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close this bookThe Courier N° 146 - July - Aug 1994 - Dossier The Private Sector - Country Reports : Eritrea , Chad (EC Courier, 1994, 104 p.)
close this folderCTA- Bulettin
close this folderNews round-up
View the documentThe convention at Work
View the documentTrade cooperation
View the documentStabex
View the documentEuropean union
View the documentGeneral information
View the documentMémoirs d'un Foyalais. Des iles d'Amérique aux bords de la Seine
View the documentReceived publications

Stabex

On the stabilisation of export earnings, the 1993 year of application and the'all destinations' derogation were the two issues.

The Council was told that, although there will be fewer losses as a result of increases in the world prices for coffee and to some extent for cocoa, as in the previous years there will not be enough resources to cover claims on the 1993 year of application And, furthermore, data for determining losses were incomplete. The Council. as a result, delegated its powers to the Committee of Ambassador.

An ACP request for the extension of the 'all destinations' derogation until the end of the current financial year did not receive a clear response. However, Mr Marfelt that such an extension by Member States of the Union would be'a political gesture of significant financial and economic content for the ACP States' - a sentiment which the Council duly took note of.

Financial and technical cooperation

Described by Mr Pangalos as the 'nucleus and dynamico element 'of the Convention, the implementation of financial and technical cooperation was judged by the Council to be 'very positive' This followed a report, accompanied by a resolution, presented by the Development Finance Committee (the Committee set up under article 325 of LomV to monitor and evaluate the implementation of this aspect of the Convention). The Council had no hesitation in adopting it and in congratulating the Committee for a job well done The report highlighted, among other things. (a) an upswing in overall EDF transactions in the past two years (7992/1993) with commitments and payments under the 6th EDF reaching 82.3% and 71% respectively, (b) the low-level participation of ACP consultants in EDF projects which it says should be addressed, (c) the encouraging progress being made in implementation of the facility on structural adjustment. (d) the various initiatives at regional cooperation and integration which it deems vital for economic recovery and sustainable growth and (e) the positive proposals that have emerged from a study on the use of the existing provisions of the Convention in favour of the least developed, landlocked and island ACP States.

Joint Assembly

Without debate, the Council took note of the resolutions adopted by the Joint Assembly at its February session in Strasbourg, resolutions on topics which differ little from those being dealt with at the Council. They concern the final report on sustainable development, the interim reports on LomV and on industrial development' end the report on the implementation of the Lomonventions. Mr Pangalos seized the opportunity to remind the Council of the significance for the European Union of the Joint Assembly which he described as a 'privileged instrument in our cooperation'. He went on to say the EU was 'happy that there is an increasing number of parliamentarians from the ACP countries' participating in its sessions and that it intends to propose during the mid-term review 'some measures to strengthen the efficiency of the work of the Assembly' which, he said, has been notable for its promotion of human rights and democratic freedoms in the ACP countries.

Augustin Oyowe

Mid-term review of LomV

Main themes and negotiating positions

Although LomV was signed for a duration of 10 years, its financial protocol covered the first five years of the Convention. This will expire in February 1995. In principle only the financial protocol for the second phase need be negotiated, but the profound changes that have taken place in the world since the Convention was negotiated and signed in 1989 dictate that it be adapted. Article 366 of the Convention itself gives both the European Union and the ACP States the right to request such an adaptation.

Over the past year both sides have reflected on the amendments they consider as necessary and each has produced a memorandum to this effect. Negotiations were formally launched by the ACP-KU Council of Ministers at its meeting in Mbabane, Swaziland, in May (see the main article). As the memoranda are not a point by point reply to issues raised by one side or the other and in order to help our readers understand these negotiations, we present below a summary of some of the main themes and the negotiating positions of the European Union and the ACP States as culled from their respective memoranda (including ACP explanatory notes). We indicate 'none' where one side does not have a clearly stated position. It is clear, however, that the ACP Group is laying more emphasis on trade cooperation while the Union is focusing on faster and more efficient implementation of projects and programmes. The proposals will mean amendments to some articles, titles, protocols and annexes (and sometimes new provisions). These are seldom indicated here to facilitate reading.

Human rights, democracy, rule of law and good governance

- The Union seeks to promote these principles in the ACP States by making them the 'essential element' clause of the Convention. Article S. which already deals with human rights, will therefore be extended to include these principles. In addition, the article will make reference to the promotion of an economic environment conducive to a market economy and development of the private sector. Funds will be earmarked to support measures in these areas. A sanction clause will be inserted to allow for the partial or full suspension of the Convention in cases of infringement. ACP Group affirms, 'within its own socio-cultural environment, its abiding faith in and deep commitment to' these principles and proposes their introduction in the Convention 'without direct or indirect conditionalities or cross conditionalities'. It agrees with the idea of financial support in pursuit of these values, so long as the request for such support emanates from the ACP States concerned. It advocates the introduction of 'an effective mechanism for the resolution of disputes arising from any perceived contravention'.

