COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document COUNCIL DECISION on the association of the overseas countries and territories with the European Union (&quot;Overseas Association Decision&quot;)
Date: 2012-07-16
Institutions: European Commission
Subjects: association agreement (EU), competitiveness, development aid, economic development, overseas countries and territories, social development, sustainable development, trade relations

EUROPEAN COMMISSION 

Brussels, 16.7.2012  
SWD(2012) 194 final 

COMMISSION STAFF WORKING DOCUMENT 

IMPACT ASSESSMENT 

Accompanying the document 

COUNCIL DECISION 

on the association of the overseas countries and territories with the European Union 
("Overseas Association Decision") 

{COM(2012) 362 final} 
{SWD(2012) 193 final} 

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Contents 

List of Acronyms........................................................................................................................ 4 

Introduction ................................................................................................................................ 6 

1. 

1.1. 

1.2. 

1.3. 

1.4. 

2. 

Procedural issues and consultation of interested parties........................................ 8 

Organisation and timing............................................................................................... 8 

Impact Assessment Board (IAB) ................................................................................. 8 

Consultation and expertise: review of consultations, studies and evaluation reports .. 9 

Statistical Data ........................................................................................................... 14 

Problem Definition ................................................................................................... 15 

2.1. 

The problem requiring action and the scope of the decision ..................................... 15 

2.1.1.  The problem ............................................................................................................... 15 

2.1.2.  Main challenges ......................................................................................................... 15 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

3.3. 

4. 

4.1. 

4.2. 

4.3. 

The underlying drivers of the problem....................................................................... 17 

The EU's right to act and the EU added value ........................................................... 18 

Objectives of the future legislative framework ..................................................... 19 

General objectives...................................................................................................... 19 

Specific objectives ..................................................................................................... 19 

Consistency with external action priorities and other EU policies ............................ 21 

Policy options............................................................................................................ 22 

Discarded options....................................................................................................... 22 

Policy option 1: Status Quo Renewal of the current Overseas Association Decision 
without any changes................................................................................................... 22 

Policy option 2: Modernisation of the Overseas Association Decision and alignment 
with EU policy framework......................................................................................... 23 

4.4. 

Option 3: Several partnership agreements concluded................................................ 25 

5. 

5.1. 

5.2. 

5.3. 

6. 

Impact assessment of policy options....................................................................... 27 

Assessment policy option 1........................................................................................ 27 

Assessment policy option 2........................................................................................ 28 

Assessment policy option 3........................................................................................ 30 

Comparing and weighing the policy options ......................................................... 32 

6.1. 

Comparing the policy options .................................................................................... 32 

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6.2.  Weighing the policy options ...................................................................................... 35 

6.3. 

Preferred option.......................................................................................................... 37 

7. 

Monitoring and evaluation ...................................................................................... 37 

Annex 1 – List of references .................................................................................................... 39 

Annex 2 – Glossary .................................................................................................................. 42 

Annex 3 – Services that participated in the Impact Assessment.............................................. 44 

Annex 4 – Structure of the Overseas Association Decision..................................................... 46 

Annex 5 – Public consultation Green Paper............................................................................. 47 

Annex 6 – EU financed cooperation with OCTs...................................................................... 49 

Annex 7 – OCT Remoteness – Liner Shipping Connectivity .................................................. 51 

Annex 8 – EU 27 Goods Imports from all OCTs in 2010 (values in 1,000 EUR)................... 52 

Annex 9 – Treatment of OCT Goods Imported into the EU under CET rates......................... 53 

Annex 10 – Overview per OCT ............................................................................................... 54 

Annexe 11 – Thematic report on environmental and climate change issues ........................... 61 

Annex 12 - Thematic report on Trade and Trade Related Aspects of the Overseas Association 
Decision...................................................................................................................... 90 

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LIST OF ACRONYMS 

ACP 

ACS 

ASEAN 

AVE 

African, Caribbean and Pacific States 

Association of Caribbean States 

Association of South East Asian Nations 

Ad Valorem Equivalent 

CARICOM 

Caribbean Community and Common Market  

CARIFORUM 

Caribbean Forum of ACP States.  

CFP  

CET 

Common Fisheries Policy  

Common External Tariff 

COMESA 

Common Market for Eastern and Southern Africa 

COMTRADE 

Commodity Trade Statistics 

CSME 

DDA 

DFQF 

EAC 

EBA 

EDF 

EEN 

EIB 

EPA 

ERDF 

ESA 

EU 

EUR 

FTA 

GATS 

GATT 

GDP 

GSP 

HS 

ILO 

ISG 

IUU 

CARICOM Single Market and Economy 

Doha Development Agenda 

Duty Free and Quota Free 

East African Community 

Everything But Arms 

European Development Fund 

Europe Enterprise Network 

European Investment Bank 

Economic Partnership Agreement 

European Regional Development Fund 

Eastern Southern Africa 

European Union 

Euro 

Free Trade Agreement 

General Agreement on Trade in Services 

General Agreement on Tariffs and Trade 

Gross Domestic Product 

General System of Preferences 

Harmonised System Nomenclature 

International Labour Organisation  

Inter Service Group 

Illegal, Unregulated, Unreported fishing 

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LDC 

MacMap 

MDG 

Least Developed Country 

Market Access Map 

Millennium Development Goals 

MERCOSUR 

Mercado Común del Sur 

MFF 

MFN 

NAMA 

NTB 

OAD 

OCTA 

OCTs 

OECS 

PACER 

PICTA 

SACU 

SADC 

SPD 

SPS 

Multi-Annual Financial Framework 

Most Favoured Nation  

Non-Agricultural Market Access 

Non-Tariff Barrier 

Overseas Association Decision 

Association of the Overseas Countries and Territories 

Overseas Countries and Territories  

Organisation of East Caribbean States 

Pacific Agreement on Closer Economic Relations 

Pacific Island Countries Trade Agreement 

Southern African Customs Union 

Southern African Development Community 

Single Programming Document 

Sanitary and Phytosanitary Measures 

STABEX 

System for the Stabilisation of ACP and OCT Export Earnings 

TBT 

TFEU 

TRIPs 

UNCTAD 

UNECLAC 

US 

USD 

WITS 

WTO 

Technical Barriers to Trade 

Treaty on the Functioning of the European Union 

Trade-related aspects of Intellectual Property Rights 

United Nations Conference on Trade and Development 

United  Nations  Economic  Commission  for  Latin  America  and 
the Caribbean 

United States 

United States Dollar 

World Integrated Trade Solutions 

World Trade Organisation 

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INTRODUCTION 

Policy context of the renewal of the Overseas Association Decision 

Part  Four  of  the  Treaty  on  the  Functioning  of  the  European  Union  (TFEU)  associates  the 
Overseas Countries and Territories (OCTs) with the European Union (EU). Article 198 of the 
TFEU  stipulates  that  the  purpose  of  the  EU-OCT  association  is  to  promote  the  OCTs' 
economic and  social development  and to create close economic relations between them and 
the EU as a whole. It is also underlined that the association shall serve primarily to further the 
interests and prosperity of the inhabitants of the OCTs, in order to lead them to the economic, 
social and cultural development to which they aspire.  

Since 1958, the detailed rules and the procedure for this association have been laid down by 
the  Council  of  the  EU  through  successive  Overseas  Association  Decisions  (OADs)1.  The 
present  OAD  will  expire  on  31  December  2013.  The  revision  process  of  this  Decision, 
conducted  within  the  limits  of  the  TFEU,  is  underway  and  should  lead  to  a  legislative 
proposal  for  a  new  OAD,  expected  to  enter  into  force  on  1  January  2014.  This  legislative 
proposal will be based on a holistic review in the context of this impact assessment and which 
has  involved  the  European  Commission,  the  OCTs,  their  Member  States  and  other 
stakeholders. In line with Council Conclusions 17801/2009 of 22 December 2009 on the EU's 
relations  with  the  OCTs,  the  legislative  proposal  should  aim  at  renewing  the  association,  as 
well as focusing its areas of cooperation around priorities recognised by all parties as being of 
mutual interests.  

According to Article 203 of the TFEU, the legislative proposal will lay down the provisions 
as regards the detailed rules and the procedure for the association of all OCTs with the EU, 
irrespectively of their level of wealth or other specific characteristics of individual OCTs. It 
will set the legal framework and define the General Framework of the EU-OCT Association, 
the  possible  areas  of  cooperation  between  the  EU  and  the  OCTs,  the  trade  regime  that  will 
govern the exchanges and the cooperation in that field between OCTs and the EU as well as 
the  different  financial  instruments  to  which  OCTs  will  be  eligible  to  (11th  EDF  and  the 
horizontal programmes).This homogeneous framework will be further detailed, as far as EU 
financial  assistance  is  concerned,  at  the  programming  stage  with  each  beneficiary  OCT  in 
order to identify the areas of cooperation where EU's aid would be the most effective in view 
of  meeting  the  objectives  of  the  association.  In  that  respect,  special  consideration  will  be 
given  to  the  specific  economic,  social  and  environmental  situation  and  needs  faced  by  the 
concerned OCT.  

The  legislative  proposal  for  a  Council  Decision  forms  part  of  the  European  Commission's 
work programme for 2012. 

1 

Decision 2001/822/EC of the Council of 27 November 2001 on the association of the overseas countries 
and  territories  with  the  European  Community,  (OJ  L  314/1,  30.11.2001),  amended  by  Decision 
2007/249/EC (OJ L 109/33, 26.04.2007). 

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Brief presentation of the OCTs2 

OCTs  are  islands  located  in  the  Atlantic,  Antarctic,  Arctic,  Caribbean,  Indian  Ocean  and 
Pacific  regions.  They  are  not  sovereign  countries  but  depend  on  four  Member  States  of  the 
EU: Denmark, France, the Netherlands and the United Kingdom. The association of the OCTs 
with  the  EU  flows  from  the  constitutional  relations  that  these  countries  and  territories  have 
with the four Member States. 

Table 1: The OCTs associated with the EU 

UK 

NL 

FR 

DK 

Caribbean 

Saint-Barthélemy 

Anguilla 

British Virgin Islands 

Cayman Islands 

Montserrat 

Aruba 

Bonaire 

Curaçao 

Saba 

Turks and Caicos Islands 
(Bermuda) i 

Sint-Eustatius 

Sint-Maarten 

Pitcairn 

Pacific 

French Polynesia 

New Caledonia 

Wallis and Futuna 

Indian Ocean 

British Indian Ocean Territory  

Mayotte 

Northern Atlantic 

Saint-Pierre et Miquelon 

Greenland 

Southern Atlantic and Antarctic 

Saint  Helena,  Ascension 
Island, Tristan da Cunha 

Falkland Islands 

South-Georgia  and  the  South 
Sandwich Islands 

British Antarctic Territory 

French 
Southern 
Antarctic Territories 

and 

i Though Bermuda is mentioned in both the TFEU and the OAD, it has asked that the association arrangements 
would not apply.  

In  general,  OCTs  have  wide  ranging  autonomy,  covering  areas  such  as  economic  affairs, 
employment  market,  public  health,  home  affairs  and  customs.  Defence  and  foreign  affairs 

2  

See Annex 10 for a brief presentation of each inhabited OCT 

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usually  remain  within  the  remit  of  the  Member  States.  The  OCTs  are  not  part  of  the  EU's 
customs territory and are outside the Internal Market. The EU legislation does not apply.  

Being  nationals  of  the  EU  Member  States  to  which  their  countries  and  territories  are 
constitutionally  linked,  OCT  inhabitants  hold  EU  citizenship.  The  OCTs'  total  population 
represents only 0.02% of the world population (1.2 million).Their total land mass represents 
only 80,000 sq km3.  

1. 

PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES 

1.1. 

Organisation and timing 

The preparation of the new Overseas Association Decision OAD has been carried out under 
the  lead  of  DG  Development  and  Cooperation  -  EuropeAid.  The  drafting  of  this  Impact 
Assessment  report  has  been  coordinated  by  the  Inter-service  Group  (ISG)  for  Overseas 
Countries  and  Territories,  acting  as  Impact  Assessment  Steering  Group  and  composed  by 
representatives  of  all  relevant  services4.  It  aimed  at  ensuring  consistency  of  the  proposals 
developed  within  this  report  with  other  EU  policies  and  duly  took  into  consideration  the 
consultations, reviews and studies mentioned in Section 1.3. The European Investment Bank 
was also consulted. 

Given  the  wide  scope  of  the  OAD,  specific  working  groups  conducted  detailed  analysis  of 
environmental  issues  and  climate  change  on  the  one  hand  and  of  trade  and  trade  related 
aspects on the other hand. These working groups delivered specific reports that are attached as 
Annexes 11 and 12 to the present report. 

Given  that  EU  financial  assistance  to  OCTs  have  been  financed  by  the  European 
Development  Fund  (EDF)  so  far  and  that  the  European  Commission  have  proposed  to 
continue  this  funding  for  the  next  multi-annual  financial  framework  (MFF),  this  impact 
assessment  took  into  consideration  the  Impact  Assessment  conducted  in  the  context  of  the 
preparation of the proposal for the 11th EDF5.  

1.2. 

Impact Assessment Board (IAB) 

Two versions were successively submitted to the Impact Assessment Board which delivered 
its opinions on 17 February 2012 and on 7 May 2012. IAB's comments were incorporated in 
this revised version of the report. In particular, the following changes were made: the scope of 
the OAD was better explained in the introduction in order to underline the fact that the OAD 
will apply to all OCTs, irrespectively of their level of wealth or other specific characteristics. 
The outcome of past consultations, studies and evaluations was better explained (section 1.3 
and  Annexe  5)  and  linked  to  the  underlined  drivers.  Furthermore,  the  problems  were  better 
identified and linked to the objectives and policy options (in that regard two tables were added 
for  clarity).  International  financial  services  and  taxation  issues  were  incorporated  in  the 

3 

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Not  counting  Greenland  (the  world's  largest  island)  and  the  British  Antarctic  Territory,  which 
respectively account for 2.2 million and 1.7 million km². 
The ISG met  on 13 September, 4 October and 30 November 2011, and 10 and 12 January 2012. See 
Annex 3 for participating Commission services. 
Commission  Communication  COM(2011)  837  of  7  December  2011.  See  the  accompanying 
Commission staff working paper SEC(2011) 1459 for an Impact Assessment dedicated to the European 
Development Fund. 

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report. Policy options were revised in order to clearly explain the shortcomings of the current 
OAD  and  the  discarded  policy  options  were  mentioned  in  the  report.  The  options  were 
compared  in  terms  of  effectiveness,  efficiency  and  coherence.  Furthermore,  the  report  fully 
integrates and references the findings in the annexes. The specific reports on environmental 
issues on the one hand and on trade issues on the other hand were incorporated in the report as 
annexes  and  were  referenced  where  necessary  as  appropriate  in  the  main  report.  Finally, 
former Annex 4 has been incorporated, as requested, in the main text and a glossary (Annex 
2) was added. 

1.3. 

Consultation  and  expertise:  review  of  consultations,  studies  and  evaluation 
reports 

In  accordance  with  the  greater  emphasis  placed  on  consultation  and  expertise  as  a  tool  to 
inform  policy  making,  the  present  report  takes  account  of  a  wide  range  of  consultations, 
studies and evaluation reports. 

Outcome of stakeholders' consultation 

The  revision  of  the  OAD  has  been  the  subject  of  various  stakeholders'  consultations 
throughout the period 2008-2011. These include public consultations, but also ad hoc regular 
meetings between the OCTs, the Member States to which they are constitutionally linked and 
the  European  Commission,  as  well  as  dialogue  foreseen  under  the  association  such  as  the 
annual Forums, the regular trilateral meetings, or the partnership working parties dedicated to 
environmental issues, trade issues, regional integration of the OCTs, financial services in the 
OCTs and the future EU-OCTs relations. 

The outcome of stakeholders' consultation highlighted the following issues: 

Paradigm shift and new policy priorities 

In  their  replies  to  the  Green  Paper6,  stakeholders  called  for  a  change  of  the  association's 
current  focus  on  poverty  reduction  and  development  cooperation  to  a  more  reciprocal 
relationship focused on the sustainable development of the OCTs (i.e. a development model 
that  conciliates  economic  activities  and  social  well-being  in  the  long  run  while  preserving 
natural  resources  and  ecosystems  for  future  generations),  which  could,  at  the  same  time, 
support the promotion of EU values and standards in the wider world. 

This was highlighted during the interventions at the stakeholders' conference in October 2008 
which gathered over 100 interested parties from the OCTs' authorities, their Member States, 
the EU's institutions and bodies and civil society at large.  

The Council of the European Union in its Conclusions of 22 December 20097 welcomed and 
expressed support to the change of paradigm. 

6  Green  Paper  COM(2008)  383  of  25  June  2008.  A  synthesis  of  the  different  contributions  is  provided  in 

Annex 5. 

7   Conclusions 17801/09 

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In a Joint Position Paper8 adopted in February 2011, the OCTs and their Member States called 
for  a  better  recognition  of  the  OCTs  as  part  of  the  European  family,  an  association  further 
based  on  the  mutual  interests  of  the  EU  and  the  OCTs  and  a  focus  on  potential  and 
vulnerabilities of the OCTs. The document also draws the attention to the issues of preference 
erosion and other trade related issues and building capacity, and calls for the EU to recognise 
the efforts the OCTs have made in complying with international standards in the area of tax 
governance and the regulation of financial services. 

It  was  also  underlined  that  issues  relating  to  environment,  climate  change  and  disaster  risk 
reduction  should  constitute  a  priority  for  the  future  EU-OCT  relations:  sustainable  use  and 
protection  of  OCTs  biodiversity  and  natural  resources,  environmental  security,  energy  and 
renewable  energy,  ecosystems  conservation,  fight  against  climate  change  impacts  and 
mitigation,  preparedness  and  response  to  disasters,  invasive  species,  sustainable  fisheries. 
Stakeholders9  called  for  an  enhanced  cooperation  of  the  EU  with  the  OCTs  and  Outermost 
regions in the field of conservation of biodiversity and ecosystems services. 

