Eurostep Home Page

The new ACP-EU Agreement -

An assessment and recommendations

for implementation[1]

Introduction

The ACP and the EU’s achievement in renewing the framework agreement that governs co-operation between the two parties is best appreciated when set against the present economic landscape of globalisation and liberalisation and the ongoing reorientation of the EU’s external relations interests. In the pessimistic climate that clouded early discussions on the follow up of the last edition of the Lomé Convention, doubts were expressed about the future of ACP-EU relations. Questions were raised as to whether an ACP group, described as neither a political group nor an economic entity, would remain a relevant partner for the EU in the future[2] or whether an ACP-EU agreement combining trade preferences and aid was appropriate at a time when trade liberalisation and foreign direct investment were seen as the keys to both economic growth and development. Despite these misgivings the ACP and the EU have emerged from the negotiations with a comprehensive 20-year agreement comprising of both trade and aid provisions, and the solidarity of the ACP group intact. The Agreement[3] nevertheless shows the influence of the interpretations of the changed economic landscape and the flux in the EU’s external relations policy.

The new Framework Agreement also reflects the relative strength of the two parties. The EU with its greater capacity and resources succeeded in incorporating much of the changes to the provisions of the Agreement that it had sought. The texts of the Agreement include specific undertakings for the two parties as well as less defined obligations, which will need further clarification. But the inequitable balance of power between the two parties has meant that in the past where precise provisions of the framework agreement have been absent, EU interpretations and definitions have tended to prevail.

While the new Agreement establishes the broad guidelines by which ACP-EU cooperation will be conducted over, at least, the next five years, it leaves room for the development of additional texts that further define issues relating to more specific policies, strategies and implementation of the Agreement. The new Agreement states that particular sectoral policies and strategies will be incorporated in a Compendium of Reference Texts providing objectives, policy orientations and operational guidelines in specific areas of co-operation. The Joint Council of Ministers may revise the Compendium of Texts annually if required. The aim here is to allow for the incorporation of new ideas into the partnership stemming from external sources such as the UN Conferences as well as from internal processes such as the European Community’s review of aid policy and the reform of the European Commission. The first edition of the Compendium of Reference Texts should be produced by the time of the signing of the new Agreement in June 2000. Annexes relating to financial and trade co-operation may also be reviewed on an annual basis if required.

Þ     This flexible approach provides a valuable opportunity for both parties to address the ambiguities and imbalances in the Agreement.  It also allows the parties the possibility to define and review the mechanisms and strategies that are required to translate the Agreement into an effective tool for development centred on people and investment in social development. However it also opens up the possibility for the terms of the agreement to be reinterpreted by the dominant party.

Þ     Given the importance and significance of the complementary text to the Agreement it is essential that all such documents produced are made available to all actors of the partnership (including civil society), preferably through the Internet.

This paper focuses on selective conclusions of the new ACP-EU Agreement and their potential impact on the implementation of the Agreement. It puts forward proposals for both parties to take forward in the Compendium of Reference Texts attached to the Agreement, and in their wider co-operation in other fora. These proposals are aimed at improving the ability of ACP economies to respond to the needs of their populations.

Principles and Objectives of the Agreement

Objectives

The new Agreement states that the ACP-EU Partnership will be “centred on the objective of reducing and eventually eradicating poverty consistent with the objectives of sustainable development and the gradual integration of the ACP countries into the world economy”.

This focus of the central objective of the Partnership on poverty is welcome. Heads of States and Governments attending the 1995 UN World Summit for Social Development in Copenhagen and the Fourth World Conference on Women in Beijing in 1995, including those from the EU and ACP member states, agreed that poverty eradication should be the end goal of development co-operation. While the new Agreement refers to both the reduction and eradication of poverty, it is important that both parties focus on the end goal of co-operation as decided in Copenhagen and Beijing  - poverty eradication.

In order to ensure that this end goal is achievable:

Þ     The Compendium of Reference text should identify a strategy that demonstrates how the Agreements’ policies and programmes, including those directed at integration into the world economy, target poverty at both the national and international level.

Þ     The ACP and the EU need to agree to hold regular assessments of the new Agreement’s contribution to poverty eradication at the national and the international level.

Þ     Both parties need to ensure that the environment in which the Country Support Strategies and National Indicative Programmes of the Agreement are implemented is conducive to poverty eradication. The reviews of the Copenhagen and Beijing Summits in June 2000 provide an opportune occasion for work towards creating such an enabling environment.

Principles

It was also agreed at the Copenhagen Summit that the process and strategies for achieving poverty eradication should be defined by developing countries. The ACP-EU Agreement with its principle of partnership and ownership remains an ideal co-operation agreement between developed and developing countries with the potential to support the Copenhagen initiative.

Apart from the principle of the equality of partners and ownership, the new Agreement identifies the fundamental principles of the Partnership as:

·        The principle of the participation of non-state actors (referred to as actors other than the central government)

·        The pivotal role of dialogue and the fulfilment of mutual obligations

·        The principle of differentiation and regionalisation

The principle of partnership and ownership states that ACP States will determine the development strategies for their economies and societies with due regard to the essential elements of the Agreement. The partnership is supposed to encourage ownership of the development strategies by the countries and populations concerned. Given its relevance to the achievement of poverty eradication, it is essential that this principle is effectively operationalised.

