Opinion of the Economic and Social Committee on the 'Green Paper on relations between the European Union and the ACP countries on the eve of the 21st century - challenges and options for a new partnership` (97/C 296/11)

On 26 November 1996 the Commission consulted the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the 'Green Paper on relations between the European Union and the ACP countries on the eve of the 21st century - challenges and options for a new partnership`.

The Section for External Relations, Trade and Development Policy, which was responsible for preparing the Committee's work on this matter, adopted its opinion on 18 June 1997. The rapporteur was Mr Malosse.

At its 347th plenary session held on 9 and 10 July 1997 (meeting of 10 July 1997), the Economic and Social Committee adopted the following opinion by 123 votes to two, with three abstentions.

Recommendations

Convinced that a thorough overhaul of the Lomé Convention is needed to attune it to the present situation as we approach the year 2000 and to provide better assistance to the ACP countries in meeting the challenge of trade globalization;

Aware of the political and economic importance to the EU of preserving privileged relations with the Convention's 71 co-signatories;

The Committee, responding to the Green Paper on relations between the European Union and the ACP countries on the eve of the 21st century - challenges and options for a new partnership, presents the following recommendations:

- The Committee calls for a strengthening of the spirit of partnership and dialogue founded on equality; this has been the moving force behind the originality and vigour of Europe's commitment to development cooperation. To be effective, however, this partnership needs to be extended on all sides to embrace new players, among them the economic and social interest groups. It would therefore recommend the creation of joint economic and social committees with responsibility for endorsing development programmes geared to the needs and expectations of the interest groups in the partner countries;

- The Committee would suggest overhauling the Convention to take more account of geographical differences and different levels of development. The Convention would thus become an EU political and economic cooperation instrument that is (a) open to new members, (b) is differentiated according to the geographical regions with which the EU has specific common interests, and (c) has differentiated arrangements for the recipient countries according to their level of development.

- The Committee would reiterate that the main objectives of cooperation are sustainable economic and social development, action to eradicate poverty and an across-the-board increase in living standards that will automatically and simultaneously flow from the growth of a dynamic, wealth-creating private sector and genuine social progress to build cohesion.

This objective will be attained all the more readily if a fabric of trade union and other interest groups is built up to ensure that all the socio-economic players are involved in the decision-making process; this must take place in the setting of a state governed by the rule of law, guaranteeing individual liberties and providing the services of general interest needed for social progress.

In this connection, the Committee would point to the fundamental role played by women as leading players in development, and emphasize the need to promote their organizations and ensure that they participate fairly in advisory and decision-making bodies.

- The ESC takes the view that the following areas of cooperation should be prioritized:

Education and training are vital since the human factor must be at the heart of all development policy. The Committee recommends that exchange and cooperation programmes between the EU and the ACP countries be organized in this field, and that particular attention be paid to the involvement of women;

Support for the private sector and for the spirit of enterprise are the deciding factor where wealth creation and improving living standards are concerned. The new Convention should therefore be founded on these objectives;

By virtue of its history and its experience, the EU must support all efforts directed at regional cooperation that aim to secure lasting peace and shared prosperity by means of joint projects, the pooling of a number of resources, the creation of integrated regional markets and the emergence of properly structured and democratic regional organizations. This regional cooperation strategy should rely on the most prosperous countries to create a 'domino effect` to increase well-being and raise living standards, as well as promote investment attracted by sufficiently large markets;

Environmental protection, the development of an agricultural sector that meets the needs of the people, urban planning, research, the dissemination of new technologies, and culture must also be encouraged because investment in these areas will, in the long term, secure the conditions for sustainable development.

- The Committee would endorse the option of 'differentiated reciprocity` to secure gradual participation of the ACP countries in international trade and to revitalize EU-ACP trade. This option will also encourage the emergence of regional markets made up of the ACP countries themselves.

- The Committee calls for sustained consistency between trade policy and development cooperation policy.

- The ESC makes a number of specific proposals to improve the operation of the Lomé instruments. These include strengthening programming and assessment tools (National and Regional Operational Programmes and Community Initiative Operational Programmes), introducing horizontal mechanisms for trade, cooperation and investment that can be accessed directly by all operators, and developing forms of budgetary investment that are straightforward and quick to use in support of micro-projects originated by, inter alia, trade union and employers' organizations, women's associations, the cooperative sector and NGOs.

The Committee would highlight the benefit of horizontal programmes that afford a basis for sharing and transferring experience - including between ACP countries - and with operators in neighbouring regions (e.g. the Mediterranean region and Central Africa) to foster the dissemination of best practices and improve global access.

- The Committee urges that EU development aid policy be placed within a cohesive framework alongside the action carried out individually by the Member States. Having advocated the necessary inclusion of the European Development Fund in the Community budget, the ESC makes a number of suggestions to improve consistency between national and Community action. By the same token, the Committee calls for the EU to dovetail its actions more closely with those of international development aid organizations.

- As an EU body representing civil society, the Committee takes the view that for a new cooperation policy to be successful there must be more efficiency and transparency in the way in which the policy is managed, both in the EU and by the authorities of the ACP countries. At the same time, it must be ensured that economic and social interest groups and businesses are genuinely involved from the outset in the drafting of measures.

1. Introduction - Reasons for issuing a green paper and the role of the ESC

1.1. The fourth Lomé Convention covers the period between March 1990 and February 2000. It was revised mid-term by the agreement signed in Mauritius on 4 November 1995, in accordance with the provisions of the current Convention. Both parties - the EU and the ACP countries - are contractually obliged to start negotiations on a new Convention at the latest eighteen months before the current Convention expires, i.e. in September 1998. The EU has until then to clarify its position.