EU's solidarity with the OCTs 

Solidarity  between  the  EU  and  OCTs  should  be  based  on  the  fact  that  OCT  inhabitants,  as 
nationals  of  the  related  Member  States,  were  also  EU  citizens.  It  was  underlined  that  by 
helping  OCTs  to  strengthen  their  competitiveness  and  resilience,  reduce  their  vulnerability 
and implant themselves in their regional environment, the EU would actually be investing in 
strategic outposts able to promote EU values in the world.  

Lessons and conclusions from studies 

The  EU-OCT  association  was  analysed  in  various  studies10,  commissioned  either  by  the 
European Commission or by the OCTs. These studies covered topics such as the trade regime 
contained  in  the  OAD,  the  OCTs'  environmental  profiles,  OCT  statistical  systems  and 
capacities,  OCT  disaster  preparedness  as  well  as  the  cooperation  of  the  EU  with  the  OCT 
during  the  period  1999-200911.  This  latter  evaluation  was  presented  and  discussed  with  the 
stakeholders on the occasion of the annual OCT-EU Forum in March 2011.  

The main conclusions of these studies are: 

Financial assistance to OCTs12  

The  external  evaluation  study  conducted  in  201113  found  that  the  EU-OCT  financial 
cooperation  in  the  period  1999-2009  (under  the  8th  and  9th  EDF  as  well  as  under  the 

8 

9  

10  
11  

12  

13  

See: 
http://www.octassociation.org/Visual%20Identity%20and%20Publications/Reports/joint%20position%
20280211.pdf 
In  July  2008  a  conference  on  "The  European  Union  and  its  Overseas  Entities:  Strategies  to  counter 
Climate Change and Biodiversity Loss" was held in La Réunion Island gathered representatives of the 
European Commission, European Parliament, public authorities and civil stakeholders from the OCTs, 
outermost regions of the EU and EU Member States. 
See Annex 1: list of references of all the documents and studies considered in the impact assessment. 
ECO Consult et al., Region Level Evaluation: Overseas Countries and Territories (OCT), contract N° 
EVA 2004/geo-acp, Final Report, July 2011 (hereafter ECO consult et al. (2011)).  
An overview of the available sources for financing cooperation with OCTs during 2007-2013 period is 
provided in Annex 6. 
ECO Consult et al. (2011), Region Level Evaluation: Overseas Countries and Territories.  

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Greenland  budget  lines)  was  coherent  with  both  the  association's  objectives  and  the  OCTs' 
political priorities.  

Out  of  EUR  380  million  committed,  31%  were  dedicated  to  education  (e.g.  skills 
development  in  mining  industry,  a  sector  with export potential  in New Caledonia), 23  % to 
transport infrastructure (e.g. upgrade of harbours, air-ports and road infrastructure to improve 
connectivity of Saint-Pierre et Miquelon, St. Helena, Ascension Island and Tristan da Cunha, 
Anguilla, New Caledonia, Turks and Caicos and Montserrat with the world), 21 % to water 
and sanitation infrastructure,  9  %  to  environment (management and protection  of resources, 
disaster preparedness and waste management), 7 % to island economies and 9 % to activities 
such as technical assistance and cooperation on trade and trade related areas (e.g. support to 
trade in services, notably in the area of tourism in Montserrat or support to trade development 
of  Falkland  Islands,  including  key  export  sectors,  such  as  fisheries,  aquaculture,  meat 
production and tourism).  

Despite  the  positive  results  obtained,  the  study  recommended  that  the  current  association 
framework  be  revised  so  as  to  better  adapt  the  financial  assistance  framework  to  political 
priorities that have recently emerged as well as the needs and realities of OCTs. It has to be 
noted  that  this  aspect  falls  within  the  scope  of  the  powers  of  the  Commission  to 
administratively manage EU financial assistance and therefore it is not addressed in the OAD. 
It will be detailed in the Commission Regulation implementing the OAD. 

The study also highlighted that there was a need to foster cooperation between OCTs and their 
neighbouring countries was also identified as a means to reach efficiency. In this respect, the 
study  highlighted  that  cooperation  between  the  OCTs  and  their  neighbours  (third  countries, 
ACP States or outermost regions of the EU) is insufficiently facilitated by the EU. 

Access to EU programmes and horizontal budget lines14 has, despite the full eligibility of the 
OCTs  to  these  programmes,  proven  difficult  to  implement,  due  primarily  to  lack  of 
administrative capacity in most OCTs. The OCTs are more than willing to participate in the 
different programmes, yet there is need for better information and guidance in the application 
process. 

The study recommended that the current association framework be revised so as: 

14 

An overview of the programmes and budget lines referred to in Annexes II E-F of the OAD is provided 
in Annex 6 of this report. 

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(a) 

(b) 

(c) 

to  incorporate  the  political  priorities  mentioned  above  in  the  programming  the 
themes and political priorities that have emerged in the last decade; 

to  promote  cooperation  between  OCTs  and  their  neighbouring  countries,  amongst 
others  through  a  better  coordination  and  coherence  of  EU  actions  and  strategies  in 
relation with the different actors; 

to  facilitate  access  to  EU  horizontal  programmes,  notably  through  information 
sessions and/or seminars financially supported by a dedicated envelope or by means 
foreseen in each programme. 

Trade and trade related issues15 

In their overall assessments of the OCT trade regime, OCTs, their Member States as well as 
external  evaluators  all  agree  that  the  trade  and  economic  component  of  the  EU-OCT 
association has contributed to the sustainable social and economic development of OCTs by 
providing  OCTs  a  secure  access  to  the  large  EU  market,  providing  numerous  export 
opportunities, and supporting local economies. Echoing the conclusion of an earlier external 
evaluation  of  the  9th  EDF16,  ECO  Consult  et  al.  (2011)  stated  that  EU-OCT  cooperation 
programmes and projects under the 8th and 9th EDF had been highly relevant to the individual 
OCTs'  needs  as  well  as  coherent  with  both  the  association's  objectives  and  the  OCTs'  own 
priorities17.  As  regards  coherence  between  EU  support  to  the  OCTs  and  other  EU  policies 
(migration, trade, fisheries etc.) ECO Consult et al. (2011) found no marked contradictions or 
inconsistencies18. 

Even  if  the  OCT  trade  regime  has  provided  levers  for  the  OCTs'  economic  development, 
certain areas of improvement were identified. LUFF et al. (2010) and others have pointed out 
that  while  the  EU  offers  OCT  wide  market  access,  this  has  not  always  translated  in  actual 
trade opportunities, as OCTs faced several challenges to effectively exploit the market access 
that was offered. The challenges not only relate to structural difficulties OCTs face, such as 
the size of their economies and their enterprise, the remoteness of their territories or even the 
absence of OCT trade policies, but also have to a certain extent to do with the EU rules and 
conditions which define  the  OCTs'  actual market access. The studies also point out that the 
relative worth of the OCTs' duty free and quota free market access is decreasing as a result of 
progressive trade liberalisation on a global and regional scale. Finally, the studies highlighted 
that  compared  to  the  arrangements  for  trade  in  goods,  the  OAD  arrangements  for  trade  in 
services were relatively underdeveloped.  

The recommendations of external evaluators were:  

(a) 

15  
16  
17  
18  

to adapt the arrangements concerning trade in goods so as to better take into account 
structural  difficulties  (small  sized  economies,  enterprises,  administrative  capacity), 
amongst others by introducing more flexible rules of origin for OCT goods exports to 
the EU; 

For a more detailed analysis of trade and trade related issues, see the dedicated report Annex 12 
BURKE et al. (2006) 
ECO Consult et al. (2011), p. 38. 
Idem, pp. 81-83. 

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(b) 

(c) 

(d) 

(e) 

to  allow  for  the  possibility  for  OCTs  to  engage  in  more  favourable  trade  relations 
with  other  OCTs  and  developing  countries,  so  as  to  reflect  the  increasing  importance 
that trade in services has gained in world and regional economies in the last decade and 
to facilitate regional integration in this area; 

to  foresee  support  and  capacity  building  for  the  development  of  OCT  trade  related 

policies as well as to assist OCTs in regulatory reform;  

to  support  dissemination  within  OCTs  of  information  regarding  the  conditions 
defining  access  to  the  EU  market  (e.g.  European  technical, food and consumer health 
regulations); 

to maintain the direct dialogue between the European Commission and the OCTs on 
e.g. trade and trade related issues and ensure that OCT interests are taken into account 
in the context of EU trade negotiations. 

One  example  of  the  difficulties  that  OCTs  have  encountered  in  accessing  the  EU  market 
relates to the rules of origin and the requirements for OCT fish exports to the EU. One of the 
requirements  concerns  the  nationality  of  the  crew  that  operate  the  fishing  vessels  that  catch 
fish outside an OCT's territorial waters19. For example, due to their remoteness and small size 
population, the Falkland Islands have had difficulties in complying with this requirement. As 
a consequence, the Falkland Islands are dependent on temporary derogations from the rules of 
origin to ensure that its fish products caught outside territorial waters can be exported to the 
EU free of duty. 

Another  example  of  problems  relating  to  the  rules  of  origin  which  OCTs  have  encountered 
relate to the possibilities for OCTs to cumulate their own materials and materials from third 
countries in view of exporting originating goods that may enter the EU market duty free and 
quota  free.  Presently,  the  OAD  allows  OCTs  to  cumulate  materials  from  other  OCTs,  ACP 
States  or  from  EU  Member  States.  However,  for  certain  OCTs,  such  as  the  isolated  OCTs 
(e.g.  Greenland  and  Saint-Pierre  et  Miquelon)  cumulation  with  ACP  States  or  EU  Member 
States is either not interesting or not feasible as these partners are located too far away. These 
OCTs  are  more  interested  in  cumulation  possibilities  with  other  third  countries,  such  as 
Canada, which is currently not allowed under the OAD, unless derogations are granted. 

Environmental issues20 

The  study  "OCTs  environmental  profiles"21  identified  the  following  main  concerns  of  the 
OCTs:  

– 

– 

– 

climate change, 

natural disasters, 

threats to wildlife and biodiversity, habitat destruction, 

19 

20  
21  

According  to  the  rules  of  origin,  at  least  50%  of  the  crew  needs  to  have  the  nationality  of  either  an 
OCT, an ACP State or en EU Member State. 
See Annex 11, sections 1.2, 2.2 and 2.3. 
OCTs  environmental  profiles  –  NIRAS  PINSISI  Consortium  Partners;  Service  contract  2006/12146; 
January 2007. 

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– 

– 

– 

illegal, unregulated and unreported fishing, 

waste management, 

water supply and sanitation. 

Another external study22 on the cooperation of the EU with the OCTs during the period 1999-
2009  concluded  that  environment  and  climate  change  adaptation  are  regarded  as  matters  of 
vital importance to the OCTs. However, only few concrete results of the EU-OCT cooperation 
were found in this field due to limited funding, despite the recognition of the importance of 
the  environment,  the  reality  of  climate  change  and  the  importance  of  disaster  preparedness. 
The  study  therefore  recommended  that  for  the  post  2013  EU-OCT  relationship,  the 
association  framework  should  be  revisited  in  order  to  better  respond  to  new  and  emerging 
priorities in the OCTs, such as energy and climate change and to address new objectives such 
as sustainable management of natural resources and conservation of biodiversity. 

The Communication23 from the Commission of 6 November 2009 

The  outcome  of  the  public  consultation  process  and  the  conclusions  from  the  studies  were 
taken  into  account  by  the  European  Commission  in  its  proposals  for  the  orientations  of  the 
future association of the OCTs with the EU. In its Communication of 6 November 2009, the 
Commission  recognised  the  necessity  for  the  EU-OCT  association  to  focus  more  on  a 
partnership  based  on  the  mutual  interests  of  the  EU  and  the  OCTs  rather  than  on  the  fight 
against poverty. The Communication identified three central objectives in order to pursue the 
purpose  of  the  association  as  stated  in  Article  198  TFEU:  (i)  enhancing  OCTs' 
competitiveness, (ii) reducing their vulnerabilities and (iii) promoting their cooperation with 
other partners. 

1.4. 

Statistical Data 

The analysis in this report is based on both qualitative and quantitative data, where available. 
An  important  reservation  needs  to  be  made  regarding  the  latter.  The  analysis  below  mainly 
draws  on  data  directly  available  to  the  European  Commission  and  external  studies,  one  of 
which was specifically dedicated to OCT statistical systems and capabilities24. For instance, 
the study found that whereas all of the OCTs that responded to its survey produced statistics 
relative to trade (exports and imports in broad categories, volume and value), these were not 
always  publicly  available  (through  websites,  hard  copies  and/or  CD-ROM).  Among  the 
reasons given to explain the lack of public availability of certain statistics the following four 
were most cited: lack of demand, provision only on demand, lack of financial resources and 
unreliability  or  non-conformity  with  international  standards.  Where  statistics  were  publicly 
available,  their  publication  was  not  always  timely  and  the  reference  periods  not  up  to  date. 

22  
23 

24 

ECO Consult et al. (2011), Region Level Evaluation: Overseas Countries and Territories. 
Communication COM(2009) 623 of 6 November 2009 "Elements for a new partnership between the EU 
and the overseas countries and territories". 
Analysis of the Statistical Systems in the OCTs and Recommendations Aiming at Enhancing Statistical 
Systems of OCTs, Framework Contract Beneficiaries – Lot 11, N° 2010/253401/1, Draft Final Report, 
September 2011. 

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Also,  the  available  statistics  were  not  always  in  conformity  with  internationally  agreed 
nomenclatures25. 

2. 

PROBLEM DEFINITION 

2.1. 

The problem requiring action and the scope of the decision 

2.1.1.  The problem 

Since the adoption in 2001 of the current OAD, the regional and international environments in 
which  OCTs  operate  has  considerably  changed.  New  political  priorities  have  emerged  at 
European  and  international  level,  (such  as  environment,  climate  change,  sustainable 
management of natural resources) as well as changes in global trade patterns. The European 
Commission  proposed  a  strategy26  articulated  around  three  priorities:  smart  growth, 
sustainable growth and inclusive growth as a response to the economic and financial crisis. 

For  their  part,  the  OCTs  continue  to  face  economic  and  social  problems  and/or  struggle  to 
found  their  economies  on  a  sustainable  basis.  They  are  confronted  with  a  number  of 
difficulties linked to their fragile environments and the need to secure the environmental pillar 
of sustainable development.  

2.1.2.  Main challenges 

Based on the results of the various studies and consultation of stakeholders, it appears that the 
main challenge OCTs face consists in putting their economies and societies on a sustainable 
development path by improving their competitiveness, reducing their vulnerability, increasing 
environmental  resilience,  and  cooperating  with  their  neighbours  and  integrating  in  the 
regional and/or world economies, where this is possible. 

Economic challenges  

OCT  economies  all  have,  in  general,  small-sized  domestic  markets  due  to  their  small 
populations.  Trade  development  therefore  often  represents  an  important  potential  for  OCT 
economic  development.  However,  OCT  production  bases  are  generally  small  and  economic 
activity is often concentrated in a few sectors. 

As  net  importers  all  of  them  face  structurally  negative  trade  balances  with  the  rest  of  the 
world, even if between 2004 and 2008 overall OCT exports grew 9% annually from USD 1.2 
billion  to  USD  1.8  billion.  In  the  same  period,  however,  OCT  imports  increased  with  10% 
every year from USD 3.4 billion to USD 5.9 billion27. OCT exports are generally concentrated 
in a few sectors. 

25 

26  

27  

Idem,  pp.  43-44  and  52.  Often  different  versions  and  combinations  were  used,  at  different  levels  of 
analysis,  of  national  and  international  classification  systems  such  as  the  Harmonised  System  (World 
Customs Organisation), the Standard International Trade Classification (UN) and the Broad Economic 
Classification (UN). 
Communication  COM(2010)  2020  final  of  3  March  2010  "Europe  2020  –  A  strategy  for  smart, 
sustainable and inclusive growth" 
ECO Consult et al. (2011), Region Level Evaluation: Overseas Countries and Territories, pp. 75-76. For 
more information about the OCTs' trade profiles, see the report on trade and trade related aspects of the 
OAD in Annex 12, notably pp. 90-102. 

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For some OCTs, economic ties with the EU are of great importance, but in general OCT/EU 
trade  tends  to  be  one-sided.  For  other  OCTs,  the  economic  ties  between  them  and  the  EU 
remain  limited.  The  tendency  for  OCTs  to  run  trade  deficits  is  reflected  in  OCT/EU  trade 
flows.  In  2010  the  OCT/EU  import/export  ratio  was  approximately  1/2,  with  the  value  of 
EU27 exports to the OCTs amounting to over EUR 2 billion and the value OCT exports to the 
EU27 amounting less than EUR 1 billion (see Annex 8). While OCTs export mainly fishery 
and other mineral and natural products to the EU, the EU primarily exports industrial products 
and some agro-food products to the OCTs. 

Services represent an important part of the economy in all OCTs, though the actual percentage 
varies. In light of the increasing importance that trade in services has acquired in the world 
economy  and  the  limited  potential  for  development  of  trade  in  goods,  OCTs  show 
considerable interest in developing economic activity and exports in their services sectors as a 
way to diversify their economies. Tourism and related sectors (culture, recreation and sports) 
came  out  as  drawing  the  most  attention.  Other  sectors  being  considered  by  OCTs  were: 
(renewable)  energy  (consulting,  engineering  etc.)  and  environment  services  (environment 
protection  etc.)  as  well  as  business,  telecommunication  and  other  supporting  services 
(telephone support services, data storage, internet traffic relay etc.)28. 