However, in practise the principle of partnership and ownership has remained a buzzword rather than a true expression of ACP-EU co-operation. The inevitable imbalance within the ACP-EU relationship will always be hard to overcome. However, Eurostep believes that balanced mechanisms for dialogue, consultation, capacity building of the ACP institutions that dialogue with EU institutions, and a recognition of the different roles, responsibilities and limitations of the parties involved, could contribute to a more effective fulfilment of the principle of partnership and ownership. Yet, several mechanisms and measures provided in the Agreement do not reflect such balance.[4] In principle ACP States have the principal responsibility of defining their strategies and programmes, but in practice the task of drafting strategy and programme documents has been assumed by the EU. This situation contrasts that related to EU structural funds, where recipient EU Member States effectively design their own strategies and programmes when applying for funds from the EU.

As a means of operationalising the principle of partnership and ownership:

Þ     Both parties should ensure that ACP States have the principal responsibility for defining their Country Support Strategies and National Indicative Programmes. Support and capacity building for this should be identified.  

Political and Institutional Framework

Political Dialogue

While the Agreement has sought to embrace a wider range of issues outside traditional development co-operation, it has failed to provide the institutional mechanisms to deal with this broadened agenda. The focus of political dialogue is supposed to be on specific political issues of mutual concern, i.e. the arms trade, excessive military expenditure, drugs and organised crime, ethnic, racial and religious discrimination, the respect of human rights, democracy, the rule of law and good governance. The objective of political dialogue is to foster mutual understanding, and to facilitate the establishment of agreed priorities.

Political dialogue is set to involve many subjects on which decisions and discussions are best carried out at the highest political level, i.e. that of heads of states. During the negotiations on migration issues, the reported influence of EU interior ministers, not involved in the negotiations, over their colleagues responsible for development-cooperation, demonstrated the need for the inclusion of ministers/officials, with the competence and authority on issues such as migration, in ACP-EU discussions.

The agreement also states that, “representatives of civil society shall be associated with this dialogue”, but the role of civil society here remains unclear and vague.

Þ     In the absence of the opportunity for all regions of the ACP to separately have an institutionalised dialogue at head of state level with the EU, ACP-EU co-operation should provide the means to involve ACP and EU heads of state and other relevant ministers in political dialogue.

Þ     The capacity building of ACP institutions to engage in political dialogue should be supported.

Þ     Specific mechanisms should be developed which provide civil society with the opportunity to participate in political dialogue (see section on institutional framework and civil society participation).

Coherence

The new Agreement includes provisions aimed at ensuring coherence of European Community (EC) policies. These provisions call on the European Commission to inform the ACP of any of its proposals that might affect the interests of the ACP in relation to the objectives of the agreement. The ACP may also initiate a request for information on the impact of Community policies. Consultations may be held at the ACP’s request. Though the EC does not have to accept the ACP’s related demands, it is obliged to explain its reasons for not doing so to the ACP as soon as possible.

Despite documented evidence of the detrimental effects of incoherent EC policies on poverty eradication in ACP countries that has been accumulated over the years, the provisions on coherence under previous Lomé Conventions were never fully implemented.

Eurostep believes that in order to ensure that the article on coherence is implemented the EC should consider the following recommendations:

Þ     The establishment of a special EC Coherence Office within the Commission, as proposed by the European Parliament, with the responsibility for monitoring the coherence of policies and their application with the development co-operation objectives and policies of the EC.

The Coherence Office should have the responsibility for:

Ø      Ensuring that required notification is given to ACP states about any potential impact to their interests of policies and actions that have been adopted. 

Ø      Responding to ACP requests on the impact of EC policies in a manner that is transparent and accessible to civil society.

Ø      Co-managing, with the ACP Secretariat, a complaints’ mechanism that is open to civil society and governments.

Ø      Carrying out assessments on the impact of all Commission policies on developing countries including the ACP. Where there is a likelihood of EC policies being incoherent with the development policies and practices of the EC, these should be explicitly noted.

The Joint Council of Ministers[5]

The main innovation as regards the Council of Ministers, which is the decision making body of the ACP-EU Agreement is the broadening of its mandate to conduct an ongoing dialogue with social and economic partners and other actors of civil society. To this end consultations may be held alongside its meetings.

The opportunity provided by the Agreement for civil society to dialogue with decision makers of the partnership is welcome. However it raises questions as to how representation of civil society will be chosen and how consultations held ‘alongside’ Council meetings will relate to the actual Council of Ministers’ meetings.

Þ     The institutional arrangement agreed necessitates the EU and the ACP to work towards the fostering and the capacity building of representative civil society networks such as the ACP-Civil Society Forum in order to facilitate dialogue between the Joint Council and civil society. In addition, dialogue at the level of the Joint Council of Ministers should reflect and build on dialogue conducted by both parties with civil society at the national level.

