Executive summary
CHAPTER 3(b): CORE BUSINESS: THE EUROPEAN UNION
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CHAPTER 3(b): CORE BUSINESS: THE EUROPEAN UNION The main objective of the Cotonou Agreement is “reducing and eventually eradicating poverty consistent with the objectives of sustainable development and the gradual integration of the ACP countries into the World economy”. The main contact points between the ACP Group and the EC remain the Commissions for Development and for Trade and downstream with the European Investment Bank for dispensing finance; taking development first and the ACP Group’s efficacity as the Heads of State and Government have ordered: The EC has approved that there will be a 10th Economic Development Fund whose size was guaranteed in February 2005 to be at least as large as the 9th EDF and to be larger in real terms through additions for inflation, growth in the number of donors (i.e. New Member States) etc. But the disbursement of the EDF is now consequent on three major policy shifts in the EC:
Grants to ACP States come out of envelopes provided in terms of National Indicative Programmes drawn up after Country Support Strategies are submitted which audit other donors present in the countries, the context and the countries’ medium-term development strategies and these are forwarded by the States’ National Authorising Officers to the EC. The sum of
makes up the EDF together with an investment facility. The size of the envelope is decided jointly by the EU and the ACP Group which implies a partnership in the application of the funds for development and poverty alleviation. Thereafter it is at local level that the delegated power of the EC Delegate puts the programme into operation together with the NAO/RAO – what is called “centralised method” and “decentralised management”. Resources are also provided for loans out of the European Investment Bank, set, for the 9th EDF, at an additional €1,9 billion. The EDF, according to the EU, has doubled in size over three decades, with fluctuations and the 9th EDF was 6% higher than the 8th in nominal terms but lower in real terms, while the Official Development Aid (ODA) of the EU as a whole outside has multiplied by 4 times in real terms29. This is a clear sign of the EDF playing a secondary and diminishing role in EU development policy. This is shown in Table 9 which illustrates the growing divergence between grants to the rest of the world and the ACP Group. The response of the ACP Group to this paradigm shift in policy application has been muted although the EC policy shift has an important impact on how the Heads of State and Government have decreed, in virtually every Summit Declaration, the ACP Group should define itself, viz. solidarity, cohesion and independence. The ACP Group needs to be present and helpful in the co-management and application of the EDF envelopes in the national and regional context which fall under the overall control of the EC now that the Chief Authorising Officer post has been abolished30 – another apparent sign that less special attention be given to the ACP Group. At present the ACP Secretariat provides for National Authorising Officers to meet and discuss problem areas as arranged in 200431 but the issues raised are felt not to be adequately aired further after the Secretariat has transmitted the NAO/RAO concerns to the European Commissioners and it is recommended that a local EC Delegate in the future be invited to participate in these workshops and that the improvement in rules application should receive attention at the level of the Commissioner Development himself. The EC are required to apply easy and transparent procedures (Article 81 of the Cotonou Agreement). The huge improvement in absorption in 2003 and the fact that some of the previous EDF accumulated amounts in troubled Member States has been usefully applied has much to do with the new processes. Evidence has been presented by a “good spender” State, that once a relationship of trust builds up between the recipient State and the EC negotiators, the rules of the EC are no longer an impediment and, indeed, supplementary development aid is offered. (In 1993 regional bureaux to follow up on Regional Indicative Programmes were proposed but not implemented.) It is also remarkable that some States are able to absorb the full value of their envelope and do not feel the restriction of the regulations. One of the representatives of a “good spender” recipient suggested that his country’s NAO offer ongoing advice and counsel to colleagues in the ACP Group – a true gesture of solidarity and a cost-free solution to a problem which continues to plague the attitudinal approach of both sides, and this Study recommends that co-operation at this level, proposed by the representative of the country concerned be further pursued and implemented. In terms of the Cotonou Agreement32, a Mid-Term Review is to be carried out of the Country Strategy Papers to readjust development goals where necessary. The first Mid-Term Review took place in 2004/5. In it, the EC prepares a response document proposing changes on the basis of the Joint Annual Report on how the country strategy has been applied which the local EC Delegate receives from the country’s National Authorising Officer. These conclusions are sent to the EDF Committee and then to the ACP-EC Development Finance Committee. It remains to be seen how this works out but the interaction promises to be an improvement on merely publishing an Annual Review nine months after the event. It is recommended that the central role of the Development and Finance Committee be emphasised in this process33. After the Mid-Term Reviews in 2004, the Secretariat invited the EC Development and Trade to report on the application of both the National Indicative Programmes and the Regional Indicative Programmes. This was the first time: it accords with the requirement in the Georgetown Agreement Article 2 (a) to “ensure the realisation of the objectives of the ACP-EC Partnership Agreements…” This Study recommends that at the highest level of the ACP Group, political pressure be applied to ensure that the Commissioner for Development take cognisance of, and offer remedies for changes in rules and slow application of the EDF where this is not justified or caused by the recipient State. The envelopes proposed by the NAOs in the National Indicative Programme, are decided in toto at central level and this level should have insight into the EDF application for future planning and political support to ACP Members in difficulty. For ACP Group efficacity, as referred to in the Terms of Reference, internal rearrangements can be made. The regional focus of the EC in its programmes, also requires an adequate response from the ACP Group. The EC Commissioner Trade said on 20 January 2005: “Trade opening or ‘market access’… comes…after regional integration has kick-started growth.” At present, each ACP State decides to which regional grouping it belongs, and Members are in several cases members of two and even more groupings, some outside the ACP Group - and the ACP Group Secretariat itself has provided a list with overlapping memberships of