1.2. The aim of the green paper is to launch a wide-ranging debate in the Union on the prospects for these negotiations and the issues involved before the Commission proposes a negotiating mandate to the Council of Ministers in the second half of 1997.

1.3. The Committee welcomes the Commission's initiative which - for the first time - opens a debate on the main instrument of its cooperation and development aid policy. The Treaties gave the ESC the task of representing civil society in the EU; following the referral from the Commission, the Committee intends to play a key role in the discussions. The Committee itself is involved in the Lomé Convention since it is jointly responsible for organizing the dialogue between the Union's economic and social interest groups and those of the ACP countries. These take the form of annual meetings during which joint resolutions are passed and submitted to the Convention authorities.

1.4. Using the conclusions of these meetings as a basis, the Committee can provide a grass-roots view of the aims and operation of the Convention based on the analyses and accounts of the economic and social players. Many of the comments and suggestions contained in the green paper had already been made by the Committee as a result of these meetings: the insufficient impact of trade arrangements, the under-involvement of economic and social interest groups in the framing and implementation of the Convention's objectives, and the insufficient weight given to action to improve social cohesion and the living conditions of local people.

1.5. The Committee recently approved an own-initiative opinion () which takes a very innovative approach to the arrangements needed to make development aid programmes more effective. It calls, among other things, for the following: better management of official aid, increased involvement of the socio-economic interest groups through decentralized cooperation, measures to be taken against corruption and assistance to be given to local administrations to improve effectiveness.

2. New issues in the forthcoming negotiations

2.1. Question-marks over Lomé as a model for cooperation

2.1.1. Since 1975 the Lomé Convention has orchestrated trade and financial relations between the EU and the ACP countries, which now number 71. It is itself the successor of a cooperation policy which established ties with the Community's overseas countries and territories through the Yaoundé Conventions, which dealt mainly with French-speaking Africa.

2.1.2. The first Lomé Convention in 1975 established a model for cooperation and development aid which had far-reaching international repercussions. This was the first time that a group of countries had negotiated a binding multilateral cooperation agreement based on partnership. It contained a trade chapter that broadly favoured the ACP countries and aid programmes which were for the most part decentralized, together with a ground-breaking mechanism to stabilize the ACP countries' export receipts.

2.1.3. It was not until the 1980s that - under the pressure of outside events and constraints - the Lomé model was gradually questioned and discussed in the EU and elsewhere. Poor results in terms of development in very many, principally African, ACP countries added fuel to the debate. Levels of development vary, however, given that a number of African countries have had very promising growth rates in recent years. There are also differences between neighbouring countries, e.g. Haiti's position compared to the other Caribbean countries.

2.1.4. In terms of funding, the Lomé Convention currently remains the biggest of the EU's external budget headings, still representing between 30 and 35 % of foreign aid and worth approximately ECU 2 billion each year. This is channelled though the European Development Fund (EDF) rather than directly through the Community budget and is funded according to a specially designed formula which accommodates the particular interests of several Member States () (at 24,3 % of the total, France's contribution to the EDF is thus the highest). This special funding mechanism is outside the control and the remit of the European Parliament and is, in short, a relic of the past. The issue of including the EDF in the Community budget is therefore of topical interest; forecasts should be carried out to assess the impact of such a move on each Member State. Those Member States which are most committed to cooperation would be able to continue to give extra assistance over and above their contribution to an EDF that formed part of the Community budget by adding bilateral aid to the joint European allocation. This would enable national aid to be dovetailed more closely with Community aid.

2.1.5. The contribution made under Lomé is, however, considerable. The Commission has calculated that the total annual public aid given by the EU to the ACP countries over the past decade is between ECU 5 and 7 billion. This includes all the public aid provided directly to the ACP countries by the EU Member States and their various public institutions and bodies (some of which is given by the regions and local authorities). Discussion of the future of Lomé will obviously be affected by attempts to tighten budgets in all the Member States and the plans to do likewise with the EU budget.

2.1.6. The meetings between the economic and social interest groups of the ACP countries and of the EU - organized by the Committee - have highlighted a degree of ineffectiveness in the cooperation programmes. Most of the EDF programme management and operation has been made the responsibility of the governments of the recipient countries and has often appeared far removed from the needs and concerns of the private sector and the economic and social players in general. Joint declarations to tackle these problems have unfortunately until now gone largely unheeded. The Committee would therefore wish to make specific proposals to bring about a genuine decentralization of action and secure the proper involvement of the economic and social interest groups.

2.2. A changing European Union

2.2.1. At the same time as discussions on the effectiveness and need for a Lomé Convention are starting, the EU is undergoing major internal change which is bound to affect the approach that it is currently able to take.

2.2.2. Successive enlargements have made many changes in the background to the political and economic relations between the EU and the southern hemisphere countries. The Union has also established a close partnership with Latin America outside the Lomé Convention. This is a part of the world with which it also has very strong historical and cultural links. The entry in 1995 of Austria, Finland and Sweden - three countries closely involved in development aid without a 'colonial` past - into the Union is also contributing to a reworking and updating of the EU's development strategy.

