the basis of, where appropriate, dialogue and cooperation with partner countries.

The Union's action on the international scene should be guided by the principles which have inspired its own creation, development and enlargement, as enshrined in Article 21 of the Treaty on the European Union

Effects and impact of measures: the Union's external action under the instruments to which this Regulation applies should contribute to clear results (covering outputs, outcomes and impacts) in countries benefiting from external financial assistance of the Union. Whenever appropriate and possible, the results of the Union's external action and the efficiency of a particular instrument should be monitored and assessed on the basis of pre-defined, clear, transparent and, where appropriate, country-specific and measurable indicators, adapted to the specificities and objectives of each instrument.

Certain criteria taken into account: the following criteria to be taken into account in respect of the implementation of actions have been added:

accessibility for persons with disabilities ; progress achieved by the partner in respect of human rights and democratic principles; the vulnerability of the partners; experience gained in the implementation of previous programmes.

Monitoring of progress: the Commission should examine the progress made in implementing the measures of financial assistance taken under the various regulations relating to EU external action.

Visibility of the Union's financial support: measures have been introduced to enhance the visibility of European assistance by means of relevant actions.

Civil society’s views to be taken on-board: during the implementation process, notably the preparation, implementation, monitoring and evaluation of measures taken under this regulation, it is important to consult stakeholders in the beneficiary countries (civil society and local authorities) to ensure they play a meaningful role in this process. Provisions should be made to allow certain tasks to be entrusted to non-profit organisations under conditions equivalent to those applying to the Commission.

Optimising resources: the EU should seek the most efficient use of available resources in order to optimise the impact of its external action. This should be achieved through coherence and complementarity between Union's Instruments for external action, as well as the creation of synergies between the Union's external financial Instruments and other policies of the Union. This should further entail mutual reinforcement of the programmes devised under those Instruments, and, where appropriate, using financial instruments that have a leverage effect.

Action programmes and nature of financing: financing decisions should include in an annex the description of each action, specifying:

its objectives, main activities, expected results, methods of implementation, budget and indicative timetable, any associated support measures and performance monitoring arrangements

and should be approved in accordance with the procedures provided for in Regulation (EU) No 182/2011.

Special measures: technical provisions were added to lay down procedures in regard to:

special measures, multiannual actions, cross-border cooperation actions

in line with the changes made in the various relevant regulations.

Other new provisions: new provisions have also been introduced on a technical level to:

promote local capacity in the framework of procurement; strengthen the follow-up, the effectiveness and the eligibility criteria in regard to the granting of budget suppor t to third countries; clarify the eligibility rules for the various programmes for partner countries; monitoring and evaluation of actions implemented at the local level; set the general framework for annual reporting of funds (mid term (2017) and final (2021)).

It should be noted that the annual report should should draw lessons from the implementation of various regulations and potentially revise certain provisions relating to the experience.

The report mentioned in Article 13 shall reflect the main lessons learned and the follow-up to the recommendations of the evaluations of the previous years.

Implementing acts: provisions were added to lay down the procedure applicable for the adoption of support measures by the Commission. In particular, it was stipulated that the examination procedure should not be used for (other than for the exceptions in the various regulations) the adoption of:

individual measures for which the Union’s financial assistance does not exceed EUR 5 million ; special measures for which the Union’s financial assistance does not exceed EUR 10 million ; technical amendments to action programmes, individual measures and special measures.

The European Parliament should be informed of the measures in question.

The proposed regulation, as amended, is accompanied by a series of joint, bilateral or unilateral declarations of the European institutions:

a Commission declaration on reflows; a Commission declaration concerning the use of implementing acts for the setting of the specific provisions for the implementation of certain rules in certain EU external policy-related regulations; a European Parliament statement on the suspension of assistance granted under the financial instruments in particular in cases where a beneficiary country fails to observe basic principles such as democracy. It is stipulated that in this case, and given that any suspension of assistance under these instruments would modify the overall financial scheme agreed under the ordinary legislative procedure, the European Parliament would be entitled to fully exercise its prerogatives in accordance with the Treaty.

The Committee on Foreign Affairs adopted the report by Elmar BROCK (EPP, DE) on the proposal for a regulation of the European Parliament and of the Council establishing common rules and procedures for the implementation of the Union's instruments for external action.

The Committee on International Trade, exercising their prerogatives as associated committees under Rule 50 of Parliament’s Rules of Procedure, was also consulted and gave an opinion on the report.

The committee recommended that the European Parliament’s position at first reading, following the ordinary legislative procedure, should amend the Commission proposal.

The main amendments were as follows:

Respect for democratic principles : the Union seeks to promote, develop and consolidate the principles of democracy, the rule of law and respect for human rights and fundamental freedoms on which it is founded, on the basis of, where appropriate, dialogue and cooperation with partner countries and regions. The Union shall integrate these principles in the implementation of the Instruments covered by this Regulation. The Union's action on the international scene should be guided by the principles which have inspired its own creation, development and enlargement, namely democracy, the universality and indivisibility of human rights and fundamental freedoms.