Customs Unions in Africa (See Annex “N”) which makes logical planning nightmarish. (See also Annex “M” which illustrates further competing organisations to which ACP member states belong). This matter will again be discussed below under the restructuring of the ACP Group and the revision of the Georgetown Agreement but it is essential for a cohesive programme on a regional level for the partners to be identified at least for negotiation purposes, to match up to the regional bias in the EC’s development programme, and to have well-defined regional groupings holding negotiations with the EC. Where at present there has been condonation of multiple membership, for the purposes of Regional Integration Organisations, member states of the ACP Group should have a single representative body, irrespective of what memberships they may have of the regional unions, associations and customs accords which should not be affected by this practical administrative choice (and it is clear that membership of more than one customs accord is a precursor to general free trade, but it also opens the Least Developed Countries who opt out of EPAs to customs–free entry for EU goods from more than one bloc) and it is admitted that this is problematic – the example of the Democratic Republic of the Congo stretching into three regions is the most complex. CHAPTER 3 (c): EUROPEAN UNION BUDGETISATION OF THE EDF The determination of the EC to move towards “budgetisation” of the EDF also requires a response from the ACP Group which has not yet declared itself formally on this thorny and perennial matter34. Much has been written and analysed about budgetisation.35 Budgetisation refers to the inclusion of the thus far protected EDF budget into Heading 4 (External Actions) of the EC budget thereby submitting the EDF to the general budgetary rules. The EDF came into being at a time when the European Community had no external actions and the EDF was sui generis – the EDF therefore has separate conditions applied to it: namely * guaranteed amounts set aside and protected within the Fund not under EU parliamentary control (though Parliament has once refused its discharge); * secondly, multi-annual (5 year) cycles of approval; and * thirdly, co-management of the Fund in terms of Article 57(4) of the Cotonou Agreement and Chapter 6 of Annex IV. The EDF’s 10th version has been approved even though the amount is still unknown and dependent on the EU Financial Perspectives which set limits on EU expenditure. Budgetisation would, in simplistic terms, unless otherwise stipulated, make the EDF subject annually to the approval of the European Parliament and to reallocation for other actions inside the bailiwick of Heading 4. This desire to include the EDF in the general budget has preoccupied the EC for decades: it is strongly recommended in the 1996 Green Paper.36 South Africa’s Trade, Development and Co-operation Agreement with the EU already lies outside the purview of the EDF, but in a bilateral agreement, co-management is an inherent feature. In the EC Working Document of 25 February 2005 however, it is stated: “The Union will ensure the necessary ringfencing of the relevant amount in the DCEC instrument in favour of the ACP under the Cotonou Agreement.” And: “…while the ACP-EC Partnership regroups the overwhelming majority of least developed countries, fragile landlocked and island economies and all sub-Saharan African countries that are central to the Community’s actions to combat poverty and reach the Millennium Development Goals, at present the ACP are not in the mainstream of the Community’s development debate. Budgetisation will bring the individual Member State contributions within budgetary normality.”37 The implication of this phrase is that the EDF marginalises the ACP Group, which seems contrary to all the logic of the special five decades old relationship. To allow the EDF, which has played the essential role in the partnership between the EU and the ACP Group, to be subsumed into ordinary budgets, is clearly not presently in the short term the intention of the EC – the Green Paper issued in 1996 discussed various options for the maintenance of the level of aid to the old partners of the EU by the application of exceptional rules to the EDF, even though it would be within the budget of Heading 4, and to the protection of the 5-year cycle. The EDF’s multi-annuality is its strongest feature for the ACP States because:
The recent approval of the existence of a 10th EDF is a clear indicator that the EC does not intend to allow the EDF to disappear immediately into the sands of the general budget. This must be reinforced by the ACP Group’s own acceptance of the political inevitability of the EDF no longer being unamendable as it was in the past, but ensuring it is politically guaranteed by the European Parliament and the political body corporate of EU member states. The EC advances several alluring arguments to justify budgetisation, but some of the arguments look like special pleading and do not appear to place the ACP Group in as good a position as it is now38. Shortly, the arguments are:
On examination though, the “flexibility” depends on reallocation from decommitted or uncommitted funds and does not respond to the benefits of predictability and multi-annual planning. To this the EC responds that there is never total predictability and the Financial Perspectives provide sufficiently for the multi-annual benefit through allocations (but not roll-overs). The ratiocinations seem more beneficial to the EU than the ACP Group. Also, bringing focus on the ACP Group by inclusion in Heading 4 remains to be proven when donor funds get included in the mass of the general budget. Moreover, there is an agenda to include the African ACP Members in the global Africa region, the Caribbean Members in Latin America and the Pacific Members in Asia which presages a new profile for regional donor funding. Co-management, which is the very lifeblood of the Cotonou Partnership Agreement is relegated by the arguments to the level of local Delegates and the country authorising officer. The European Investment Bank, as a forerunner to this, and as the major instrument for the disbursement of a €2,2 billion (previously €1,9 bn) finance facility, already applies the same rules for financing applications to the ACP applicants as other parts of the developing world. (See Annexure “H”). From observation and discussion, fear of the immediate political consequences of the budgetisation of the EDF appears to be premature. The matter was the subject of a serious debate at the recent Joint Parliamentary Assembly in Bamako. The deep suspicion that budgetisation will break the priority role and the spirit of the Cotonou Agreement characterised the ACP Group members of parliament’s argument in the face of the general approval of budgetisation by the Members of the European Parliament who believe that budgetisation will speed up delivery. In the event, the JPA Committee on Economic Development, Finance and Trade decided a study be made on pros and cons taking the Cotonou principles and the joint role of the ACP-EC Development, Finance and Co-operation Committee’s into consideration.
