Symposium: Trade issues in the context of Lomé IV and 1992

The ACPs and the Community are wondering how to make a success of LomV, even before it takes effect, and with this in mind, a “ High-level Seminar on Strategic Trade Issues in the context of LomV and 1992” was held in Brussels from 9-11 July.

Many leading ACP figures were there, in particular more than 25 ACP Ministers, including Joshua Nkomo, the Vice-President of the Government of Zimbabwe. Some ACPs were represented by their Ambassadors in Brussels.

The Community representatives were Manuel Marin, Vice-President of the Commission, who opened the meeting, Dieter Frisch, the Director-General for Development, and Peter Pooley, Deputy Director-General. Dr Garret Fitzgerald, the Irish Prime Minister at the time of the signing of Lom (1975), also attended.

Manuel Marin said that the Community thought the Uruguay Round was a unique opportunity to lay down the basic rules for international trade in the future and that, naturally, the new agreement would have to take account of both traditional partners and the new economies which are just taking off, as well as the special problems of those countries which have not yet made a significant mark on the world trade scene. “We need to be aware”, he pointed out, “of the fact that the real problem facing ACP countries is not the erosion of preferences but rather the fundamental reasons which have prevented them from enjoying those preferences.

In fact, competition is the key word here. The ACPs will have not only to cope with the intensification of competition in their traditional markets but also seize the new opportunities offered by a dynamic world economy. In order to take up the challenge launched by this competition, it is necessary to abandon certain practices and develop new habits...

As for the trade system itself, the ACP countries need to be present in the Uruguay Round both individually and collectively... The Community can only do so much; the rest you must do yourselves through your representatives in Geneva”.

Joshua Nkomo said that Europe’s Single Market of 1992 was an unprecedented departure whose success was already apparent to everyone. But the best finest aspect of it was that it would be an example to “ those of us who want to work to create a unified market as part of the Lagos Action Plan. We are convinced”, he said, “ that the path thus traced will be worthy of being followed by other regional and international organisations. But we remain sceptical about our ability, as ACP States, to meet the standards laid down for the access of goods to the enlarged market. This will no doubt cause trade flows with various parts of the world, including countries and zones which have achieved a better standard of economic development than ours. The basic question is how can we survive the competition with which we shall be faced. The bulk of the products we export to the Community market can easily be replaced by products from the Community itself, from newly industrialised countries or from Eastern European countries in the throes of change”.

A thoroughgoing dialogue

Once each party had outlined its position, extensive exchanges of views were held on the GATT negotiations and the Uruguay Round, the implications of the Single Market of 1992 and relations between Eastern and Western Europe, the trade provisions of LomV and various questions related to ACP firms, employment and services.

The basic issue was why, when it came to trade, the ACP States failed to derive full benefit (or got less benefit than the Asian countries) from their privileged relations with the Community. Participants answered this with both well-worn and new (in the ACP-EEC context) arguments along two lines.

First of all, they repeated, the chronic ACP trade deficit with the Community was due to the constant decline in the price of ACP exports (commodities) and the dwindling investments which European and other developed nations were making in the Group. In addition, the manufactures exported to the ACP States were getting more expensive all the time, as a representative of the ACP Secretariat-General, in particular, tried to make clear. Although the rise (and fall) of commodity prices had never kept pace with that of industrial products from the developed world, it was not the sole reason, or even the main reason, for the ACP-EEC trade deficit today - a point which was illustrated by the ACPs themselves, in particular the delegates from Cd’Ivoire, Dominica and Trinidad and Tobago.

Siaka Coulibaly (Cd’Ivoire) that there was no point in having access to a market - in this case the market of the Twelve unless you had something to sell. In a market economy with free competition, it was quality and price which won the day and the ACPs and Africa in particular did not currently fulfil these conditions. The GATT agreements, he said, would only be of any help to the ACPs and Africa in particular in the long term, and only then if the Community realised that the real ACP problem was the weakness of the structures of their respective economies and not, in the immediate future, access to the markets.