Action programmes and special measures : the Commission should adopt annual action programmes specifying for each action the objectives pursued, the expected results and main activities, methods of implementation, budget and indicative timetable, any associated support measures and performance monitoring arrangements.

Technical provisions have also been added to decide on the procedures to be followed as regards the adoption of:

special measures; multi-annual actions; cross-border cooperation actions

in line with the changes introduced in the various regulations.

When designing and implementing programmes and projects, account shall be taken of criteria regarding :

accessibility for persons with disabilities progress achieved by the partner in respect of human rights and democratic principles; the vulnerability of the partners; experience gained in the implementation of previous programmes.

Monitoring of progress : the Commission should examine the progress made in implementing the measures of financial assistance taken in external action.

Visibility of the Union's financial support : measures have been introduced to enhance the visibility of European assistance.

Taking account of stakeholders’ views : when working with stakeholders of beneficiary countries, specific account should be taken of their needs and context, when defining the modalities of financing, the type of contribution, the award modalities, etc.

Optimising resources : the EU should seek the most efficient use of available resources in order to optimise the impact of its external action. This should be achieved through coherence and complementarity between Union's Instruments for external action, as well as the creation of synergies between the Union's external financial Instruments and other policies of the Union.

Other new provisions : new provisions have also been introduced on a technical level:

promote local capacity in the framework of procurement; clarify the eligibility rules for the various programmes for partner countries; monitoring and evaluation of actions implemented at the local level; set the general framework for annual reporting of funds (mid term (2017) and final (2021)). It should be noted that the annual report should draw lessons from the implementation of various regulations and potentially revise certain provisions relating to the experience.

Implementing acts : provisions have been added to set the framework of the procedure applicable for the adoption of the Commission support measures. It is state that the examination procedure shall not apply to the adoption of support measures for which the Union's financial assistance does not exceed EUR 10 million . The European Parliament should be duly and promptly informed.

PURPOSE: to establish common rules and procedures for the implementation of the Union's instruments for external action for 2014-2020.

PHILOSOPHY AND ACTION PLAN FOR EXTERNAL AID 2014-2020: what happens outside the borders of the EU can and does directly affect the prosperity and security of EU citizens. It is therefore in the interest of the EU to be actively engaged in influencing the world around us, including through the use of financial instruments. The Lisbon Treaty marks, in this regard, a new departure in the EU’s relations with the rest of the world.

The EU's engagement needs to be tailored to individual circumstances . Its partners range from development economies to the least developed countries in need of specific assistance from the EU.

In general, the overall objective for external action for the period 2014-2020 may be summarised as follows:

long-term commitment to establishing an area of stability, prosperity and democracy in its own neighbourhood; facilitating the EU's engagement with third countries on issues that are of global concern, such as climate change, environmental protection, irregular migration and regional instabilities, and allowing the EU to respond rapidly and effectively to natural and manmade disasters around the world.

A major rationalisation of the instruments took place in 2003 and has begun to deliver more effective results. The Commission does not consider that another major alteration of the legislative architecture is necessary for the next MFF period , although some improvements are being proposed and the overall investment is being stepped up.

The Commission proposes to allocate EUR 70 billion for the 2014-2020 period for external instruments broken down as follows:

Financing instrument for development cooperation Partnership instrument for cooperation with third countries Instrument for Pre-accession Assistance (IPA II) European Neighbourhood Instrument Instrument for nuclear safety cooperation Instrument for Stability Financing instrument for the promotion of democracy and human rights worldwide

In parallel and for the first time, the Commission proposes a single horizontal regulation establishing common rules and procedures for the implementation of the Union’s instruments for external action. This is the purpose of the present proposal.

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

BACKGROUND: a priority for the Commission within the context of the Multiannual Financial Framework (MFF) is to simplify the regulatory environment and facilitate the availability of Union assistance to partner countries and regions, civil society organisations, SMEs, etc. to the extent that they contribute to the objectives of the Regulation.

In the implementation of the new Instruments, simplified and flexible decision-making procedures would allow a swifter adoption of implementing measures and thus of delivery of EU assistance, in particular for countries in crisis, post-crisis and fragility. Furthermore, the revision of the Financial Regulation, which is particularly substantial with regard to the special provision on external actions, will facilitate the participation of civil society organisations and small businesses in funding programmes, for example by simplifying rules, reducing the costs of participation and accelerating award procedures. The Commission intends to implement this Regulation using the new flexible procedures provided for in the new Financial Regulation.

IMPACT ASSESSMENT: the Commission performed an internal review of different reports (evaluations, audits, studies, mid-term reviews). The review looked at what worked and what did not work, and drew lessons for the drafting of the financial instruments. The review showed that the current Instruments contributed to progress towards the MDGs in developing countries. The implementation modalities, such as budget support and the "sectorwide approach", have allowed deeper cooperation with partner countries and a more efficient division of labour through co-financing between donors. Nevertheless, the review identified a number of shortcomings. The current implementation process was assessed as too complex and does not allow swift adjustments if required . These shortcomings have been directly addressed in the present Regulation.

