Bookworm is quite correct and demonstrates the dangers of relying on a failing memory when posting from a third-rate airport in the middle of the night while waiting for Pedro to change a nosewheel tyre. I should have waited until I got back to my books. What I should have said, of course, is that no further information should be expected from Part-FCL, which deals only with how to obtain and maintain the licences, ratings and certificates required by the Basic Regulation.
EASA's position may be clarified by its response to various comments in the CRD to NPA 2008-17b, such as:
"The Basic Regulation establishes two possible ways to accept a licence issued by a third country: through a bilateral agreement celebrated between the Community and that third country and, in the case of aircraft registered in a third country flown by an operator established or residing in the Community, though unilateral acceptance based on related implementing rules. A proposal for those rules was included in NPA 2008-17, in Annex III to the Licensing regulation."
Further, the following statement was made in response to a comment on Annex III:
"In relation to the issue of the IR, however, it needs to be said that it is widely known that the content of the training required by the FARs and the JARs is different, specifically on the level of the theoretical knowledge. The Agency considers that an equivalent level of knowledge and proficiency needs to be ensured for pilots flying under IFR in the European air space in order to ensure safety. It is further considered that the requirements that were included in JAR-FCL and have been included in the Agency's proposal are adequate to guarantee that. The Agency does not intend to fundamentally change these requirements without a dedicated assessment."
In response to a comment by the FAA regarding the applicability of Annex III, the following statement was made:
"The sentence ‘established or residing in the Community’ includes both private/ commercial operators whose principle place of business is within the territory of the Community. For private pilots (GA pilots) this means their place of residence. For organisations, it means the place where their principle place of business is: the place of their head office or registered office within which the principal financial functions and operational control, including continued airworthiness management, of the Community operator are exercised."
These statements clearly confirm the Agency's intent that an operator established or residing in the Community will be able to operate a third country aircraft only on the basis of the rules in Annex III to the Cover Regulation (i.e. either by validation for up to a year or by conversion, which applies only to the licence and associated class/type rating but not to any other rating or certificate such as the IR). Since this provision is in the Basic Regulation, that is already EU law, there is no realistic way to change it in the short term, no matter what 'influence' owners of such aircraft may think they have.
Consequently, an EU-based/resident operator of a third-country aircraft (including M-Reg aircraft owned by organisations with a principle place of business in the EU) who holds an ICAO licence with instrument rating could convert the licence and any associated type/class rating in accordance with Annex III but would subsequently have to obtain an EASA IR. However, Article 7 of the Cover Regulation allows for a reduction of course duration, number of lessons and specific training hours to be reduced on the recommendation of an approved training organisation and so it would not be necessary for an individual to complete the full approved course(s) to obtain an EASA IR. They would, however, be required to pass the relevant theoretical knowledge examinations and skill test.