Þ     The Joint Council should clearly define in its rules of procedure, the role consultations with civil society will play in its work. Consultations with civil society should be made an integral part of the Council’s work. It should contribute to the output of the Council's work rather than serve as an exercise that merely fulfils a perceived obligation to consult with civil society.

Þ     The Joint Council should provide civil society access to all relevant documents discussed and produced by the Council in order to ensure that discussions with civil society are balanced.

The Joint Parliamentary Assembly[6]

The new Agreement renames the Joint Assembly – the Joint Parliamentary Assembly in an attempt to emphasise the intended parliamentary nature of this body. Included in the tasks of the Joint Parliamentary Assembly is the organisation of regular contacts, not only with economic and social actors (as in the previous Lomé Convention), but also with the actors of civil society.

However the new Agreement fails to strengthen the Assembly’s function as a body that monitors decision making, it is still described as a consultative body. The ACP-EU decision-making bodies remain unaccountable to the Joint Assembly in contrast to the expected and legitimate role of parliaments vis-à-vis the executive bodies to which they relate.

Þ     In order to strengthen its ability to monitor decision-making, Joint Parliamentary Assembly sessions should include in their agendas, discussions with the Joint Council and European Commission on how Joint Parliamentary Assembly proposals are being taken forward.

Þ     To ensure that the Assembly is able to closely monitor decisions and implementation at the national level, the Joint Parliamentary Assembly should develop a strategy for collaboration with national parliaments. National parliaments themselves should be given a role in the review of National Indicative Programmes.

Þ     In response to its broadened mandate, the Joint Parliamentary Assembly, in its rules of procedure, should define a clear strategy for working with civil society representatives. This should specify means of making Joint Parliamentary Assembly documents, including draft resolutions, and procedures publicly available.

Civil Society Participation

One of most potentially significant innovations of the new ACP-EU Agreement is the inclusion of a chapter on the actors of the ACP-EU Partnership. This chapter defines the role of non-state actors within the partnership. The Agreement states that where appropriate non-state actors:

·        Will be informed and consulted on Co-operation policies and strategies, especially in areas that directly affect or concern them, and on political dialogue;

·        Will be provided with financial resources under conditions laid down in the agreement;

·        Will be involved in the implementation in projects and programmes that concern them or where they have a comparative advantage;

·        Will be provided with capacity building in order to reinforce their capabilities, (this includes establishing arrangements to involve non-state actors in the design, implementation and evaluation of development strategies and programmes);

The Agreement’s definition of non-state actors includes the private sector, economic and social partners and trade union organisations. It states that the recognition of non-governmental actors in particular will depend on the extent to which they address the needs of the populations, their specific competencies and their transparent and democratic management.

The principle of involving non-state actors in the partnership has been one of the most trumpeted aspects of the new Agreement, yet the fulfilment of this principle remains uncertain because of the lack of mechanisms and safeguards to ensure its implementation. Furthermore with the use of words such as “where appropriate” as regards the role of civil society, the text on civil society is crafted in a manner that guarantees that the degree of participation of civil society in the partnership is left in the hands of the governments.

To ensure effective civil society co-operation, Eurostep calls for:

Þ     The Compendium of Reference Texts of the Agreement to include a clear definition of civil society's role in each phase of the programming process. Civil society's role in the pursuance of the objectives of National Indicative Programmes should also be outlined. These Programmes should specify whether their preparation involved consultation with civil society.

Þ     The establishment and effective implementation of a policy for disclosure to the public by the ACP and EU decision-makers on all proposals made in all phases of programming.

Þ     The establishment of mechanisms at national and regional and global levels for enabling civil society involvement at all phases of the agreement’s implementation. Resources for these processes should be identified and programmed.

Þ     The ACP and the EU to improve the quantity and quality of staff specialised in co-operation with civil society. All Commission delegations in ACP countries should include staff assigned to increase co-operation with civil society.

Trade and Investment

Future Trade Arrangements

The main principle of trade cooperation is that co-operation in this area will build on regional integration initiatives of ACP States. The Agreement states that regional integration is a key instrument for the integration of ACP States into the world economy. This means the dismantlement of non-reciprocal preferential trade arrangements in favour of free trade based regional agreements with the EC. However, Eurostep believes that the provisions for future trade arrangements do not provide the time and options for ACP countries to choose the trade arrangements that allow them to best advance poverty eradication.

According to the new Agreement, the parties agree to a preparatory period of 8 years before moving to new WTO compatible trade arrangements based on free trade Economic Partnership Agreements (EPAs). Formal negotiations for these agreements will start in September 2002 and enter into force by January 2008 unless both parties agree earlier dates. The 8-year period is supposed to be used to prepare the ACP States for these trade arrangements, including, where appropriate, assistance to budgetary adjustment, fiscal reform and investment promotion.  In 2004 the EC will assess the situation of non-LDC ACP countries in relation to these agreements. If after consultations these countries decide they are not in a position to enter economic partnership agreements, the EC will examine alternatives in order to provide these countries new trade arrangements equivalent to their existing situation but in conformity with WTO rules. The ACP and the EC will then carry out a formal review in 2006 of the future arrangements planned for all countries to ensure that no further time is needed for preparations or negotiations.