2.2.3. The Single European Act and the Maastricht Treaty made significant changes to the very nature of the EU. The completion of the single market and the prospect of a single currency have an effect on the type of economic and trade relations that the Union can offer its partners. The establishment of a more integrated market with high health and quality standards is altering the terms on which products from ACP countries can enter EU markets. Furthermore, the efforts made to meet the convergence criteria required for economic and monetary union will have a direct impact on Member States' capacity to contribute to development aid. Besides this, it is the EU's desire to build up political muscle internationally in line with its importance in world trade that is creating a new context for the negotiations. In future the Lomé Convention may indeed fall within the scope of the implementation of the CFSP (common foreign and security policy). The new Treaties that emerge from the Intergovernmental Conference are likely to accelerate this trend.

2.2.4. The Treaty on European Union set the objective of development cooperation (Article 130u), sustainable economic and social development, the smooth and gradual integration of the developing countries into the world economy, and the campaign against poverty.

2.2.5. Against a background of trade globalization, the collapse of the Soviet Union and its emergence on the international political stage, the EU established binding relations in the 1980s with other parts of the world such as the Mediterranean region, Eastern Europe and Asia. In some cases these relations included new types of trade advantages and arrangements for cooperation. Operators, businesses, universities, training organizations and local authorities often have direct access to these arrangements. As a general rule, these policies place greater emphasis on promoting and extending the private sector. Such achievements and experiences must now be considered in discussions on forging a new Lomé policy.

2.3. A changing world

2.3.1. The collapse of the Soviet Union changed the background of ideological rivalry and struggle for influence that affected both EU and ACP countries. It is still too early to measure the full impact. The development model founded on Soviet-style authoritarian, centrally planned economic management has now disappeared. There is, however, a definite feeling that new political and cultural rifts could appear (respect for human rights, religious freedoms, democratic systems) as well as economic and social rifts. It would indeed be incorrect to believe that only one type of development is possible. The EU must remain able to put forward its own view of how development should proceed.

2.3.2. The conclusion of the Uruguay Round in 1995 and the setting-up of the World Trade Organization (WTO) also create a new context which will influence negotiations - beyond simply ensuring that the new multilateral regulations are complied with - to work out EU-ACP trade relations. The Lomé Convention is temporarily exempt from WTO rules until it expires in the year 2000. After that date, the Convention's trade arrangements will have to be adjusted to the new multilateral framework or be negotiated. It is of more direct concern to the ESC that, on the whole, the ACP countries' share of global production and exports has decreased over the last twenty years. According to recent research carried out by the Harvard Institute for International Development, development in sub-Saharan Africa is lagging behind that of Asia and Latin America in part because its markets are not sufficiently able to take part in international trade. A review of the current terms of the Lomé Convention is thus necessary from the point of view of trade - not only to adjust it to the new international context, but also to meet the challenge which the consequences of globalization pose for the ACP countries themselves and to help them to play an increasing part in world trade.

2.3.3. Although the globalization of trade is a fact of life, the major world powers - the United States, Japan and the EU - are nevertheless devising, or have devised, regional partnership strategies. The Lomé agreements cannot avoid this situation, and how a new Convention can and must embrace it needs to be determined: by linking Africa with the Euro-Mediterranean dialogue, coupling the Caribbean with the Latin America partnership, while the Pacific basin is inevitably influenced by its links with Asia. It is a source of unease that total European investment in the ACP countries has fallen over the last few years. Japanese and US investment, meanwhile, has increased.

2.3.4. Against this background, the EU's relations with the ACP countries are a key concern. The Committee therefore calls for the convention to be thoroughly overhauled to counter (a) the risk that the partnership might lose its special, preferential character and result in a reduction in Europe's political and economic influence, and (b) the current malaise created by a convention that in its present state seems unable to respond to the challenges and issues that face us as we approach the year 2000.

3. The Committee's priorities

3.1. The Committee congratulates the Commission on the clarity and relevance of the options set out in the green paper. On this occasion the Commission has put the practice of issuing green papers to excellent use since it sets out realistic options so as to launch a thorough discussion involving all the interested parties both inside and outside the EU. This is a vital contribution to the debate, given that the Commission presents the advantages and disadvantages of each of the options rather than emphasizing one option above the others.

3.2. The Committee's main concerns are to tackle the basic question of the relevance of the current Lomé framework, including its chapter on trade; to propose a new plan for European development aid policy; and to make a number of specific suggestions to improve the working of the current instruments.

3.3. As an EU body representing civil society, the Committee considers that - as a matter of principle - the priority of cooperation and development aid policy should be to contribute to sustainable and self-supporting economic and social development with a view to improving the standard of living and employment conditions in all sectors of the population, particularly those most deprived, and that special attention be paid to women. To this end the Committee takes the view that priority should be given to:

3.3.1. strengthening the structure of associations, trade unions, occupational groups and women's organizations which ensure - in such areas as education, participation in decision-making, and democratic life - a more cohesive social fabric and thus contribute to sustainable development;

3.3.2. bringing about a climate that genuinely favours the growth of a local private sector and a spirit of enterprise, which are the driving forces behind economic development and job creation;

3.3.3. making better use of women's and men's capabilities and potential by means of education, exchanges, occupational training and culture;

3.3.4. ensuring women's just and fair representation in education and in the decision-making process;

3.3.5. giving a boost to democratic and purposeful action in the public domain so as to help secure personal growth and security and ensure that the conditions are right for the creation of wealth and its fair distribution;

3.3.6. ensuring that more account is taken of protection of the environment and quality of life that require long-term investment;

3.3.7. ensuring that better use is made of public resources by means of more efficient management and effective measures to eradicate corruption. Action must address both management procedures and administrative channels in the developing countries, as well as the practices and behaviour of the authorities and operators in donor countries;

3.3.8. supporting all kinds of regional cooperation, particularly the creation of integrated regional markets. In this area the EU has a responsibility dictated by its experience and history.