a) the enlargement of the EU will bring about and b) the regional negotiations for Economic Partnership Agreements which will engender changes in trade patterns and customs collection. CHAPTER 3 (d) : ENLARGEMENT OF THE EU Detailed studies have been made of the economic effects the accession of the ten New Member States will have upon the trade and investment patterns EU-ACP. One study at the behest of the World Bank found that trade between New Member States–ACP was negligible40 and that replacement trade/investment would have infinitesimal negative effect upon the economic position of the ACP Group in its relations with the EU and its exports of commodities. Another report is much more sanguine about the negative effects of enlargement, showing that already manufactured dairy products, lower grade meat and cereals are being sent cheaply to ACP markets in growing volume and this will probably escalate after enlargement when even more cheap transformed agricultural products find their way into ACP States. The ACP industries are unable to compete and enlargement will aggravate this41. In one case the milk powder industry in an ACP State was bankrupted by cheaper EU imports. However, the study for the World Bank does not elaborate on the opportunities such enlargement of the EU brings. The study does give evidence that the New Member States are positively inclined towards development in the ACP states, but also illustrates the paucity of contact between the new 10 and the ACP as well as the untapped markets for tropical goods and tourism. The opportunities for new trade and markets cannot be neglected. This must also be a focus for the organ of the ACP Group to introduce EU New Members to the markets in leather, wood (Czech Republic) and tourism and investment in IT. Table 8 lists the consequences of the enlargement both positive and negative for the ACP inter alia the fact that few of the New Member States will meet their aid targets as set in Monterrey and that the ACP is not yet in a position to market its goods in the New Member States and may miss the opportunities offered by duty-free access. This Study recommends intensive interaction and lobbying of the New Member States, both in Brussels where a joint meeting/workshop is recommended as well as lobbying in the capitals of the New Member States. Some of the consequences of enlargement are described in Table 8 below: TABLE 8: CONSEQUENCES OF ENLARGED EUROPE FOR DEVELOPMENT POLICY
Adapted from: Final report: Consequences of enlargement for development policy Vol 1, Aug 2003 www.europa.int The New Member States will also contribute to the EDF on a voluntary basis – this is one of the major reasons why the 10th EDF is being held up until the contributions are approved; it is also a reason why the EC is so keen to achieve budgetisation which brings the New Member States into a compulsory contribution regime. Table 9 illustrates the way in which contributions into Official Development Aid (which will alter now that some of the recipients will become New Member States) have outstripped contributions into the EDF which is unique to the ACP Group and which has declined in percentage: TABLE 9: NET ODA DISBURSEMENT FROM EC BUDGETS AND PAYMENTS INTO THE EDF (US$ - OECD FIGURES) Adapted from: Final report : Consequences of enlargement for development policy Vol 1, Aug 2003 www.europa.int The Monterrey targets of 3,3%of Gross National Income for individual EU States and 3,9% globally for the EU will be difficult to meet for some New Member States and catching up on the shortfall will not improve the position of the EDF. CHAPTER 3(e): ECONOMIC PARTNERSHIP AGREEMENTS An innovation in the Cotonou Partnership Agreement is the regional negotiation of Economic Partnership Agreements, a reaction by the EU to the dissatisfaction in the rest of the world at the privileged non-reciprocal access of ACP Group products to the EU market. The EU thus insists that the EPAs be World Trade Organisation compatible and that reciprocal free trade agreements allow free trade in 90%+ goods within a reasonable time, said to be 10 years. In agreeing to the Cotonou Agreement, many of the interlocutors in ACP States interviewed for this Study, felt that Economic Partnership Agreements had been foisted upon them against their will. Well, this is one of the weaknesses of the present internal arrangements of the ACP Group which this Study deals with in Chapter 6, namely, that without the mechanism of voting, the whole Group is taken to have acquiesced in something proposed by the EU, whereas there might be grave doubts and disquiet which cannot be expressed in voting. “It was based more on pragmatism”.42 An alternative route was offered to Economic Partnership Agreements in the Cotonou Agreement for those ACP States which did not feel themselves ready for inclusion to opt out (Article 37(6) of Cotonou). Great concerns have been expressed about the EPAs in many quarters in the preparation for this Study:
All of these concerns are summed up in the ACP Guidelines46. The UK has expressed some of these concerns in a Statement issued in March 2005 which also urged renegotiation of Art 24 of the GATT, proposed 20 years for transformation and emphasised the opt-out clause47. Initial rounds have started in some of the regions. They have caused much tension in the ACP Group and some regions are more eager than others to get a move on. The EU claims that the EPAs will restructure economies and achieve an investment flow from the EU. “But the models on which these arguments are based assume that the theoretical benefits of free trade between economies at similar levels of development will also apply in the reality of underdeveloped, post-conflict Southern (sic – sub-Saharan?) African economies.”48 The ACP Secretariat has not been involved in or properly informed of the status of these latter regional preliminary negotiations even though a Technical Monitoring Committee has been set up. The global risk of these macro arrangements is that macro-economic comparative advantages will prevail over the economic