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DEVELOPMENT: EU, ACP to Sign New Trade and Aid Pact

Brian Kenety

COTONOU, Benin, Jun 23 2000 (IPS) - After 18 months of negotiations, the African, Caribbean and Pacific (ACP) group and the European Union (EU) will sign a new trade and aid partnership agreement here Friday to replace the Lome Convention which has governed relations between the two blocs since 1975.

To a much greater degree than the Lome Convention, the new partnership agreement “is based on respect for human rights, democratic principles and the rule of law, and good governance,” says the EU executive Commission.

The Cotonou Agreement, as the accord is to be known, focuses on poverty reduction as its principal objective, to be achieved through political dialogue, development aid and closer economic and trade co- operation.

It also allows for a more “flexible response” in terms of crisis management, says Poul Nielsen, EU Commissioner for Development Co-operation and Humanitarian Aid, whereas under the Lome Convention the mechanisms could be compared to “total retaliation policies of the Cold War.”

At a news conference late Thursday evening at the conclusion of the joint ACP-EU ministerial council here Nielsen said that the EU “needed someone to talk to (à) who could bring some credibility, no matter what our opinion” to discussions.

The meetings, however, were dogged by the shadows of Cuba and Fiji. The Fijian capital Suva was the original site for the signing of the new EU- ACP agreement. A coup d’etat last month necessitated a change of venue.

Top EU officials here have been carefully guarded in commenting on the situation in Fiji. Nielsen himself said the EU did not “wish to jump to conclusions” regarding the ongoing political crisis in the tiny pacific island nation.

But pressed by reporters to send a “message” to the people of Fiji, Nielson added that “we are not at the end of this process. We are not giving a message to the people of Fiji.”

The Portuguese minister for development, Luis Amado, whose country holds the rotating EU Presidency until it passes to France July 1, said the EU was currently not in a position to impose punitive “instruments” to respond to “this internal crisis in Fiji” and that Brussels would act in every possible way to assist Fiji to bring the situation under control.

In May, Cuba withdrew its candidature to the EU-ACP agreement after several members of the European bloc on Apr. 18 voted for a resolution before the UN’s Commission on Human Rights in Geneva condemning Havana for alleged human rights abuses.

Although EU officials have repeatedly pointed out that it was Cuba’s choice to withdraw from the EU-ACP pact, Havana’s expressed outrage at what it sees as northern donors dictating the political structures of southern recipient countries, was widely supported by ACP delegates.

Political dialogue between the EU and each of the partner States (or regions) will play a key role in determining the nature and objectives of the assistance provided, according to the Commission, which noted in a news release this week that the agreement “also establishes special consultation procedures and appropriate sanctions for dealing with human rights violations and serious corruption.”

Jamaica and the Dominican Republic, were especially outspoken in their support of Cuba, which attended ACP ministerial meetings here earlier in the week as an observer, in what they see as its rebellion against the developed nations’ interference into the internal matters of developing countries.

Privately, ACP delegates speak of a political “pre-conditionality” imposed by the EU upon countries wishing to sign on to the Cotonou Agreement, through which the EU will disburse some 13.5 billion euros to the ACP states through its European Development Fund (EDF).

The EU lobbied successfully for “good governance,” to be an essential element of the new accord, the violation of which could result in the application of sanctions from Brussels, something which a large number of ACP states felt was an intrusion on their sovereignty and were reluctant to agree to.

EU officials acknowledge privately the need to “tread softly” when questions of sovereignty arise, but reject the assertion that Brussels’ apparent reluctance to take a strong stand on Fiji is directly related.

By all accounts, agreement on nearly all the issues took place months ago and there were no surprises during the EU-ACP talks that took place here this week, and for that reason the politics behind the situation in Fiji and related to Cuba grabbed the spotlight.

One notable exception where agreement has not been reached is regarding sugar, where the two have “agreed to disagree,” with the EU saying it will not continue with what amounts to price support mechanisms for ACP suppliers.

Under the new partnership agreement, the system of trade preferences previously granted the ACP states will gradually be replaced by a series of new economic partnerships based on the progressive and reciprocal removal of trade barriers.

Partly in order to comply with WTO regulations, preferential access to the EU markets for bananas and other commodities produced by the ACP states may be dismantled. Although both parties are pushing for a WTO waiver on bananas, which are not grown in significant quantities by EU member states or their territories, European commercial interests compete with the ACP for sugar.

These agreements will be defined as part of what the EU sees as a broader strategy to improve the ACP States’ ability to attract private sector investment.

Nielson told reporters that only one percent of the world’s foreign direct investment (FDI) went to sub-Saharan Africa, the countries of which comprise over two-thirds of the ACP group, and that investors looked for “good governance” when deciding where to put their resources.

In sub-Saharan Africa, and in most of the Caribbean and Pacific islands which belong to the ACP group, almost half the people live in conditions of absolute poverty, forced to survive on less than one US dollar a day. This situation is the consequence “both of serious economic problems and of considerable political instability,” said the Commission in a statement.

“Notwithstanding, many of these countries have already embarked upon a process of democratisation. At the same time, economic reform is beginning to bear its first fruit. Certain recent developments, in particular the opening up of South Africa (also a signatory to the Agreement) and the intensification of regional integration and co-operation in West Africa, are helping to change the face of an entire continent,” it said.

The new ACP-EC partnership seeks to create a more favourable context for sustainable development and poverty reduction, and to reverse the processes of social, economic and technological marginalisation.

After the failure of the ministerial council of the World Trade Organisation (WTO) in Seattle last December, the EU is hopeful that the Cotonou Agreement constitutes a joint ACP-EU response to “the challenges posed by globalisation.”

ACP Secretary-General Jean-Robert Goulongana told reporters at the conclusion of the ACP council of ministers’ two-day meeting Thursday night that the 7 7 ACP member states recognised that despite the loss of preferences, there were a number of areas in which they should work to improve market access. These include infrastructure and distribution networks as well as “better marketing.”

Through the EDF, the Commission has said it will support the ACP governments in their attempts “to create a balanced macro-economic context, expand the private sector and improve both the quality and coverage of social services.”

Regional integration among the ACP States themselves is also an important objective of the EU, which believes this can facilitate their integration into the global economy.

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