The CAP and cohesion policy after 2020: the greater demand for ‘European added value’ set against the principles of subsidiarity and proportionality
2020 ECA Award winner
Antoine Dumartinet is one of the two ex aequo winners of the 2020 ECA Award. His paper discusses the use of the EU added value concept during the negotiations on the post-2020 Multiannual Financial Framework (MFF), particularly in relation to EU policies such as agriculture and cohesion under shared management. Antoine Dumartinet currently works as an expert for the German agency for technical cooperation — Gesellschaft für Internationale Zusammenarbeit, GIZ — at the Serbian Ministry of European Integration. Below, he provides the main aspects covered in his award winning contribution.
By Antoine Dumartinet, Deutsche Gesellschaft für Internationale Zusammenarbeit — GIZ (German Technical Cooperation Agency)/integrated expert working at the Ministry of European Integration in Serbia
EAV used as an argument both in favor of and against financial cuts in shared management policies
At the end of the extraordinary European Council meeting of February 2020, Member States did not manage to agree on the volume of appropriations to allocate to the next multiannual financial framework 2021–2027 (hereinafter ‘post-2020 MFF’”). In particular, Member States failed to agree on the amount of credits to be devoted to the common agricultural policy (CAP) and to the cohesion policy, respectively facing a -15% and -10% decrease of their envelopes in constant 2018 euros. While some Member States considered these reductions insufficient with regard to the alleged low European added value (EAV) of these two policies, others required on the contrary — and reversely citing the same arguments — to increase these envelopes. Beyond budgetary matters, the failure of February’s negotiations illustrates the difficulty Member States and EU institutions have to agree on a common definition of what the EAV should be.
From abstract concept to key principle…
From a legal standpoint, the principle of EAV is not formally defined in any of the Treaties. Nevertheless, as I explain in my paper, the European Commission and the European Court of Auditors have successfully converted this abstract concept into an essential principle of European public finances. In 2017, ahead of the launch of negotiations on the post-2020 MFF, the Commission published a reflection paper on the future of EU finances in which it provided EAV with a solid conceptual framework. The purpose of it was to make EAV an effective tool for allocating appropriations within the future MFF and for pacifying the whole budgetary procedure.
In its paper the Commission considered, on the one hand, that EAV consisted in the achievement of the objectives set out in the Treaties; and, on the other hand, that EAV consisted in providing/protecting public goods with a European dimension or which helped to uphold fundamental freedoms, the single market or Economic and Monetary Union (EMU). Rightly, the Commission also related this EAV notion to the principles of subsidiarity and proportionality, stressing that ‘the EU should not take action unless it is more effective than action taken at national, regional or local level.’ Accordingly, the EU’s action has to be additional or complementary to national or regional efforts, but in no way to fill in gaps left by the shortcomings of national policies.
The principle by which the level of EAV should logically determine the degree of financial intervention by the Union after 2020 was clearly outlined in the Commission’s proposal of May 2018. In practice, unfortunately, the Commission seems to have applied this key principle unequally between EU policies. In particular, the arguments put forward to measure the EAV of the Common Agricultural Policy (CAP) and the EU’s cohesion policy turned out to be much vaguer and less convincing than for the other policies. The EAV of the CAP and of cohesion policy was indeed mostly justified by means of references to the objectives — all in all very general — set out by the Treaties. Plus, the financial resources devoted to certain components of the CAP and of cohesion policy appeared to be out of sync with the degree of EAV the Commission itself lent them in the preamble (e.g. European territorial cooperation, 2nd pillar of the CAP, stabilization instrument, agricultural crisis reserve, etc.).
…but in need of stricter criteria…
The difficulties related to the assessment of the EAV of the CAP and cohesion policy in general terms can mostly be explained by the extremely wide scope of intervention of these two policies. Besides, we may also consider that the EAV of these policies is partially undermined by their specific mode of management (which entails complex and costly governance structures), the rigidity of the national share pre-allocation system (which hinders necessary financial adjustments in the event of unforeseen circumstances) and the existence of similar national measures.
All in all, the specific case of the CAP and cohesion policy might plead in favor of a stricter definition of EAV which would enable this crucial principle to be made an operational tool for prioritizing EU investments and pacifying the budgetary procedure. Member States should also be actively involved in enabling EU measures to achieve their full EAV potential on their territory, in line with the principles of subsidiarity and proportionality. In that perspective, I propose the degree of added value of an EU action should be assessed by using the following criteria:
- the action of the Union is fully in line with the objectives set by the Treaties and the corresponding measures achieve — via synergies — economic, coordination and security gains;
- the European measures achieve the objectives initially assigned to them, without deadweight effects, and within a reasonable timeframe;
- the European measures do not compete with national mechanisms which are already effective and whose conditions of access for beneficiaries are also easier;
- the implementation of European measures does not constitute an excessively heavy burden for national administrations;
- the benefits resulting from the implementation of the European measure are not exclusively national.
…to evaluate EAV more sincerely and rationally
It is obvious that the assessment of the EAV of measures financed by the Union budget will always involve an element of arbitrariness. Such a situation should not, however, prevent Member States and EU institutions from seeking to agree on a stricter and more binding definition of the principle of EAV. On the one hand, this requires that the Commission departs from the logic according to which any intervention by the Union is justified. And on the other hand, that Member States undertake to carry out the necessary work of substituting European appropriations for national funds in order to give the European measures adopted their full EAV. The definition of a more stringent and empowering framework could thus make it possible to move away from the logic of ‘net returns’ which undermines the negotiations related to each new MFF. Such logic irremediably leads Member States to haggle — at the last minute — for discounts on their contributions and/or for increases in their national allocations, provided to implement EU actions.
In concrete terms, the (possible) mid-term review of the post-2020 MFF could be settled as a rendez-vous clause on which basis the EAV of the measures financed by the Union budget could be reassessed. Such a review could be carried out by using the annual reports sent by the fund managers to the Commission each year as well as by ad hoc reports aimed at answering several thorny questions commonly identified by the Member States and the Commission upstream during the start of the programming. In this respect, I very much welcome the provision in the recent Recovery and Resilience Facility regulation, which requires an independent ex-post evaluation in order to assess the EAV of the investments made through this Facility and newly financed by issuing EU debt.
This article was first published on the 3/2020 issue of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.