In  some  OCTs,  located  in  the  Caribbean,  financial  services  are  the  mainstay  of  their 
economies.  In  2008,  the  values  of  the  respective  GDPs  of  the  Cayman  Islands  and  British 
Virgin  Islands  were  estimated  at  USD  2.87  billion  and  USD  1.215  billion29.  Foreign 
investments into the territories amounted to USD 10.9 billion and USD 3 billion respectively, 
the bulk of which goes to the financial sector. Investment outflows are important as well. By 
contrast, productive investments in the real economy are modest, especially when compared 
with other OCTs such as New Caledonia.30  

Environmental challenges31 

All  OCTs  are  characterised  by  a  high  biological  diversity  as  they  are  remote  and  have 
developed in isolation. These insular and remote countries and territories constitute privileged 
locations for the development of endemic species, whether animal or vegetable, terrestrial or 
marine. However, the OCTs’ potential as regards biodiversity is subject to several threats such 
as  the  impacts  of  climate  change  or  the  introduction  of  non-endemic  species.  OCTs  are 
amongst the insular countries that have to face the impacts of climate change. Depending on 
the geographical location of the OCTs, the effects of climate change will be different: melting 
of  permafrost,  coral  reef  bleaching  impacting  marine  fauna  and  flora,  salinisation  of  fresh 
wateraquifer are among examples. 

The  insular  characteristics  of  the  OCTs  make  them  particularly  exposed  to  environmental 
shocks as well as natural disasters whose frequency could be influenced by climate change. 

28 

29  

30  
31  

Information taken from a questionnaire the European Commission circulated among the OCTs and their 
Member States in the Summer of 2011. A more detailed discussion as well as an overview of the replies 
to the questionnaire can be found in the report on trade and trade related aspects of the OAD in Annex 
12. 
Source: UN Statistics Division, Country Progiles for Cayman Islands and British Virgin Islands. See: 
http://data.un.org/. 
LUFF et al. (2010), pp. 163-163 
"OCTs environmental profiles" assessed by the Joint-Venture of NIRAS PINSISI Consortium partners. 
Service  contract  2006/12146,  January  2007.  The  main  report  can  be  consulted  on  the  following  web 
page: http://ec.europa.eu/development/icenter/repository/environmental_profile_main_report_en.pdf 

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The OCTs are particularly vulnerable to climatic, seismic and volcanic risks and to tsunamis. 
Such  natural  disasters  can  easily  destroy  the  infrastructures  and  hamper  the  economic 
activities. Besides the risk of economic paralysis, these phenomena can cause a heavy human 
toll and lead to the displacement of populations, and are thus likely to disrupt the economic 
and social organisation of the OCTs. 

OCTs  are  highly  reliant  on  fossil  fuels  imported  at  high  transport  costs,  which  make  them 
extremely  vulnerable  to  external  economic  shocks.  They  therefore  face  the  challenge  of 
reducing this energetic vulnerability. 

Finally,  sustainable  management  of  water  and  waste  is  of  vital  importance  in  OCTs.  These 
issues are among the most challenging OCTs need to face, as the absence of critical mass in 
these countries and territories make adapted solutions necessary. 

2.2. 

The underlying drivers of the problem 

The underlying drivers of the problem identified above can be summarised as follows: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

The  OCTs  have  difficulties  to  overcome  handicaps  due  to  their  physical 
characteristics (insular, small, remote, variable in size of exclusive economic zone); 

They fail to mitigate their high vulnerability linked to their geographic characteristics 
(located  in  areas  of  cyclonic  and  seismic  activities,  exposed  to  impacts  of  climate 
change such as coral reef bleaching or sea level rise, highly dependent on imports of 
fossil fuels at high transport costs); 

They hardly overcome low administrative capacities due to their small size and, as a 
consequence, they face difficulties in elaborating and implementing policy tools and 
developing infrastructures; 

They fail to develop their micro-economies characterized by structural weaknesses, a 
small undiversified production base, with exports concentrated in a few sectors 32: 

They  are  confronted  with  erosion  of  trade  preferences  for  OCTs  in  their  relations 
with the EU and increased competition for their exports in third markets, due to the 
conclusion  of  an  increasing  number  of  free  trade  agreements  (FTAs)  by  major 
trading partners (the EU, the US and Canada) that are important destination markets 
for some OCTs; 

They are sometimes unable to be covered by initiatives/agreements concluded by the 
EU and/or their Member States aiming at tackling political priorities at European and 
international  level  that  emerged  in  the  last  ten  years  such  as  impacts  of  climate 
change  with  third  partners,  lowering  the  capacities  of  the  OCTs  to  join  global 
response mechanisms. 

32 

For a more detailed analysis of the OCTs' economic profiles, see Annex 12. 

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Table 2: problems and underlying drivers 

Problems 

Underlying drivers 

OCTs continue to face economic and social 
problems 

Handicaps linked to their physical 

characteristics 

Low administrative capacities 

Micro-economies  with  structural 

weaknesses  

OCTs  are  confronted  to  difficulties  linked 
to their vulnerable environments 

vulnerability 

linked 
geographic characteristics  

to 

their 

The OCTs do not benefit from the changes 
global trade patterns and global issues that 
emerged the last ten years 

Erosion  of  trade  preferences  and 
increased competition for their exports 
to third markets 

Incapacity to be part of initiatives 
relating  to  global  issues  that  emerged 
in the last ten years  

2.3. 

The EU's right to act and the EU added value 

The EU's right to act in the area of EU-OCT relations derives primarily from Part Four of the 
TFEU.  The  purpose  of  the  EU-OCT  association,  the  social  and  economic  development  and 
close economic ties between the OCTs and the EU as a whole, cannot be achieved via actions 
at  Member  States  level.  Moreover,  with  regard  to  the  OCT  trade  regime,  Member  States 
actions would not be possible as the common commercial policy falls within the domain of 
the  EU's  exclusive  competence  (Part  Five,  Title  II  of  the  TFEU).  According  to  Article  206, 
the  EU's  trade  policy  should  contribute  to  the  harmonious  development  of  world  trade,  the 
progressive abolition of restrictions on international trade and on foreign investment, and the 
lowering of customs and other barriers. The rules of the EU-OCT preferential trade relations 
are governed by the principles laid down in Title II of Part Five of the TFEU regarding the 
EU's trade policy. 

As stipulated in Article 203 of the TFEU, the Council of the EU shall lay down provisions as 
regards the detailed rules, arrangements and procedures of the association of OCTs with the 
Union33.  These  include  trade  and  trade  related  issues,  customs  arrangements,  public  health, 
public security or public policy and freedom of movement for workers throughout the OCTs 
and Member States. This is expected to be in accordance with the principles laid down in the 
TFEU regarding the definition and implementation of EU policies and activities, concerning 
inter alia environment and gender equality (TFEU Part One). 

In  view  of  increasingly  complex  challenges,  none  of  the  EU's  internal  priorities  –  security, 
smart,  inclusive  and  sustainable  growth  and  job  creation,  climate  change,  access  to  energy, 

33  

An overview of the structure of the current OAD is provided in Annex 4. 

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18 

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resource  efficiency,  including  the  protection  of  biodiversity,  safe  management  of  water  or 
waste, health and pandemics, education - will be achieved in isolation from the wider world. 

With 27 Member States acting within common policies and strategies, the EU alone has the 
critical mass to respond to global challenges, such as climate change. The action of individual 
Member States can be limited and fragmented. This critical mass also puts the EU in a better 
position to conduct policy dialogue with partner OCT governments. 

Through its external action, the EU is committed to promoting its standards, and sharing its 
expertise. The OCTs have the potential for becoming strategic outposts of the EU throughout 
the world. Upgrading the OCTs legislation and standards to EU levels could increase both the 
influence of the OCTs and subsequently the EU in their respective regions.  

3. 

OBJECTIVES OF THE FUTURE LEGISLATIVE FRAMEWORK 

On the basis of the policy needs, problems and drivers that are anticipated in the period until 
2020, the general and specific objectives of the OAD 2014-2020 are as follows34. 

3.1. 

General objectives 

Based on the Articles 198 and 199 TFEU, the general objectives are: 

(1) 

to promote the economic and social development of the OCTs; 

(2) 

(3) 

(4) 

(5) 

to establish close economic relations between the OCTs and the EU as a whole; 

to further the interests and prosperity of the inhabitants of the OCTs in order to lead 

them to the economic, social and cultural development to which they aspire; 

to allow OCTs to benefit from the same trade treatment that Member States accord to 

each other  

to promote the definition and implementation of environmental policies in the OCTs 
as one of the three pillars of sustainable development (alongside with economic and social 
development). 

3.2. 

Specific objectives 

Throughout the various consultations and external studies, a clear consensus has arisen among 
stakeholders,  external  assessors  and  political  actors  alike  that  the  purpose  and  objectives  of 
the  association,  as  laid  down  in  Articles  198  and  199  of  the  TFEU,  would  need  to  be 
translated into the objectives identified by the Commission as central to this framework and 
which were endorsed by the Council of the EU35. The specific objectives might seem broader 
and less detailed than would be appropriate for any particular programme. The key purpose of 
these  objectives  is  to  provide  a  basis  for  assessing  the  options  in  relation  to  the  future 
priorities of the OAD. 

34  

35  

Operational  objectives  will  be  identified  in  future  cooperation  programmes  to  be  concluded  with  the 
OCTs. 
COM(2009) 623 and conclusions of the Council 17801/09. 

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The specific objectives of the next association framework would therefore be as follows: 

o 
o 

o 
o 
o 
o 
o 

to help promote EU's values and standards in the wider world; 
to  establish  a  more  reciprocal  relationship  between  EU  and  OCTs  based  on  mutual 
interests; 
to enhance OCTs' competitiveness; 
to strengthen OCTs' resilience, reduce their economic and environmental vulnerabilities; 
to promote cooperation of OCTs with third partners; 
to integrate the latest EU policy agenda priorities; 
to take into account changes in global trade patterns and EU trade agreements with third 
partners. 

Table 3: Link between problems and objectives 

Problems 

General Objectives 

Specific objectives 

OCTs continue 
to face economic 
and social 
problems 

) 

) 

OCTs are 
confronted to 
difficulties linked 
to their 
vulnerable 
environments 

To 

promote 
and 

the 
social 

economic 
development of the OCTs. 

To 

establish 

close 
economic  relations  between 
the  OCTs  and  the  EU  as  a 
whole. 

of 

To further the interests 
the 
and  prosperity 
inhabitants  of  the  OCTs  in 
order  to  lead  them  to  the 
and 
economic, 
to 
cultural  development 
which they aspire. 

social 

to 
To  allow  OCTs 
benefit from the same trade 
treatment 
that  Member 
States accord to each other. 

To 

promote 

the 
environmental  development 
of the OCTs. 

of 

To further the interests 
and  prosperity 
the 
inhabitants  of  the  OCTs  in 
order  to  lead  them  to  the 
and 
economic, 
cultural  development 
to 
which they aspire. 

social 

) 

To  allow  OCTs 

to 

o  To help promote EU's values and 
standards in the wider world. 
o  To  establish  a  more  reciprocal 
relationship  between  EU  and 
OCTs based on mutual interests. 
OCTs' 

enhance 

o  To 

competitiveness. 

o  To  strengthen  OCTs'  resilience 
and  reduce  their  economic  and 
environmental vulnerabilities. 
o  To  promote  cooperation  of 

OCTs with third partners; 

o  To  integrate  EU  policy  agenda 

priorities. 

o  To  take  into  account  changes  in 
global  trade  patterns  and  EU 
trade  agreements  with 
third 
partners. 

o 

 To  help  promote  EU's  values 
and standards in the wider world. 
o  To  establish  a  more  reciprocal 
relationship  between  EU  and 
OCTs based on mutual interests. 
OCTs' 

enhance 

o  To 

competitiveness. 

o  To  strengthen  OCTs'  resilience 
and  reduce  their  economic  and 

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20 

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Problems 

General Objectives 

Specific objectives 

benefit from the same trade 
treatment 
that  Member 
States accord to each other. 

o 

environmental vulnerabilities. 
 To  promote  cooperation  of 
OCTs with third partners. 

Problems 

The EU-OCT 
association does 
not take into 
account the 
changes of global 
trade patterns 
and emerging 
global issues 

) 

) 

) 

) 

) 

) 

To 

promote 

the 
environmental  development 
of the OCTs. 

General Objectives 

Specific objectives 

o  To help promote EU's values and 
standards in the wider world. 
o  To  establish  a  more  reciprocal 
relationship  between  EU  and 
OCTs based on mutual interests. 
OCTs' 

enhance 

o  To 

competitiveness. 

o  To  strengthen  OCTs'  resilience 
and  reduce  their  economic  and 
environmental vulnerabilities. 
o  To  promote  cooperation  of 

OCTs with third partners. 

o  To  integrate  EU  policy  agenda 

priorities. 

o  To  take  into  account  changes  in 
global  trade  patterns  and  EU 
third 
trade  agreements  with 
partners. 

To 

promote 
and 

the 
social 

economic 
development of the OCTs. 

To 

establish 

close 
economic  relations  between 
the  OCTs  and  the  EU  as  a 
whole. 

Tto 

further 

the 
interests  and  prosperity  of 
the inhabitants of the OCTs 
in order to lead them to the 
and 
economic, 
cultural  development 
to 
which they aspire. 

social 

To  allow  OCTs 

to 
same 
benefit 
treatment 
that  Member 
States accord to each other. 

from 

the 

To 

promote 

the 
environmental  development 
of the OCTs. 

3.3. 

Consistency with external action priorities and other EU policies 

The "Europe 2020" provides the benchmark against which the coherence of EU policies and 
the promotion of EU values, standards and interest need to be checked36. Coherence with the 
Europe  2020  strategy  should  be sought,  as  far  as  its  smart  growth  and  sustainable  priorities 
are  concerned,  promoting  support  to  research,  innovation  as  well  as  to  information  and 
communication  technologies  (ICT)  and  sustainable  growth  capacities  as  catalysts  for  socio-
economic development. 

36  

Commission Communication COM (2010) 2020, 3 March 2010. 

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The  2014-2020  OAD  will  play  an  important  role  in  that  respect.  Indeed,  the  idea  of 
establishing  ‘centres  of  experience  and  expertise’  could  relate  to  the  implementation  and 
promotion  of  high  standards,  including  international  standards,  e.g.  in  the  fields  of 
environment  and  food  safety  and  consumer  health.  The  OCTs  are  all  characterised  by  rich 
biodiversity. The sustainable use and protection of this biodiversity would benefit from better 
scientific documentation and access to research results. 

Likewise, the implementation of international standards within the area of food safety, animal 
and plant health could facilitate trade between OCTs and their trading partners, including EU 
Member  States.  The  EU's  commitment  to  environmental  standards  as  well  as  its  role  as  a 
global player in the fight against climate change could be of great value to both the EU and 
the OCTs. The European Commission believes that biodiversity and other natural assets of the 
OCTs  could  be  the  object  of  a  strengthened  cooperation  in  the  field  of  research  and 
conservation.  A  partnership  in  the  area  of  environment  could  be  of  mutual  interest  to  both 
parties. 

4. 

POLICY OPTIONS 

4.1. 

Discarded options 

a) No EU action 

The option ‘no EU action’ is not assessed in this impact assessment report as Part IV of the 
TFEU constitutes in itself an obligation for the EU to act. 

b) Two distinctive Council Decisions: one for trade regime and another for cooperation for 
sustainable development  

This option was discarded since it would weakness the possibility to define a comprehensive 
framework  for  all  OCTs.  In  addition,  it  would  rather  increase  the  legislative  burden  for  EU 
institutions and would limit the visibility of the EU-OCT partnership.  

4.2. 

Policy  option  1:  Status  Quo  Renewal  of  the  current  Overseas  Association 
Decision without any changes. 

Under  Policy  option  1,  the  structure  and  the  content  of  the  currently  into  force  Association 
Decision would be maintained for the period 2014-2020.  

Cooperation issues 

Fight  against  poverty  will  continue  to  be  the  overall  goal  of  the  association  despite  the  fact 
that the Commission, the Member States, the OCTs and all stakeholders have recognised its 
inappropriateness in an EU-OCT framework of cooperation. Furthermore, the various areas of 
cooperation will be maintained without any particular focus on the mutual interests of the EU 
and OCTs. 

Trade rules 

The  arrangements  for  trade  between  the  EU  and  the  OCTs  would  remain  unchanged  (no 
possibility for introduction of provisions for improved conditions under which OCTs access 
the  EU  market  nor  for  modifications  in  terms  of  the  arrangements  for  trade  in  services  and 

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establishment).  Finally,  under  this  option,  and  given  the  developments  in  trade  patterns  and 
EU/third  countries  trade  agreements,  the  EU  would  not  be  in  a  position  to  comply  with  its 
Treaty  obligations  requiring  applying  to  the  OCTs  the  same  treatment  as  the  one  Member 
States accord each other. 

Financial assistance 

Under  policy  option  1,  EDF  resources  would  be  distributed  between  five  main  categories 
(Territorial,  Regional,  Technical  Assistance,  Emergency/Humanitarian  Aid,  European 
Investment Bank – Investment Facility) and according to the same key of distribution of the 
total  envelope  (69%,  14%,  2%,  5%  and  10%  respectively).  In  addition  to  the  financial 
allocations under the EDF, the OCTs would remain eligible to the horizontal budget lines of 
the EU. 

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Implementation of policy option 1 

According to policy option 1 the period of validity of the next OAD would be 2014- 2020. It 
would  also  imply  the  definition  and  adoption  of  a  Commission  Regulation  laying  the 
implementation  modalities  of  the  OAD  as  well  as  the  establishment  of  programming 
guidelines  following  consultations  with  OCTs  and  their  Member  States.  In  terms  of 
implementation  of  the  financial  cooperation  under  policy  option  1,  a  margin  of  flexibility 
could  be  built  in  by  reserving  a  given  amount  as  non-programmed  aid  to  respond  to 
unforeseen events and mitigate the impact of economic external shocks. Dedicated technical 
assistance and capacity building would be made available to support the OCTs in identifying 
and formulating comprehensive policies and subsequent implementation plans, namely in the 
areas chosen for EU financial assistance. 

