The Cotonou Agreement
A partnership for globalisation

Stabroek News
December 31, 2000

This week we are publishing the first instalment of a four-part series on the Cotonou Agreement prepared by the European Union Delegation. It is intended to explain the central themes of the pact, which is a successor to the Lome Convention between the African, Caribbean and Pacific States and the European Union.

What is the Cotonou Agreement?
The Cotonou Agreement, which takes its name from the capital of Benin where it was signed, represents a new partnership between the European Union (EU) countries and the 77 African, Caribbean and Pacific States (ACP) who will work together for poverty reduction.

The agreement was born out of the Lome Conventions and has been under discussion since 1996. Actual negotiations began in September of 1998 and were successfully concluded by February of 1999.

The purpose of the agreement is to allow the EU and ACP sustainable development, and gradually to integrate the ACP countries into the world economy. The compact covers cooperation in the form of aid, and cultural and social assistance to the ACP countries, many of which are former colonies of European nations that are now members of the EU. The assistance is aimed at promoting the development of ACP states in such a way as to contribute to peace, security and a stable, 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 the participation of civil society. With its emphasis on good governance, the agreement is perceived as representing an advance over previous pacts (Lome I to IV).

After twenty-five years of the Lome Convention the results were mixed. It was recognised that the effectiveness and viability of cooperation was often undermined because insufficient consideration had been 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. Adaptation to global developments and economic and trade processes, however, had to be consistent with World Trade Organisation rules.

At the negotiations, the EU emphasised the need for a change in attitudes, and as a result the Cotonou Agreement now includes the political dimension of development and recognises the closer involvement of civil society, the private sector and the economic and social sector.

At the negotiations, the EU emphasised the need for a change in attitudes, and as a result the Cotonou Agreement now includes the political dimension of development and recognises the closer involvement of civil society, the private sector and the economic and social sector.

The agreement reflects the EU's reach as the leading international trading partner and the world's main provider of official development assistance. The new covenant carries forward EU-ACP cooperation established over four generations of Lome agreements with its well-rooted respect for social, economic, political and human rights, and aid and trade concessions. Together, the ACP 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 European Commission and African Caribbean and Pacific states have agreed that the Cotonou Agreement will last for twenty years, with a review every five years. Much like the Lome Convention, the new arrangements offer assistance and promote cooperation between the EU and the ACP states.

The new approach, however, is expected to allow for more flexibility in dealing 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
* reform of financial cooperation.

Political dialogue
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
As stated earlier, 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
Poverty reduction is a central objective of the new partnership and will centre around 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 EU 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 (EDF) 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 an 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.

After twenty-five years of the Lome Convention the results were mixed. It was recognised that the effectiveness and viability of cooperation was often undermined because insufficient consideration had been given to the institutional and policy context of the partner countries

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 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, case-by-case assessment every two years.

Trade relations
The system of trade preferences which the EU granted the ACP states under the previous Lome 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 which 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.

Poverty reduction
The European Union has long been the largest donor of development assistance to the ACP countries and under the Cotonou agreement a greater focus is placed on poverty reduction, and the key measures put in place to actively address means of reducing poverty. The twenty-year Cotonou agreement of partnership between The European Union and the African, Caribbean and Pacific States has spelt out how development assistance will deal with issues such as low cost housing, malnutrition and starvation, clean potable water and environmental sustainability. Poverty reduction under the Cotonou agreement will be centred around the building of a better private sector, 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.

The approach to poverty reduction under Cotonou for the first time proposes a global strategy for development which will include the Community, member states and ACP partners working together to establish a joint and effective strategic framework. This will allow them to measure the progress of their efforts according to the results. The plan has divided the approach to the issues into three areas of focus: Economic Development, Social and Human Development and Regional Cooperation and Integration.

Private sector the engine to stimulate growth
In the area of economic development, one of the first approaches to fighting poverty lies in the creation of a favourable environment for investment and private sector development which will lead to competition and viability. To do this the agreement envisages the promotion of public-private sector dialogue and cooperation, the development of entrepreneurial skills and business culture, privatisation and enterprise reform and the development and modernisation of mediation and arbitration systems. The EU also recognises that this alone will not stimulate private sector development and investment, so the Cotonou agreement also aims to improve the access and quality of financial and non-financial services to private enterprises.