Parliamentary institutions (Joint Assembly)

The Union believes that the work of the Joint Assembly will be more effective if it reflects the democratic process taking place in the ACP States. It would thus seek changes to its composition and to the frequency of its sessions.

ACP Group (none)

Policy dialogue and programming of Community aid

The Union seeks to strengthen policy dialogue and to insert in the Convention a reference to the priorities of Community cooperation policy as stated in Article 130u of the Treaty establishing the European Community. In order to speed up implementation, the procedure of which will have be spelt out in the Financial Protocol and in Article 311, it proposes a more flexible system involving two phases of indicative programme. It also proposes that, where an ACP State, for reasons of civil war or suspension of cooperation, is unable to implement its indicative programme, the Community and Member States should be able to use the resources of the ACP State concerned in a different manner from that originally planned. As the proposals concerning priorities and a new flexible system of indicative programme will have financial implications, the Financial Protocol will have to be adapted accordingly.

ACP Group (none)

Support for economic development

The private sector

The Union hopes to strengthen and consolidate ACP States' basic economic infrastructure through the development of commercial structures, private investment, and financial services and banking. It would advance these by using the funding opportunities offered in the indicative programme, It will review the structure and operation of the CDI, and seek greater flexibility in the terms and conditions of the risk capital operations of the EIB European Investment Bank) and in its grant of automatic interest rate subsidies for loans granted from its own resources. It proposes the reservation of a proportion of risk capital for the least-developed countries to take account of their economic and financial difficulties.

ACP Group aims to place specific and sub stantial amounts of the financial resource in the Convention at the disposal of the private sector and to facilitate entrepreneurs' access to them. This will involve, among other things, targeted use of ElB's risk capital resources for all aspects of private sector development (including technical assistance, training, studies, etc), better terms and conditions (in particular as regards guarantees, interest rates, repayment and re-use of resources) and greater emphasis on equity investment aimed at reducing debtcreating transfers. More adequate financing, it says, is imperative if comprehensive interventions by the CDI are to be realised.

Trade cooperation

The Union is prepared to examine with the ACP States how they could benefit more fully from the trade advantages already available to them under the Convention.

ACP Group sees adaptation in this area as vital it the ACP-KU relationship is to have the greatest impact on the ACP States. This has become imperative because of the very many important changes that have taken place since LomV was negotiated. These changes call for an improvement of the operational mechanisms of the trade sector and for greater attention to be given to ACP competitiveness and diversification..

In this regard, the Group seeks amendments to the provisions of the Convention on access of agricultural products and for special attention to be paid to enhancing ACP opportunities for trade in services with the European Union following the outcome of the Unuguay Round and the Union's final offer during the negotiations (it should be noted that the chapter of the Convention on trade services was not concluded before LomV was signed due to the GATT talks). The Group proposes that resources be made available for the effective implementation of the provisions relating to cooperation on commodities and for the realisation of ACP's strategy in this area. As individual Member States of the European Union can no longer invoke safeguard measures (article 177.1 and 2) since November 1993, the ACP States want amendments to the relevant provisions to empower only the Union to do so. The Group also seeks improvements in rules of origin in view of continued ACP dissatisfaction with their implementation.

Effective use of instruments

Stabex

The Union proposes to harmonise the use of Stabex funds with structural adjustment measures, and even to use the funds for structural adjustment if necessary. it proposes to reduce eventually the bases for transfer in the event of 'significant changes' (with exemptions for the least developed and landlocked states when their bases are below ECU 2 million and for island countries when their's are below ECU 1m) and for sums paid into block accounts under the framework of mutual obligations (FMOs) to be returned to the system's resources if me conditions for transfer are not met (the Union indicates that it reserves the right, in due course, to specify in more detail its proposals).

ACP Group feels that Stabex has not achieved the objectives set out in the Convention because of the inadequacy of funds and the new conditions introduced under LomV. It therefore will seek an increased allocation of funds for Stabex (to take into account the rate of inflation and losses incurred by the ACP States), the adoption of a special mechanism to enable ACP States, which have not received their total transfer entitlements, to have the amounts deducted from their debt obligations to the European Union. It also agrees that the least-developed and landlocked states as well as island countries should be exempted from any reductions in the event of insufficiency of resourcm during the year of application when they fall below ECU 2m and ECU 1 m respectively.

