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FUTURE ACP-EU RELATIONS ACP/28/059/97 Rev.3 Brussels, 28 October 1997 Or:Eng/Working-Group Report EXECUTIVE SUMMARY Report of the Subcommittee on the Future of ACP-EU Relations |
TABLE OF CONTENTS
The negotiations for a successor to the Lomé Convention (due to expire in February 2000) will be of crucial
importance to ACP countries. More than ever before ACP countries need a good vibrant partnership with
the EU, one of the major economic groupings in the world, in order to address the very real threat of
economic marginalisation in a globalised world economy. The ACP's efforts to meet the challenges of
globalisation require support of a kind which only a new and invigorated Convention can provide.
To prepare for the negotiations the Committee of Ambassadors set up a Sub-Committee on ACP/EU Future
Relations which has been working assiduously in Brussels while, concurrently, national and regional
consultations have been taking place in ACP countries.
The European Commission, on the basis of a Green Paper on "Relations between the EU and the ACP
countries on the eve of the 21st century" has been engaged in a process of consultations in the EU as well
as in ACP countries.
2. THE INTERNATIONAL ENVIRONMENT AND THE ACP
Previous ACP-EU co-operation agreements were signed at a time and in an international environment when there was a shared rationale on both sides for entering into such agreements. Geo-political considerations and the EC's need to secure guaranteed supplies of commodities and raw materials were matched by the ACP's need to secure guaranteed access to EU markets for their products.The negotiations for a successor arrangement will, however, be taking place in a radically transformed
international environment. The end of the Cold War, the conclusion of the Post-Uruguay Round of
Multilateral Trade Negotiations, the advent of the WTO on the one hand, and the profound implications of
increased globalisation and liberalisation on the other, have ushered in a new international economic and
political landscape.
The EU itself is undergoing major transformation with economic and political integration, expansion of its membership to include Eastern and Central European countries, and monetary union, with the adoption of a single currency. It can be assumed that these will impact on the new priorities and concerns of the EU.
Globalisation and liberalisation clearly favour those countries and corporations which are highly efficient,
competitive and have a global reach. Globalisation may well open new opportunities for developing
countries but only a few are currently able to benefit from it. In the long term ACP countries may also do so
but in the short to medium term, the ACP are in danger of marginalisation.
This danger as well as the scope and speed at which changes are taking place demand a novel approach
from ACP countries and new strategies to adapt to the future. ACP countries should therefore attempt to
find a new paradigm to sustain a qualitatively re-newed and reinvigorated ACP-EU co-operation framework
beyond the year 2000 to support their efforts to cope with the new world economy.
Many ACP States have already embarked on a painful process of structural adjustment of their national
economies and have undertaken important political and constitutional changes in the direction of
democracy, good governance, and respect for human rights.
The economic outlook in many of the ACP States is improving and prospects for the future are brighter. An
ACP Group with countries where growth is increasing steadily, giving rise to increases in demand for goods
and services, should be an even more attractive partner for the EU.
3. EMERGING EUROPEAN POSITIONS
The European Commission's Green Paper published in November 1996 proposed a number of options for a future co-operation framework. The paper argues that any future agreement must conform to WTO disciplines, and suggests several options for future trade co-operation. It also makes proposals on the geographical scope and content of a new agreement. Some of the options have far-reaching implications for the ACP Group as they put in question the unity and solidarity of the Group.Various Member States of the EU have reacted differently to the Commission's Green Paper. While all have
shown strong support for the continuation of the relationship, some favour ideas such as the extension of
the Agreement to include all least developed countries (LDCs), differentiation and regionalisation of the
ACP Group, while others support the idea of an ACP-EU free trade area in order to secure WTO
compatibility. The Commission having concluded its consultations, is preparing a Negotiating Mandate for
submission to the EU Council before the end of 1997. It is important for the ACP leaders to continue to
make representation at the highest levels of government in the EU before the negotiations begin to ensure
that the ACP's views are understood and fully taken into account.