4. The relevance of the current Lomé framework

4.1. The advisability of a new Convention, i.e. should the single framework that currently gives a structure to relations with the 71 ACP countries be kept in place, split up or extended? This is a matter that deserves consideration both for reasons of effectiveness and in relation to a broad strategic vision of the Union's external relations which takes account of the new realities of the present-day world: globalization and regional strategies. Whichever option is chosen, the historic preferential relations between several Member States and the current ACP countries will remain. The question that follows is whether it would be sensible to dismantle all of the existing framework, which would lead to the EU losing the benefit of these relations. Nevertheless, the options of creating distinct geographical zones (sub-Saharan Africa, the Caribbean basin and the Pacific) or extending the Convention to other countries deserve consideration and debate with the EU's economic and social partners.

4.2. The Committee takes the view that consideration should be given to the geographical characteristics of the various regions and the EU's interest in maintaining privileged political relations with the ACP countries. At all events, the EU needs a stronger framework for cooperation that includes political dialogue and the implementation of the Union's two new pillars (CFSP and cooperation in the fields of justice and home affairs) to tackle immigration problems with the ACP countries. The question of preserving the single framework or introducing a reference convention containing separate instruments for various geographical areas should be the subject of detailed discussion between the Union and the ACP countries.

Whatever is decided, the Committee calls for an approach that allows real differentiation to be made, so that the economic and political problems of each of the major geographical areas can be dealt with and examined in an appropriate setting:

4.2.1. A cooperation framework with sub-Saharan Africa to include political dialogue with individual countries and groups of countries, inter alia the Organization of African Unity (OAU). Questions of mutual interest, extending cooperation, and matters pertaining to the EU's two other pillars (common foreign and security policy, and justice and home affairs) could be tackled within this framework. Respect for fundamental human rights and confidence-building measures to ensure peace and stability in Africa should be at the top of the agenda for this political cooperation.

4.2.2. Cooperation frameworks with the Caribbean and Pacific basins that include strong and permanent links both politically and operationally with EU programmes in neighbouring regions (south and central America for the Caribbean; and Asia for the Pacific).

4.2.3. The Committee considers that another specific framework could be established for the Indian Ocean region (the Seychelles, Mauritius, Madagascar and the Comoros).

4.2.4. As far as the Pacific, Asian and Indian Ocean regions are concerned, care must also be taken to ensure that measures to help the ACP countries and those taken for neighbouring OCTs (Overseas Countries and Territories) and the most remote EU regions are consistent and tie in well together.

4.3. At the least, the Committee calls for a strengthening of the binding partnership principle that provides a basis for the special features of the European approach. It is within this framework, founded on the inherent equality of sovereign states, that the future shape of the new convention should be planned. This framework should be expanded and made more consistent with the Union's overall external relations and CFSP strategy. If the overall Lomé framework is strengthened and differentiated on the basis of geographical regions, it could be extended to cover other countries and regions.

However, in any new cooperation agreement a balance will have to be struck between the concept of the inherent equality of states and the need to operate any future partnership flexibly so that the EU can, when necessary, manage the deployment of aid effectively.

4.4. The Committee also calls for greater coherence between Lomé policy, the other EU policies in - for instance - the areas of foreign affairs, foreign trade, labour and employment, security and justice, and Member States' bilateral action. In this connection, the Committee supports the approach taken by the Commission document and suggests a truly global approach to development aid. To this end it proposes permanent mechanisms for cooperation, such as: regular meetings of directors responsible for policy in connection with the CFSP; placing questions concerning immigration policy on the agendas of meetings of ministers responsible for justice and home affairs; an overhaul of the cooperation framework to include - as part of a global, geographic strategy for the Union's external relations - mandatory consultation on aid programmes in the form of agreed multi-annual planning within which EU and Member State co-financing will be sought.

4.5. Making the EDF part of the Community budget must be considered as part of an increased synergy between action at national and Community level. If not, the inclusion of Lomé aid in the 'Community remit` will come up against the reality of wide differences in opinion and commitment between the various Member States and their capacity to fund this policy. The Committee therefore calls for the EDF to be included in the Community remit; this would embrace horizontal action, regional cooperation aid programmes and operational programmes dealing with the most disadvantaged countries. The Member States, meanwhile, would be asked to make specific national contributions to the programmes and countries that they consider a priority. In this way, making Lomé part of the Community budget would be flanked by a real effort to secure consistency between action at Community level and national policies. The ESC takes the view that this effort to achieve consistency should be one of the main priorities of the reform of the current convention.

4.6. The Committee urges that Community action be better coordinated with the action and programmes carried out by international institutions, especially those in which EU Member States play an important and sometimes leading part (e.g. FAO, ILO, UNDP, UNIDO, UNESCO and the World Bank). In this connection, the Committee would suggest the signing of contracts setting out objectives between the Union and these institutions. This would open up the possibility of EU funding for actions carried out by such bodies. This collaboration should take place at grass-roots level as part of a concerted planning of cooperation schemes, but also centrally by ensuring that the participation and strategy of the Member States and the EU itself are more consistent with those of such organizations.

4.7. The Committee also calls for partnership to embrace the grass-roots players, the private sector, trade unions and community groups. This is essential if cooperation is to be made more effective, given the aim of securing sustainable economic and social development. The economic and social interest groups should be involved from the framing of cooperation schemes to their actual implementation.