Policy  option  1  would  allow  the  EU-OCT  association  to  continue  to  support  the  OCTs,  the 
same way as the current framework does, in the economic and social problems they face and 
the  difficulties  linked  to  their  vulnerable  environment  they  are  confronted  with.  The 
implementation  of  the  OAD  as  proposed  under  policy  option  1  would  not  allow  addressing 
the issues in relation with the need to take into account changes in global trade patterns and 
emerging global issues. 

4.3. 

Policy  option  2:  Modernisation  of  the  Overseas  Association  Decision  and 
alignment with EU policy framework 

Option 2 would modernise and align the OAD with the EU policy framework. Its objectives 
and principles would be revised, taking into account the political orientations of the Council 
of the EU, the requests the OCTs and their Member States expressed on different occasions as 
well as the results of external studies. 

Cooperation issues 

Under this option, the EU-OCT cooperation would give a particular focus on areas of mutual 
interests, as called for by the stakeholders and underlined as a recommendation in the external 
studies,  e.g  climate  change,  biodiversity  conservation,  research  and  innovation,  allowing  to 
take  into  account  the  international  political  priorities  that  emerged  in  the  last  ten  years  and 
which  are  in  accordance  with  the  Europe  2020  agenda.  Furthermore,  under  this  option,  the 
EU-OCT  association  would  contribute  to  the  promotion  of  EU  interests  and  values, 
considering OCTs as outposts of the EU in their regions. 

Trade rules37 

Under policy option 2, the trade regime would continue to give OCTs duty free and quota free 
access to the EU market. In parallel, new provisions would foresee improved conditions under 
which  OCTs  could  access  the  EU  market  by  revising  the  preferential  rules  of  origin 
(e.g. deletion of the requirement regarding the nationality of the crew manning vessels fishing 
outside  territorial  waters  and  the  inclusion  of  new  or  clearer  definitions  of  wholly  obtained 
goods  and  minimal  operations,  lighter  administrative  requirements  regarding  evidence  of 
direct transport of OCT goods between the OCT's territory and the EU, new possibilities for 
cumulation,  more  flexible  administrative  procedures  for  granting  derogations  to  the  rules  of 

37  

See Annex 12 section 7.2.3. 

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origin  with  period  of  validity  determined  on  a  case  by  case  basis,  etc.).  In  addition,  policy 
option  2  suggests  revising  the  arrangements  for  trade  in  services  and  establishment  and 
granting the OCTs Most Favoured Nation treatment, where they currently receive only basic 
third country treatment (i.e. GATS).  

Finally,  policy  option  2  suggests  the  introduction  of  new  provisions  that  would  ensure  the 
correct management of trade preferences and the clarification of the respective responsibilities 
of OCTs, Member States and the EU concerning administrative errors and fraud. 

Financial assistance 

The  financial  assistance  for  the  OCTs  would  still  be  based  on  territorial  and  regional 
envelopes. Option 2 suggests the increase (in comparison with the current OAD) of regional 
allocation.  This  would  allow  achieving  the  objectives  aiming  at  better  responding  to  issues 
that emerged in the last decade, and are of common interest to all OCTs and the EU. Some of 
these issues have been continuously highlighted by the OCTs and their Member States, such 
as:  environment,  climate  change,  statistical  systems,  disaster  risk  reduction,  health  threats, 
renewable energy and innovation. 

The envisaged increase of the regional allocation under the 2014-2020 OAD would also serve 
the objective for an enhanced cooperation between OCTs and their neighbouring partners as 
well  as  the  objective  aiming  at  expanding  the  EU's  sphere  of  influence  via  the  OCTs.  The 
OCTs, as recognised members of the wider European family and outposts of the EU in their 
respective  regions,  will  thus  directly  benefit  not  only  the  EU  as  a  whole  but  also  their 
neighbours, thereby serving as a lever for the objectives of EU external policy. 

Option 2 also proposes to renew the eligibility of the OCTs to all the EU programmes. Where 
relevant, EU programmes would have a dedicated window in favour of the OCTs (e.g. climate 
change,  environmental  research  and  biodiversity).  Through  a  closer  dialogue  between 
Member  states,  the  European  Commission  and  the  OCTs,  a  better  alignment  of  the  EU 
assistance and the aid provided by the Member States would be pursued. This would facilitate 
the  creation  of  synergies  between  the  two  types  of  assistance  and  would  lead  to  more 
predictability and aid efficiency. 

Policy  option  2  does  not  foresee  a  change  in  relation  with  the  programming  modalities  of 
financial  resources.  Indeed,  "territorial"  and  "regional"  financial  allocations  would  be 
programmed in a Programming Document (PD). The OCTs would be requested to concentrate 
the EU financial support on a single focal sector. For the regional envelope the choice of focal 
sector would be done from the list of themes of mutual interest mentioned above. 

Implementation of policy option 2 

The  period  of  validity  of  the  next  OAD  would  be  2014-  2020.  As  policy  option  1,  policy 
option 2 would also imply the definition and adoption of a Commission Regulation laying the 
implementation  modalities  of  the  OAD  as  well  as  the  establishment  of  programming 
guidelines  following  consultations  with  OCTs  and  their  Member  States.  In  terms  of 
implementation  of  the  financial  cooperation  under  policy  option  2,  a  margin  of  flexibility 
could  be  built  in  by  reserving  a  given  amount  as  non-programmed  aid  to  respond  to 
unforeseen events and mitigate the impact of economic external shocks. Dedicated technical 
assistance and capacity building would be made available to support the OCTs in identifying 

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and formulating comprehensive policies and subsequent implementation plans, namely in the 
areas chosen for EU financial assistance. 

In  terms  of  programming,  option  2  suggests  to  keep  the  current  programming  requirements 
and modalities while proposing that particular account will be taken and consideration will be 
given  where  it  exists  a  "comprehensive  territorial  development  plan"  or  a  "comprehensive 
development plan agreed between the OCT and the Member State". 

The association framework envisaged under policy option 2 would allow the EU to continue 
supporting  the  OCTs  in  their  efforts  to  address  the  economic  and  social  problems  and 
difficulties they face in a more focused and coordinated way than the current framework does. 
It would fully take into account the requests expressed by the stakeholders for a more targeted 
cooperation  on  areas  of  mutual  interests.  Changes  in  global  trade  patterns  and  emerging 
global issues would be fully integrated in the new framework. 

This  policy  option  could  contribute  to  the  achievement  of  general  and  specific  objectives 
defined  in  sections  3.1  and  3.2  above  through  a  more  focused  and  coordinated  partnership, 
aligning with EU policy framework, EU policy agenda priorities and changes in global trade 
patterns. 

4.4. 

Option 3: Several partnership agreements concluded 

Option  3  would  entail  a  diversification  of  EU-OCT  relations.  In  the  area  of  trade  and 
economic cooperation two approaches would be adopted. Certain OCTs could be included in 
other  EU  bilateral  trade  arrangements,  namely  Economic  Partnership  agreements  (EPAs)  or 
FTAs, where relevant and possible. For the remaining OCTs, an OCT trade regime equivalent 
to policy option 1 or 2 would be foreseen under the association framework. Whilst this would 
not  cover  the  trade  and  economic  cooperation  with  those  OCTs  which  would  have  been 
included  in  other  trade  agreements,  it  could  cover  cooperation  with  all  OCTs  in  all  other 
areas. An alternative option would consist in having all cooperation with OCTs that would fall 
under an EPA or FTA take place in the context of these agreements. This would include that 
financial assistance would also take place outside of the association framework. 

Cooperation issues 

Integrating  OCTs  in  other  trade  agreements  would  imply  that  at  least  that  EU-OCT  trade 
related cooperation would be channelled via the specific institutional set up of the agreements 
in which the OCTs would be integrated. For other areas of cooperation, such as environment 
and climate change, EU-OCT cooperation could also be included in this framework or could 
continue  to  take  place  in  an  EU-OCT  specific  framework  covering  all  OCTs  or  only  one 
OCT, irrespective of the trade regime under which they would fall. 

Trade rules 

Under this option, it would be made use of theoretical opportunities for the inclusion of OCTs 
in EU trade agreements with the Caribbean region (for Dutch and British OCTs), the Central 
American and Andean countries (for Dutch OCTs), the Pacific region (for French and British 
OCTs) and Canada (for French and Danish OCTs). As a consequence, OCTs would not only 
be ensured market access to the EU, but also to the market(s) of the other co-signatories of the 
relevant trade agreement(s). In exchange, the OCTs would have to open up their markets to 

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the  EU  and  the  trade  partner(s)  concerned  through  negotiations.  OCT  commitments  would 
have to be negotiated for each OCT separately. 

The rules of origin applicable to OCT goods would be the ones negotiated in the context of 
the  agreement  in  which  the  OCTs  would  be  integrated.  For  example,  under  the  EPAs,  the 
OCTs  would  benefit  from  a  number  of  simplifications  and  relaxations  of  the  general 
provisions and product specific rules that were introduced prior to the reform of the General 
System of Preferences (GSP). Thus, the OCTs concerned would not benefit from innovations 
such as the deletion of the crew requirement for vessels fishing outside of territorial waters or 
the  simplification  of  the  rule  on  direct  transport.  However,  such  innovations  could  be 
introduced at a later stage, at the moment when the EU and its relevant trade partners review 
their agreement. Additional cumulation possibilities could be foreseen, depending of the EPA 
that  the  OCTs  would  join  (cumulation  with  neighbouring  countries  belonging  to  a  coherent 
geographical  entity  or  cumulation  for  products  entering  the  EU  duty  free  quota  free  under 
MFN[,  GSP]  or,  for  industrial  products,  under  an  FTA  with  the  EU).  For  example,  in  the 
Pacific EPA, the OCTs would have access to the global sourcing provision, allowing them to 
import non-originating tuna for further processing that would benefit from preferential access 
when exported to the EU38. 

OCTs  that  would  be  integrated  in  an  EU  trade  agreement  would  benefit  from  the 
commitments in trade in services and establishment which the EU took in the context of that 
agreement. These OCTs would need to give further market access to both the EU and the third 
countries concerned. 

The  goods  and  services  of  those  OCTs  which  would  not  be  integrated  in  other  trade 
agreements  would  receive  a  treatment  in  line  with  the  ones  described  in  policy  options  1 
and 2. 

Financial assistance 

For  those  OCTs  that  would  be  included  in  other  trade  agreements,  the  trade  and  economic 
cooperation would take place in the relevant FTA or EPA. Trade and economic cooperation 
with  OCTs  would  take  place  in  the  context  of  the  relevant  trade  agreement.  Cooperation  in 
other  areas  would  continue  to  take  place  in  a  framework  specific  to  the  OCTs.  Financial 
assistance  would  be  provided  under  the  11th  EDF,  taking  into  account  the  different 
cooperation frameworks that would be foreseen. 

Implementation of policy option 3 

Integrating  or  associating  OCTs  to  other  trade  agreements  would  imply  considerable  legal 
changes. It would imply that OCTs joining such an agreement would not be covered by Part 
IV  of  the  TFEU.  Their  Member  States  would  have  to  request  that  the  OCTs  concerned  be 
removed  from  Annex  II  to  the  TFEU,  which  lists  the  OCTs  associated  to  the  EU,  if  the 
substantive  FTA  provisions  would  be  incompatible  with  it.  Inclusion  of  OCTs  within  the 
scope  of  EU  trade  agreements  would  be  subject  to  negotiations  between  the  EU’s  trade 
partners,  representatives  of  the  OCTs  themselves  and  the  EU.  As  OCTs  are  not  sovereign 
States, Member States would have to represent them in the negotiations with the EU and the 

38  

Limited to the Pacific EPA signatories, global sourcing allows Pacific EPA countries to derogate from 
the  standard  rules  of  origin  for  transformed  fish  products  by  using  non-originating  fish  (tuna)  as  raw 
material. 

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trade partner concerned. The agreements that have already been concluded would need to be 
amended  to  incorporate  the  OCTs  and  adapt  them  so  as  to  cover  the  realities  of  the  OCTs. 
Some  trading  partners  may  request  concessions  from  EU  to  accommodate  the  inclusion  of 
OCTs. 

Option  3  would  bring  EU-OCT  relations  in  line  with  the  current  EU  policy  agenda, 
incorporating  new  political  priorities  such  as  environment,  climate  change,  biodiversity, 
sustainable management of natural resources and food safety, while ensuring the upgrading of 
EU-OCT trade relations. 

The inclusion of OCTs in other EU trade agreements could stimulate these OCTs' integration 
in  regional  and  world  economies  but  would  generate  a  multiplication  of  trade  regimes  and 
cooperation settings which would constitute a real challenge in implementation terms of the 
association between the EU and the OCTs as a group. 

5. 

IMPACT ASSESSMENT OF POLICY OPTIONS 

As  a  consequence  of  the  absence  of  up-dated  comparable  and  reliable  statistics39  regarding 
OCTs, assessing the impacts of the different policy options is challenging. External assessors 
have  commented  that  the  absence  of  data  made  it  difficult  if  not  impossible  to  assess  the 
possible social, economic and environmental impacts that certain EU measures may have on 
the OCTs. Therefore, the assessment of different policy options is focusing on quality rather 
than  on  quantitative  impacts  (for  a  more  detailed  analysis  of  the  impacts  of  the  different 
policy options in the fields of environment and climate change and the trade and trade related 
aspects of the OAD, see Annex 11 chapter 5 and Annex 12 section 7.3). 

5.1. 

Assessment policy option 1 

Social and economic impacts 

Deterioration  of  EU  market  access  for  OCTs:  any  trade-related  impact  would  stem  from 
increased  competition  which  OCTs  might  face  on  the  EU  market  as  a  consequence  of  EU 
third partners gaining better market access for their goods and services (e.g. through an FTA 
or via a multilateral agreement). An OCT loss in competitiveness might translate in weakened 
EU-OCT  economic  ties.  Policy  option  1  might  also  be  an  option  in  which  the  trade  rules 
would  not  offer  enough  incentives  to  those  OCTs  that  currently  do  not  maintain  strong 
economic relations with the EU to start doing so. It is therefore unlikely that the trade rules 
under policy option 1 would promote OCT economic diversification. Regional integration of 
the  OCTs  would  be  undermined  as  the  set  of  rules  of  origin  would  not  offer  additional 
opportunities for OCTs to source inputs from their neighbours, and thus trade more with them 
(a detailed analysis is provided in Annex 12 section 7.3.2). 

Environmental impact 

Maintaining  the  status  quo  would  fail  to  impulse  greater  positive  impact  of  the  EU-OCT 
association on the OCTs' environment. The absence of the recognition of environmental and 
climate  change  issues  as  an  area  of  mutual  interest  for  the  EU  and  the  OCTs  undermines 
progress in these fields in which only a few OCTs decide to cooperate with the EU.  

39  

See section 1.4 above. 

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Furthermore, policy option 1 would not allow the EU to promote its political agenda and its 
international commitments40 regarding biodiversity, green energy, climate change and disaster 
risk  reduction  in  the  OCTs,  and  the  OCTs  would  not  help  to  promote  EU's  values  and 
standard in these fields in the wider world. 

Administrative impact 

This option would not influence the administrative burden of neither the EU nor the OCTs. 
The  programming  cycle  would  remain  the  same,  as  would  the  legal  framework.  Under  this 
option, it would be difficult to respond positively to the requests/recommendations expressed 
by  the  external  evaluators  in  relation  with  the  promotion  of  the  cooperation  between  OCTs 
and  their  neighbouring  countries,  amongst  others  through  a  better  coordination  of  the 
respective financial instruments available to OCTs, ACP States and the Outermost Regions of 
the  EU  (European  Regional  Development  Fund  -  ERDF).  Furthermore,  option  1  would  not 
allow adapting rules and procedures of the programming of financial assistance. 

5.2. 

Assessment policy option 2 

Social and economic impacts 

Policy option 2 is likely to have a positive social and economic impact on OCTs due to the 
improvement of the market access conditions for OCT goods, a greater EU openness to OCT 
services  operators  and  investors,  and  the  possibility  of  more  focused  capacity  building 
measures.  Option  2  thus  carries  the  potential  for  greater  economic  diversification  and  job 
creation in sectors such as renewable energies, ecosystems management, innovation etc. The 
proposed changes to the rules of origin are likely to result in a more effective use by OCTs of 
the export opportunities offered by the OCT trade regime.  

Simplifying and relaxing conditions, strengthening transparency and coherence with the rules 
of  origin  of  other  trade  partners  is  likely  to  result  in  efficiency  gains,  increase  the 
attractiveness  and  legal  certainty  for  investments  in  economic  sectors  that  depend  on 
preferential  market  access  and  reduce  administrative  burdens  for  OCT  companies  and 
authorities. The diversification of cumulation possibilities would allow for an improvement of 
sourcing  opportunities  for  OCT  companies,  which  could  have  a  positive  influence  on  their 
competitive  position  and  could  stimulate  the  development  of  economic  relations  between 
OCTs and other third countries.  

Through  technical  assistance  and  capacity  building  OCTs  could  be  supported  in  complying 
with technical, sanitary and phyto-sanitary rules which constitute the most important obstacles 
which OCT exports face in accessing the EU market.  

In  the  services  sector,  the  benefits  for  OCTs  would  be  considerable.  In  a  first  instance,  the 
EU's  market  openness  to  OCTs'  service  operators  would  be  aligned  with  the  EU's  most 
favourable  treatment  and  would  thereafter  be  automatically  increased  every  time  the  EU 
would grant more favourable treatment to other third partners. Whereas the weighted average 
openness  of  the  EU  corresponds  to  a  factor  34  for  modes  1,2  and  3  under  GATS,  it 

40  

Communication COM(2010)2020final of 3.3.2010 "Europe 2020 – a strategy for smart, sustainable and 
inclusive growth" and Communication COM(2011) 500 final of 29 June 2011 "A budget for EU 2020 . 

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corresponds to a factor 57 (and 74 for establishment) under a preferential agreement such as 
the EPA with CARIFORUM41.   

Weighted Openness Index 

The weighted openness index is the count of weighted average commitments by all EU divided by 
the number of sectors that can be listed.  