4. THE STRATEGIC OBJECTIVES OF THE ACP
The ACP must clearly define the strategic objectives it wants to obtain and must make concrete proposals and recommendations to achieve those objectives. The following objectives should be considered:
5. FUTURE FRAMEWORK OF CO-OPERATION
The ACP has been in existence of over two decades. The maintenance of the Group as a single entity and its further consolidation, with a strong sense of purpose and commitment is a high political priority. Expansion of membership beyond its present geographical framework is not contemplated.
Differentiation is already a feature of ACP-EU co-operation. The ACP recognises and supports the need for positive differentiation on the basis of levels of development, problems of structural adjustment and the special needs of certain countries The ACP also supports any improvement in the Lomé Convention's provisions that would be of benefit to the Least Developed, Landlocked and Island Countries.However, positive differentiation implies differentiated treatment in policies for different needs to ensure the
efficiency differency of aid. It should not be divisive of the ACP or lead to diversion of resources from one
category to the other.
Graduation implies a reduction in the allocation of resources or concessions to a country which has attained
a certain level of GNP per capita. The ACP has reservations about the application of such a criterion as it
disregards the principle of partnership in co-operation, and other important considerations such as the
fragility and vulnerability of some ACP countries, and the special circumstances of some small island and
land-locked countries. Graduation may finally end up penalizing good performance, and thus jeopardising
the sustainability of development.
5.4. Context, Scope and duration of the Agreement
Areas of critical importance to the ACP are trade, investment and development co-operation. The
Agreement should cover these areas but must also be comprehensive enough to embrace social, political,
cultural and environmental dimensions.
The ACP States favour a long-term agreement with the EU that guarantees security and predictability in
their long-term planning as they adjust their economies to the changing global environment.
6. PRIORITY SECTORS OF CO-OPERATION
6.1. Trade, Investment and Related Economic Issues
The trade preferences of the Lomé Convention, apart from a few exceptions, have often been criticised for
not having improved the trade and export performance of ACP countries. Moreover, the WTO compatibility
issue of non-reciprocal trade preferences is seen to be a stumbling block in securing its continuity in a
successor agreement.
It should be pointed out that trade preferences cannot uniquely explain poor trade performance. There are
many other reasons, such as, supply-side constraints, poor infrastructure, lack of export diversification and
high value-added products.
The WTO compatibility issue is important to the ACP. It is important that we elaborate a common strategy
with the EU on this matter. It should be made clear that there is no level playing field between developed
and most developing countries and any trade arrangement that gives sympathetic consideration to the
special circumstances of developing countries should be supported.
The ACP should therefore seek to secure agreement that:
New concessions should be sought in respect of ACP agricultural exports and the services sector. The
services sector which is of growing importance to ACP countries should be a major element in a new
Convention with provisions to accelerate the development of this sector in ACP countries and to facilitate
ACP participation in EU markets.
In view of the importance of the WTO in regulating international trade and the on-going discussions in Geneva on important trade issues, the ACP must ensure its active participation in the debates and be vigilant against to its exclusion from discussions and being merely called upon to rubber-stamp so-called consensus decisions. It must, therefore, increase its visibility and participation in the WTO:
With respect to proposals for the establishment of a Free Trade Area between the EU and the ACP, serious
consideration should be given to the implications for ACP economies and their fledgling industries. The
studies now being undertaken should help to clarify the problems and determine an ACP position on this
issue.
The maintenance of preferences, or the creation of a Free Trade Area, in themselves will not be effective if
priority consideration is not given to trade development within the ACP States, aimed to improving their
productive capacity, export growth and the vertical and horizontal diversification of their economies.
The ACP should therefore seek the assistance of the EU for a package of measures intended to:
a) address supply-side constraints manifest in excessive dependence on one or two commodities, the slow pace of diversification of the export product base; poor institutional capacity and infrastructure; incompetent management; lack of market information; inadequace quality control and standards, and inefficient technology;
b) expand and make more effective the role of the CDI and CTA, for example by enabling them to provide appropriate advisory and research services.
c) support the diversification of ACP exports into services. The General Agreement on Trade in Services (GATS) has opened new possibilities in the services sector. The ACP should seek preferential terms in the field of services as this is a vitally important sector with considerable potential for growth.
In view of the importance of trade, the ACP/EU should take a more integrated and co-ordinated approach to
this sector. The Group should propose a Trade Development and Promotion Agency which would have
comprehensive functions in this field.
