The Council of the EU and the European Parliament reached an agreement on the €5 billion Brexit adjustment reserve at the first interinstitutional negotiation meeting (trilogue) on Thursday 17 June.
“Agreement on the Brexit adjustment reserve”, announced European Parliament rapporteur Pascal Arimont (EPP, Belgium) soberly on his Twitter account, after 3 hours of negotiations. “There was an urgent need to be able to respond on the ground to the multifaceted Brexit crisis. This is what we are doing in an extremely short time with the Brexit adjustment reserve”, Younous Omarjee (The Left, France) told EUROPE.
Indeed, because of the need to respond to the most immediate needs of the Member States, the co-legislators moved quickly. The political meeting was intensively prepared by five meetings at technical level following the agreement reached in Parliament (see EUROPE 12737/9).
“The trilogue agreement is a great success for the Parliament, which obtained the exclusion of financial services from the scope of the reserve, a compulsory earmarking for the fisheries sector and the involvement of local and regional authorities in the implementation of the instrument”, commented MEP Irène Tolleret (Renew Europe, France), responding to EUROPE.
The negotiations were facilitated by the fact that the European Parliament aligned itself with the EU Council’s method of allocating funds (see EUROPE 12726/8). This initial concession from Parliament to the Council of the EU reportedly allowed parliamentarians to advance their positions on other policy issues.
Thus, the co-legislators opted for a single method of allocating funds and abandoned the threshold of 0.06% of GDP for access to the second tranche of aid. In the context of pre-financing, Parliament abandoned its two-tranche approach for the EU Council’s three-tranche approach over the period 1 January 2020 to 31 December 2023 (Parliament wanted it to start as early as 1 July 2019). On the other hand, Parliament has obtained a guarantee from the European Commission that the pre-financing will arrive quickly.
The first pre-financing tranche will amount to €1.6 billion in the 30 days following the entry into force of the regulation. The second tranche—€1.2 billion—will be disbursed before 30 April 2022. Finally, the third tranche of €1.2 billion will be disbursed before 30 April 2023. The amounts mentioned in the regulation remain in 2018 prices, which will smooth out the effects of inflation. The last remaining billion will be disbursed by the European Commission in 2025 on the basis of Member States’ payment claims submitted before September 2024.
Another important point is that the co-legislators now foresee that the Reserve can only be deployed for sectors negatively impacted by Brexit. The financial sector is explicitly excluded from the financing of the reserve in the recitals of the regulation. This will guide the European Commission’s monitoring and approval action and the interpretation of the EU Court of Justice, where appropriate.
Parliament was partially heard on the issue of the effective earmarking of funds to the fisheries sector. As a result, 7% of the national envelope will have to be devoted to the fisheries sector for those Member States receiving aid of at least €10 million, according to the distribution key agreed by the co-legislators. Portugal, for example, will be excluded from this obligation, with the country receiving a total of €25 for the fisheries sector, according to one source. This earmarking can be 50% of the amounts allocated within the allocation calculated for fisheries elsewhere.
The interinstitutional agreement is expected to be supported by the Committee on Regional Development (REGI) in July. The text is expected to be submitted for approval to MEPs at the September plenary session. “[We are making] sure the assistance can already be allocated from the end of this year”, Mr Arimont pledged. (Original version in French by Pascal Hansens)