viability of the ACP States. Some Members of the ACP Group initially attempted to convince the EC Trade to continue the all ACP stage of negotiation to set down the principles applicable to the EPAs, but after year-long discussions started in 2002 and after the expression of the opinion by other Member States that they would prefer to move swiftly, in 2004 the process started at regional level with some defined regions notably in the Pacific and the Caribbean and ECOWAS (plus Mauritania) which are about to embark on the second round of negotiations, the first having begun in September 2004. This process was to be subject to follow-up by the Joint Technical Co-ordinating Committee. Evidence from representatives of ACP Member States shows concern that there is a huge differential between the competence of the EC negotiators (Trade) and those in the ACP. There is a great desire to use experts, as should be necessary in such comprehensively important dealings to be in a position to give policy inputs to the progress of this new fundamentally different approach to engaging the ACP. One Member State has offered such expert assistance on several occasions and also at the meeting of Finance Ministers hosted by South Africa (3 from each region) in 2001 to give counsel on these matters. South Africa provided other member states with the documents used by them in the negotiating of its own TDCA with the EU which could be used as a blueprint for other states’ negotiations with the EU. Together with the Joint Technical Monitoring Committee in the regions (where the Secretariat has Observer Status experts) the presence of these experts would place the ACP Members at parity at least. The EU-ACP Policy Management Unit and the Joint Integrated Technical Assistance Programme (JITAP) of the World Trade Organisation both have resources to build capacity in the negotiating process and this Study recommends that full use of these facilities be sought and used by the regions and Member States. These negotiations are going to be complex given the fact that trade between LDC’s and the EU is governed by other principles than that for other developing countries. A unified approach covering all likelihoods is virtually impossible. Moreover, the protocols for bananas, sugar, beef and veal presuppose, after their suppression, that replacement industries or better transformation, production and marketing will compensate. This is highly unlikely – the support price for sugar goes down by a massive 37% for ACP Group producers (33% for EU) and all the while sugar confectionery exports from the EU to the ACP have grown49. In the light of the dangers of cheap EU products squeezing out local value-added goods, a sectoral approach is advisable in negotiation. However, given that the Everything but Arms facility open to the LDCs expires in 2010, it is important that all countries in any given region participate in the EPA negotiations to ensure their long-term interests are safeguarded even if the EBA facility is extended. The development feature of Economic Partnership Agreements together with protection for infant industry, are not defined in the equation although the Joint ACP–EC Technical Monitoring Committee reported it “agreed that EPAs need to be accompanied by appropriate development-support measures in order to allow ACP countries and regions to maximise the benefits they should be receiving from EPAs.” The same sentiment appears in the 4th Doha Ministerial Declaration and is reiterated in the words of the EC Commissioner Trade in a speech of 20 January 2005: “I have decided to go further, and put the EPA process under continuing review. We will set up a new review mechanism to ensure that at every stage in the negotiations, we really do put development first.”50 One of the EC Delegates interviewed during the course of this Study, declared that he and his colleagues were well aware of the dangers of the market opening, but that this would not take place “willy-nilly” and infant industries would not be “washed away.” The EC Commissioner (Trade) has said that the EPAs aim to “provide markets for them, not for us”, but inevitably economists will look at EPAs in macro-economic terms with a bias towards comparative advantage, something which has revealed its limitations in the crisis in the textile industry in Europe. This is all very well when the EU’s barriers are so fickle: in its Trade Development and Co-operation Agreement which will probably be an indicator for EPAs, South Africa was given a quota of 5000 tonnes of cheese to export, but was required to supply through “approved undertakings” i.e. recognised dairy producers, and the very competition to the exporters. Needless to say no cheese has been supplied! Regional Preparatory Task Forces have been set up by the Joint Technical Monitoring Committee “to foster inter-linkage and complementarity between the strategies supported by the EU, and economic and trade cooperation so as to make them mutually reinforcing.”51 Without the benefit of a centralising oversight over the negotiations by the Secretariat of the ACP, the cohesion of the ACP runs the risk of crumbling and the direct relationship EC-ACP Regions predicates 6 organisations where there is presently one – this Study recommends that even greater capacity be built into the Joint ACP-EC Technical Monitoring Committee and that consideration be given to negotiating on a sector by sector basis including experts from one country that has already been involved in such negotiations in the past. This is pertinent because of the negative experience relating to past EU fishing agreements for instance. Poor countries are willing to agree to anything to get recompense for fishing rights but there is a devil in the small print – poor countries have no means of monitoring the catch or the number of ships and EU Members have been guilty of abuses in the past that have led both Namibia and South Africa to restrict EU fishing. Cook Islands was offered an agreement on tuna but the end result would have badly affected local fishermen, there