155

∑

j

=

1

Open

mi

=

27

∑

i

=

1

N

i

+

27

∑

=

1

w
i

P
i

27

155

, for m=1,3; i= 1,…,27; j=1,….,155,  

Where  m,  i  and  j  are  indices  for  mode  of  supply,  EU  member  state  and  services  sector  respectively,  N  is 
None’s and P is partial commitments (bounds) and w is the given weight. 

The  services  sectors  which  would  benefit  most  from  removing  limitations  would  be  the 
construction  services,  environmental  services,  and  recreational  services;  all  of  which  are  of 
interest  to  OCTs.  By  further  opening  its  services  sectors  to  OCTs'  operators,  the  EU  would 
stimulate  the  further  development  of  new  or  existing  sectors  by  offering  additional 
opportunities  for  exports,  including  for  cross-border  trade  through  modern  communication 
technologies.  Those  OCTs  which  highly  depend  on  financial  services  would  get  the 
opportunity  to  diversify  their  economy  by  proposing  a  wider  range  of  services.  In  addition, 
policy  option  2  would  open  the  non-services  investment  (establishment)  to  OCTs,  which  is 
currently not covered. It would also contribute to OCTs becoming more attractive destinations 
of  foreign  direct  investment.  Ensuring  that  OCTs  automatically  extend  to  the  EU  the 
treatment they give to major economies such as US or China would respect the spirit of the 
special  relationship  between  EU  and  OCTs  and  would  be  a  translation  of  the  principle  of 
reciprocity.  

Within a bilateral dialogue, the EU might encourage OCTs to promote principles of Corporate 
Social Responsibility (CSR) among the companies investing and operating in their territory. 
This would positively impact social and environmental standards in OCTs. 

The continued, targeted and coordinated support to OCT strategies, capacities, legislative and 
institutional  frameworks  proposed  under  policy  option  2  is  likely  to  increase  the  EU's 
involvement  in  OCT  policies,  regulatory  models  and  the  like.  An  avenue  for  doing  so  is 
offered  by  the  new  provisions  concerning  EU-OCT  cooperation  on  trade  which  option  2 
envisages. 

The  EU  support  to  OCTs'  capacity  building  could  also  concern  the  elaboration  and/or 
implementation of social policies (e.g concerning unemployment or professional training) in 
order to accompany their strategies towards economic growth. 

Environmental Impacts 

41  

See Annex 12 on trade and trade related aspects of the OAD. 

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The emphasis on regional allocation (suggested under option 2) in view of better responding 
to issues that emerged in the last decade, and are of common interest to all OCTs and the EU 
would  ensure  that  the  specific  characteristics  of  the  OCTs  regarding  environment,  climate 
change and biodiversity issues, are dealt with more appropriately. The allocation of a specific 
envelope  to  environment  and  climate  change  would  be  in  line  with  the  EU  policy  agenda 
priorities and promote EU values. Furthermore, investment in improved natural environments 
and  improvements  in  environmental  quality  would  also  result  in  substantial  economic  and 
health impacts. 

Administrative impact 

The automatic granting by the EU of the most favourable treatment in services would mean 
that the implementation of this policy option would not put additional strains on the limited 
administrative capacities of OCTs as long and complex negotiations would be avoided. The 
proposal to define the technical assistance for the entire period would ensure a more coherent 
identification  period  and  a  subsequently  more  efficient  administration  of  the  strategies  and 
programmes  chosen  for  cooperation.  This  would  ensure  coherence  and  exchange  of  know-
how between the local administrations and external experts.  

Shorter  lead-in  times  for  EU  financial  assistance  and  faster  implementation  of  the  EU 
assistance  would  lead  to  further  development  of  OCTs  capacities  in  the  field  of  policy 
formulation and legislation. 

Option 2 is expected to have a positive impact also in terms of timely programming thanks to 
the  possibility  which  is  proposed  in  relation  with  "comprehensive  territorial  development 
plans"  or  "comprehensive  development  plans"  agreed  between  the  OCT  and  their  Member 
States and would be taken into account for defining the strategy of cooperation between OCTs 
and the EU. 

5.3. 

Assessment policy option 3 

Social and economic impacts 

The  impact  of  policy  option  3  would  depend  on  the  results  of  the  negotiations  between  the 
OCTs,  the  EU  and  the  third  partner(s)  concerned.  Thus,  the  impact  would  vary  from  one 
negotiation to another. In general, under this option OCT trade flows with the third partner(s) 
might gain in importance. On the other hand, their industries could face stronger competition 
in  the  OCTs'  domestic  markets  as  cheaper  imported  products  could  become  available. 
Consumers would gain in this development. Where the cheaper products would serve as input 
to processing industries, the latter may benefit and become more competitive as costs would 
drop.  The  most  sensitive  products  could  be  excluded  from  liberalisation.  Customs  revenues 
could go down and OCTs would then have to develop alternative sources of revenue that are 
less  dependent  on  goods  trade.  The  option  could  therefore  have  a  serious  impact  on  public 
spending in OCTs. 

The social and economic impact of a possible inclusion of the Pacific OCTs in an EPA could 
stimulate the development of processing industry (for example fish/tuna), which might attract 
more foreign investment, at the expense of other partners (GSP+ and ACP countries). It could 
also  lead  to  a  vertical  integration  of  the  different  industries.  The  EU's  relevant  processing 
industry  could  benefit  from  these  developments  if  it  would  lead  to  a  steady  supply  of  these 
products  to  the  EU.  However,  the  EU  industry  could  also  be  negatively  affected  by  the 

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stronger competition which they would face. In the most negative scenario, this could lead to 
job loss and the cessation of activities in certain EU Member States42.  

OCTs opening their market in services and establishment to their neighbours might bring in 
more  foreign  direct  investment  or  temporary  service  providers  as  well  as  open  markets  for 
OCT  service  providers  and  investors.  However,  this  depends  on  the  outcome  of  the 
negotiations with third countries and the sectors every OCT would choose to liberalise. Due to 
limited  administrative  capacity  for  negotiations  on  the  OCTs  side,  close  cooperation  and 
support  would  be  needed  during  negotiations  so  as  to  avoid  a  premature  liberalisation  of 
sectors  where  domestic  regulation  has  not  been  sufficiently  developed  to  ensure  consumer 
protection.  Where  the  partner  countries'  interest  for  OCT  markets  is  not  very  high,  adding 
OCTs  to  EU  FTAs  (possibly  including  a  multilateral  negotiation  in  services  and 
establishment) may mean that the EU will be asked by its FTA partners to compensate with 
further  commitments.  This  would  risk  unbalancing  the  deal  reached  between  EU  and  the 
partner country/ies.  

Those  OCTs  that  would  join  EPAs  could  gain  access  to  nominally  larger  amounts  of  trade 
related financial assistance under the 11th European Development Fund, but they would have 
no guarantee that sufficient financial resources be dedicated to their needs as the interests of 
the bigger partners and the developing countries may prevail. This effect may be counteracted 
if the OCTs would ally themselves within their region with ACP States such as Antigua and 
Barbuda, Fiji, Guyana and Palau, which are Small Island Developing States and face similar 
challenges  as  the  OCTs43.  While  gaining  access  to  these  funds,  the  OCTs  would  be  cut  off 
from other potential sources of financing from which they benefitted under the OAD, such as 
the internal horizontal programmes and budget lines of the EU. This would be the case as well 
for OCTs which would be integrated or associated to other free trade agreements. However, 
for  them  this  loss  would  not  be  compensated  by  access  to  additional  funds  under  external 
programmes covering their region. 

Environmental impact 

Given the size of OCTs, the environmental impact of including some of them in other trade 
agreements  is  likely  to  be  limited  and  would  not  add  to  the  environmental  impact  already 
identified  for  those  agreements.  The  environmental  impact  of  opening  to  a  neighbouring 
country might also be higher than when opening to the EU alone, as one could expect that this 
would lead to an increase of transport related impacts, although these neighbours would tend 
to be located closer to the OCT than the EU. The net impact (compared to the status quo and 
the improved arrangements under option 2) would differ by OCT, the agreement to which it 
would be annexed and the situation in the OCTs in specific sectors prior to negotiations. For 
those OCTs that would remain in the trade regime under the OAD, the environmental impact 
would  correspond  to  the  one  identified  for  policy  options  1  or  2.  Negative  environmental 
impacts might be mitigated through cooperation with the EU on environmental issues. 

42 
43  

See Annex 12. 
For 
the  UN 
rep/ohrlls/sid/list.htm. 

list  of  Small 

Island  Developing  States, 

see:  http://www.un.org/special-

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32 

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Administrative impact 

The  negotiation  and  implementation  of  policy  option  3  would  be  heavy  and  complex  for 
OCTs,  their  Member  States,  the  EU  trade  partner(s)  and  the  EU  alike.  This  process  would 
have  to  be  reiterated  for  every  single  trade  agreement  that  would  need  to  be  amended  to 
include specific OCTs.  

6. 

COMPARING AND WEIGHING THE POLICY OPTIONS 

6.1. 

Comparing the policy options 

Policy option 1 

Maintaining  the  status  quo  could  legitimately  be  considered  as  a  valid  option  for  the  future 
EU-OCT  association  as  current  arrangements  were  found  to  have  been  beneficial  for  the 
OCTs' social and economic development, amongst others by providing free access to the large 
EU  market  and  the  possibility  of  support  for  exploiting  the  export  opportunities  this 
represents.  The  EU-OCT  cooperation  in  the  period  1999-2009  was  considered  by  external 
studies  to  have  been  coherent  with  both  the  association's  objectives  and  the  OCTs'  political 
priorities  and  concluded  that  no  marked  contradictions  or  inconsistencies  had  occurred 
between EU-OCT cooperation and other EU policies. Though consistent with Part Four of the 
TFEU and its Preamble, option 1 would not accomplish the shared ambition of OCTs, their 
Member  States  and  the  European  Commission  to  reshape  and  modernise  the  EU-OCT 
relations on a reciprocal basis. Rather than modernising the relations and introducing a more 
reciprocal  partnership,  in  which  mutual  interests  could  be  better  taken  into  account,  the 
donor/beneficiary rationale which has traditionally underpinned EU-OCT relations would be 
maintained. 

OCT  goods  and  services  access  to  the  EU  would  remain  subject  to  the  existing  rules  and 
would  lead  to  loss  of  market  access  for  the  OCTs  (due  to  preference  erosion).  This  would 
have a negative impact on the social and economic position of OCTs. 

Policy option 2 

Policy  option  2  would  enhance  an  EU-OCT  cooperation  based  on  the  mutual  interests  the 
stakeholders  identified  throughout  the  consultation  process.  It  would  also  promote  a  more 
efficient cooperation through a more focus and coordinated action between the EU, the OCTs 
and  their  Member  States.  Areas  of  cooperation  recognized  as  priorities  by  the  OCTs  would 
receive  an  enhanced  support  from  the  EU  (e.g.:  conservation  of  biodiversity  and  ecosystem 
services, research and innovation). 

Under  policy  option  2,  the  EU  would  support  the  OCTs  to  address  sensitive  issues 
undermining their sustainable development, such as climate change which they cannot tackle 
alone. For such challenges, insular territories cannot develop successful measures alone, they 
need to find partners and be integrated in global responses. 

Policy option 2 would offer to the OCTs a modernised trade regime with the EU that would 1) 
entail  improved  rules  and  origins  and  2)  guarantee  a  treatment  for  trade  in  services  and 
establishment that would not be less favourable than the one given by the EU to other third 
partners, which is not the case under the current framework.  

EN 

33 

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Policy option 2 would be consistent with Part Four of the TFEU and its Preamble. It would 
also  translate  the  political  orientations  of  the  Council  of  the  EU  on  the  three  objectives  of 
competitiveness, resilience and cooperation. Under policy option 2, the association framework 
would take into account recent policy developments and would take stock of discussions that 
emerged in the last decade. Policy coherence would be ensured under this option and would 
be  strengthened.  The  social,  economic  and  environmental  impacts  would  be  more  positive 
than under options 1. 

Policy option 2 would better reflect the notion of mutual interests than it is currently the case. 
It would allow the integration of EU policy agenda priorities in the relations between the EU 
and the OCTs and the EU added value as a global partner in emerging global issues would be 
enhanced. In doing so, the OCTs better promote EU's values and standards in the wider world. 

Policy option 3 

By integrating or associating OCTs to other trade agreements, some of the objectives of the 
OCT/EU association could be met. However, this would be done outside of the association as 
such.  Furthermore,  option  3  may  not  be  fully  adapted  to  the  needs  and  realities  of  most  or 
even  all  OCTs.  There  may  be  negative  impacts  also  for  the  EU  itself  if  significant 
compensation  is  required  in  order  to  incorporate  the  OCTs  into  existing  agreements.  By 
integrating  OCTs  in  other  trade  agreements  the  associated  countries  and  territories  with 
constitutional links to Member States would legally and effectively cease to be OCTs. As the 
implementation  of  policy  option  3  may  result  in  the  EU  having  to  work  out  solutions  for 
setting up different types of relations with each of the OCTs, the legal process would be very 
complicated  and  would  need  to  be  reiterated  for  every  OCT.  It  would  likely  increase 
confusion  as  regards  to  their  status  and  that  of  their  inhabitants.  Certain  rules  currently 
contained or being considered in the different agreements may not apply to OCT inhabitants 
to the extent that they are EU citizens. 

Coherence 

The three policy options are coherent with Part IV of the TFEU.  

Policy  options  2  and  3  will  allow  for  consistency  with  the  policy  agendas  and  the  political 
priorities  that  emerged  in  the  last  ten  years,  while  policy  option  1  would  not  align  the 
association  with  these  latest  developments  and  would  not  fully  integrate  the  three  central 
objectives  of  competitiveness,  resilience  and  cooperation  that  were  proposed  by  the 
Commission and politically endorsed by the Council of the EU (cf. Section 1.3 above).  

Effectiveness 

Policy  option  1  does  not  allow  a  definition  of  goals  and  objectives  in  conformity  with  the 
political priorities defined by the Commission in its Communication44 on the elements for a 
new partnership between the EU and the OCTs and endorsed by the Council45. Indeed, policy 
option  1  does  not  foresee  the  revision  of  the  Association  Decision  in  order  to  integrate  the 
new challenges faced by both the EU and the OCTs. Furthermore, the inability of the OAD to 
take into consideration the changes in the context of EU trade agreements with third partners 

44  
45  

Com(2009) 623 final of 6 November 2009 
Council conclusions 17801/09 of 22 December 2009 on the EU's relations with the OCTs 

EN 

34 

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would diminish the capability uner option 1 for the EU to attain the goal of a modernised EU-
OCT framework. 

On the contrary, policy option 2 proposes to revise the association framework and thus take 
full account of the association's purpose and objectives as defined in Part IV of the TFEU, of 
the political priorities that have emerged since 2001 as well as of the three central objectives 
of  competitiveness,  resilience  and  cooperation.  This  would  allow  closer  cooperation  on 
environment and climate issues, creating synergies and therefore increasing the environmental 
resilience of the OCTs with a positive impact on their social and economic development and 
on an increased competitiveness. 

Policy option 3 would theoretically allow to provide a "tailor made" response to OCTs in the 
field  of  trade  but  would  fail  to  set  a  comprehensive  framework  for  a  holistic  partnership 
between the EU and all OCTs. 

Efficiency 

As mentioned above, the Commission has indicated its intention to propose the modernisation 
of  the  EU-OCT  association.  In  that  respect,  policy  option  1  does  not  seem  to  constitute  the 
most appropriate decision. Indeed, option 1 is not addressing in an efficient manner the need 
to  renovate  the  partnership  between  the  OCTs  and  the  EU  since  it  would  fail  to  take  into 
consideration  the  ongoing  liberalisation  of  international  trade,  the  potential  of  OCTs  as 
proponents of the EU's values or the ability to pinpoint areas of mutual  interest and to give 
special attention to areas like the environment and regional integration. 

Policy option 2 provides the most appropriate response to the commitment of the Commission 
to propose a modernised association framework between the EU and the OCTs. In addition, 
policy  option  2  would  set  more  flexible  and  lighter  administrative  requirements  and 
procedures in the field of trade relations. 

The  efficiency  of  policy  option  3  could  be  affected  by  the  co-existence  of  two  parallel 
frameworks of cooperation (trade relations under the EPA or FTA on the one hand and OAD 
for other areas on the other hand), as it would put additional administrative burden. Putting it 
into place would be a heavy and complex process for the OCTs, their Member States, the EU 
trade  partner(s)  and  the  EU  alike.  These  drawbacks  are  likely  to  have  a  cost  incidence  on 
administrative expenditure for both the EU and the OCTs.  

EN 

35 

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6.2.  Weighing the policy options 

Effects 

Option 1 

Option 2 

Option 3 

OCTs' economic & social  development 

Global objectives of the OAD 

Close economic EU-OCT relations 
Further the interests and prosperity of the inhabitants of the OCTs 
OCT benefitting from the same trade treatment the Member States accord to each other 
OCTs' environmental development 

Specific objectives of partnership 

Promotion of EU's values and standards in the wider world 
Establishment of a more reciprocal relation based on mutual interests 
OCTs' competitiveness 
OCTs' resilience  
OCTs' cooperation with other partners 
Integration of EU political agenda priorities 
Taking into account changes in global trade patterns 

= 

= 
= 
= 
= 

- 
- 
= 
= 
= 
- 
- 

++ 

++ 
++ 
= 
++ 

++ 
++ 
++ 
++ 
+ 
++ 
++ 

- 

- 
- 
- 
- 

- 
- 
- 
- 
++ 
- 
+ 

EN 

36 

EN 

 
  
 
Effects 

Option 1 

Option 2 

Option 3 

Alignment with developments in EU policies 
Promotion of mutual interests & reciprocity 
Facilitation of the EU-OCT dialogue 
Adaptation to the particularities of the OCTs 

EU administrative burden 
Conformity with TFEU 

Coherence 
Effectiveness 
Efficiency 

Policy Context 

Legislation 

Coherence, Effectiveness & Efficiency 

- 
- 
= 
- 

= 
= 

= 
- 
- 

++ 
++ 
+ 
+ 

+ 
= 

+ 
++ 
+ 

+ 
+ 
- 
+ 

- 
= 

+ 
+ 
- 

++ indicates a very positive response in relation with the objective(s) + denotes a moderate positive response in relation with the objective(s), - 
a negative one, and = a neutral or minor impact compared to the current situation. 