The EC states its aim to improve current market access for the ACP through, among other things, a review of the rules of origin.  The EC also states its intention to start at the earliest by 2000 and latest 2005 a process of allowing duty free access for essentially all products from all LDCs building on the level of trading provisions between the ACP and the EC.

In order to better manage the new trade arrangements, a new institution – a joint ACP-EC Ministerial Trade Committee - will be set up. In examining ACP-EC trade and current multilateral trade negotiations, it will make recommendations on preserving the benefits of the ACP-EC trading system.

The weaknesses of the Agreements’ provisions for future trade arrangements are in the unsuitability of these provisions for the ACP, their infeasibility, and their uneven-handedness when coupled with the EC’s Common Agricultural Policy. This is made clear in the studies that the European Commission itself commissioned on future trade arrangements.

According to most observers levels of regional integration and institutional capacities that exist at present in most ACP-sub-regions do not suggest that these regions are on course to be able to embark on free trade EPAs with the EC by 2008. The Southern African Development Community (SADC), one of the more advanced African regional organisations involved in integration, is only likely to complete its regional integration programme between 2010 and 2012.[7]

Furthermore the period in which ACP-EC regional free trade arrangements will be negotiated is likely to coincide with WTO negotiations for a new trade round, if the EU’s proposal to begin a new WTO trade negotiations, as soon as possible is accepted. Most ACP countries do not have the capacity to engage simultaneously in the two sets of negotiations.

Even though ACP least developed countries (LDCs) are still entitled to current ACP-EC trade preferences beyond 2008, evidence from studies commissioned by the EC show that it would be extremely difficult for the LDCs, within a region, which is engaged in EPAs, to control the movement of ‘free’ imports from the EU. Furthermore two sets of trade arrangements within one region, i.e. LDCs maintaining trade preferences, while non LDCs engage in EPAs, could set regional integration in the ACP back rather than advance it.

If the Common Agricultural Policy is maintained as it is, EPAs will not amount to reciprocal free trade, as EU farmers will be competing with ACP farmers who do not benefit from support provided to EU farmers. Even without free trade the effects of subsidised EU agricultural exports in the ACP have been shown to be detrimental towards poverty eradication in ACP countries.

Eurostep puts forward the following recommendations in order to ensure that the proposed future trade arrangements advance poverty eradication:

Þ     The assessment set to take place in 2004 and the review foreseen in 2006 should be based on rigorous sustainability and social impact assessments. The details of this should be provided in the Compendium of Reference Texts of the Agreement. As the results of these reviews cannot be predetermined, the parties should foresee the possibility of an extension of the preparatory period or for any ACP country to opt out of EPAs.

Þ     It is essential that ministers involved in the new Ministerial Trade Committee are the ministers responsible for defining trade policies in their countries. This would ensure that decisions taken by Trade Committee are not subject to approval from other ministers who may lack the experience and knowledge of ACP-EC co-operation on trade.

Þ     The EU should actively support the establishment of autonomous political and economic integration within the ACP regions, with financial resources allocated to capacity building and institutional support. Most importantly promotion of integration should include support for fiscal reform in order to ensure the availability of adequate financial resources for sustainable development.

Þ     The EU and ACP should support the consequent application of the principle of Special and Differential Treatment of developing countries in all agreements on Trade and Investment. A reform of the GATT article XXIV is needed to enable regional non-reciprocal trade agreements between structurally and economically unequal groups of countries.

Þ     The objectives of social development should be included as legally binding obligations in all the EPAs to be negotiated.

Þ     Subsidies of exports to Least Developed Countries should be abolished.

Þ     Full access to EU markets should be granted to developing countries, in particular LDCs, without exceptions on sensitive products. This is the basic prerequisite for a European North-South Policy creating a more viable environment for increased trade co-operation that potentially could also benefit the South in terms of static trade effects.

Þ     The EU should provide the necessary assistance to support the capacity of ACP countries to engage in negotiations with the WTO and EU on future trade arrangements. This support should be without conditions on the outcome of the negotiations.

Trade Related Areas

For the first time the ACP-EU Agreement contains a chapter on trade related areas relating to non-tariff barriers. This includes sections on intellectual property rights and biodiversity, competition policy, standards, sanitary and phytosanitary measures, trade and the environment and trade and labour standards.

The EU and the ACP agree to adhere to the international agreements on Trade Related Intellectual Property Rights (TRIPs), thus requiring all parties to implement the measures for protecting patented products, including those owned by companies in the EU that effectively patent plant and animal extracts found in developing countries.  In contrast to the provisions on TRIPs, the references to protecting biodiversity are general in nature with less clarity on how they will be implemented. In these circumstances the formal TRIPs agreements that are incorporated with the new Agreement will take precedent over the other clauses. 

Þ     The EU and the ACP should therefore ensure that a clear agreement is reached on how biodiversity is protected, including the commitment to give this priority over commercial interests.

Þ     The Compendium of reference text should include measures that support ACP countries’ rights to licence the production of medicines. This is particularly important in the treatment and the fight against HIV/AIDS.