would have been little extra employment offered, transformation onshore would have been minimal and control would have been difficult. The experience and collaboration of experts of the CTA is essential in this part of the EPA negotiation and it is recommended the Secretariat synchronise their efforts with the CTA as well as accepting the offer of South Africa to provide those who have the experience of such negotiations. There is no reason why the ACP Group should not also approach the negotiations from a positive point of view for the creation of an all-ACP Free Trade Agreement on the lines of what the UK has offered in its Commission for Africa Report of duty free entry of all goods52 and it is recommended in this Study that consideration to such a solution be immediately given. The Mercosur European Business Forum created in 1999 has appealed for just such a comprehensive Free Trade Area between Mercosur and the EU53. The UK has posited the possibility under Cotonou of offering an alternative to EPAs. CHAPTER 3 (f): NON-STATE ACTORS Non-State Actors are, in terms of the Cotonou Partnership Agreement, a fundamental part of the capacity building for EPAs. The evidence presented to your consultants of the inclusion of Non-State Actors has proved in some States in Africa to be deficient – either little consideration has been given to these players, or there is a measure of animosity towards their potential role where they are regarded as a fifth wheel on the chariot, or otherwise looking after their own interests and survival. Some of the local EC Delegates recognised their importance but admitted to doing little to include them in the on-going process. Others had listed the competencies and held regular discussions with Non-State Actors, particularly in the Southern Africa region – South Africa has a list of more than 4000 Non State Actors on record for development functions. In the Caribbean, on the other hand, it was reported, Non State Actors, and in particular, women’s groups have taken a dynamic and innovative role. They are trusted by the authorities and have been made responsible for several development projects. In Brussels, special seminars arranged by the Secretariat, have led to further involvement of such organisations in ACP projects and studies. An audit in the ACP States and in the regional context has been made and the CDE has a database. The Non-State Actors are:
Their role is, in some places, undervalued according to the Study’s observation and, what is more, little is known of the ACP or the European Development Fund in broad society in the countries visited for this Study although a guidebook for Non-State Actors prepared for the Secretariat is readily available – greater efforts are recommended54. CHAPTER 3 (g): FORUM IN TERMS OF THE SANTO DOMINGO DECLARATION At the Santo Domingo Summit of Heads of State and Government, a Forum was proposed for the development of Trade. Despite the proposal, it has not operated. Trade and investment in the ACP States is not promoted in a co-ordinated fashion. As mentioned above, intra-African trade is calculated in a band of 6%-8% of foreign African trade.55 Below, this Study deals with the elements which help to bind together the ACP Group beyond solidarity in the abstract but in policy. What is said in this present paragraph should be read in the light thereof: listed below are combining factors such as tropical tourism, tropical foodstuffs and their exploitation, service industries and ICT, tropical medicine and veterinary services as examples. All of these provide potentiality for investment, trade and exchange. The EU has arranged credible and successful conferences on trade and investment with MERCOSUR. This Study recommends that the Forum proceed on the lines of the Mercosur-EU Business Forum – a business-driven initiative pursuing the enhancement of trade and business relations between the two regions. The same promotion can be achieved through the Forum in a series of seminars and conferences aimed at trade and investment in the regions and across regional frontiers and including New Member States. The CDE is specially set up to help private enterprise in the ACP and this Study recommends that the Secretariat synchronise its planning for the business Forum with the Board of the CDE at the beginning of each financial year. The Investment Facility in the EDF is now entirely dedicated by the European Investment Bank to preferential loans to ACP private sector businesses or state enterprises being privatised or state enterprises run on private sector lines. The ACP Group’s Development Finance Committee has declared the intention of further promoting the use of the €2,2 billion facility, so this ties in neatly with a trade and investment series of seminars/workshops. However, since the terms of the Investment Facility were drawn up without ACP Group participation and because it aims at an “appropriate business environment”, the ACP Group has undertaken to monitor its application closely as a development rather than a political tool which can exclude certain ACP States. The Investment Facility was revised in December 2004 with the participation of the Development and Finance Committee56. CHAPTER 3 (h): MIGRATION FROM THE ACP STATES TO THE EU Article 13 of the Cotonou Agreement provides: “The issue of migration shall be the subject of in-depth dialogue in the framework of the ACP-EU Partnership.” In Article 13 (4) the Parties agree that poverty reduction reduces migratory flows. The ACP has ordered a study on Migration in the EU57 which demonstrates how many skilled workers from ACP States work in the EU. In this Study it was found that 85%of all graduates from Guyana are working abroad. The evidence received in drawing up the present Study showed 70% of secondary education trained Jamaicans leave the country. In the health industry, large numbers of skilled workers in the EU come from ACP States. This is proof of the “brain drain” towards the developed world. Long has this been a source of dissatisfaction: the developed world is only too happy to