The COTONOU Agreement, partnership for globalisation

Guyana Chronicle
January 7, 2001

(The Chronicle today begins a series on the Cotonou Agreement signed between the European Union and the African, Caribbean and Pacific States. The Cotonou Agreement replaces the Lome Conventions. The articles are prepared by the European Union (EU)) What is the Cotonou Agreement?

THE Cotonou agreement takes its name from the capital of Benin where it was signed and represents a new partnership of cooperation between the European Union and the 77 African, Caribbean and Pacific States (ACP).

The purpose of the agreement is to allow the EU and ACP countries to work together for poverty reduction, sustainable development and the gradual integration of the ACP countries into the world economy.

The agreement covers cooperation in the form of aid, cultural and social assistance to the ACP countries, many of which are former colonies of European Nations that are now Members of the European Union. The assistance is aimed at promoting the development of ACP states with the intention of contributing to peace, security and a stable and democratic environment.

Under the Cotonou agreement, the development of the private sector is emphasised along with sustained economic growth, increased employment, better access to productive resources and participation of the civil society.

The new agreement represents an improved and upgraded version of the previous agreements (Lome I to IV) that existed under the earlier programmes of cooperation. However, one major step is that the Cotonou is seen as a partnership that emphasises good governance.

After 25 years of the Lome Convention, the results have been mixed. It was recognised that the effectiveness and viability of cooperation was often undermined because insufficient consideration was given to the institutional and policy context of the partner countries. The impact of non-reciprocal trade preferences was disappointing, with ACP countries' share of the EU market declining to three per cent in 1998, while 60 per cent of the total exports were concentrated around ten products.

The pressure to adapt to global developments, economic and trade processes had to be consistent with World Trade Organisation (WTO) rules. The EU also emphasised the need for a change in attitudes. As a result, the Cotonou agreement now includes the political dimension of development and recognises the closer involvement of civil society, the private sector, the economic and social sectors.

The Agreement reflects the Union's reach as the leading international trading partner and the world's main provider of official development assistance.

The new agreement carries forward the EU-ACP cooperation established over four generations of Lomé agreements with its well-rooted respect for social, economic, political and human rights and aid and trade concessions. Together, the ACP States signatories to the agreement represent a total of more than 650 million people covering sub-Saharan Africa and most of the Caribbean and Pacific islands.

In the Caribbean region, Europe remains a necessary partner. Maintaining relations with Europe is equally vital for the small island economies of the Pacific which lie scattered at such a distance from the rest of the world, the largest with only four million inhabitants, the smallest with only two thousand.

The Cotonou agreement was born out of the Lome agreements and was under discussion since 1996, negotiations for the agreement began in September of 1998 and were successfully concluded by February of 1999.

The European Commission and African Caribbean and Pacific states have agreed that the Cotonou Agreement will last for 20 years, with a review every five years. Much like the Lome Convention, the Cotonou agreement offers assistance and promotes cooperation between the EU and the ACP states.

Under the Cotonou agreement, it is expected that there will be a reform of the EC-ACP partnership by building on the last 25 years. The new approach is expected to allow for more flexibility to deal with changing realities.

The Cotonou agreement is based on five interdependent aspects;

* a comprehensive political dimension,

* participatory approaches,

* a strengthened focus on poverty reduction,

* a new framework for economic and

* trade cooperation and reform of financial cooperation.

Political dialogue between the EU and each of the partner countries will play a key role in determining the nature and objectives of the assistance provided. The Agreement is based on respect for human rights, democratic principles, the rule of law and good governance. It also establishes special consultation procedures and appropriate sanctions for dealing with human rights violations and serious corruption. It will also encompass peace-building initiatives, while conflict prevention will be addressed in the partnership using regional and local capacities.

Increased Participation: The partnership aims to encourage greater participation by local governments, civil society, the private sector and trade unions. This new approach will help advance democratic processes and transparency, while more information and consultation should ensure that cooperation projects prove more viable than in the past. Non-state actors will be given more direct access to funds. ACP countries will be expected to identify those eligible for such support, which could include the private sector, trades unions, civil society in various forms and local government.

Poverty Reduction: This is a central objective of the new partnership and will centre on private sector development, investment and development, macro-economic policies and structural reforms, social sector policies, youth issues, cultural development, gender equality, environmental sustainability and institutional and capacity building. Under this aspect of the agreement, issues such as eliminating hunger and malnutrition, improving health systems, access to safe potable water and accessibility to housing will be addressed. The E.U has long been the largest donor agency to the ACP countries and it is expected that through policies aimed at reducing poverty, more will be gained from the partnership.

Economic and Financial reform: Through euro 13.5 billion European Development Fund support in the Agreement's first five years, the EU will help the ACP governments in their attempts to achieve economic growth, improve both the quality and coverage of social services, and expand the private sector. In addition, euro 9.5 billion of uncommitted monies from previous EDFs will supplement the new fund. There is a seven-year deadline for its disbursal. The EDF will be further boosted by up to euro 1.7 billion pledge of loans from the European Investment Bank's (EIB) own resources. A euro 2.2 billion EDF Investment facility will also be managed by the European Investment Bank, and will support the expanding ACP private sector.

New programming provisions for EDF monies will allow quicker and more flexible disbursement and will reward good performers with the promise of additional funds if initial amounts are well spent. Allocations will no longer be automatic, but will be subject to revision in based on developments in need and performance. Resources will not be frozen in countries, which do not put them to good use, but will be transferred to countries where they can be put to good use. There will be an annual operational review, summarising the results of regular dialogue and extending programming for the following period. There will be a detailed assessment, case by case, every two years.

Trade Relations: the system of trade preferences which the EU granted the ACP states under the previous Lomé conventions, will gradually be replaced by a series of new economic partnerships based on the progressive and reciprocal removal of trade barriers. These agreements will be defined as part of a broader strategy to improve the ACP States' ability to attract private sector investment. A step-by-step timetable agreed between the EU and ACP includes:

* a roll-over of the existing references until 2008 at the latest;

* liberalisation of essentially all imports from the least developed countries in the grouping by 2005;

* the launch of formal negotiations on Regional Economic Partnership Agreements (REPAs) by September 2002;

* new trading arrangements will enter into force by January 2008 at the latest.

A new joint ACP-EU trade forum will meet at ministerial level to examine the impact of wider liberalisation on ACP-EU trade and ACP development and to preserve the benefits of ACP-EU trading arrangements.

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