(1) 

(2) 

(3) 

EN 

Coherence means possibilities to create synergies with other decisions and policy agendas, with the aim of achieving the agreed 

objectives and to avoid negative consequences and overlaps between different decisions and policies. 

Effectiveness means setting the right goals and objectives and making sure they are attained. 

Efficiency means providing the most appropriate decision for the defined purpose and to ensure that the resources allocated are 

administered in an efficient manner. 

37 

EN 

 
  
 
 
 
6.3. 

Preferred option 

Based  on  the  analysis  and  comparison  of  the  different  policy  options,  option  2  is  the 
preferred option since it would best reflect: 

(a) 

the  shared  ambition  of  the  European  Commission,  the  OCTs,  their  Member 
States and the EU to review and revise the EU-OCT association, and to establish a more 
reciprocal  partnership,  based  on  mutual  interests  and  taking  into  account  the  various 
challenges OCTs face; 

(b) 

(c) 

the  purpose  and  general  objectives  of  the  EU-OCT  association  as  set  out  in 

Part Four of the TFEU on the EU’s relations with OCTs; 

the specific objectives of the next association framework defined in section 3.2 

above. 

Option 2 would thus lead to the modernisation and alignment of the OAD with the current EU 
policy framework. Subsequently, option 2 makes possible to better focus on the three pillars 
of sustainable development (economic, social and environmental) and to give more emphasis 
to  the  international  political  priorities,  such  as  climate  change,  environment  and  energy, 
which emerged in the last ten years. 

Concerning trade rules, option 2 would permit to continue to give OCTs duty free and quota 
free  access  to  the  EU  market  and  at  the  same  time  (contrary  to  option  1)  to  introduce 
improved conditions under which OCTs would access the market (by revising the preferential 
rules of origin e.g. deletion of the requirement regarding the nationality of the crew manning 
vessels  fishing  outside  territorial  waters  and  the  inclusion  of  new  or  clearer  definitions  of 
wholly obtained goods and minimal operations, lighter administrative requirements regarding 
evidence  of  direct  transport  of  OCT  goods  between  the  OCTs'  territory  and  the  EU,  new 
possibilities for cumulation, more flexible administrative procedures for granting derogations 
to  the  rules  of  origin  with  period  of  validity  determined  on  a  case  by  case  basis,  etc.).  In 
addition,  under  option  2  it  is  proposed  to  revise  the  arrangements  for  trade  in  services  and 
establishment and grant the OCTs the "Most Favoured Nation" (MFN) treatment, where they 
currently receive only basic third country treatment (i.e. GATS). 

Concerning  the  financial  assistance,  option  2  suggests  increasing  the  share  of  the  regional 
allocation  within  the  total  financial  allocation  reserved  for  the  OCTs  under  the  2014-2020 
period.  This  would  allow  to  financially  supporting  the  efforts  of  the  OCTs  in  addressing 
issues that emerged in the last decade, and are of common interest to all OCTs and the EU. In 
parallel, option 2 would serve the objective for an enhanced cooperation between OCTs and 
their neighbouring partners as well as the objective aiming at expanding  the EU's sphere of 
influence via the OCTs and to promote EU's policy agenda as a global player. 

7. 

MONITORING AND EVALUATION  

The Overseas Association Decision is the legislative act by which the Council sets the legal 
framework for the association of the OCTs with the EU. It is by nature a text defining the EU 
external relations with these countries and territories and as such, its implementation cannot 
be assessed through core indicators.  

EN 

38 

   EN 

 
As far as the EU financed cooperation is concerned, the effectiveness of the association will 
be monitored through audits and evaluations. The detailed provisions for this monitoring will 
be  laid  down  in  a  Commission  regulation  implementing  the  Council  Decision.  Input  and 
output  indicators  will  be  defined  in  the  framework  of  each  programme  relating  to  the  EU 
financed cooperation that will be concluded between the Commission and each OCT. These 
evaluations will be in line with the provisions that will concern the implementation of the 11th 
EDF. 

EN 

39 

   EN 

 
 
ANNEX 1 – LIST OF REFERENCES 

Council Decisions and Conclusions 

-  Council  Decision  (2001/882/EC)  of  27  November  2001  on  the  association  of  the  OCTs 
with the European Community (OJ L 314 of 30 November 2001) as amended by Council 
Decision (2007/249/EC) of 19 March 2007 (OJ L 109 of 26 April 2007) 

-  Council  Decision  (2006/526/EC)  of  17  July  2006  on  relations  between  the  European 
Community on the one hand, and Greenland and the Kingdom of Denmark on the other(OJ 
L 208 of 27 July 2006) 

-  Council  conclusions  17801/09  of  22  December  2009  on  the  on  the  EU’s  relations  with 

Overseas Countries and Territories (OCTs) 

Commission Documents (Communications, Green Papers, Working Documents) 

-  Commission Green Paper COM(2008) 383 of 25 June 2008on Future relations between the 

EU and the Overseas Countries and Territories . 

-  Commission Staff working document SEC(2008) 2067 of 25 June 2008 accompanying the 
green paper “Future relations between the EU and the Overseas Countries and Territories” 
COM (2008) 383 

-  Commission Communication COM(2009) 623 of 6 November 2009 on Elements for a new 

partnership between the EU and the OCTs 

-  Commission  Communication  COM(2010)  2020  of  3  March  2010  on  Europe  2020:  a 

Strategy for Smart, Sustainable and Inclusive Growth 

-  Commission Communication COM(2010)612 of 9 November 2010 on Trade, Growth and 

World Affairs: Trade Policy as a Core Component of the EU's 2020 Strategy 

-  Commission Communication COM(2011) 837 of 7 December 2011 on Preparation of the 
multiannual  financial  framework  regarding  the  financing  of  EU  cooperation  for  African, 
Caribbean  and  Pacific  States  and  Overseas  Countries  and  Territories  for  the  2014-2020 
period (11th European Development Fund) 

-  Commission Staff working document SEC(2011) 1459 of 7 December 2011 on Preparation 
of  the  multiannual  financial  framework  regarding  the  financing  of  EU  cooperation  for 
African, Caribbean and Pacific States and Overseas Countries and Territories for the 2014-
the  subsequent 
2020  period  (11th  European  Development  Fund)  and  covering 
implementing and financial regulations of the 11th European Development Fund (EDF) 

-  Commission  Staff  working  document  SEC(2011)  1484  of  7  December  2011 
Accompanying the document [draft] Council Decision on relations between the European 
Union  on  the  one  hand,  and  Greenland  and  the  Kingdom  of  Denmarkon  the  other  and 
covering the subsequent implementing regulation of the Decision on relations between the 
European  Union  on  the  one  hand,  and  Greenland  and  the  Kingdom  of  Denmark  on  the 
other 

Documents from other Stakeholders 

-  Joint Position Paper of the Governments of the Kingdom of Denmark, the French Republic, 
the  Kingdom  of  the  Netherlands  and  the  United  Kingdom  of  Great  Britain  and  Northern 

EN 

40 

   EN 

 
 
Ireland,  and  the  Overseas  Countries  and  Territories  on  the  future  relations  between  the 
Overseas  Countries  and  Territories  and  the  European  Union,  adopted  at  the  Ministerial 
Conference  of  the  Association  of  the  Overseas  Countries  and  Territories  of  the  European 
Union, Nouméa, New Caledonia, 28 February 2011 

-  Message  from  La  Réunion  Island  of  July  2008:  http://www.reunion2008.eu/pages/en/en-

home.html 

-  Rio principles, Kyoto protocol: http://unfccc.int/2860.php 

Studies 

-  BROOKS,  P.,  STONEMAN,  R.  and  RIOS,  R.  Enhancing  Atlantic  OCTs'  Trade  and 
European  Union), 

their 
Economic  Activity 
EUROPEAID/11/9860/C/SV/multi - Lot N° 10, N° 2008/170783, February 2010 

(within 

region 

and 

the 

-  BURKE, S.J., KIROSINGH, M., Overseas Countries and Territories Technical Assistance 
for  the  Mid  Term  Review  (MTR)  2006,  Final  Report,  Framework  Contract  Lot  N°  4  – 
Sectoral and project evaluations – Specific Contract No 119860/C/SV/multi, 18 December 
2006 

-  ECLAC,  Review  of  CARIFORUM/EU  EPA:  Implications  for  the  British  and  Dutch 

Caribbean OCTs, LC/CAR/M.176, 4 September 2008 

-  ECO Consult et al., Region Level Evaluation: Overseas Countries and Territories (OCT), 

Contract N° EVA 2007/geo-acp, draft Final Report, July 2011. 

-  HELLYER,  M.,  CARICOM  Single  Market  and  Economy:  Costs/Benefits  Study,  Final 

Report, June 2004  

-  KIRKPATRICK  et  al.  (2011),  A  Trade  Sustainability  Impact  Assessment  Relating  to  the 
Negotiation of a Comprehensive Economic and Trade Agreement (CETA) between the EU 
and Canada, Trade 10/B3/B06, Final Report, June 2011. 

-  LUFF,  David  et  al.,  the  Analysis  of  the  Regional  Economic  Integration  Processes 
(Caribbean, Pacific and Indian Ocean) and Recommendations Aiming at Enhancing Trade 
and Economic Activity of OCTs within their Region and with the EC, Framework Contract 
Beneficiaries– Lot 11, N° 2008/170791, February 2010 

-  SALMON Jean Michel, OCT Regional Integration Impact Study, Final Report, Framework 

Contract Beneficiaries - Lot 11 N°. 2006/123116, July 2007 

-  SPANNEUT,  C.,  Analysis  of  the  Statistical  Systems  in  the  OCTs  and  Recommendations 
Aiming at Enhancing Statistical Systems of OCTs, Framework Contract Beneficiaries – Lot 
11, N° 2010/253401/1, Draft Final Report, September 2011. 

-  NIRAS  PINSISI  Consortium  partners,  OCTs  Environmental  profiles,  Service  contract 

2006/12146, January 2007 

Main report:  
http://ec.europa.eu/development/icenter/repository/environmental_profile_main_report_en.pdf 

Caribbean region: 
http://ec.europa.eu/development/icenter/repository/environmental_profile_caribbean_en.pdf 

Pacific region: 
http://ec.europa.eu/development/icenter/repository/environmental_profile_pacific_en.pdf 

North Atlantic region: 

EN 

41 

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http://ec.europa.eu/development/icenter/repository/environmental_profile_north_atlantic_en.pdf 

South Atlantic region:  
http://ec.europa.eu/development/icenter/repository/environmental_profile_south_atlantic_en.pdf 

Indian Ocean region: 
http://ec.europa.eu/development/icenter/repository/environmental_profile_indian_ocean_en.pdf 

-  Study on the current actions and initiatives in the field of civil protection in the Caribbean 
in  order  to  promote,  enhance  and  reinforce  the  regional  cooperation  mechanisms  (final 
report of May 2010) 

Other Sources 

-  EU legislation concerning protection of nature and biodiversity: 

http://europa.eu/legislation_summaries/environment/nature_and_biodiversity/index_en.htm 

-  EU legislation regarding climate change: 

http://europa.eu/legislation_summaries/environment/tackling_climate_change/l28157_en.htm 

-  French  initiative  "Grenelle  de  l'Environnement"  and  consecutive  legislative  decisions 

concerning the French overseas entities (OCTs and outermost regions): 

http://www.legrenelle-environnement.fr/ 

http://www.legrenelle-environnement.fr/spip.php?rubrique2 

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ANNEX 2 – GLOSSARY  

Ad Valorem Equivalent (AVE): Rate of tariff or tax on an item that equals the amount payable 
if it was taxed on the basis of its value. 

African,  Caribbean  and  Pacific  States:  The  European  Union  and  the  African,  Caribbean  and 
Pacific  countries  (ACP  countries)  enjoy  special  relations  that  can  be  traced  back  to  the 
Union's beginnings. These political, economic and social relations are to be found mainly in 
the  field  of  development  cooperation.  The  Cotonou  Agreement  signed  in  2000,  follows  on 
from  the  previous  conventions  (Yaoundé,  Lomé)  and  currently  provides  the  general 
framework  for  relations  between  the  Union  and  the  79  ACP  countries.  This  framework  is 
reinforced by regional and national components and supplemented by a financial component 
represented mainly by the European Development Fund. 

Common External Tariff (CET): The Common External Tariff (CET) comprises the tariff 
duties that are levied on any goods that are imported into the European Union. As indicated 
by the name, these tariffs are common to all EU Member States 

Europe 2020 Agenda: Europe 2020 is the EU's growth strategy for the coming decade. In a 
changing  world,  we  want  the  EU  to  become  a  smart,  sustainable  and  inclusive  economy. 
These three mutually reinforcing priorities should help the EU and the Member States deliver 
high  levels  of  employment,  productivity  and  social  cohesion.  Concretely,  the  Union  has  set 
five  ambitious  objectives  -  on  employment,  innovation,  education,  social  inclusion  and 
climate/energy  -  to  be  reached  by  2020.  Each  Member  State  has  adopted  its  own  national 
targets  in  each  of  these  areas.  Concrete  actions  at  EU  and  national  levels  underpin  the 
strategy. 

Economic Partnership Agreements (EPAs): The Economic Partnership Agreements (EPAs) 
between  the  EU  and  African,  Caribbean  and  Pacific  group  of  countries  are  aimed  at 
promoting  trade  between  the  two  groupings  –  and  through  trade  development,  sustainable 
growth  and  poverty  reduction.  Since  2002,  six  regional  groupings  negotiate  EPAs  with  the 
EU to replace Cotonou trade chapters. These EPA aim at reciprocal free trade, comprising of 
tariff and quota free market access, asymmetric gradual market opening of ACP markets for 
EU exports and simpler rules of origins. Only one full EPA has been concluded so far with 
Cariforum,  interim  EPA  are  thus  in  place  with  Southern  African  Development  Community, 
East and Southern Africa and key trading partners in the Pacific  

European  Development  Fund  (EDF):  Created  in  1957  by  the  Treaty  of  Rome,  and  first 
launched in 1959, the European Development Fund is the main instrument for providing EU 
development aid in the African, Caribbean and Pacific (ACP) countries. 

European  Investment  Bank  (EIB):  The  European  Investment  Bank  (EIB)  is  the  European 
Union's financing institution. Its shareholders are the 27 Member States of the Union, which 
have jointly subscribed its capital. The EIB's Board of Governors is composed of the Finance 
Ministers  of  these  States.  The  EIB's  role  is  to  provide  long-term  finance  in  support  of 
investment projects. 

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European Regional Development Fund (ERDF): The ERDF is a financial instrument of the 
cohesion  policy  of  the  EU,  aiming  at  strengthening  economic  and  social  cohesion  in  the 
European Union by correcting imbalances in its regions.   

Free  Trade  Agreement  (FTA):  Free  trade  Agreements  are  non  tariff  and  non  barrier  trade 
agreements whose rules are set out in the WTO, Article XXIV of the GATT and Article V of 
the  GATS.  The  EU  negotiates  comprehensive,  new  generation  FTAs  (with  WTO  members) 
which include services, FDI, IPR, public procurement, standards, competition… but also non 
trade concerns. Free trade Agreement can be pictured at the centre of the EU pyramid of trade 
preferences,  after  MFN  treatment  and  Non  reciprocal  preferences  (GSP-EBA)  and  less 
comprehensive than association agreements or internal market association. 

General  Agreement  on  Trade  in  Services  (GATS):  The  General  Agreement  on  Trade  in 
Services states how much access foreign service providers are allowed for specific sectors. It 
also includes a list of types of services where individual countries say they are not applying 
the “most-favoured-nation” principle of non-discrimination. 

Generalised System of Preferences (GSP): Generalised System of Preferences (GSP): The 
Generalised  System  of  Preferences  is  a  scheme  under  which  the  EU  offers  non-reciprocal 
trade preferences to support developing countries exporting to the EU. The GSP is based on 
the  1979  GATT  enabling  clause  and  is  composed  of  three  components  with  increasing 
benefits; GSP, GSP+ and EBA. The general arrangement of the GSP system allows for duty 
free  access  for  non  sensitive  products,  tariff  reductions  for  sensitive  products  [...].  GSP+  
presents more conditionality than the general GSP system, it is defined as a special incentive 
for  sustainable  development  and  good  governance  in  which  vulnerable  countries  can  have 
duty  free  access  to  up  to    90,  4  %  of  tariff  lines.  EBA  is  a  special  arrangement  for  least 
developed countries, offering duty free and quota free access for all products except arms.     

Most  Favoured  Nation  (MFN):  The  most  favoured  nation  treatment  is  a  fundamental  non 
discrimination principle of the WTO trading system. It entails each member of the WTO to 
treat all other members equally as their most favoured trading partner. This principle ensures 
non discrimination between imported foreign products guaranteeing imports from lowest cost 
foreign  suppliers.  Free  trade  agreements  sometimes  also  contain  MFN  clauses.  Via  such 
clauses  the  parties  commit  themselves  to  granting  each  other  the  most  favourable  treatment 
they give to any third partner with which they have a free trade agreement separate from the 
one they conclude amongst themselves. 

Preference  Erosion:  Preference  erosion  is  the  phenomenon  by  which  the  relative  value  of 
trade  preferences  which  major  trading  partners  traditionally  granted  to  certain  beneficiaries 
decreases as a consequence of the unilateral or bilateral trade liberalisation conducted by the 
same trading partners. 

Rules of Origin: Within the context of international trade, the notion of origin refers to the 
"economic nationality" of goods. Origin determines whether or not goods which are imported 
into a certain market benefit from preferential access (reduced or zero rate of duty). The rules 
that are followed to determine the origin of an imported product are laid down in preferential 
trade  agreements  or  arrangements.  The  rules  of  origin that  apply to  OCT  exports  to the EU 
market are laid down in Annex III to the OAD. 