use the services of skilled workers while the developing world loses an important resource but has paid for the resource through education, social benefits and training. This is particularly notable in the health sector where nurses and doctors trained in ACP countries are happily recruited to the EU’s health services. In the year to March 2005, 12.700 overseas nurses joined the UK nursing register.58 Observation shows that recruiting is done blatantly and cynically, depriving the sending country of essential resources. Naturally, the imported services are paid for at higher rates and some of the receipts return to the home country, but this can never replace or repay the costs of training and the loss of services. The developed world is all too aware that poverty in the rest of the world holds several dangers for its own stability, none less so than in the social sphere. Internationally, the steep Gini-Coefficient is an indicator that immigration to developed countries is a direct results of this differential. This Study recommends that the ACP Group take the political decision to act on behalf of its Members’ interests and enter immediate and intense discussions with the Commissioner for Employment, Social Affairs and Equal Opportunities about the use of skilled workers (especially in Health) from ACP States and seek means of compensation and remedies for the brain drain. Since the Cotonou Agreement provides for in-depth dialogue on migration, the time has come to seek negotiation on compensation from the EU for the use of ACP brainpower and the deprivation of its resources. CHAPTER 3(i): COMPATIBILITY WITH WTO RULES The WTO undoubtedly provides a huge challenge to the way that the ACP Group and the EU do business especially since the EU has thrown the WTO rules into the role of conditioner for the Economic Partnership Agreements: despite concessions to preferential trade between the developed world and “asymmetry” admitted for less-developed countries, there is a major future hurdle in the offing to permit, by 2008, arrangements to be in place regulating trade agreements affecting the preferential position which ACP States enjoy in the EU. The concerns which can be satisfied and the appeal by the ACP Group for changes in Art 24 rules of the GATT have been discussed above. The NGOs which oppose the EPAs urge a deviation from the reciprocal 90%+ coverage of products included in free exchange and this Study has found enough suspicion of the effects of the WTO rules amongst those who contributed to the debate, to urge wariness and a continuation of the spirit shown in Doha, and later at Cancún with the Group of 90 in lobbying the WTO. Nevertheless, the opening of an ACP office in Geneva accredited to the WTO is evidence of the presumed serious consequences of the future non-preferential and non-reciprocal trade regimes. CHAPTER 3 (j): PREFERENTIAL AND NON-RECIPROCAL TRADE ACCESS Research in many studies shows that the preferential trade regime has not led to a consistent growth in the sale of goods from the ACP States into the EU – on the contrary, the ACP States have lost market share over the last 20 years – Africa’s share of 3% of the EU market in 1985 has declined to 0,9% despite preferential access59. Moreover, exports from the ACP States has remained within a restricted number of commodities so that 60% of ACP exports to the EU are represented by only 10 products, solely commodities and in large part oil,60 as illustrated in Table 10, below: TABLE 10: ACP TRADE STATISTICS
Note: The figures above exclude exports to the EU from South Africa They also exclude “imports” into Europe of Cruise ships. We believe that considerations of flags of convenience may distort this figure. Adapted from: European Community Trade Statistics http://trade-info.cec.eu.int WTO Statistics www.wto.org Countries not enjoying the preferences, such as Thailand, have even surpassed the ACP competitors in gaining market share in rice, bananas and sugar61: this is evidence that the preferences as such do not guarantee the volume of exports and that ACP States need to analyse
The World Bank study argues that investment does not follow the preferential regime precisely because the preferences are precarious, but, when the preferences are removed, better production practices will need to be in effect to ensure competitiveness. This is, for instance provided for in Article 2 of Protocol 5 of the Cotonou Agreement (Second Banana Protocol where the Parties were required to “confer in order to determine the measures to be implemented so as to improve the conditions for the production and marketing of bananas.” The same goes for storage, transport and promotion.) South American countries with the support of the USA companies have taken a dispute with the EU to the WTO objecting to discrimination through lower tariffs62. Innumerable studies have been effected to examine the potential damage in ACP countries of the end of preferences, but none has come up with satisfactory solutions. This Study urges that the negotiations for the EPAs proceed on a product sector by product sector basis and that this is accompanied by insistence on protection of infant and transformation industries in particular in the agro-alimentary area which is a large employer and the provider of foreign exchange. It is nevertheless clear that ACP States will have to make concerted efforts to promote their agricultural products irrespective of diversification (where possible) of exports and to stimulate service industries. This is part of the political role the ACP needs to assume to protect the interests of its Members. The role of the ACP office in Geneva and synchronising its efforts with the CDE and CTA is essential. However, in the spending from the EDF, agriculture gets short shrift, although it is the major export item for almost the whole of the ACP. All of the countries have difficulty in meeting EU standards and health requirements. This Study urges that in in-depth discussions on Rules of Origin about which much is spoken and little done, the non-tariff