Investment

The new Agreement identifies the support for investment and private sector development as one of the development strategies of the Agreement. Provisions for the support of investment are far more extensive than those in the previous Lomé Convention.

The Agreement states that Cooperation on investment will involve:

·        Investment promotion through inter alia:

Taking measures to help create and maintain predictable investment climate, encouraging the EU private sector to invest in the ACP, and promoting ACP-EU private sector dialogue through in particular an ACP-EU private sector business forum. 

·        Investment finance and support through long-term financial resources, including risk capital, grants and loans from the European Investment Bank.

·        Investment guarantees through inter alia, reinsurance schemes to cover foreign direct investment, guarantee programmes to cover risk and national and regional guarantee funds.

·        Investment protection through investment promotion and protection agreements in order to promote either party's investments on their respective territories.

These provisions of the Agreement do not include any mechanisms to ensure investors’ responsibilities to their workforce, surrounding communities and national development.

In addition, the Agreement does not sufficiently point out the relation between the quality of investment and poverty eradication. Rather the assumption is made that it is simply the quantity of investment that is essential. However evidence of the detrimental effects on investment in the fisheries sector in some ACP countries, inter alia, shows that investment regulations needs to ensure that the investment contributes to poverty eradication and sustainable development.

The Agreement also does not advance mechanisms that allow ACP States to control the flow of portfolio capital. The absence of such mechanisms contributed to the recent financial crisis in South East Asia. An international tax on speculative capital transfers would allow the ACP to avoid such instability that results from capital attraction. 

Eurostep believes that in order to ensure an equitable agreement of investment that advances sustainable development and poverty eradication:

Þ     The EU and the ACP should agree on binding standards for transnational enterprises to which the provisions on investment of the Agreement are applied. These could be similar to those proposed by the European Parliament in January 1999 for European enterprises active in developing countries. A binding regulation for transnational enterprises should encompass:

Ø      Unified standards for environment and social protection at a high level;

Ø      The establishment of an international centre for monitoring investment, including a complaints procedure for those who believe that their rights have been violated by transnational enterprises.

Ø      The establishment of an effective system of incentives and sanctions that will help guarantee that transnational enterprises will respect human rights and adhere to regulations that have been agreed.

Þ     The EU and the ACP should support regulatory measures that help developing countries retain control over capital inflows, including a taxation of international capital transfers.

Gender Equality

The section in the Agreement on the objectives and principles of the ACP-EU Partnership states that “systematic account shall be taken of the situation of women and gender issues in all areas - political, economic and social”. Yet there is very little evidence of this in text on other areas of the Agreement.

In a section on gender issues, the Agreement states that ACP-EU co-operation will “help improve the access of women to all resources required for the full exercise of their fundamental rights”. More specifically, co-operation shall create the appropriate framework to inter alia:

·        Integrate a gender sensitive approach and concerns at every level of Development Co-operation including macroeconomic policies, strategies and operations.

·        Encourage the adoption of specific positive measures in favour of women such as inter alia:

o       Access to basic social services, especially to education and training, health care and family planning;

o       Access to productive resources especially to land and credit, and to the labour market; and

o       Taking specific account of women in emergency aid and rehabilitation operations.

The section on gender issues does not provide for necessary practical plans for action, which can be monitored in future to verify if gender equality in the ACP is being achieved.

In order to ensure that gender equality concerns are mainstreamed in all aspects of ACP-EU co-operation Eurostep believes that:

Þ     The Compendium of Reference Texts of the Agreement should identify gender equality concerns in all areas and phases of co-operation. Practical plans for action should be identified along with targets and goals by which co-operation can be assessed.

Þ     The ACP and the EU should develop gender-disaggregated data for use in policy formulation and in monitoring the impact of policies on women.

Þ     The ACP and the EU should improve the quantity and quality of staff with expertise on gender issues. All Commission delegations in ACP countries should include gender experts.

Þ     EU delegates and ACP offices responsible for reviewing programmes should be required to include a section on the gender impact of these programmes in their reports.

Social Development

The nature of the ACP-EU co-operation has great potential for achieving social development with its emphasis of the concepts of partnership and policy dialogue. This should enable donors and recipient governments to work harmoniously in achieving universal access to basic social services.

According to the Agreement, co-operation in social development aims at improving the coverage, quality and access to basic social infrastructure, while reducing the inequalities of access to these services. Specific sectors identified for improvement are education and training, health systems, populations issues, the fight against HIV/AIDS, security of household water, the availability of affordable and adequate shelter and the participatory methods of social dialogue as well as respect for basic social rights. However the Agreement does not identify how these aims will be achieved.

The Agreement also fails to specify how it intends to contribute towards the realisation of the international development targets and commitments agreed to by the EU and the ACP governments at the international level.

To effectively realise the potential of ACP-EU co-operation in the area of social development, the ACP and EU Joint Council of Ministers should ensure that:

Þ     The Compendium of Reference Text of the Agreement specifies how the Agreement aims to contribute to achieving the international development goals and commitments.