4.7.1. Drawing on its experience gained from the meetings of the EU-ACP economic and social interest groups, the Committee suggests that the present consultative system be strengthened by adding an economic and social cooperation mechanism run by the ESC in the form of joint committees. These committees would preferably be organized on a geographical and regional basis and ensure that civil society was fairly represented, with no discrimination on the basis of sex or ethnic group. Together with the parliamentary Joint Assembly, these committees would be called on to give their opinions on economic and social development plans submitted by the countries concerned and put before the EU for approval and funding. Where plans were not endorsed, recipient countries could be required to revise them.

4.7.2. The ESC would also wish to be directly brought into future negotiations on overhauling the convention.

5. A new framework for trade

5.1. A new framework in this area is especially important given that, overall, the terms of trade of the ACP countries have been in permanent decline. Their share of the EU market has fallen from 7 % in 1975 to 2,8 % in 1995, a pattern repeated in international trade generally (the world market share for the ACP countries' 30 most important export products fell from 9,7 % in 1975 to 2,8 % in 1995). This worrying trend in itself justifies a revision of the trade framework to make it more effective. The revision must also take into account the adjustment of the convention to the new international trade rules and the erosion in real terms of trade preferences under Lomé for the less developed countries, compared to the multilateral system of generalized preferences. The necessary improvements should draw upon the lessons to be learned from the various international trade success stories (e.g. Mauritius, Zimbabwe, Côte d'Ivoire, Fiji and Jamaica) and the generally more encouraging 1996 figures.

5.2. Concerning trade, the green paper proposes four principal options: including the trade chapter in the GSP in order to prevent any derogations from WTO principles; keeping the current system in place with some improvements; a uniform reciprocity system; and a differentiated reciprocity system. The Commission document sets out the advantages and disadvantages of each of the options, together with two additional options which are a combination of the main ones. The Committee wishes to assess these different options in terms of the following criteria:

5.2.1. the choices in respect of geographical coverage, particularly the interest expressed in regional cooperation between countries in the same area, with a view to encouraging the emergence of regional markets;

5.2.2. the wish to give the ACP countries simplified phased access to global markets;

5.2.3. efforts to achieve greater effectiveness given the mediocre results of the mechanisms which currently promote commerce and trade;

5.2.4. incorporation of the different economic development levels of the various countries;

5.2.5. the determination to preserve the Union's capacity to make a substantial contribution to supplying global markets while retaining the advantages that the convention has offered until now, particularly in terms of non-reciprocal trade;

5.2.6. the intention of achieving consistency between the EU's development and trade policies, and in order to prevent distortions of competition that would restrict the growth of local production;

5.2.7. agricultural development - where natural conditions permit - that addresses human requirements as a matter of priority.

5.3. Taking these criteria as a base, the Committee considers that priority should be given to the following:

5.3.1. Greater account to be taken of differences in economic development and capacity to play a part in world trade (cf. the contrasting situations of Mauritius and Madagascar). For this reason, the Committee does not favour preserving a single framework, including by means of the option of uniform reciprocity.

5.3.2. Efforts to improve effectiveness as part of the EU's special responsibility to its partners, especially in Africa. In this respect, simply applying WTO principles and GSPs will not provide sufficient guarantees and will, at the same time, deny the more advanced ACP countries the key benefit of Lomé. There must, however, be awareness of the need to make the current arrangements eventually compatible with the rules of international trade and to promote the integration of these countries in trade at a global level. Consequently, the EU and the ACP countries must press the WTO to retain a number of nonreciprocal preferences for the least developed ACP countries on a temporary basis.

5.4. It is only the option of differentiated reciprocity - applied in full - that permits both differentiated treatment and the maintenance of a contract-based partnership. It also complies with the rules of the WTO. This would involve negotiations with geographical areas, groups of countries or single countries on phased programmes to bring about improved market access. The phasing-in of these arrangements would allow the least developed ACP countries to maintain, for a limited period, protection to support the development of a number of their economic sectors.

5.5. The ESC takes the view that there are two main advantages to opting for differentiated reciprocity. The first is to promote regional cooperation between the ACP countries insofar as such programmes to open up markets would, as a matter of priority, include an 'internal` chapter dealing with the region concerned, providing for accelerated free trade and increased cooperation between countries which, for the most part, have markets that are too small to increase their international competitiveness. The cumulation of rules of origin that would be granted by the EU could well increase the potential of such regional markets and thus encourage investment. The second is to give these countries enhanced credibility in the eyes of foreign investors by supplying the confidence and stability of a process that could be regarded as irreversible.

5.6. As part of this option, special attention would be paid to trade relations between the ACP countries themselves, together with neighbouring Community OCTs and most remote regions. The intention would be the speedy application of principles of reciprocity and trade liberalization to promote the emergence of genuine regional markets. These programmes would also tackle the removal of the technical obstacles to trade that exist among the ACP countries, standardization for instance. The Community's experience in this area could be very instructive.

5.7. The introduction of a policy of differentiated reciprocity should be flanked by action plans to genuinely enable these countries to increase production and thus find outlets on world markets. Such plans will have to tackle, inter alia, the quality and reliability of production chains. They would also aim to encourage producers' participation in the export and distribution sectors. Parallel to implementation of these plans, the EU could introduce a technical assistance and trade cooperation centre. It would be responsible for (a) disseminating best practice, building on the aforementioned success stories, and (b) informing exporters of arrangements governing access to EU markets (quality standards, health regulations, etc.). This action would be carried out in the ACP countries in liaison with UNCTAD and could be made the responsibility, within the EU, of the CDI. This would give the latter a wider remit, the link between industry and trade being self-evident.