barriers be included – the ACP Group has frequently confirmed that there is no desire to infringe health or sanitary rules, but the inclusion of the Commissioner Health and Consumer Protection and an audit of complaints by ACP States of non tariff barriers will accelerate the process. “The need for additional funds to be made available to finance programmes of assistance in meeting EU standards is reinforced when one considers that, of the allocation of €6,2 billion to National Indicative Programmes in ACP Countries only 7% was allocated to rural development measures (some €437 million), only 1,1% was allocated specifically to agricultural development (some €69 million), only 0,6% was allocated to business development (€37,4 million) and less than 0,1% was allocated to trade development (€6,2 million). Of these allocations very little will have gone to sanitary and phytosanitary compliance.”63 (See Table 11 Below). This being said, a number of relatively large EU programmes have been established at the sectoral level to meet specific ACP needs. For example the pesticide initiative and fisheries SPS-support programmes. These are largely financed from the regional programmes of the EDF and are small if one considers the number of States being aided and the scale of the problem of EU compliance. So too, to help ACP Members face up to the “Official Feed and Food Controls” regulations slated for 2006 which demand detailed information from third countries about feed and food sanitary control to meet EU safety standards, a programme has been approved. An indicative amount of €30 million has been taken from the conditional €1 billion of the EDF to contribute to the capacity building in ACP countries to meet these standards64 with €300 million assessed as necessary. From evidence received during this Study, ACP countries have not asked for this type of funding in their National Indicative Programmes and restructuring of the agricultural and fisheries sector is undervalued. More detailed discussion needs to take place in the negotiations for EPAs. Table 11 shows how agriculture, despite its fundamental importance for the ACP Group is undersubscribed in National and Regional Indicative Programmes, as is business development, making up less than 9% of the Programmes (although the Country Support Strategies may show a different trend). TABLE 11: Adapted from: Discussion Paper “Implications for EU Enlargement” http://agritrade.cta.int The fall in commodity prices is universally believed to have caused ACP States’ economies to underperform. This calamity should be rectified by emphasis on joint marketing and value-addition, which is discussed in Chapter 4 and forms part of the Recommendations. The EC has, however, launched an Action Plan to provide affordable risk insurance for ACP producers. €45 million from the long-term development envelope is to be devoted to the ACP-EU Action Plan on Agricultural Commodities. A Joint Committee will apply the Plan with World Bank assistance to co-finance insurance premiums65. The example of joint action in the case of kava, a drink and a product in tablet form widely used and grown in the Pacific Islands is instructive: a joint study on the health impact of consuming kava was undertaken to obviate German objections to imports on health grounds. It was considered important enough for the W Samoan Head of Sate to visit Germany to put the case of the producers. CHAPTER 3 (k): EU COMMON AGRICULTURAL POLICY SUBSIDIES Another aspect of the decline of ACP products in EU market share remains the subsidy regimes for agricultural and other products in the EU – and the same applies in the USA and other developed countries. This Study has not the scope to go into the matter deeply, but there is an undeniable non-tariff barrier which makes competition with developed countries difficult and which affects the efficiency of the ACP Group in the protection of its interests and poverty alleviation. The subsidies, now made as income support rather than as supply oriented so as to make them “WTO compatible”, but having the same effect on low prices for agricultural products, favour exports to ACP States not only of primary products like temperate grains, but also value-added products like jams, confectionaries, butter, yoghurt and cheese which can be produced cheaply in developed countries because of price distortions caused by subsidies. EU farmers receive on average 100 times more in subsidies than ACP farmers receive in income66. Agricultural products such as tomato paste and chicken legs can be dumped on ACP markets.67 The ACP Group is in a position to align itself with those NGO’s, States and Organisations which are lobbying for the removal of subsidy regimes in developed countries, even those subsidies which are so-called WTO compatible, such as income support subsidies to farmers. These distortions also receive the attention of the UK’s Commission for Africa Report. CHAPTER 3 (l): RULES OF ORIGIN A further non-tariff barrier which requires immediate attention is the strictness of the Rules of Origin, technical barriers criteria applied to goods with value added content exported from ACP States. These matters receive attention in the Cotonou Agreement in Articles 47 (Standardisation and certification) and 48 (Sanitary and phytosanitary measures) and Protocol 1 on “originating products”68. The study by Hinkle & Newfarmer for the World Bank in regard to sub-Saharan Africa shows69 how the Rules of Origin and non-tariff barriers impinge heavily on the ability of those countries to diversify their exports from primary products and oil, a diversification which will be essential in the wake of the new trade regimes. The Joint Technical Co-ordination Committee for EPAs and the UK’s Commission for Africa recognise this huge impediment to development of industry and goods with which to trade. Although this is agreed upon, little seems to be done: the literature speaks of seminars70 but liberal changes in Rules of Origin appear not at all. It is time for pressure at the highest level to move this generally