DEVELOPMENT: EU and ACP Hammer Out New Trade and Aid Convention

By IPS Correspondents Reprint | | Print |

BRUSSELS, Dec 10 1999 (IPS) - After two years of talks, the 15-member European Union (EU) and 71 former European colonies in Africa, the Caribbean and the Pacific (ACP) agreed here Thursday as to the shape of the future relationship between the two blocs.

The Lome Convention – the world’s most comprehensive agreement on trade, development and co-operation – will expire on 28 February 2000 and be replaced by a new ACP-EU agreement the text of which has yet to be verified in a formal ministerial setting.

After the last ministerial post-Lome conference, which ended in Brussels at dawn on 9 December, European Commissioner for Development Poul Nielson said he considers that a successful conclusion is within reach.

However, time constraints impeded negotiators from formalising and formally approving all the texts necessary to reflect the full agreement on all major points of this negotiation, said EU chief negotiator Philip Lowe.

All outstanding major issues of the negotiations were resolved, he said, with ministers reaching almost full agreement in the last two days, bringing “tremendous satisfaction on both sides.”

ACP senior negotiators were not immediately available for comments.

The EU hopes to finalise the texts and formally adopt them by end-January – in time to ensure continuity in all ACP-EU arrangements. The first pact was signed in Lome, the capital of Togo, in 1975.

Lowe said negotiators reached “a very firm” agreement on trade, despite the fact that a number of texts remain unrealised, such as how to enhance ACP countries’ market access to the EU and how to help ACP countries which presently benefit from soon-to-disappear special support, or protocols, in rum and rice exports.

Lome trade preferences that allow ACP nations to export to the EU most of their goods at zero-tariff “had to be put into a wider context,” said Lowe.

“It was not possible simply to discriminate only in favour of developing countries in the ACP group: we have to look at the wider picture of the EU’s relationship with all developing countries,” Lowe told reporters.

The EU has already committed itself to opening up its markets for “substantially all products” to Least-Developed Countries (LDCs) by 2005, of which 38 are also members of ACP. The EU, however, has staunchly refused to end its agricultural subsidies, considered to be a crucial trade obstacle.

The EU negotiating mandate foresaw a five-year transition period before entry into force of any new trade arrangements. The ACP group, however, was asking for a ten-year period and argued that future arrangements should not be defined at this stage.

At the meetings, an eight-year preparatory period before setting up new trading arrangements was confirmed, said Lowe. Beyond that timeframe, “there will be further periods of transition of between 10 and 15 years” before EU countries could export duty free to ACP nations, he said.

Lowe said that all ACP countries had been invited and had agreed to participate in the preparation of “(Regional) Economic Partnership Agreements”, or REPAs, among ACP countries. The EU hopes to replace the Convention with free-trade arrangements between the Union and such agreements.

Lowe stressed that this process “is in the hands of ACP countries themselves”.

Yet free trade arrangements are not expected to have a positive impact on ACP states, according to many ACP delegates. This possibility was reflected in a set of studies released by the EU’s executive Commission in November 1998.

The present Convention is covered by a waiver of the World Trade Organisation (WTO) which expires with the Convention in February.

Ministers agreed to request a new eight-year waiver for the new trade and aid pact. Lowe said he was confident that the WTO would grant the waiver, but independent sources said this should not be taken for granted.

According to a November brief by the European Centre for Development Policy Management, a Maastricht-based think tank, a waiver “would require concessions by the EU to other WTO members and it would remain open to challenges.”

Stabex and Sysmin, two financial support instruments that help offset price fluctuations in volatile export earnings in agriculture and mineral sectors, will be eliminated in the new arrangements for financial co-operation, said Lowe.

After four days of discussions among EU member states, the Union proposed to the ACP, for the funding of the first five years of the future agreement, a 13.5 billion euros envelope of grants through its European Development Fund (EDF), which disburses four fifths of EU’s financial aid to ACP countries.

Although the ACP has not yet given a public reaction to the proposed envelope, it had called two weeks ago for a substantial increase in funding in real terms.

Also, the EU put a condition on the approval of the EDF funding: up to one billion euros would be reserved for decision in 2004 “as to whether that extra billion was necessary, in function of financial performance.”

“The major concern of EU countries is that the monies for development co-operation should be used effectively in the time foreseen for them,” Lowe explained.

Ministers also agreed that the concept of “good governance” should be included among the “fundamental elements” of the future agreement in addition to requirements for democracy, human rights and the rule of law.

The infringement of a fundamental element may bring suspension of aid and many ACP countries feared “good governance” could be evoked too easily.

During negotiations, ministers finally agreed that co-operation would not be suspended only on the grounds of lack of good governance. Full agreement, according to Lowe, was reached on corruption issues.

“Serious cases of corruption, whether affecting EU aid or more generally, would be grounds for invocation of the clauses of the agreement which call for consultation and if necessary partial or total suspension of aid,” he said.

From the beginning of formal negotiations for a new extension of Lome, in the autumn of 1998, civil society groups have been expressing concern about the lack of participation, decentralisation and transparency in the EU-ACP renegotiations.

Finally, ministers at their meeting decided to include “decentralised actors” in the formulation and implementation of the new Convention.

Eurostep, a Brussels-based network of European non-governmental development organisations that has long lobbied for civil society to be included in the new convention, reacted cautiously to the news.

“We welcome the decision to include civil society as an actor of the partnership,” Eurostep policy advisor Guggi Laryea told IPS.

“However, we believe that without precise mechanisms to assure civil society participation and safeguards, effective implementation would be difficult,” he added.