Þ     Strategies to enhance social development are explicitly identified in the Compendium. These strategies should include the objectives and targets to achieve universal access to social services in the next generation of development co-operation agreements between the EU, the ACP countries, and other developing nations. Explicit contributions to achieving this must be identified in National Indicative Programmes.

Þ     The EU invests at least 50% of its official development assistance to the ACP in social sectors. The current level of allocations to basic health and education should be doubled.

Þ     Adequate reports and data are provided during implementation of the Agreement, which identify the efforts, made to contribute towards achieving universal access to basic social services.

Þ     Emphasis is given to the need for investment in relevant basic education of adequate quality, and in which participation of stakeholders in the design is guaranteed.

Þ     The improvement of quantity and quality of the staff of both parties with expertise on social development issues. This should involve adequate representation of expertise in Social Development in Commission delegations in the ACP.

Financial co-operation and instruments

The overall amount of EU financial assistance for the first five years of the Agreement is set in an annex of the Agreement as 15.2 billion euro. This will comprise of 13.5 billion euro of provided in the 9^th European Development Fund (EDF) and 1.7 billion from the European Investment Bank in the form of loans made from its own resources for the purpose of economic and industrial development of the ACP States on a national and regional basis.

Out of the EDF 10 Billion in the form of grants is reserved for support for long-term development. This will be used to finance the National Indicative Programmes among other things. 2.2 billion of the EDF will be allocated to finance the Investment Facility according to specific terms and conditions, with the remaining 1.3 billion going in the form of grants to regional co-operation.

Eurostep called for a level of resources provided under the new Agreement to be adequate for the implementation of the international commitments made by ACP and EU governments and at least equivalent in real terms to the levels provided under the 8^th EDF.

While the EU did make some efforts to make adjustments for inflation in deciding on the figure for 9^th EDF, it does not seem that account was taken of the fall in value of the euro against other currencies like the dollar, or the prospect of more countries (East Timor, Cuba) joining the ACP. Considering inflation alone it has been calculated that the aid volume will be 3% less in real terms than under the 8^th EDF[8]. Furthermore evidence shows that if the international development targets were to be met, most donors would have to increase real levels of aid.

The EU’s argument in not increasing the level of the EDF is that by doubling the current rate of disbursement of aid, through reforms, it would be able to meet the needs of the ACP countries[9]. This is yet to be proven. While EDF disbursement rates have increased over the last year, it is foreseeable that the unfamiliarity of ACP and EC staff to new systems of operation under the new Agreement may, at least in the first instance, actually slow down the rates of disbursement. Furthermore the demands in implementing the new Agreement may require increases in the staffing levels at the Commission. At present this is not foreseen.

The Agreement also leaves the EDF outside the EC’s overall budget, thus denying the European Parliament, the only elected body of the EC, to have control over its use and application.

Þ     In order to demonstrate its ability to increase levels of disbursement the EU needs to draw up a strategy specific to meeting requirements of the new Agreement. This should include plans to increase staffing levels in the Commission.

Þ     The ACP and the EU should agree to a time-schedule for implementing the disbursement of the 9^th EDF within the period 2000-2008. 

Þ     The EDF should be incorporated into the overall EC budget in order to bring it under the control of the European Parliament, Both the European Commission and the European Parliament are supportive of such a proposal.

Resource Allocation and Programming

The new Agreement introduces significant changes to programming procedures and resource allocation.

One positive change with regard to the previous Lomé Convention is that ACP States, in drafting Indicative Programmes, are now supposed to identify eligible non-state actors and the resources allocated for non-state actors.

However provisions on resource allocation under the new Agreement appear even less clear than under previous Lomé Conventions. The new system also provides the EU with more discretionary power in allocating resources. Resource allocation to ACP countries is now based on both needs and performance. An annex to the Agreement states that needs are assessed according to criteria relating to per capita income, population size, social indicators and level of indebtedness, export earning losses and dependence on export earnings, in particular from the sectors of agriculture and mining with more favourable treatment for least developed, land-locked and island countries. It is not clear how these different criteria will be weighted and calculated.

Performance criteria provided in the Agreement also seem vague and open to interpretation. According to the Agreement performance will be assessed on the basis of progress in implementing institutional reforms, performance in the use of resources, effective implementation of current operations, poverty alleviation/reduction, sustainable development measures and macroeconomic and sectoral policy performance.

ACP and EC authorities will jointly carry out an annual review in addition to mid-term and end of term reviews of National Indicative Programmes. An aim of the annual review is to determine any causes of delay in implementation and propose measures to remedy the situation. On the basis of needs and performance ACP States will be provided with an indicative allocation of resources for their programmes.

Allocated resources will have two elements. An allocation to cover macroeconomic support, sectoral policies, programmes and projects; and an allocation to cover unforeseen needs such as emergency assistance (where support cannot be taken from the EC budget), contributions to internationally agreed debt relief initiatives and support to stabilise export earnings. Following mid-term and end of term reviews the EC may revise resource allocation to ACP States according to their needs and performance.

While the value of carrying out reviews of programmes is recognised, the increase in the number of reviews to be carried out in the programming process could prove to be an additional burden for both ACP and EC staff.