In the area of macro-economic and structural policies and reforms the co-operation agreement will support macro-economic growth and stabilisation by promoting disciplined fiscal and monetary policies that result in a reduction in inflation. The Community will also assist in designing policies that will help to reinforce the role of the private sector, while improving the environment for businesses.

The Cotonou agreement also targets social and human development as one of the critical areas in the reduction of poverty. The co-operation agreement will support plans by the ACP states that will improve quality and access to basic social infrastructure and services, while ensuring that that there is a fair distribution of resources. To this end the agreement will aim at:

* Improving education and training, and building technical capacity and skills;
* Improving health systems and nutrition, eliminating hunger and malnutrition, ensuring adequate food supply and food security;
* Improving reproductive health, primary health care, family planning and prevention of female genital mutilation;
* Promoting the fight against HIV/AIDS;
* Improving access to safe water and adequate sanitation;
* Improving the availability of affordable and adequate shelter for all, through support for low-cost and low-income housing programmes and improving urban development;
* Encouraging the promotion of participatory methods of social dialogue as well as respect for basic social rights.

The third broad area under which the partnership agreement will address poverty, is through regional co-operation and integration. Assistance in this area will focus on inter-regional and intra-ACP cooperation and will aim to:

* Foster the gradual integration of the ACP States into the world economy;
* Accelerate economic cooperation and development both within and between regions of the ACP states;
* Promote the free movement of persons, goods, services, capital, labour and technology among ACP countries.

Overall, the aim is to bring the regions closer together to ensure that through integration and co-operation the partners can help each other and thereby help deal with poverty.

Apart from these three broad areas of focus for addressing poverty, the Cotonou agreement also recognises that issues such as gender equality and the sustainable use of the environment and natural resources play a vital role in the elimination of poverty.

The political dimension and increased participation
A key aspect of the Cotonou agreement is its emphasis on good governance and accountability. One of the five pillars on which the 20 year agreement rests stresses the need for the ACP countries to respect democratic principles, human rights and the rule of law. As a consequence, measures were agreed to address breaches of these principles.

One of the requirements in this area is that the two sides, the ACP countries and the EU, shall meet regularly for in-depth discussions and political dialogue, which will allow both sides to give their commitment. It is hoped that with this dialogue they will be able to exchange information, which in turn will facilitate a better understanding and a common, agreed agenda.

It is expected that the two sides would continue, as is required under the partnership, to promote stability, peace and a democratic political environment. In this regard the dialogue will address issues such as the arms trade, excessive military spending, drugs, organised crime, racial, religious and ethnic discrimination, human rights and the rule of law.

The role of other non-state actors is also taken into account under the political dimension, and it is expected that the dialogue would be flexible and that representatives of civil society would be involved providing key inputs.

The Cotonou agreement spells out that the focus of the co-operation offered is human development, and that people should be the main beneficiaries of it. As a result the partnership stresses respect for all human rights, fundamental freedoms, the rule of law, accountability and democracy.

Good governance, corruption and the role of civil society
The issue of good governance is also covered by the Cotonou agreement, which explains that the EU will deal harshly with serious cases of bribery and corruption, involving possibly a country's assistance being withheld. This, it is believed, would allow for more transparency, greater equity and a fairer distribution of resources. In short, if a country does not follow accepted and fair procedures in disbursing the funds and any assistance given, then the issue would be discussed and appropriate action would be taken.

The new twenty-year deal includes the participation of civil society. The EU plans to consult with members of civil society on the various programmes that will benefit the country. In the past many of the programmes were undertaken and assistance given after consultations with governmental agencies. This will change; the new partnership agreement will see the forging of closer ties between governments and civil society, along with greater participation. In many countries, where members of civil society and the government do not hold any discussions, the EU plans to change this trend. It is hoped that the Cotonou agreement will become the vehicle to allow for more regular and structured dialogue, which would complement the political dimension of the agreement, advance and strengthen the democratic process and allow for increased accountability. This new approach also hopes to improve the viability of the programmes undertaken since the non-state actors will be more involved in defining the needs of the communities and will be eligible for direct access to funds. Full involvement and consultation are to be the key words that will define the European Union's increased spirit of participation.

Follow the goings-on in Guyana
in Guyana Today