5.8. The advantage of doubling up the choice of single framework in this way - by temporarily including the various options - would be both to preserve a clearly identified trade chapter and to respond to particular situations. Non-reciprocal preferences for the least developed countries, and a number of protocols on products such as sugar, bananas and beef, would also be kept in place on a temporary basis.

5.9. To make this approach clearer, the Committee recommends that only one option (differentiated reciprocity) be chosen. This would be compatible with WTO rules and is the one most likely to integrate the ACP countries in world trade. A single-framework implementation timetable for maintaining transitional and temporary arrangements could in any case accompany this option so as to ensure that the mechanism is phased in and a common framework maintained for trade.

5.10. There are special rules for trade in agricultural products between the EU and the ACP countries due to the Common Agricultural Policy. The impact of these rules is, however, very limited given the general differentiation between tropical and sub-tropical ACP products and EU products. The Union must make efforts to support a number of ACP products on the international market, prevent any possible adverse impact from the Common Agricultural Policy, and study any problems that may arise from it. The specific protocols for sugar, bananas and beef are important instruments in this connection. For a number of countries - such as Mauritius - these arrangements have had a very positive effect and have fostered development. In the case of other countries, and in respect of the free access to the Community market for ACP products not covered by the CAP (e.g. tropical products), inadequate product quality and marketing problems are the real reasons for the slow increase in agricultural trade between the EU and the ACP countries. The progressive creation of free-trade areas should therefore not pose any real problems for the Union in this sector, provided that there are arrangements for maintaining - at least temporarily - certain product protocols. These aim to support ACP exports in the hope of boosting productivity and quality which will thus make them competitive on world markets. Differentiation in the application of these protocols to genuinely encourage the least favoured countries is likely to make them more acceptable internationally as far as their mandatory renegotiation after 2000 is concerned. It is also likely to make the beneficiaries actually consider them as exceptional measures.

6. A new view of development aid policy

6.1. The very concept of development aid is currently being questioned. The Committee notes that nowadays discussions tend to focus on a minimalist, humanitarian outlook (helping people below the poverty line) and on the ultra-liberal view that commerce and free trade are the only ways of securing development.

6.2. The ESC, on the other hand, calls for an original approach that is true to European traditions and is founded on the universal values that were paramount when the first Lomé Convention was signed: humanitarianism, solidarity and partnership. It is, however, an approach that must be adjusted to a changing Europe and a changing world. For this reason the Committee suggests that new operating principles and new priorities be adopted, without renouncing the basic principles of the European view of development aid.

6.3. The Committee would begin by calling for an overhaul of the partnership. This must accommodate the Union's new political dimension and include a dialogue on fundamental values: human rights, democracy, respect for religious freedoms, social and trade union rights, equality between men and women, a defence of private property and security of domestic and foreign investments, measures taken to combat all types of crime, and corruption prevention. The ESC understands dialogue to be a genuine partnership that needs to operate in both directions. In order to prevent corruption, for instance, action also needs to be taken in European countries; particularly by eliminating the tax arrangements that sadly still encourage it in a number of Member States.

This dialogue should not be the sole preserve of governments, either in the EU or in the ACP countries. If this is to be a genuine partnership, it must also include parliamentary bodies and economic and social interest groups. Extending the partnership in this way will breath new life into the convention and ensure its effectiveness and transparency.

6.4. The contractually-binding implementation of plans between the EU and the ACP states or groups of states, including a chapter on trade liberalization and technical and financial cooperation programmes, could be proposed as part of this improved partnership and genuine dialogue on common values. The Committee calls for these programmes to make a real contribution to economic and social development in the recipient countries. Aid levels should not be calculated mathematically but, rather, should depend on the quality of the programmes that are presented and the common determination to achieve the goals that have been set. The Commission should first decide on its cooperation priorities.

6.5. The ESC takes the view that one of these priorities should be to open up new areas for cooperation. Cooperation programmes should aim for sustainable development that works to the advantage of the whole of society in the candidate country and ensures parallel and balanced progress between the economic and the social. In other words, it should promote the growth of a private sector, which is a vital requirement for generating jobs, and create the conditions in which genuine social progress can take place, using ILO standards as a basis.

6.5.1. Human exchanges to foster mutual understanding should be put at the heart of cooperation programmes. The Committee believes that the meeting of different cultures can lead to considerable mutual understanding. This new approach will have very practical consequences: the replacement of projects by programmes, the organization of the transfer of know-how among grass-roots players, a significant extension of exchange programmes and the promotion of horizontal regionally-oriented measures.

6.5.2. In the ESC's view it is vital to improve intermediary structures for a dynamic civil society to function properly: entrepreneurs' associations, the cooperative sector, consumer groups, trade unions and chambers for different economic activities (crafts, agriculture and trade and industry). This can best be achieved by developing cooperation between EU and ACP players.

6.5.3. The growth of a dynamic private sector, particularly in the industrial and service sectors, is a key factor in creating jobs and securing growth and an improved standard of living. In this connection, a number of across-the-board projects should be considered to promote a spirit of enterprise, channel local savings into businesses, and support the development of SMEs. It is essential that these programmes are implemented in close collaboration with entrepreneurs and that the aid which is granted is of direct relevance to them. At the same time, the ACP countries should be encouraged to create confidencebuilding conditions to make investments secure and to promote private initiative: transparent, businessfriendly taxation, efficient services of general interest, systems of justice that run smoothly, measures to eradicate corruption, and so on.