LEGAL BASIS: Article 209(1) and 212 (2) of the Treaty on the Functioning of the European Union (TFEU).

CONTENT: the Commission proposes set of simplified rules and conditions for providing the Union's financial assistance to actions, including action programmes and other measures, under the following Instruments:

the Development Cooperation Instrument (‘DCI’), the European Instrument for Democracy and Human Rights (‘EIDHR’), the European Neighbourhood Instrument (‘ENI’), the Instrument for Stability (‘IfS’), the Instrument for Nuclear Safety Cooperation (‘INSC’), the Instrument for Pre-accession Assistance (‘IPA’) and the Partnership Instrument (‘PI’).

The proposal sets out the objectives of the Regulation which are to provide a harmonised set of implementing rules for Relex Instruments, to protect the financial interests of the Union, and to promote simplification and flexibility in implementing these Instruments.

Adoption of Action Programmes, Individual Measures and Special Measures : the proposal provides that financing decisions taken by the Commission are to be in the form of action programmes, based on the multiannual programming documents .

Exceptionally , individual measures can be adopted outside the action-programme framework. In the event of unforeseen and duly justified cases, the Commission may adopt special measures not provided for in the multiannual programming documents.

Support measures : the proposal defines the types of expenditure that represent support to the implementation of this Regulation and which may be covered by Union financing (e.g. preparation, follow up, monitoring, audit and evaluation activities, provision of information and communication efforts). These measures can be financed outside the scope of the programming documents.

Provisions on the financing methods : The Union's financial assistance may be provided, inter alia, through the following types of financing envisaged by the Financial Regulation:

grants; procurement contracts for services, supplies or works; budget support; contributions to trust funds set up by the Commission; financial instruments such as loans, guarantees, equity or quasi-equity, investments or participations, and risk-sharing instruments, possibly combined with grants; shareholdings or equity participations in international financial institutions, including regional development banks.

The Union's financial assistance may also be provided, in accordance with the Financial Regulation, through contributions to international, regional or national funds , such as those established or managed by the European Investment Bank, international organisations, Member States or by partner countries and regions, for attracting joint financing from a number of donors, or to funds set up by one or more donors for the purpose of the joint implementation of projects.

Implementing tasks : the Union's financial assistance shall be implemented by the Commission as provided for by the Financial Regulation, directly by Commission departments, Union delegations and by executive agencies, or indirectly by entrusting budget implementation tasks to the entities listed in the Financial Regulation, including under shared management with Member states.

Technical measures : the proposal also provides for innovative instruments, such as loans, guarantees, equity and risk-sharing instruments, and describes possible arrangements with respect to taxes, duties and charges. It describes that the measures under this Regulations may be implemented directly by the Commission or indirectly by entrusting budget implementation tasks to any entity or person listed in the Financial Regulation. This provision also defines the type of co-financing (parallel or joint).

It also lays down measures to protect the Union's financial interests, and in particular to enable it (notably the Commission, the Court of Auditors and OLAF) to carry out all the necessary checks on the measures implemented as well as conditions governing access to public procurement and grant awards for the purposes of implementing the Regulation. The proposed provisions are significantly simplified and indicate the objective to work towards untied aid delivery. Nevertheless, the articles introduce in detail the conditions for eligibility of third countries (reciprocity requirement, participation in the implemented programme, non-eligibility of certain countries, etc.) and exceptions thereto (unavailability of products or services provided, extreme urgency, triangular cooperation, etc.).

Evaluation and implementation report : the Commission should regularly evaluate the results of the implemented policies and programmes, sectoral policies and the effectiveness of programming itself. All relevant stakeholders will be associated to the evaluation and the report will be shared with the Council and the European Parliament. No later than 31 December 2017 , a report shall be established by the Commission on the achievement of the objectives of each of the Instruments by means of result and impact indicators measuring the efficiency of the use of resources and the European added value of the Instruments, in view of a decision on the renewal, modification or suspension of the types of actions implemented under the Instruments.

The Commission shall examine the progress made in implementing the measures of financial assistance taken in external action and shall submit to the European Parliament and to the Council a report every two years starting in 2016 on the implementation and results and, as far as possible, on the main outcomes and impacts of the Union's financial assistance. Specific tracking system based on the OECD methodology (‘Rio markers’) is proposed. By mid 2018, the Commission shall prepare and submit a report evaluating the implementation of this Regulation to the European Parliament and the Council, and, if appropriate, present a legislative proposal introducing the necessary modifications. Likewise, this report will assess the impact of the measures adopted on the basis of this Regulation.

Comitology : the proposal describes the involvement of the relevant committees in the implementation of this Regulation.

BUDGETARY IMPLICATIONS: the proposal has no implications for the EU’s budget.