It is also recommended that a meeting of ACP Ministers of Commerce, preceded by a meeting of trade
experts be convened to consider the above and formulate a coherent set of proposals.
6.1.3. Investment Promotion and Protection
While, inflows of foreign capital in the form of aid, loans and investment can make a significant contributions
to the development of ACP States, it is vital that these States should better mobilise their domestic
resources. Stronger efforts by the ACP States are needed to reverse the situation of declining rates of
public and private investment.
Specific measures to support and develop private enterprise, including appropriate incentives for savings
and domestic investment, financial sector regulation and privatization are essential if domestic resources
are to play a greater role in financing development. Investment codes designed to attract , retain and
promote investment are a prerequisite. The ability of ACP Governments to facilitate and provide basic
infrastructure needs also to be increased.
6.1.4. Private Sector Development
There is a general consensus that private sector development should be given much greater emphasis in a
successor agreement. There are many suggestions as to how to broaden and deepen the involvement and
participation of the private sector in the socio-economic development of ACP countries. The sector's direct
access to official development assistance is one options. A new agreement also should be more responsive
to the unemployment problem and the need to expand the productive sector. Measures to promote and
support the informal/micro sector by funding mechanisms similar to that of the Grameen Bank should
supported.
The EU should be requested to enable the EIB to expand its lending to the private sector in ACP countries,
including for infrastructure projects and productive activities that would contribute to the reduction of
poverty.
6.1.5. Intra-ACP Trade and Regional Co-operation
Aggressive policies of intra-ACP and regional co-operation could enhance the economic performance of
ACP countries. The structural and institutional constraints that have impeded such co-operation should be
addressed at the political level. The Regional Indicative Programmes should be reinvigorated to give a
greater impetus to regional co-operation.
6.2. Development Finance Co-operation
6.2.1. Impact and Value of Current Provisions
Previous Lomé Conventions have been an important source of financial and trade support to ACP States.
The current Convention has made significant contributions to alleviating poverty, establishing and improving
infrastructure, increasing exports and stabilising export earnings. In spite of these achievements, there
have been critical shortcomings, viz: erosion of the principle of recipient responsibility and the replacement
of dialogue with burdensome conditionalities.
6.2.2. Principles of a Future Framework
Many of the provisions of the present Convention aimed at encouraging , social and economic development
will remain relevant into the 21st century. However, they will require further refinement and improvement. A
new partnership will entail new priorities, modalities and targets.
ACP-EU co-operation is widely regarded as co-operation between the European Union and ACP
governments. This concept must be revised, so that the partnership is extended to all actors of civil society,
including the non-governmental and private sectors.
6.2.3. Least Developed, Landlocked and Island Countries
Many ACP States are among the world's least developed. A variety of policies and measures are required
to reverse their marginalisation. The tasks facing them are colossal and often beyond their capacity.
Effective and sustained support is crucial.
Lack of territorial access to the sea, aggravated by remoteness and isolation from world market, imposes
serious constraints on the overall socio-economic development efforts of landlocked ACP countries. These
countries require special attention to enable them to carry out the necessary development policies and
measures of reform to reduce high transit costs and expand external trade.
Similarly, ACP island states, especially the smaller and more remote ones, are constrained by such factors
as environmental fragility, smallness, distance from markets and recurring natural disasters. They, too,
require special attention to assist them to overcome their vulnerability.
6.2.4.1. Poverty Eradication and Food Security
Unemployment, underemployment, food insecurity, environmental degradation and poverty are major
concerns in ACP countries. Future development co-operation must be concentrated on these problems.
Both the ACP and the EU agree that poverty alleviation, reduction and eventual eradication must be a
central objective of a new agreement. The Maastricht Treaty identifies poverty alleviation as a key objective
of EU development policy. Economic growth on a sustained basis should contribute to the eradication of
poverty. Adequate measures will also have to be put in place in ACP countries to increase food security
which is inseparable from the problem of poverty.