The Dominican Minister, Mr Maynard, and the representative of Trinidad and Tobago, Mrs. Sheelagh De Osuna, both underlined the contradictions in the various trade agreements between the developed countries and the Third World. The power of the developed nations and the weakness of the developing ones created a permanent state of imbalance, to the detriment of the latter, Mr Maynard said. The developing nations were asked to go in for full application of the rules of a liberal economy, but how could they compete if their markets were not protected, when the developed countries had a very efficient protectionist policy even if they did not call it that? Mrs. De Osuna pointed to the Caribbean Basin Initiative (the tax and customs facility package which the USA offered the Caribbean for exports of processed products to the American market), which was proving a failure because the Americans crossed all Caribbean products which were competition for US products, particularly textiles and sugar, off the list. These two outstanding ACP speeches suggested that the ACP States should rethink their whole system of production, marketing and management. It was the price they would have to pay if they wanted to keep their heads above water in international competition and take advantage of any trade agreements. The barriers to ACP trade with the Member States began at national level.

This was in fact the whole PMDT (processing, marketing, distribution and transport) strategy discussed at length during the LomV negotiations. The second area of discussion was world trade trends as a reason for the decline in the ACP situation. This was the line taken by Ireland’s Professor Dermot McAlesse, who reminded the meeting that manufactures represented 73 % of the value of world trade in 1988, an increase of 17% over 1980, when the figure was 56 %. Many developing countries had a worthwhile part to play in this, he said - by 1987, eight out of 28 countries in sub-Saharan Africa had gone beyond the level of their export earnings in the seventies. This, Peter Pooley said, was why, “ in the real world, where we all have to gain our living, a trade preference is only of value where a trade exists. The sad and solemn fact is that for very many ACP countries, the preferences accorded have little or no value, because a trade does not exist: or if it once did, it has now diminished”. As Manuel Marin had already said: “ There is no doubt that those developing countries which have had most success with their development are able to integrate themselves more closely in the multilateral system and to abide by the obligations resulting therefrom”.

The various points of view and the discussion they triggered - an interesting debate but with some surprisingly simple questions can be summed up in the following way: trade preferences, but to do what? In an international political reshuffle, can the ACPs just go on presenting themselves as the “ victims “ of an “ unfair “ international economic order?

Investment or rather disinvestment - in the ACP States, ACP financial transfers to the developed nations and the transfer of technology were also discussed. Investments were falling off because the ACP States were not creating the right conditions for profit (red tape and the lack of sound management were just some of the reasons) and ACP financial transfers were always being made to the benefit of the developed world. And, on the subject of the transfer of technology, it was Siaka Coulibaly again who said that “ technology isn’t transferred, it’s acquired “.

Trade at last!

Dieter Frisch, Director-General for Development at the Commission of the European Communities, and Mr de Carvalho Guerra, the Angolan Ambassador, wound up the seminar after spokesmen had reported on works of work of the four working parties (see box). The Angolan Ambassador said that countries with weak economies were unlikely to benefit from all the possibilities offered by LomV unless they went into partnership with European firms. “ At last we come to trade”, Dieter Frisch responded, welcoming the fact that the discussions had not “ skated over the problems, dealing with one-off questions”, as was all too often the case in trade.

“A return to closed markets” was in any case impossible, but it was important Mr Frisch said to “avoid any doctrinal responses to the question of whether the aim should be to integrate the ACP economies into the world economy”. Effectiveness was the most important thing and unduly open economies should sometimes be avoided. He declined to accept a “global analysis of the phenomena” which failed to take account of the extreme diversity of situations and thought that they should “ look very carefully to see just where a preference can help the ACPs”.

M.H.B. and L.P.

Extracts from the reports and recommendations

1. Practical obstacles to the effective use of the trade provisions of LomV.

The working party noted the “absence of awareness of economic operators... of the provisions of LomV aiming to stimulate trade development “, and the “ practical difficulties of beneficiaries in interpreting LomV”. They recommended that Governments: “define a consistent trade development strategy associating the private sector in the definition and implementation of the programmes”.

2. The trade environment

Working party 13 stressed the urgent need for “a more active participation of ACP countries in the GATT negotiations” and to systematically provide for “the possibility” in LomV, of reinforcing trade and support services internally and internationally”.

3. Key elements of trade and services development programmes

“All ACP States and regional organisations should consider trade and services as factors in overall economic planning”. The (trade development) programmes should be sector and market specific with quantified and qualified objectives established at the design stage... Programmes should... involve an appropriate private public sector mix and include (at this design stage) all the necessary support services (export credits, insurance, packaging, transport and warehousing)... Some countries and regions which are especially “ services “ sector oriented may regard development in such sectors (consultancy, telematics etc) as taking precendence over visible trade programmes... It was recommended that part of the resources of LomV be used to help ACP States and regions to decide the location of production units in selected product groups in order to avoid duplication of investment while satisfying market needs... “

4. Improving intra-ACP trade

“In view of the fact that the lack of a political will is a major obstacle to intra-ACP trade, it is recommended that the ACP States take appropriate measures and/or implement the resolutions adopted regionally concerning the free movement of goods, services and persons...