In order to address these ambiguities and complexities regarding resource allocation and programming:

Þ     The EU should explain the detailed formula used for calculating resource allocations for the National Indicative Programmes in the Compendium of Reference Texts. Criteria for resource allocation should be transparent and related to the objective of poverty eradication. The ACP-EU Joint Parliamentary Assembly and the European Parliament should be informed and consulted on the criteria on which allocations are based.

Þ     The ACP and EU should jointly agree to more precise and objective performance criteria. Performance criteria should be country specific and tailored to the different conditions prevailing in ACP countries. Performance criteria should include assessments of public finance that go beyond a simple analysis of the budget and include: (i) legislation on the budget preparation, expenditure and reporting; (ii) the quality of the procedures on the same aspects; (iii) the quality of the budgetary control at governmental level and at the level of national parliaments, and (iv) audits and analyses of realised expenditures (Public Expenditure Review).  The ACP-EU Joint Parliamentary Assembly and the European Parliament should be informed and consulted on the development and use of performance criteria.

Þ     It should be agreed in the Compendium that the money pledged by the Member States should be transferred to an interest bearing account locked for the use of ACP countries.  

Þ     In order to streamline administration efficiency and accelerate procedures a more decentralised management approach should be established through the delegation of operational and financial responsibilities to the delegations. In the Compendium it should be agreed that a gradual transfer of decision-making to the level of delegations be realised. The delegations should be strengthened in their decision-making powers and responsibilities.

Þ     As part of this process - and even without decentralisation - the role of the EDF Committee[10] in programme and project approval becomes highly questionable. The role of the EDF-Committee - if it still has a function - should be thoroughly re-assessed.

Þ     The level of resources to be allocated at national level to the social sectors, basic health and basic education, should be clearly identified.

Þ     The level of resources to be allocated to support civil society's participation at the national level, for its support in the design of Programmes and their review should be identified and programmed.

Þ     Support and capacity building of ACP offices involved in carrying out reviews of Programmes should be identified.

Þ     The specific role that the different actors of the partnership will play in Indicative Programmes should be specified in these Programmes.

Export Revenue Stabilisation

The new Agreement replaces STABEX and SYSMIN[11], the export revenue stabilising instruments, with a system for support for short-term fluctuations in export revenue.  Resources for this will be drawn from the National Indicative Programmes. Support is provided if a worsening in public deficit coincides with a loss of overall export earnings or a loss of export earnings from all agricultural and mineral products. Least developed countries enjoy a more favourable threshold on export losses required for triggering support. An aim of this support system is to adopt a more comprehensive approach that makes the link between public deficits and export revenue.

However, criteria for allocation for support under the new system appear to be more complex and opaque than under the previous systems of STABEX and SYSMIN. This can be partly attributed to the fact that measuring public deficit in many ACP countries is problematic due to lack of data and differences in calculation methods.

Meeting the criteria of losses in export revenue and worsening public deficit simultaneously may prove more difficult for many ACP countries than STABEX and SYSMIN criteria, resulting in ACP countries receiving less support for export stabilisation than previously.

Inexplicably the new system excludes land-locked and island states from the more favourable treatment that is accorded to least developed countries as is done in other parts of the Agreement.

A consequence of the use of complex criteria in the new support system is that overall disbursement rates may be slowed down considerably, contrary to the aims of both parties. 

In order to ensure that support for fluctuations in export revenue is effective, Eurostep proposes that:

Þ     The Compendium of Reference Text of the Agreement should include details on how worsening public deficits will be calculated.

Þ     Measures for addressing potential slow disbursement rates should also be identified.

Debt and Structural Adjustment

The debt burden for many ACP economies remains the greatest obstacle to achieving the international development targets. The enhanced HIPC (Highly Indebted Poor Countries) initiative agreed by the international community, even when combined with existing aid, does not provide sufficient resources for most countries to address the international development targets.

Outside the negotiations for a new framework agreement, the ACP agreed to an EU proposal to use up to €1 billion from uncommitted EDF funds to support the HIPC initiative for ACP Highly Indebted Poor Countries. The EU proposal followed the G7's decision to deepen and speed up the implementation of the HIPC initiative.

The new Agreement makes room for the EU's initiative stating that on a case-by-case basis, uncommitted resources from past indicative programmes will be used for debt relief.  In addition resources provided in the 9^th EDF will be used to contribute towards debt relief initiatives in the ACP that have been approved at the international level. Provision is also made for technical assistance for the ACP on debt management and the use of available foreign currency provided for by the Agreement for servicing of European Investment Bank debts on a case-by-case basis. Both parties agree to continue discussions on debt relief in other relevant fora.

One of the features of structural adjustment support in the new Agreement is its acknowledgement of the inclination towards regional integration adopted in other parts of the Agreement. Adjustment support is supposed take account of the net transitional costs of regional integration on budget revenue and balance of payments, either through general import programmes or budgetary support. Support is supposed to be mobilised in a flexible manner and in the form of sectoral and general import programmes or budgetary support.