Eliminating poverty and encouraging development call for more than financial resources. Empowering the poor to be more productive is crucial to the effort to eliminate poverty. However, these aspects of capacity building and institutional development have tended to be neglected. Assistance and the methods used to deliver it often subordinate recipients' priorities and concerns to donors' preferences. Partly as a result of this aid has contributed less than expected to relieving the human condition. New cooperation programmes should include a provision to upgrade the capacity of ACP countries' personnel to designed execute and manage projects and programmes that are better centered on poverty reduction.
The Convention already recognises the fact that sustained social and economic development cannot be
attained without the full participation of women. More women are living in poverty than men. Solutions to
this problem require the explicit inclusion of strategies and measures that promote gender equality. Both
the ACP and the EU are committed to supporting the political and economic empowerment of women and
control of their own resources. The quest for accelerated economic growth must integrate the pursuit of
economic efficiency into broader social objectives, including equity and protection of the environment.
Future ACP/EU cooperation should create a framework for action to strengthen policies and programmes
that improve, and broaden the participation of women in all spheres of political, economic, social and
cultural life, as equal partners, and ensure their access to the resources required for the full exercise of
their fundamental rights.
6.2.4.4. Debt and The Flow of Financial resources
Many ACP States are so deeply entrenched in debt that it is practically impossible for them to sustain vital
socio-economic reforms, as they expend a considerable proportion of their scarce resources on servicing
debt. Concerted EU support in ensuring that the stock of debt and its servicing are reduced to sustainable
proportions would be a concrete and tangible way to help millions of impoverished people.
ACP-EU cooperation should aim at ensuring the long-term programming of aid and co-operation in terms of
the volume of available resources and their geographical and sectoral allocation. Aid should also be made
more effective and efficient overall by the process of gradually untying it from source procurement and
simplifying the procedures for accessing it. Greater risk capital should be made available to ACP States,
especially to the private sector. Grant funds should be increased especially for poverty related projects. And
concessional resources should be adequate to finance priority projects and programmes.
Because of the high dependence of ACP countries on commodity exports and the persistent fluctuation of
commodity prices, STABEX was introduced as a mechanism to compensate ACP producers for shortfalls in
earnings and thereby to provide some stability and predictability to Governments and farmers. STABEX has
been of immense value to the ACP. However, delays occasioned by the need for negotiating the
Framework of Mutual Obligations and restrictions on the level and allocation of funds to recipients have
often vitiated the objectives of the scheme.
STABEX should be maintained in a new ACP/EU Agreement and the operational impediments that have
adversely affected it should be removed. STABEX funds should also be made available in advance of falls
in commodity prices so that they can be used in a timely manner to improve productivity and
competitiveness and develop downstream operations.
Given the importance of mining in ACP States and the benefits conferred by Sysmin that instrument should
be retained and improved upon. Sysmin should be strengthened and imbued with the dynamism needed to
render it more capable of and suited to accelerating investment in mining industries, including greater
domestic processing of minerals. The procedures used in appraising and financing requests should be
simplified and streamlined in order to minimise delays in the preparation and implementation of projects.
A clearly defined strategy will assist translating into practice the principles of sustainable development.
Beside the on-going efforts in the form of impact studies and specific positive measures, new policy in this
field should focus on certain priorities such as the link between poverty and the deterioration of the
environment; the internalisation of environmental costs; capacity development; and a participatory
approach to environmental protection.
The Protocol on the Sustainable Management of Forest resources, which was added to the Fourth Lomé
Convention, was a positive step in this direction. The EU should play a constructive role by encouraging
and supporting ACP States, in the context of a policy dialogue, to develop their own capacity to assess and
manage environmental problems such as the quantity and quality of water supply, the destruction of forests and the problems of cities. Environmental protection should be of priority for ACP countries and the EU should support their endeavours in this regard.
6.2.5. Making Better Use of Development Resources
Clear objectives should guide all aspects of co-operation to ensure that they remain coherent. In order to
avoid the drawbacks of current (donor-driven approach) practice, it is necessary to transform the
donor-recipient relationship into more of a partnership, based on mutual and reciprocal rights and
obligations, designed to achieve long-term goals and a more explicit allocation of the responsibilities
between partners. The Co-operation policy and framework should also be tailored to individual
circumstances for reasons of efficiency; and transparency. Accountability to the donor and recipient public
should be a must. Consistency and coherence in the disbursement of resources and the application of
policy is also very much in need of improvement.