The transport and communication problems encountered nationally and regionally the lack of information, the absence of complementarily in the various productions. their limited competitiveness in relation to the rest of the world the investment problems and in particular the trade financing problems as well as the compensation mechanisms are recognised as being the main obstacles to the development of intra-ACP trade...”

Fisheries and aquaculture: new guidelines and new challenges

by Cornelia NAUEN

From modest beginnings, individual EC Member States and, since the 1970s the Community, on request primarily of its ACP partners, have become major donors in fisheries cooperation. Initially this coincided with the expansion phase of fisheries worldwide after World War II, when natural resources were far from being fully exploited except in a few areas. Local problems could, at the time, be overcome by geographical expansion which did, indeed, happen with development of long-distance fleets facilitated by low fuel costs. The oil crisis in the early 1970s coincided with changing exploitation patterns in that more and more stocks became fully exploited and in some areas signs of economic and/or biological overfishing became apparent.

An analysis of the fisheries sector worldwide suggests that the situation has changed profoundly since. The new challenges emerge from the fact that these natural resources are now fully exploited almost everywhere and that investment which was highly successful during the expansion phase of fisheries in the 1950s and 1960s, when resources were amply available, would now spell failure under conditions of full exploitation. The new ocean regime established through the Third UN Conference on the Law of the Sea has resulted in virtually all coastal countries establishing 200-mile Exclusive Economic Zones (EEZ) which have been instrumental in redistributing the wealth of the sea and making possible the control of user rights vis-is foreigners. But this has not necessarily solved fierce competition among groups of domestic users (i.e. small-scale versus industrial fleets).

“Too many boats, too few fish “

Overexploitation in economic terms means that too many boats are chasing too few fish. In biological terms it may put the very existence of the resource at risk, either because too many fish are caught to maintain the size of biomass the environment could sustain or, even worse, too many fish are caught at the early stages of their life history before they have had a chance to reproduce at least once (recruitment overfishing). Indeed, studies have demonstrated for several countries that a reduction of total fishing effort and/or changes in exploitation patterns would increase the net benefit of this primary sector to the national economy. This could be achieved through suitable policy and management matched with monitoring, control and surveillance.

Against this scenario and across the continents, the Commission has committed some ECU 320 m to the sector over the years. In 1987 there was a general perception that some key parameters in the sector had changed or were changing and that it was time to take a critical look at project performance in a sectoral perspective rather than on a case by case basis. The task was assigned to a joint team of ACP and EC experts, on the principle that joint undertakings could only be assessed and improved together.

It turned out to be a valuable experience which has triggered a string of other efforts to improve project quality and performance in the light of the changes in the sector. In between, the team studied both EEC and non-EEC supported projects to capitalise to a maximum on all existing and documented experience, assessed several individual projects chosen to represent certain sub-sector aspects and submitted their findings and recommendations to a meeting of ACP and EC fisheries experts and evaluators held in April 1989 in Malawi. This meeting condensed its deliberations on the report into draft Basic Principles for the sector to serve as future reference material for better project preparation and implementation. What were the key features of the criticisms and suggestions for future quality improvement?

Weaknesses identified

Many weaknesses that had given rise to criticism were associated with insufficient project preparation which later gave rise to difficulties which could sometimes have been avoided. Insufficient integration into sector and national plans, where they existed was a further problem, and institutional support in the country often left much to be desired. A recurrent theme was that intended beneficiaries were not sufficiently involved in project preparation resulting in the need for avoidable adjustments later on.

There was a series of cases where commitments in the Financing Agreement, i.e. on counterpart funds, were not sufficiently respected, leading to an imbalance in project finance and to difficulties in viability after external support ceased. Time-overrun was also a common problem and the analysis suggested that unwieldly administrative procedures on either side of the administration often added to the problem rather than smoothing things out during implementation.

Not surprisingly, the role of individuals, whether nationals or expatriates working in and for a project, was seen as crucial. The common perception was that good experts could sometimes make the difference between a good and a mediocre project and that much depended on the commitment of the individuals concerned and their ability to cooperate with beneficiaries.