Procedures

The Union estimates that in order to improve the effectiveness of cooperation and speed up implementation, and without prejudice to the prerogatives which the Convention gives to the ACP States, a limited readjustment of the powers regarding financial and technical cooperation is necesary. This concerns the attribution of responsibilities between the chief authorising officer and the national authorising officer (NAO) during preparation, appraisal and evaluation of programmes and projects. it suggests the setting up of a technical management unit to assist in management and execution. To enable these measures to be implemented, the Union proposes that a specific amount be set aside in each indicative programme. ACP Group proposes that, in order to accelerate procedure, the Delegate of the Union should be empowered to take onthe-spot decisions on some technical and financial issues which they are currently obliged to refer to the Commission - issues such as preparation of shortlists of consuitants, the approval of tender dossiers for all types of contract and the award of all contracts no matter their value (except where there is a disagreement between the NAO and the Delegate). It suggests that a system for settlements of disputes over implementation of projects and programmes be set up. And, with regard to technical assistance, the Group proposes that NAOs should, on their own initiative, use resource of the indicative programmes and/or counterpart funds to acquire the human and material resources necessary for effective and sustainable management of projects and programmes.

A.O.

EUROPEAN DEVELOPMENT FUND

Following, where required, favourable opinions from the EDF Committee, the Commission has decided to provide grants and special loans from the 5th, 6th and 7th EDFs to finance the following operations (grants unless otherwise stated):

Corrigenda - issue no. 144 of March-April 1994

In the article 'Fourth time lucky with democracy' which was published in our Ghana Country report, a mistake has crept in regarding the date of the return of Jerry Rawlings to power at the outset of the PNDC era. As perceptive readers have pointed out, the 31 December coup took place in 1981 and not in 1991 as we reported (see page 31). Our apologies for any confusion that may have been caused by this typographical error. In the article entitled 'Cultural cooperation between the European Union and the ACP States' by Pierfranco Alloa, an error appears in the table on page 102. In the column headed 'Amount (in ECU)' at point Vl.2 (Support for the Foundation for ACP-EC cultural cooperation) the figure should be 3 926 787 and not 11 676 787. In consequence, the total amount is 38 916 553 and not 46 666 553.

ECONOMIC AND SOCIAL INFRASTRUCTURE

ERITREA: ECU 3.7 million towards a rehabilitation programme in the fields of health, veterinary services, water distribution, and the integration of former soldiers into civilian society.

Mali: ECU 1.934 million for the reconstruction of primary schools in the north of the country (Gao, Bourem, Menaka and Ansongo regions).

Niger: ECU 18 million for a programme aimed at improving the exploitation of pasture lands (provision of water points), meeting human and animal health needs and commercialising the livestock sector.

Senegal ECU 1.99 million for the relaunch of artisanal fishing (infrastructure development) and for strengthening SMEs

Aruba: ECU 3.1 million for an extension to the airport.

Wallis and Futuna: ECU 500 000 to acquire materials for public works aimed at providing road access for isolated communities.

Wallis and Futuna: ECU 1.125 million for works to bring the main road on the island of Wallis up to standard.

TRADE PROMOTION/ STRUCTURAL Adjustment

Cameron: ECU 20 2 million, of which ECU 15 2 million is from the structural adjustment facility, for a general import programme.

Chad: ECU 15.2 million from the structural adjustment facility for a general import programme

Cd'lvoire: ECU 28.8 million to support phase three of the general import programme.

Gabon: ECU 13 .2million, of which ECU 5 million is from the structural adjustment facility, for a general import programme.

Niger: ECU 20 million, of which ECU 11.9 million is from the structural adjustment facility, to support a general import programme.

Senegal: ECU 16 million, of which ECU 10 million is from the structural adjustment facility, for general import programme.

All ACPs and OCTs: ECU 2 million for a second global commitment authorisation to finance trade and international tourism events, through the national indicative programmes (NlPs). All ACPs: ECU 7 2 million for an ACP-KU trade development project aimed at helping ACP States to set up commerdal exchanges in order to increase their hard currency earnings.

AGRICULTURE

Congo ECU 3.4 million for a project to improve the market gardening belt in
Brazzaville.
Ethiopia. Kenya, Tanzania and
Uganda: ECU
1.15 million for a regional project to support agricultural research.
Niger: ECU 1.8 million for a small-scale irrigation programme to allow for agricultural development in 79 villages in the department of
Zinder.
West Africa: ECU 1.93 million for phase
2 of the OFAR (On-Farm Adapative
Research) agricultural research project.

ENTERPRISE

Gabon: ECU 14 million from Sysmin funds for three projects relating to mines in difficulty and two projects involving investment for diversification purposes in the Haut-Ogooue province and Lambarene region.

HEALTH Burkina Faso: ECU 1.35 million to strengthen interventions in respect of sexually transmittable diseases (STDs) and AIDS.