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Sanitary  and  Phytosanitary  Measures  (SPS):  Measures  dealing  with  food  safety  and 
animal and plant health. With regards to the OCTs the cost of complying to certain Sanitary 
and Phytosanitary rules is high and acts as a disincentive. 

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ANNEX 3 – SERVICES THAT PARTICIPATED IN THE IMPACT ASSESSMENT 

Agriculture and Rural Development (AGRI) 

Climate Action (CLIMA), Competition (COMP) 

Economic and Financial Affairs (ECFIN) 

Education and Culture (EAC) 

Employment, Social Affairs and Inclusion (EMPL) 

Enterprise and Industry (ENTR) 

Environment (ENV) 

Health and Consumers (SANCO) 

Home Affairs (HOME) 

Information Society and Media (INFSO) 

Maritime Affairs and Fisheries (MARE) 

Internal Market and Services (MARKT) 

Justice (JUST) 

Legal Service (SJ) 

Mobility and Transport (MOVE) 

Regional Policy (REGIO), Research and Innovation (RTD) 

Secretariat General (SG) 

Trade (TRADE) 

European Anti-Fraud Office (OLAF) 

Budget (BUDG) 

Taxation and Customs (TAXUD). 

Furthermore,  EU  Delegations  in  Mauritius,  Fiji,  Barbados,  Guyana  and  Jamaica,  European 
Investment Bank (EIB), as well as thematic and geographical units of Directorate General for 
Development and Cooperation – EuropeAid were associated to this exercise. 

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EN 

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ANNEX 4 – STRUCTURE OF THE OVERSEAS ASSOCIATION DECISION 

Part One: General Provisions of the Association of the OCTs with the Community 

Chapter 1 

Chapter 2 
Chapter 3 

General  provisions:  purpose,  objectives,  principles,  basic  elements,  least 
developed OCTs 
Actors of cooperation 
Principles  and  procedures:  dialogue  and  partnership,  ACP/EU 
Parliamentary Assembly, Management 

Part Two: Areas of Cooperation 

Articles 10 -17 

Productive  sectors,  trade  development,  trade  in  services,  trade  related 
areas,  social  sectors,  regional  cooperation  and  integration,  cultural  and 
social cooperation 

Part Three: Instruments of OCT/EU Cooperation 

Title I 

Chapters 1-8 

Title II 

Chapters 1 - 5 

the  use  of 

(rules  governing 

finance  cooperation 

Development 
development finance cooperation) 
General  provisions  Objectives  (support  and  promote  OCT  efforts  to 
achieve  sustainable  development,  economic  diversification,  encourage 
inter-OCT  and  OCT/ACP 
regional  cooperation  etc.);  principles 
(partnership,  complementarity  and  subsidiarity),  Single  Programming 
Documents,  scope  of  financing,  eligibility  for  financing,  programming 
and implementation, resources available, implementation procedures etc. 
Economic  and  trade  cooperation  (rules  regarding  trade  in  goods  and 
services, establishment and trade related areas) 
Objectives  (OCT  economic  &  social  development,  OCT/EU  economic 
ties,  economic  integration),  arrangements  for  trade  in  goods  (EU 
measures, OCT measures, transhipment, surveillance, safeguard), trade in 
services  and  establishment,  trade  related  areas  (payments  and  capital 
movement, 
rights, 
standardisation/certification,  trade  and  environment,  trade  and  labour 
standards,  consumer  policy  and  consumer  health  protection),  monetary 
and tax matters, vocational training, programmes open to OCTs etc. 

competition, 

intellectual 

property 

Part Four: Final Provisions 

Annexes 

List of OCTs and list of OCTs considered to be the least developed 

Annex I A - B 
Annexes II A - F  Rules  and  conditions  for  OCT  eligibility  to  funding  from  internal  and 
external  financial  instruments:  9th  and  10th  EDF,  loans  from  EIB  Own 
Resources,  EIB  Investment  Facility,  support  in  case  of  fluctuations  in 
export earnings, budgetary aid for developing countries (DCI, Instrument 
programmes 
for  Stability 
(Competitiveness and Innovation Framework, Research Framework etc.) 
Rules of origin 
Transhipment facility 

Annex III 
Annex IV 

in  Community 

participation 

etc.), 

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ANNEX 5 – PUBLIC CONSULTATION GREEN PAPER 

The Green Paper launched a public consultation that ran from 1 July to 17 October 20081, and 
the Commission organised a stakeholder conference in Brussels on 3 October 20082 to present 
the issues raised in the Green Paper. Moreover, the Commission, the OCTs and the Member 
States to which the OCTs are linked discussed the Green Paper at the annual OCT Forum on 
28 and 29 November 20083. 

The contributions received in response to the Green Paper, as well as the discussions during 
the stakeholder conference and the 2008 OCT Forum, revealed a broad consensus between the 
parties  directly  concerned  on  a  number  of  general  issues..  A  common  opinion  is  that  the 
current  anti-poverty  focus  in  the  relations  between  the  EU  and  the  OCTs  no  longer 
corresponds to the reality in the field and should be replaced by a new approach. The unique 
relationship between the OCTs and the EU should be the cornerstone of such a new logic. It 
should  take  due  account  of  the  OCTs’  specificities,  in  particular  their  economic  and  social 
development, diversity and vulnerability, as well as their environmental importance. It should 
also  aim  to  strengthen  their  resilience  and  enhance  their  competiveness,  especially  in  the 
regions where they are located. One key message is that the OCTs, as outposts of Europe all 
over the world, should be seen as assets for the EU and not a burden. 

Many contributions stressed that the solidarity between the EU and the OCTs should be based 
on the fact that all inhabitants of the OCTs are in principle4 EU citizens, as nationals of the 
related  Member  States,  and  on  the  close  links  resulting  from  common  history  and 
constitutional traditions. They argue that the new association should focus on the potential of 
the  OCTs,  while  addressing  their  vulnerability,  rather  than  the  fight  against  poverty. 
According to some contributions, this also means that the OCTs should not be ‘worse off’ in 
the future in terms of Community financial assistance, and that the OCTs’ access to funding 
in general should be facilitated. 

Furthermore, the public consultation confirmed the  OCTs’  challenges  and  potential from  an 
environmental point of view, and the mutual interests of the EU and the OCTs in this field. 
Many contributions demonstrate the importance of the OCTs and their rich biodiversity as a 
global  environmental  heritage.  They  also  suggest  that  the  OCTs  could  usefully  be  seen  as 
laboratories  for  examining  the  impacts  of  climate  change  or  as  testing  grounds  for 
environmental  pilot  projects.  A  large  number  of  stakeholders  suggested  making  available 
specific  —  and  additional  —  resources  for  environmental  protection  in  the  OCTs,  the  fight 
against climate change and disaster risk reduction.  

There is a general demand for more ‘partnership’ between the EU and the OCTs, but only a 
few contributions provided input on  the actual  responsibilities  that this should entail for the 
OCTs themselves. On the other hand, a lot of reactions call for the OCTs to be taken better 

1 
2 
3 
4 

http://ec.europa.eu/development/how/consultation/index.cfm?action=viewcons&id=3841 
http://ec.europa.eu/development/geographical/regionscountries/regionscountriesocts_en.cfm 
http://ec.europa.eu/development/geographical/regionscountries/regionscountriesoctsforum_en.cfm 
Accordingly  to  Article  17  of  the  EC  Treaty,  every  person  holding  the  nationality  of  a  Member  State 
shall be a citizen of the Union. As a matter of fact, all nationals of Greenland, and the French and the 
Dutch OCTs also have the nationality of the related Member States automatically and are therefore EU 
citizens. As from 21 May 2002, the citizens of all the British OCTs are also British citizens, but they 
can renounce it in favour of remaining British overseas territories citizens only.  

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into account and even involved more directly in EU policy-making in areas that are likely to 
affect them. 

Several contributions point to the need for supporting the OCTs to become more competitive, 
for  example  through  the  creation  of  centres  of  excellence,  the  reinforcement  of  regional 
cooperation and integration, strengthening of the role that OCTs could play as outposts of the 
EU  in  their  respective  regions,  the  simplification  of  rules  of  origin  and  sanitary  and  phyto-
sanitary  requirements  for  import  into  the  Community,  etc.  Notwithstanding  the  importance 
attached  to  regional  cooperation,  it  appears  that  the  degree  of  an  OCT’s  participation  in 
regional integration processes, where possible, depends on the actual advantages this would 
bring for each partner. 

Nearly  all  contributions  call  for  a  new  framework  able  to  take  due  account  of  the  OCTs’ 
diversity. In particular with regard to trade issues, the different situations in which OCTs find 
themselves  are  highlighted.  Consequently,  there  is  a  strong  demand  for  more  flexibility  to 
address  an  OCT’s  specific  challenges.  However,  several  contributions  calling  for  greater 
diversification  underline  at  the  same  time  the  importance  of  maintaining  a  coherent  overall 
framework for all OCTs. 

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ANNEX 6 – EU FINANCED COOPERATION WITH OCTS 

The European Development Fund 

Since the Treaty of Rome, EU financial assistance to OCTs has been mainly delivered under 
the European Development Fund (EDF). The 10th EDF foresees a total amount of EUR 286 
million for cooperation with the OCTs. This amount is divided as follows: EUR 195 million 
for territorial programmes and projects, EUR 40 million for a regional programme, EUR 30 
million  for  an  OCT  investment  facility  managed  by  the  EIB,  EUR  6  million  for  technical 
assistance managed by the European Commission;  and  EUR  15  million  for  contingency  aid 
(disasters, fluctuations in export earnings)1. 

Territorial envelope: EUR 195 million 

This  envelope  is  distributed  among  OCTs  whose  GDP  does  not  exceed 
the  EU  average  GDP.  Only  13  OCTs  are  eligible  to  this  envelope  that 
must be programmed through a territorial Single Programming Document 
(SPD).  The  individual  amounts  delivered  rank  from  2  million  Euros  to 
22.92 million Euros for the whole period. Greenland is not eligible to this 
envelope,  bilateral  cooperation  with  the  EU  being  financed  under  the 
budget. 

Regional envelope: EUR 40 million 

This envelope is programmed through a regional SPD that contains five 
sub-programs.  Two  of  them  are  thematic  and  concern  all  OCTs 
(territorial  strategies  for  innovation  and  technical  assistance  to  the  OCT 
Association). The three other sub-programs concern the OCTs located in 
Caribbean, the Indian Ocean and the Pacific.  

Non allocated reserve: EUR 15 million 

humanitarian, emergency and refugee aid for the OCTs and, if necessary, 
the additional support in the event of fluctuations in export earnings 

new  allocations  in  accordance  with  the  development  of  the  needs  and 
performance of the OCTs 

Grants for programmable 
support for long terms 
development, humanitarian 
aid, emergency aid, 
refugee aid and additional 
support in the event of 
fluctuations in export 
earnings as well as for 
support for regional 
cooperation and 
integration 

Total: EUR 250 million 

Investment Facility 
managed by the European 
Investment Bank (EIB) 

Total: EUR 30 million 

Technical assistance 
managed by the European 
Commission 

Total: EUR 6 million 

1  

In addition, EUR 176.6 million has been reserved within the EU General Budget (article 21 07 02) for 
cooperation with Greenland in non-fisheries sectors in the period 2007-2013. The EU-Greenland non-
fisheries partnership focuses on education and vocational training. It has been the subject of a separate 
impact assessment. See: Commission Staff Working Paper SEC(2011) 1484 of 7 December 2011. The 
EU-Greenland Fisheries Agreement also foresees specific sectoral support mechanisms to promote the 
implementation  of  sound  and  sustainable  fisheries  policies  and  governance  in  Greenland.  An  ex-post 
Evaluation of the EU-Greenland Fisheries Partnership Agreement was completed in August 2011. 

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In its Communication of December 2011 on an Internal Agreement between Member States 
regarding the 11th EDF the European Commission proposes to reserve EUR 343.4 million to 
finance  territorial  and  regional  programmes,  technical  assistance  and  interventions  in  case  of 
contingency  situations  in  the  period  2014-20202.  EUR  5  million  would  be  allocated  to  the 
European  Investment  Bank  (EIB)  to  finance  interest  subsidies  and  technical  assistance  in  the 
context of EIB projects.  

EU budget lines and horizontal programmes  

Articles 25.2 and 58 of the current OAD stipulate that OCTs can benefit from certain actions 
under  EU  programmes,  subject  to  the  rules  and  objectives  of  the  programmes  and  the 
arrangements applicable to the Member State to which the OCT is linked. OCTs are eligible 
for  the  following  actions  adopted  for  developing  countries  within  the  general  budget  of  the 
the  Development  Cooperation  Instrument3, 
EU: 
rehabilitation  and reconstruction operations financed under the  Instrument for  Stability4 and 
Humanitarian Aid5.  

thematic  programmes  financed  by 

2  

3  

4  

5  

See  the  Communication  of  the  Commission  "Preparation  of  the  multiannual  financial  framework 
regarding  the  financing  of  EU  cooperation  for  African,  Caribbean  and  Pacific  States  and  Overseas 
Countries and Territories for the 2014-202 period (11th European Development Fund)" – COM(2011) 
837 final of 7.12.2011. 
Regulation (EC) N° 1905/2006 of the European Parliament and of the Council of 18 December 2006 
establishing a financing Instrument for Development Cooperation (DCI) – OJ L 378, 27.12.2006, p. 41 
Regulation (EC) N° 1717/2006 of the European Parliament and of the Council of 15 November 2006 
establishing an Instrument for Stability – OJ L 327, 24.11.2006, p. 1 
Council  Regulation  (EC)  N°  1257/96  of  20  June  1996  concerning  humanitarian  aid  –  OJ  L  163, 
2.7.1996, p.1. Regulation a last amended by Regulation (EC) N° 1882/2003 of the European Parliament 
and of the Council (OJ L 284, 31.10.2003, p.1) 

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ANNEX 7 – OCT REMOTENESS – LINER SHIPPING CONNECTIVITY 

Most  OCTs  are  remote  and/or  at  great  distance  from  the  European  continent  and  their 
neighbouring  markets,  with  low  freight  transport  connectivity,  irregular  shipping  and  air 
transport services and high transport costs as a consequence. This forms a major obstacle to 
the  OCTs'  participation  in  those  markets.  UNCTAD'  Liner  Shipping  Connectivity  Index 
(LSCI)  ECO  Consult  et  al.  (2011)  gives  an  indication  of  the  OCTs'  weak  integration  into 
global liner shipping networks. 

Evolution of shipping lines connectivity index 2004-2009 

2004 

2005 

2006 

2007 

2008 

Growth p. a 
2004 – 2008 

Aruba 
Cayman Islands 

Greenland 

French Polynesia 
Netherlands Antilles 

New Caledonia 

France 
Netherlands 

7.37 
1.90 

2.32 

10.46 
8.16 

9.83 

67.34 
78.81 

7.52 
2.23 

2.32 

11.14 
8.23 

10.34 

70.00 
79.95 

7.53 
1.79 

2.27 

8.91 
7.82 

9.00 

5.09 
1.78 

2.27 

8.60 
9.22 

8.81 

5.09 
1.78 

2.36 

9.01 
8.56 

9.23 

67.78 
80.97 

64.84 
84.78 

66.24 
87.57 

United Kingdom 

81.69 

79.58 

81.53 

76.77 

77.99 

Source: ECO Consult et al. (2011) p. 71. 

- 0.57 
- 0.03 

- 0.01 

- 0.36 
- 0.10 

- 0.15 

- 0.28 
2.19 

- 0.92 

2009 

3.52 
1.76 

2.27 

8.39 
8.57 

8.74 

67.01 
88.66 

84.82 

Growth 
2009/2008 

Rank 
2009 (161 
countries) 

- 1.57 
- 0.02 

- 0.09 

- 0.62 
0.01 

- 0.49 

0.77 
1.09 

6.83 

144 
158 

156 

95 
92 

90 

13 
4 

6 

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ANNEX  8  –  EU  27  GOODS  IMPORTS  FROM  ALL  OCTS  IN  2010  (VALUES  IN  1,000 
EUR) 

HS   Description 

totals (A)  % (A/B) 

Fish & crustaceans, molluscs & other aquatic invertebrates 
Preparations of meat, of fish or of crustaceans, molluscs  

03 
16 
27  Mineral fuels, mineral oils and products of their distillation 
71  Natural or cultured pearls, precious or semi-precious stones 
72 
75  Nickel & articles thereof 

Iron & steel 

Total value of main EU 27 imports from OCTs 

Total value of all EU 27 imports from OCTs* 

340.914 
91.567 
35.774 
75.854 
158.556 
175.079 
877.744 

987.543 

34.5%
9.2%
3.6%
7.6%
16%
17.7%
88.6%

(A) Value of EU27 imports (at 2-digit level of the HS) from OCTs representing at least 1% of all EU27 
imports from OCTs 
(B) Total value of all EU27 imports from OCTs  

EU 27 Goods Exports to all OCTs in 2010 (values in 1,000 EUR) 

HS   Description 

totals (A)  % (A/B) 

04 
19 
21 
22 
27 
30 
39 
48 
73 

84 
85 
87 

90 
94 

Dairy produce; birds' eggs; natural honey 
Preparations of cereals, flour, starch or milk 
Miscellaneous edible preparations 
Beverages, spirits & vinegar 
Mineral fuels, mineral oils & products of their distillation 
Pharmaceutical products 
Plastics & articles thereof 
Paper & paperboard; articles of paper pulp 
Articles of iron or steel 
Nuclear 
appliances  
Electrical machinery and equipment & parts thereof 
Vehicles other than railway or tramway rolling-stock 
Optical,  photographic,  measuring,  precision,  medical 
instruments 
Furniture; bedding, mattresses, mattress supports, cushions  
Total value of main EU 27 exports to OCTs 
Total value of all EU 27 exports to OCTs *  

reactors,  boilers,  machinery  &  mechanical 

51.000 
50.410 
61.449 
119.445 
219.503 
179.710 
71.317 
43.412 
101.083 

422.780 
295.648 
250.756 

96.063 
68.780 
2.031.355 

 2.884.688 

1.7%
1.7%
2.1%
4.1%
7.6%
6.2%
2.4%
1.5%
3.5%

14.6%
10.2%
8.6%

3.3%
2.3%
69.8%

(A)  Value  of  EU27  exports  (at  2-digit  level  of  the  HS)  to  OCTs  representing  at  least  1%  of  all  EU27 
exports to OCTs 
(B) Total value of all EU27 exports to OCTs  

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ANNEX 9 – TREATMENT OF OCT GOODS IMPORTED INTO THE EU UNDER CET RATES 

OCT (all figures for 2010) 

Imports* 
(A) 
(€ 1000)** 

Dutiable Imports 
(B) 
(€ 1000) 

CET Duties 
(C) 
(€ 1000€) 

AVE CET*** 
Total (C/A) 
% 

Cayman Islands 
New Caledonia 
Greenland 
Virgin Islands (British) 
(former) Netherlands Antilles 
Falkland Islands 
French Polynesia 
Mayotte 
Aruba 
Saint Helena 
Saint-Pierre et Miquelon 
Montserrat 
Pitcairn 
Turks and Caicos Islands 
Anguilla 
Wallis and Futuna Islands 
Total 

872,367
343,875
316,672
155,862
144,533
112,444
23,028
5,016
3,993
1,608
1,314
1,222
592
344
289
50
1,983,211

2,808 
7,350 
297,796 
5,762 
56,487 
110,740 
12,683 
1,766 
2,172 
252 
1,311 
410 
490 
207 
17 
34 
500,285 

63
461
37,587
223
9,105
7,696
1,268
143
119
25
194
15
18
15
0
2
56,937

0.01 
0.13 
11.87 
0.14 
6.30 
6.84 
5.51 
2.86 
2.99 
1.56 
14.78 
1.24 
3.09 
4.46 
0.17 
4.57 
2.87 

* Total value of EU imports 
** Thousands of Euros 
*** Ad Valorem Equivalent 
The average rate is calculated by dividing dutiable exports by total exports. Pitcairn, Turks and Caicos and Wallis and Futuna exports are so small that all three OCTs 
combined would face duties between EUR 35,000 and 14,000, taking into account that their combined exports to the EU represent only EUR 1million. 