The EU's decision to contribute a substantial amount of money to the ACP debt incurred outside the ACP-EU framework is a welcome shift in its approach to ACP debt. It acknowledges the fact that neither the goals of the ACP-EU partnership nor the international development targets will be achieved without ACP-EU co-operation on debt reduction in other fora. However the funds used for this initiative are taken from funds that had already been allocated for development co-operation. To a certain extent this amounts to a trade off between co-operation in other areas and debt relief.

In order to ensure effective debt relief and the realisation of the development targets in the ACP:

Þ     The EU should work with other donors to ensure that the HIPC debt relief package is fully funded. Future EU debt relief packages should be funded from additional resources identified outside existing EDFs.

Þ     The EU should ensure that debt relief is given to ACP countries committed to spend debt saving on anti-poverty programmes.

Þ     As complementary to the HIPC initiative, the EU should push for all creditors to move towards the cancellation of all unpayable debts incurred by ACP countries.

Þ     Given the EU's position as the world's leading donor and its stance on ownership of development policies, the EU should play a critical role in the development of the Bretton Wood's institutions' Poverty Reduction Strategy Paper (PRSP) process to ensure that the poverty reduction strategies remain in the hands of ACP and other developing countries.

Þ     The EU and ACP should support the use of SAPRI (the Structural Adjustment Participatory Review Initiative (SAPRI) established by the World Bank after the Copenhagen Summit) as a model for a participatory examination and review of structural adjustment policies. The experiences and recommendations evolving from SAPRI should form the basis for the PRSP process.

Þ     The programming process under the new Agreement should be linked with the national implementation process of the UN Social Summit Declaration and Plan of Action to ensure that ACP countries are not faced with more uncoordinated and incoherent demands from the donor community. The national strategies for poverty eradication should be implemented by governments, with the help of UN specialised agencies, International Financial Institutions and the full involvement of civil society organisations.

CONCLUSION

At present most of the contributions that the new ACP-EU Framework Agreement could make to poverty eradication and sustainable development remain potential rather than real. This is because the mechanisms, strategies and plans of actions – ‘the hands and feet of the Agreement’ that are required to implement many of its key provisions are not provided for. Yet the true test of any framework agreement is not on the intent of its wording but in its ability to deliver on its objectives.

Thus it is crucial that the additional texts being produced to accompany the Agreement provide concrete mechanisms, strategies and plans of action that transform the Agreement from a statement of intent into an effective instrument that addresses the structural causes of poverty.

Much also hinges on the reform of the Commission and EU Member States’ working methods. In the Commission’s own words, “Taking up this challenge {doubling current levels of disbursement} presupposes a major overhaul of the old Convention’s instruments and procedures, internal reform with the Commission and a redefinition of the respective roles of the Commission and the Member States in the decision-making process.”[12]

Finally it is essential that the EU and the ACP collaborate in other fora including the UN organisations, the WTO and the Bretton Woods Institutions in order to ensure an enabling environment conducive to the achievement of the overall objective of the partnership - poverty eradication in the ACP.

Eurostep believes that the extent of the achievement of these measures, strategies and reforms referred to above will be the major determinant of the new ACP-EU Agreement’s success.

May 2000

[1] The parties of the Agreement are officially identified as the African, Caribbean and Pacific (ACP) States on the one hand and the European Community (EC) and its Member States on the other. In this paper the abbreviation EU will refer to the EC and its Member States.

[2] “Green Paper on Relations between the European Union and the ACP Countries on the eve of the 21^st Century   Challenges and options for a new partnership”

[3] The Agreement in this paper refers to the “Partnership Agreement between the African Caribbean and Pacific States and the European Community and its Member States” (08/02/2000)

[4] A point in case is the consultation mechanism for the essential and fundamental elements of the Agreement, where consultations take place between a single ACP State on one side and all the Member States of the EU on the other.

[5] The Joint Council of Ministers consists of the EU development co-operation ministers on one hand and ACP ministers charged with implementing and managing the ACP-EU Agreements on the other.

[6] The Joint Parliamentary Assembly is composed of equal numbers of EU and ACP representatives, i.e. on the one hand, members of the European Parliament and, on the other, members of parliament or, failing this, representatives designated by the parliament of each ACP state. 

[7] Keet Dot, Presentation on “The Implications of a Reciprocal Free Trade Agreement with the EU in Relation to Regional Integration and Development in Southern Africa”, 1999

[8] Wolf, Susanna and Dominik Spoden: Allocation of EU Aid towards ACP-Countries, ZEF-Discussion Papers on Development Policy No. 22, March 2000

[9] EU-ACP Negotiation Information Memo No 10, http://europa.eu.int/comm/development/event/negociation10_en.htm

[10] The EDF Committee is a body made up of civil servants from EU Member States and the European Commission that administers EDF resources. It, de facto, takes the final decision on how EDF resources are utilised.

[11]STABEX was an instrument that aimed to stabilise export earnings from a specific list of agreed agricultural products. SYSMIN was aimed at stabilising earnings from mineral products.

[12] ibid

Updated on 5 May 2000
Please address comments to [email protected]
Developer's Note: These pages were developed for use on the Netscape browser.