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  European Commission Welcomes the Support by the EU Council and the Parliament to Offer a Complete Untying of Aid

The European Community has adopted two regulations on the access to EC external assistance that establish an unprecedented level of untying.

Giving aid on the condition that it will be tied to the purchase of goods and services from the donor country has been a major impediment to the effectiveness of aid. But this consensual decision represents a remarkable step toward the enhancing of EC aid effectiveness the European Commission said in Brussels on 21 November 2005.

ANZAC impact
Australian firms will now be able to compete for all EC aid contracts relating to the Least Developed Countries Australian sources say.

New Zealand companies would appear to be able to already access this part of EC aid as their aid program is untied.

The second key change relates to the remaining part of EC aid, which will be open to other donors contractors on the condition that those donors open their own aid programs.

This second change currently will not impact on Australian firms, but clearly provides a real commercial imperative for Australia to completely untie the aid program.

Partner at centre
The Council and the Parliament have agreed to the Commission's approach that goes far beyond a trade negotiation between donors. It puts the partner country at the center and advocates an intelligent use of the concept of untying that also supports regional integration, capacity building and the development of local markets. It helps concretely the partner country to become a major actor of its own development not only in political terms but also as an operational actor.

European Commissioner for Development and Humanitarian Aid, Louis Michel, presented this agreement as "a concrete delivery that proves that we have taken seriously the commitments we made on aid effectiveness in the UN Summit".

The announcement coincided with a Wellington workshop presenting the final findings of the comparative trans-national research project Public, Elite and Media Perceptions of the EU in Asia Pacific region, including Australia and New Zealand. The workshop did not include the Forum Island countries which include some least developed countries.

National Centre for Research on Europe
The National Centre for Research on Europe at Canterbury University, the leading organization for the trans-national project, says the November report of the international research team on the final findings will serve to launch the opening of discussions between two sides – the EU and Asia Pacific.

The objective is to develop a set of recommendations and strategies for furthering the quality of the dialogue between the two regions by promoting an understanding of the dominant perceptions, attitudes, beliefs and opinions about each other.

Aid to LDCs untied
In the new EU regulations, all aid to the Least Developed Countries will be unilaterally untied. All expertise will be untied and based only on its dual criteria of quality and price. Food aid will be untied. In total, this is 30% of all EC aid that will be completely untied. According to international agreed estimations this would create a better value for money up to 500 million euros. This goes much further than the existing limited international consensus that covers 2% of aid.

The remaining part of EC aid will be open to other donors upon the condition that they open themselves their own aid, according to the principle of reciprocity. This represents a generous offer for those donors that do not yet untie their own aid. It could bring an additional better value for money of 1.2 billion euros.

The regulations also entail several operational simplifications favouring more joint actions between donors. They constitute a further implementation of the principles and commitments agreed by the European Union in the High Level Forum on harmonization and the "Paris Declaration" on aid effectiveness.

Find out more in the text of the Regulations.
Updated 22 November 2005




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