acknowledged logjam. It is recommended that an audit be made immediately of the Rules of Origin which impinge upon diversification in ACP States and at the highest level this be placed on an agenda for resolution with the Commissioners concerned. Even in respect of Everything But Arms duty free imports, the rules of origin and requirements of size, quality and chemical-free production are of the usual strict EU safety type. A problem here rears its head: many of the non-tariff barriers do not stem from the contact points of the ACP with the EC but from Commissions like Health & Consumer Protection and Environment and this is understandable and provided for in the Cotonou Agreement. Evidence was received during the course of this Study for instance that furniture imports to the EU were banned if certain chemical products were used in the manufacture of the furniture: this directive came not from the Commissioner Trade, but from the Commissioner Health and Consumer Protection. This places the ACP exporter before a conundrum: all of a sudden, his product is not acceptable and he is in no position to negotiate a solution. There is room here for prior consultation and solutions by the relevant Commissioners via the contact with the Commissioners Trade and Development as is being planned for the Official Feed and Food Controls. Trade is an important facet of the Gross Domestic Product of all ACP States. In sub-Saharan Africa it accounts for between 29% and 34% of GDP. Serious attention is warranted for the ACP Group to this shackling of the ability to diversify and as stated above only 0,1% of National Indicative Programme funds in the EDF were dedicated to trade development. Action will needs be accompanied by the same changes intra-ACP which hinder trade. The EC strongly believes that trade even in the short to medium term, is a powerful engine for development and growth. The transition phase to trade liberalisation is not set by the EU, but the WTO rules state transition periods “should exceed 10 years only in exceptional cases.”71 CHAPTER 3 (m): REDUCED CUSTOMS REVENUE A severe consequence of the opening of ACP markets to products at lower tariffs according to the World Bank report cited above,72 is the heavy reduction of customs and excise income for the States who have to reduce tariffs in terms of WTO rules (Article 24 which requires “substantially all trade” in free trade agreements to be tariff-free) is the immense effect this has upon state revenue: in sub-Saharan Africa where state revenue from tariffs amounts to between 2% and 6%of GDP. A study in 2004 showed that EU exports to selected countries would increase by as much as 21% but result in revenue losses of up to 4,1% of GDP.73 In the case of the South African TDCA, reductions in tariff revenue for the other members of the South African Customs Union have already been noted and the ACP Guidelines for the EPAs warn of this effect. The response of EC Trade to this potentially harmful loss in State revenue is to propose that the ACP States adopt a sales tax and/or a VAT system to compensate for the loss of tariff income. Some ACP States have already such a sales tax/VAT regime. Two major factors militate against this:
The percentage of State revenue from customs tariffs is illustrated in Table 12 which shows the high level of dependence in Africa and the Pacific: TABLE 12: TRADE TAX AS A SHARE OF TOTAL TAX REVENUE % 
Adapted from: Changing Customs : IMF 2003 The regional integration promoted by the ACP States is hampered by some Members themselves who, despite Customs Unions purportedly in effect, apply bans on imports, do not apply Common External Tariffs and close borders arbitrarily. In terms of Article 2 (g) of the Georgetown Agreement, the ACP is required to promote regional integration ”to increase competitiveness” and this Study recommends that the Secretariat monitor the breach of such customs regimes. In Chapters 2 and 3 above, this study has dealt with:
The next Chapter 4 will deal with intra-ACP relations and how they can be improved to enhance the recommendations already made above and Chapter 5 is linked closely with the greater cohesion of the Group which will lead to its higher visibility in the concert of nations. Finally, the Study will come to the changes necessary in the Georgetown Agreement to underpin all of the above. -o0o- CHAPTER 4 INTRA-ACP RELATIONS AND COHESION CHAPTER 4 (a): INTRODUCTION The ACP Group has existed for three decades and further back through five generations of agreement dating back to 1960. The consistent cry of the Heads of State and Government of the ACP Group has been “to reinforce our unity and solidarity” (Nadi Declaration July 2002 and Maputo Declaration August 2004) and to promote intra-ACP trade and contact. In this respect, almost limitless opportunities exist to make the numerical clout of the ACP Group count significantly in the concert of nations74. There can be no doubt that the critical mass the ACP Group has achieved, has not been properly put into effect to bring about energetic dynamism. Political will is not just verbal, and leadership needs to be shown to bring about the desired results. This Chapter must be read together with the recommendations regarding the improvements to the institutional structure of the ACP Group in Chapter 6. The undeniable international persona of the ACP Group depends also on the intra-ACP cohesion and this persona can only fully evolve through the ACP Group’s relations with other bodies, organisations and States which receives attention in Chapter 6. It would take a number of steps to give concrete form to intra-ACP unity and this has already been the subject of a decision by the Heads of State and Government at S. Domingo in 1997. The Declaration sets out clearly the mandate for an expansion of relations outside the EU as summarised in Table 13: TABLE 13: THE SANTO DOMINGO DECLARATION AND PLAN OF ACTION 1999
Adapted from: The Santo Domingo Declaration ACP/28/015/99 Final Yüklə 0,88 Mb. Dostları ilə paylaş:
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