Zaire ECU 18.5 million for a programme of transitional support (PATS) for the health sector.

INSTITUTIONAL SUPPORT

Cote d'lvoire: ECU 756 000 to support a project allowing the Ministry of Agriculture and

Animal Resources (Minagra) to strengthen its capacity to elaborate policies and programmes in the rural sector.

EUROPEAN INVESTMENT BANK

Loans

Botswana. ECU 4 million to finance small and medium-sized enterprises in the industrial, agro-industrial and tourism sectors. The loan has been granted to the Botswana Development Corporation which will intervene through partner banks that have close links with the private sector, a sound knowledge of local markets and priorities in the area of economic development. Namibia: ECU 6 million to finance the modernisation and extension of a water treatment plant serving the capital, Windhoek and its surrounding area where most of the country's rapidly growing industrial and manufacturing activity is situated. Papua-New Guinea: ECU 4 million to finance small and medium-sized enterprises in the industrial, agroindustrial and tourism sectors. The loan is granted to the Hank of Papua New Guinea which will direct the funds through commercial banks.

VISITS

President Nujoma of Namibia

5am Nujoma, the President of Namibia, recently undertook his first official visit to the Commission since the independence of his country The President was accompanied by Foreign Minister, I Theo-Ben Gurirab, and was received by President Delors, Vice-President Marand Commissioner van den Broek.

Independent since March 1990, Namibia is a multi-racial, multi-party democracy with a free-market economy. Despite substantial progress in the political, economic and social fields, it continues to require help from the European Union which offers an increasingly important market for Namibian trade.

The position of this southern African country has always been a signrficant one. It is one of the key actors in the process of change that SADC (the Southern Africa Development Community) is undergoing in the wake of the elections in South Africa.

President Nujoma's visit helps to reinforce the close links between the European Commission and Namibia, and highlights the importance that the latter attaches to a strengthening of its cooperation with Europe.

Delegation from the French OCTs on 26 May, Vice-President Marhad a meeting with a large delegation from the French overseas countries and territories (OCTs). These included elected members and representatives of socio-professional groups from Mayotte, New Caledonia, French Polynesia, st Pierre & Miquelon, and Wallis & Futuna.

The visit took place in the context of the midterm review of the Association between the OCTs and the EU which entered into force for a ten year period in 1991.

The discussions focused on the implementation of the current association decision and on possible changes to:

- the trade regime (the OCTs are the only partners of the EU to benefit from completely free access for products originating in their territories); the right of establishment and the provision of services; financial and technical cooperation through the European Development Fund (EDF) and the European Investment Bank (EIB);

- the operation of the partnership in practice

Mr Marexplained to the delegation how this revision was taking place at an appropriate time given the new characteristics of the

. the hoped that it could be carried out speedily and in tandem with the LomV revision in respect of the ACP States, so as to avoid delays in the implementation of the 8th European Development Fund which was scheduled to come into force between now and the end of February 1995.

As to the content of the mid-term review, Mr Marsaid that the changes he was seeking were broadly those that had already been agreed by the Council as regards financial cooperation with the ACP countries. Mr Margave assurances to the delegation that, in the elaboration of its proposal to the Council, the Commission would take full accounts of the specific characteristics of the OCTs. He noted, for example, that the differences between British, Dutch and French OCTs were already formally recognised in their association with the KU. He believed that the new Council decision should establish a suitably flexible framework. As regards the indirect consequences for the OCTS resulting from the establishment of the single market, Mr Marstressed that a stronger and more unified European Union did not mean any diminution of solidarity on the part of the EU vis-a-vis its partners.

MISCELLANEOUS

'Budgetisation' of the EDF

In conformity with the commitment made during the negotiation of the inter-institutional agreement of 29 October 1993, the Commission, at its meeting on 19 April 1994, adopted a report on the possible ways and means of 'budgetising' (ie integrating into the European Community budget). the European Development Fund. This report will be forwarded to the other two branches of the budgetary authority (the Council and the Parliament) for analysis and comments. If the report is favourably received by the other two institutions, formal negotiations will be initiated on the basis of the Commission's proposal. Whatever the outcome, 'budgetisation' of the EDF cannot be undertaken before 1996.

OCTs: Stabex transfers

Definitive decisions under the Stabex (stabilisation of export earnings) exercise for 1992, in respect of the Overseas Countries and Territories associated with the EC, have been taken by the Council. These decisions involve the payment of ECU 1 147 675 to the Falkland Islands and ECU 52 325 to French Polynesia for export losses on wool and copra oil respectively. In fact, the compensation rights involved amounted to twice what was actully decided, but it was necessary to reduce the sums paid in order to remain within the maximum amount budgeted for OCTs for 1992 (ECU 1.2 million).