6.5.4. Cultural cooperation is one of the new areas for development that should be made a priority. It both encourages communities to blossom and is a very important way of securing economic and social development in LDCs. The Committee thus recommends that arrangements be introduced to promote exchanges and joint action between EU Member States and ACP countries. The Media programme, which assists in the creation and distribution of artistic works, supports film and theatre co-productions and fosters mutual understanding of cultural traditions.

6.5.5. Education and training, particularly technical and vocational training, should be central to all development policies; a substantial part of any programme or project receiving EU support should, from now on, be devoted to these aspects. This is a subject that is not properly dealt with in the Commission document and which the Committee - aware of the key importance of this issue as far as ensuring sustainable development is concerned - could tackle in an own-initiative opinion. It could suggest, for instance, extending the partnership between the EU and the ACP countries in this area through the organization of exchanges of personnel and advanced training courses. Particular attention should be paid in this field to cooperation with businesses and the development of distance learning techniques.

6.5.6. Domestic economic activity will not thrive and foreign investment will not be attracted if the country itself is inefficient, does not guarantee individual freedoms, is not capable of securing its people's support for collective projects and of providing satisfactory services of general interest. The EU could propose programmes to bring administrations up to date, in those ACP countries in which they were needed. Where appropriate, these could also involve the Member States. Such programmes must include a chapter on the closer alignment of legislation, the purpose of which would be to clarify and harmonize trade arrangements, simplify the protection of investments and tax and customs procedures, bring legal systems up to date, and secure social progress by introducing ILO standards. In particular, the EU could - given its experience and its history - provide practical assistance for regional integration projects.

6.5.7. Other priority matters that the Committee plans to raise include rural development and urban planning, which are closely linked. Desertification in the countryside and urban overcrowding are factors that in many ACP countries can increase tension and damage the environment. These are areas in which the EU's expertise and experience could be harnessed profitably. The development of an efficient farming sector attuned to the needs of local or neighbouring communities, flanked by the growth of multiple activities (such as tourism and crafts) and agricultural reform, should be a priority area of action, together with, for instance, measures to improve the quality of life in cities.

6.5.8. The Committee also calls for the subject of industrial cooperation and investment - which are, in the main, under-exploited in the current convention - to be examined in more detail. First of all, the matter of investment security needs to be included in all cooperation programmes because European businesses, and SMEs in particular, now turn away from many ACP countries due to a lack of confidence. Specific confidence-building arrangements and guarantees should be proposed, such as insurance and arbitration arrangements.

6.5.9. Other horizontal issues include research and development programmes (involvement of ACP businesses in certain EU programmes, dissemination and exploitation activities, and demonstration programmes in the field of energy saving), up-to-date information and environmental protection networks. The ESC calls for provision for these to be made in future conventions.

6.5.10. The green paper mentions direct budget aid to the ACP countries with the aim of helping them get out of debt. The Committee takes the view that such aid should only be envisaged as part of a plan to restructure the debt, including its possible cancellation, flanked by projects to maintain levels of public investment aimed at promoting sustainable economic and social development (education and training, health, services of general interest, basic infrastructure) and by structural action to encourage growth in the private sector and good administration.

7. Improving cooperation instruments

7.1. The problem of the effectiveness of the cooperation instruments is currently illustrated by the ever-increasing delay in committing EDF appropriations. There is the danger that the appropriations of the 8th EDF for the period 1996-2000 - fixed after lengthy negotiation at the European Summit in Cannes in June 1995 at ECU 13,3 billion - may not be used before the year 2000, i.e. following the expiry of the current convention. Although there are many reasons for the delay, due in part to political problems in a number of ACP countries, this does not alter the fact that it is a real barrier to the effectiveness of the present instruments. The Committee would therefore propose a number of courses of action to overhaul cooperation methods and instruments.

7.2. Replace projects by programmes: there is too little use made of programming, in spite of the existence of national indicative programmes. The Committee would suggest prioritizing programmes to enable a better link to be made between the aid and the objectives set out in the partnership arrangements. The Committee sees programmes as ambitious schemes that set out precise objectives for economic and social development and the measures to achieve them. They would also include arrangements for consulting the economic and social interest groups, for follow-up action, evaluation, and so on. These programmes could be termed National Operational Programmes (NOPs) or Regional Operational Programmes (ROPs). They would deal with groups of countries and be negotiated on the basis of binding contracts. They would also be referred to the Joint Assembly and the joint committees for economic and social consultation which the ESC would like to see set up. If these bodies did not endorse the programmes they would need to be re-drafted. They would set out the EU's financial commitments and, where appropriate, those of the recipient countries, Member States and other organizations, including international. As in the case of the EU's Structural Funds, the Commission could launch Community Initiative Operational Programmes (CIOPs) running concurrently in designated areas, such as support for the private sector, environmental protection, research and development activities, occupational training and education, and rural development and urban planning.

7.3. Introduce horizontal cooperation instruments administered by the EU with its grass-roots European partners. The EU's positive experiences acquired through its SME support measures (Euro-info-centres, Europartenariat meetings, support for joint ventures under the JOB programme, and so on), its programmes to promote education and training (Leonardo, Socrates, etc.), its cooperation programmes in the field of urban planning (MED URBS), its cultural programmes (Media, Raphaël, etc.) and its rural development programmes (Leader), would be usefully repeated in the new Lomé Convention. These instruments could be accessed directly by operators in ACP countries and the EU Member States and be assessed on quality alone. The dissemination of best practices and improved global access will be encouraged by the creation of synergies between these instruments and existing EU programmes, whether with the countries of the Mediterranean region, with Central America or with other regions in the world.