The team looked into different subsectors and pointed out problems relating to industrial fisheries, small-scale fisheries and aquaculture and their complexities and complementary or conflictual interaction which had often not been taken fully into account.

Trying to draw the lessons from this constructive criticism, the Basic Principles attempt to highlight aspects needing more careful consideration in future projects, particularly in view of the changes in a sector which is now in a phase of readjustment.

They highlight the need for careful project preparation formalised in appropriately detailed documents which should not only set out the technical aspects of a future project, but also all the general socio-economic context and national sector planning against which the principal intermediary objectives can be defined. Emphasis is placed on the need to quantify targets as the only way to achieve accountability.

Where databases are weak, phased approaches are preferable to immediate large-scale implementation. In the same vein, close coordination and where possible cooperation with neighbouring projects could shorten the trial periods and facilitate efficient use of resources.

The major sustainability factors for project appraisal serve as reference principles to monitor implementation. These are:

- government support to the project by practical measures throughout implementation;

- careful consideration of any positive or negative effects on the environment, including sustainability of resource use and management;

- clear identification of target groups and their involvement in the production system from catching/production to marketing, taking into account the structure of fishing communities including general conditions (health, education etc.), gender division of tasks, social organisation, etc.;

- judicious choice of technologies in compliance with risks beneficiaries can take and their aspirations;

- strong management and skill development at all required levels to ensure long-term viability at the level of beneficiaries and, where necessary, in strengthening competent institutions crucial to project and sector success; - financial and economic viability (ensurance of maintenance, flow of spare parts, operational costs etc.).

From the planning stage, appropriate institutional arrangements need to be examined for different project aspects and support envisaged to the public and/or private sector accordingly. The lessons from past handling of revolving and credit funds are manifold, i.e.:

- integration of traditional credit can be extremely effective at small-scale level;

- choice of production means bought on credit left as far as possible to beneficiaries will enhance their commitment to reimbursement;

- mobilisation of savings and cooperation with formal credit institutions where they operate in rural and fishing communities will enhance the chances of long-term survival of schemes which otherwise risk collapse at the end of external project funding.

Last but not least, formalisation of all stages of the project, including definition of appropriate performance indicators, is believed to be a prerequisite for proper progress reports to ensure timely help if difficulties arise, or through technical reports for wider distribution to share experience and capitalise on them.

All this has recently been presented to the Article 193 Committee of the Lomonvention. Its general work and particularly its continued striving for improved quality of cooperation in all sectors is well known to readers of The Courier. The Committee has deliberated on these Basic Principles and the ACP/EEC Council of Ministers adopted them at its most recent meeting in March 1990 in Fiji.

As readers may imagine, those directly concerned with the sector have not waited to adopt many of the recommendations of the evaluation report and the Basic Principles and have sought ways to become more efficient and effective. One practical step to improve the openness of EC fisheries cooperation to other countries and donors is through a special EC Fisheries Cooperation Bulletin which has appeared quarterly in English and French since December 1988.

Work has also continued on a more substantial follow-up of the sectoral evaluation and the Basic Principles, not only through regular exchange between fisheries officers in ACP countries and the Commission, but also with fisheries advisers of EC Member States. One result of these efforts has been more detailed draft guidelines on how to prepare fisheries and aquaculture projects to work upstream of the problems identified. They are a reaction to the analysis of changes characterising the sector in this decade of adjustment after the expansion and crisis of the resource and the industry.

That natural resources are becoming increasingly rare is not the least indicated by the slowing down of annual production increases of about 1% in the face of population growth outstripping it by far, and overall price increases of the commodity of around 4-5% per year.

Limitation of natural resources and capture fisheries increases the chances of aquaculture- and culture-based fisheries becoming economically feasible where it used not to be. However, the analysis calls for caution in avoiding the mistakes of the past, where ample assistance focused on bio-technical aspects, while constraints appear to have dominated on the socioeconomic side. In other words, successful introduction or strengthening of various forms of aquaculture hinge on a comprehensive analysis of the total production system, including people, their social organisation, land and water tenure systems, production conditions and access to markets and market conditions.

The guidelines try to address these challenges and offer a framework in which to carry out work in a more systematic way and, above all, to help fulfil a greater share of the sector’s substantial potential if it is properly understood and managed. Should this perhaps invite ACP and donor administrations to take a second look at their own fisheries department or service and their working conditions?

C.N.