Many past reforms, programmes and projects did not achieve the desired results partly because of lack of
recipient ownership. Therefore, any new future development strategy must put considerable emphasis on
the local ownership of economic and social reforms and development policies and programmes.
In order to overcome the diversity of accumulated aid instruments, it is necessary to make aid more efficient
and increase its impact on ACP Countries by adopting a thematic approach and refocusing assistance on
sectoral policies and reforms; creating the right conditions for providing assistance in the form of direct
budgetary aid to national budgets instead of financing sets of individual projects; and maintaining project
aid only within a specific institutional and policy framework to tackle clearly identified and specific problems
where a transfer of know-how is needed or to take account of situations which are by no means
homogenous. This is one of the issues that will need further consideration by the ACP.
The revised Convention provides for strengthening of ACP-EU political dialogue by extending it to foreign policy and security issues, matters of general interest and issues common to a group of countries. This dialogue is not limited to ACP-EU Council of Ministers. It can also be held within a regional geographical framework or between partners more specially concerned with a given topic. Generally, the ACP-EU dialogue is limited in nature. And in recognising this weakness, the Council of Ministers decided in 1992 to include on the agenda items which would permit for wide-ranging discussion without commitment. Unfortunately, this does not seem to have resolved the problem. The EU has more extensive and meaningful dialogue with partners of more recent standing than the ACP.
The current weakness could be addressed by regional or thematic approaches. The EU and SADCC do
have dialogue outside the Lomé framework which appears to work very well. The issue of attendance and
participation in these discussions needs resolving. Sometimes, it is alleged that the participants to ACP-EU
meetings cannot discuss matters which impinge on the portfolio of Ministers of Foreign/External Affairs.
What is needed in future is a determination and commitment to usher in a new era of ACP-EU partnership.
This calls in turn for a re-invigoration of the development dialogue. Such dialogue must however be
comprehensive, covering all issues of international and national concern in a balanced manner based on
the imperatives of genuine interdependence.
6.3.2. Conflict Prevention, Management and Resolution
Conflicts remain an endemic problem in certain ACP countries in spite of great strides in the recent past
towards greater political stability. Underdevelopment in itself creates a thriving environment for conflict and
instability. Moreover, conflict unfortunately leads on to greater poverty as it diverts scarce resources for law
and order and the maintenance of peace. It also scares away important FDI and affects business
operations, causing enormous suffering to innocent people.
Peace and security is an important precondition for development and development in turn allows peace to
endure. ACP States must therefore commit themselves to:
ACP countries should welcome the participation of the international community in their mediation efforts in
conflict situations. However it is important that a concerted effort be undertaken to avoid parallel initiatives.
Therefore, it is recommended that such efforts be done in conjunction with regional organisations such as
the OAU.
The context and enlarged scope of a new co-operation agreement with the EU, the need for the ACP to
reconsider its own organisation and structure and the inclusion of political co-operation as an important
pillar of the agreement will necessitate a revisiting of the institutional arrangements underpinning both the
ACP and the Joint ACP-EU institutions.
However, such an institutional revision is a highly political issue that can be determined only at the political
level. Among the suggestions for consideration are the following: examination of the role of the Council of
Ministers and whether it should be coupled with a Council of Ministers of Foreign Affairs; the
decision-making structure and role of the Committee of Ambassadors and its constituent bodies, the
structure and the role of the Secretariat and the Secretary-General in particular; the representation of the
ACP Group beyond Brussels (e.g. in the WTO); the role of the President-in-Office of Council on such issues
as spokemanship of the ACP Group, lobbying missions on an Ad hoc basic; the status and review of the
joint institutions with the EU; the inclusion of non-state actors in the Lomé process (NGO's civil society,
private sector, academics, trade unions).
The setting up of some national consultative mechanism in each ACP State is also recommended as a
means of democratising participation in the Lomé process to include non-state actors. This could avert the
often repeated criticism that Lomé co-operation pertains only to the public sector. It could also facilitate
wide-based consultations at the grassroots level.
It is recommended therefore that a special Ministerial Committee be appointed to review the institutional
framework of the ACP and other institutional issues.
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