7.4. Promote credit and investment support measures for local businesses, particularly SMEs, implemented with the aid of the European Investment Bank and banks operating in recipient countries. These principally concern global loans that draw on the financial engineering experience of Community instruments (guarantees, venture capital, etc.), and the introduction of instruments designed to promote European investment in the ACP countries: bringing businesses together on the Europartenariat model, facilitated for European enterprises of the ECIP or JOP type.

7.5. The role of the Centre for the Development of Industry should be expanded. It should be given additional resources to enable it to give more practical assistance directly to European and ACP operators in liaison, for example, with the instruments to encourage investment. In the case of ACP operators, its activities could be extended to help with boosting trade and commerce, including compliance with quality and health standards, and the organization of distribution channels and partnerships. More and more the key issue for ACP manufacturers will be their capacity to produce products that are competitive on world markets. With its wider remit, the CDI could be re-named the Centre for the Development of Enterprise. It would be encouraged, more than in the past, to make use of local enterprise networks in the EU to lend force to its action. In a number of Member States this would make it more effective. With the same aim in mind, the Centre should improve its cooperation in the ACP countries with specialized international organizations such as UNIDO for industry and UNCTAD for trade matters, by carrying out joint or linked operations as part of common projects.

7.6. Modernize the STABEX and SYSMIN instruments: although they have had very positive results in terms of stabilizing raw material export receipts, they have not enabled the ACP countries to develop alternative export strategies. The position of most ACP countries on world markets has deteriorated and the automatic granting of aid does not make for competitiveness or growth. As far as STABEX is concerned, the solution could be to make the granting of aid dependent on programmes to develop exports in alternative sectors that have a high added value (industry, services, agricultural products and processed raw materials, and so on). Given the great potential of the mining sector, the Committee would, for the most part, propose that procedures be made more flexible and that the instrument be deployed more systematically to assist the private sector, either locally or in the EU. This would involve, for instance, funding feasibility studies and venture capital contributions.

7.7. Decentralize operation implementation: many programmes need the input of expertise and the transfer of know-how. The Committee takes the view that the economic and social interest groups and the various operators in the EU have this expertise. The experience of the Phare and Tacis programmes in eastern Europe has revealed the limits of the improper and costly use of consultants who neither assimilate into the countries concerned nor provide local decision-makers with the proper training. That is why the Committee recommends using decentralized cooperation as a priority means of implementing technical assistance and cooperation schemes. This method would have the advantage of securing direct links without involving the government of the country concerned, which would save both money and time. It would also encourage partnerships. In this connection, the Committee looks forward to the creation of the permanent body for economic and social cooperation which could be responsible for encouraging the settingup of cooperation networks between ACP and EU players.

7.8. Appropriate budgetary provisions should be put in place to support direct initiatives taken by players in civil society. These provisions must be specially tailored to the specific ways in which these players operate, and should include separate budget lines for NGOs and organizations representing employers and workers. The access procedure must be tailored to the capacities of those seeking aid and response times should be short. Organizations in ACP countries must have direct access to the provisions; they should not be reserved for EU organizations as is presently the case.

7.9. Make the administration of operations more effective: for the horizontal instruments and Community Initiative Operational Programme in, for instance, the areas of investment, education and training, the environment, research and development, culture and urban planning, the ESC recommends that a team of specialists be set up in Brussels, with field offices in the ACP countries. Its primary task would be to guide and advise those carrying out projects, rather than simply making administrative checks. As far as operational programmes are concerned, the Committee does not take the view that the current problems would be solved by centralizing programme management in Brussels. On the contrary, the systematic use of decentralized cooperation and making the inclusion of a chapter on technical assistance mandatory in each programme would make such programmes more effective. This technical assistance could thus be provided by experts, staff on secondment working in the area of decentralized cooperation or experienced personnel from the Member States. All of these would be supervised by the Commission. In those countries with a suitable and efficient administration, management should be decentralized as far as possible. In the case of other countries, the local management responsibilities of Commission delegations should be extended.

7.10. Extend assessment and monitoring: the Committee proposes that Commission delegations be strengthened to include qualified and experienced staff from outside the Commission with a background in the private sector, in associations, or in the administrations of the Member States. At the same time, the ESC calls for the introduction of a permanent instrument to provide independent evaluation, under the responsibility of professionals in this field. There should be a mid-term assessment of all national and regional programmes. The results should be forwarded to the political authorities and the advisory bodies.

7.11. Ensure that development programmes do not clash: the Committee is most concerned that there should be genuine consistency and complementarity between action carried out at Community level and the bilateral operations of the Member States, together with those of international institutions such as the World Bank, the IMF and the ILO, and specialized UN agencies such as UNIDO, UNCTAD, UNESCO and FAO. Programming should therefore be used to this end. All programmes should include detailed information on complementary national and international action. Contracts setting out the objectives would be signed with the partners, including the Member States. They would cover both additional funding from, for instance, individual Member States or groups of Member States, and deal with the possibility of the EU making its partners responsible for the administration of certain operational programmes.

Brussels, 10 July 1997.

The President of the Economic and Social Committee

Tom JENKINS

() Opinion on development aid, good governance and the role of the socio-economic interest groups.

() Member States' current contributions to the budget of the 8th EDF.

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