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ANNEX 10 – OVERVIEW PER OCT 

Caribbean OCTs 

Constitutional 
relations 
Member State  

with 

Capital 

Geography 

Industries 

Anguilla (UK) 

British  Overseas  Territory.  UK  remains  responsible  for  external 
affairs, offshore finance,  defence and  internal  security (including 
the  police  force)  and  the  public  service.  Citizens  can  renounce 
British  nationality  if  they  wish.  Debate  ongoing  on  the  future  of 
Anguilla’s  status  vis-à-vis  the  UK.  Recently,  political  tensions 
arose between the UK & Anguilla governments over the balance 
of the latter's budget. 

The Valley 

91 km² island located in the upper part of the arch formed by the 
Leeward Island 

Tourism, construction, government service, international financial 
services, banks and insurance. 

Trading partners 

North  America  (mainly  US),  Caribbean  Region  (CARICOM,  St 
Martin/St Maarten and other Caribbean countries). 

Aruba (NL) 

Constitutional 
relations 
Member State 

with 

Country within the Kingdom of the Netherlands, together with the 
Netherlands,  Curaçao  and  Sint-Maarten.  Autonomy  in  internal 
affairs.  Common  interests  of  the  Kingdom  of  the  Netherlands, 
such as defence and foreign affairs, are promoted jointly.  

Capital 

Geography 

Industries 

Oranjestad 

180 km² island located in the Lesser Antilles, north of Venezuela. 

Tourism, international financial services, oil refining and storage.  

Trading partners 

US, NL, PA, CO, VZ, Netherlands Antilles 

British Virgin Islands (UK) 

Constitutional 
relations 
Member State 

with 

British  Overseas  Territory.  UK  remains  responsible  for  external 
affairs, offshore finance,  defence and  internal  security (including 
the  police  force)  and  the  public  service.  Citizens  can  renounce 
British nationality if they wish. 

Capital 

Geography 

Road Town, Tortola 

Group of islands with a total land area of 153 km².located at the 
extreme northern point of the arch formed by the Leeward Islands.

Industries 

Tourism, international financial services. 

Trading partners 

VI (US) & US. 

EN 

56 

   EN 

 
 
 
Cayman Islands (UK) 

Constitutional 
relations 
Member State 

with 

British  Overseas  Territory.  UK  remains  responsible  for  external 
affairs, offshore finance,  defence and  internal  security  (including 
the  police  force)  and  the  public  service.  Citizens  can  renounce 
British nationality if they wish. 

Capital 

Geography 

Industries 

George Town, Grand Cayman 

3 islands with a total land area of 260 km² island, located south of 
Cuba and east of Jamaica 

Tourism,  international  financial  services,  real  estate  sales  and 
development. 

Trading partners 

US.  

Montserrat (UK) 

Constitutional 
relations 
Member State 

with 

British  Overseas  Territory.  UK  remains  responsible  for  external 
affairs, offshore finance,  defence and  internal  security  (including 
the  police  force)  and  the  public  service.  Citizens  can  renounce 
British nationality if they wish. 

Capital 

Geography 

Industries 

Plymouth (now destroyed by the volcano) 

102 km² island, located in the upper part of the arch formed by the 
Leeward islands 

2/3  of  the  island  uninhabitable  following  volcano  eruptions  in 
1995  &  1997.  Limited  economic  activity  including  mining  and 
quarrying, 
services, 
professional services and tourism. 

construction, 

international 

financial 

Trading partners 

US, UK, JP, TT, PR. 

(Former) Netherlands Antilles (NL) 

Constitutional 
relations 
Member State 

with 

Capitals 

Geography 

Former Country of the Kingdom of the Netherlands. Dissolved on 
10 October 2010 and replaced by two new countries (Curaçao and 
Sint-Maarten)  and  three  special  municipalities  (Bonaire,  St-
Eustatius  and  Saba  -  BES).  Curaçao  and  Sint-Maarten  have 
autonomy in internal affairs. The BES islands are attached to the 
Netherlands. All islands continue to have OCT status and for EU 
law purposes the Netherlands Antilles still exist. 

Curaçao: Willemstad, Sint-Maarten: Philipsburg 

Curaçao (444 km²) & Bonaire (288 km²) are p are located north of 
Venezuela;  Sint-Maarten  (34  km²),  Saba  (13  km²)  &  Sint-
Eustatius  (21  km²)  are  located  in  the  upper  part  of  the  Leeward 
Islands. 

Industries 

Tourism, petroleum refining, international financial services.  

Trading partners 

US, EU.  

EN 

57 

   EN 

 
 
Constitutional 
relations 
Member State 

with 

Capital city 

Geography 

Saint-Barthélemy (FR) 

The  island  used  to  be  part  of  the  overseas  department  of 
Guadeloupe, before becoming in 2007 an overseas collectivity of 
the French Republic. This evolution in internal law led the island 
to be ruled by Art. 74 of the French Constitution which provides 
for  legislative  speciality  (French  laws  are  not  automatically 
applicable)and  an  ad  hoc  status  for  the  overseas  collectivities 
sharing the competences with the States. Nevertheless, legislative 
speciality  (French  laws  automatically  applicable)  remains  in  all 
competences of the State, excepting the texts regulating the entry 
and  residence  of  foreigners  that  must  explicitly  be  applicable  to 
Saint-Barthélemy. The island became an OCT associated with the 
EU on 1 January 2012.    

Gustavia 

Island  of  21  km²  (25  km²  including  the  islets)  located  at  the 
extreme North-East of the Caribbean sea. 

Industries 

Up-market and residential tourism,  

Trading partners 

FR 

Turks and Caicos Islands (UK) 

Constitutional 
relations 
Member State 

with 

Capital 

Geography 

Industries 

British  Overseas  Territory.  UK  remains  responsible  for  external 
affairs, offshore finance,  defence and internal security  (including 
the  police  force)  and  the  public  service.  Citizens  can  renounce 
British  nationality  if  they  wish.  TCI's  elected  government  and 
parliament  were  dissolved  in  August  2009  after  it  became 
apparent  that  the  incumbent  government  had  indulged  in  fraud 
and  maladministration  practices.  The  UK  governor  is  now  in 
charge  of  the  Turks  and  Caicos  Islands  government.  The  UK 
government  has  made  a  return  to  normalcy  conditional  to 
sufficient  progress  in  the  achievement  of  a  set  of  constitutional, 
electoral, political and financial reforms.  

Cockburn Town, Grand Turk 

Island grouping with a total area of 430 km² located north of Haiti 
and the Dominican Republic. 

Tourism, property development, real estate, international financial 
services  and  fishing.  The  combined  effect  of  the  financial, 
economic  and  political  crisis  as  well  as  the  passage  of  tropical 
storm Hanna & Hurricane Ike in 2008 led to the deterioration of 
the archipelago's economy. 

Trading partners 

US 

EN 

58 

   EN 

 
 
Atlantic Ocean 

Falkland Islands (UK) 

Constitutional 
relations 
Member State 

with 

British  Overseas  Territory.  UK  remains  responsible  for  external 
affairs,  offshore  finance,  defence  and  internal  security  (including  the 
police  force)  and  the  public  service.  Citizens  can  renounce  British 
nationality if they wish. 

Capital 

Geography 

Industries 

Stanley 

Group of islands with a total area of 12 173 km²located in the South 
Atlantic, east of the Argentine province of Tierra de Fuego  

Fisheries, tourism, agriculture. Potential for the hydrocarbon industry. 
Oil  drilling  activities  are  taking  place  in  the  waters  surrounding  the 
Falkland Islands 

Trading partners 

UK, ES, CL 

Greenland (DK) 

Constitutional 
relations 
Member State 

with 

Greenland  is  an  autonomous  community  within  the  Kingdom  of 
Denmark.  Status  governed  by  the  2009  Self  Governance  Act,  which 
recognises  the  Greenlanders  as  a  separate  people  with  a  right  to  self-
determination.  The  Kingdom  of  Denmark  remains  responsible  for 
foreign policy, but Greenland has received great autonomy to negotiate 
entries  on  behalf  of  the  Kingdom  in  areas  where  Greenland  has  full 
competence. 

Relations with EU 

1973 – 1985: Part of the EU territory 

1985  -  …:  Greenland  Treaty;  Greenland  Decision  &  Greenland/EU 
Fisheries Partnership Agreement  

Capital 

Geography 

Industries 

Nuuk 

Largest  island  in  the  world  with  a  total  land  area  of  2  166  086  km, 
located  between  the  Arctic  Ocean  and  the  North  Atlantic  Ocean, 
northeast of Canada and northwest of Iceland 

Main  sectors:  Fishing,  tourism  and  minerals.  Greenland  is  potentially 
one  of  the  biggest  sources  of  rare  earth  elements  (REE),  crucial  for 
technological  appliances  such  as  cell  phones.  Restrictions  on 
exploitation  of  these  resources,  because  of  zero  tolerance  for  uranium 
(side-product of REE). Ban followed the crash of a US air bomber with 
nuclear  heads  at  the  Thule  airbase  in  1968,  causing  wide  spread 
radioactive contamination. Exploratory oil drilling activities are taking 
place in the waters surrounding Greenland.  

Trading partners 

EU (DK, UK, DE), US, JP, CN & RU.  

EN 

59 

   EN 

 
 
Saint Helena, Ascension Island and Tristan da Cunha (UK) 

Constitutional relations with 
Member State 

British  Overseas  Territory.  UK  remains  responsible  for 
external affairs, offshore finance, defence and internal security 
(including the police force) and the public service. Citizens can 
renounce British nationality if they wish. 

Capital 

Geography 

Industries 

Jamestown 

Disparate group of islands with a total area of 122 km² located 
in South Atlantic. The main island lays about 1200 miles from 
the south west coast of Africa.  

The  territory  has  few  natural  resources.  Agriculture,  fishing 
and tourism are the main economic activities, apart from retail 
and construction. 

Trading partners 

US, TZ, ID, UK, JP, NL, NG, PL & ES. 

Saint Pierre et Miquelon (FR) 

Constitutional relations with 
Member State 

Overseas  collectivity  of  the  French  Republic  with  partial 
legislative  speciality:  i.e.  French laws  are  applicable  except  in 
areas where the collectivity has specific competence (customs, 
taxes, urban development etc.)  

Capital city 

Geography 

Industries 

Saint-Pierre 

Archipelago  of  8  small  islands  in  the  North  Atlantic  Ocean, 
south of Newfoundland. Total area: 242 km² 

Fish  and  fish  products,  soybeans,  animal  feed,  molluscs  and 
crustaceans, fox and mink pelts. 

Trading partners 

CA, UE (FR, PT, NL, ES, DE), CN, US   

EN 

60 

   EN 

 
 
 
 
Pacific Ocean 

French Polynesia (FR) 

Constitutional 
relations 
Member State 

with 

Overseas  collectivity  of  the  French  Republic  with  legislative 
speciality:  i.e.  French  laws  are  applicable  to  the  territory  only  if 
they  explicitly  provide  for  this  and  the  share  of  competences  with 
the State is provided for in an ad hoc status. 

Capital city 

Geography 

Papeete 

Grouping  of  118  islands  in  the  South  Pacific,  with  a  total  area  of 
3 600  km²  scattered  over  a  maritime  area  as  vast  as  Europe  (2.5 
million km²). The islands are grouped in 5 archipelagos: the Society 
Islands,  the  Tuamotu  Islands,  the  Marquesas  Islands,  the  Gambier 
Islands & the Austral Islands.  

Industries 

Tourism, pearls, fisheries, copra. 

Trading partners 

EU (mostly FR), SG, US, CN, NZ, AU, JP.  

New Caledonia (FR) 

Constitutional 
relations 
Member State 

with 

Sui  generis  collectivity  of  the  French  Republic.  Some  State 
competences have been progressively and irreversibly transferred to 
New  Caledonia,  formed  by  the  three  provinces  of  Province  Nord, 
Province Sud and Province des Iles Loyauté. 

Capital city 

Geography 

Industries 

Nouméa 

Archipelago of 18 575 km² in the Pacific Ocean  

Nickel, tourism.  

Trading partners 

EU (mostly FR), SG, AU, NZ, JP, US.  

Pitcairn (UK) 

Constitutional 
relations 
Member State 

with 

British  Overseas  Territory.  UK  remains  responsible  for  external 
affairs,  offshore  finance,  defence  and  internal  security  (including 
the  police  force)  and  the  public  service.  Citizens  can  renounce 
British nationality if they wish. 

Main town 

Geography 

Adamstown 

Pitcairn  is  situated  in  the  South  Pacific,  mid-way  between  New 
Zealand and Panama. It is approximately 2 miles by 1 mile. There 
are 3 other (uninhabited) islands in the Pitcairn group, Oeno, Ducie 
& Henderson. 

Industries 

The  Territory  has  few  natural  resources.  Tourism  is  the  main 
economic activity. 

Trading partners  None.  Developing  low-level  market  garden  exports  to  French 

Polynesia. 

EN 

61 

   EN 

 
 
Wallis et Futuna (FR) 

Constitutional 
relations 
Member State 

with 

Overseas  collectivity  of  the  French  Republic  with  legislative 
speciality:  i.e.  French  laws  are  applicable  to  the  territory  only  if 
they  explicitly  provide  for  this  and  the  share  of  competences  with 
the State is provided for in an ad hoc statuts. 

Capital city 

Geography 

Mata-Utu 

Archipelago  in  the  South  Pacific  composed  of  Wallis,  Futuna  and 
Alofi 

Industries 

Barter economy 

Trading partners 

FR, SG, AU, NZ, FJ, NC 

Indian Ocean 

Mayotte (FR) 

Constitutional 
relations 
Member State 

with 

Overseas  department  of  the  French  Republic  since  March  2011 
ruled under Article 73 of the French Constitution (French laws are 
automatically  applicable).  France  has  requested  the  evolution  of 
Mayotte  from  an  OCT  associated  with  the  EU  to  an  Outermost 
Region of the EU as from 2014 onwards. 

Capital city 

Geography 

Dzaoudzi 

Located  in  the  Indian  Ocean  (Channel  of  Mozambique).  Eastern 
part of the Comoros archipelago. 

Industries 

Ylang-Ylang, aquaculture, vanilla, tourism. 

Trading partners 

Imports: UE (FR, DE), CN, TH, MY, JP 

Exports: FR, KM, MG, MU. 

EN 

62 

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ANNEXE 11 – THEMATIC REPORT ON ENVIRONMENTAL AND CLIMATE CHANGE 
ISSUES 

Introduction 

The  non-European  Overseas  Countries  and  Territories  (OCTs)  which  have  special 
relations with Denmark, France, the Netherlands and the United Kingdom are associated 
with the European Union, accordingly with Part IV of the Treaty on the Functioning of 
the European Union (TFEU). The detailed rules and the procedure for this association are 
laid down by the Council in the Overseas Association Decision (OAD)1 that will expire 
on 31 December 2013. The revision process of this Decision, conducted within the limits 
of  the  TFEU,  is  underway  and  should  lead  by  July  2012  to  a  legislative  proposal  for  a 
new OAD, expected to enter into force on 1 January 2014. 

An impact assessment was carried out in order to assess different policy options for the 
revision  of  the  OAD.  According  to  this  framework,  environmental  issues  in  the  OCTs, 
including climate change impacts, were subject to a specific analysis. 

Chapter 1: Procedural Issues and Consultation of Interested Parties 

1.1. 

Procedural issues 

The impact assessment has been prepared by Directorate General for Development and 
Cooperation - EuropeAid. Inter-service cooperation was ensured through the OCT Inter-
Service Group (ISG), acting as the impact assessment steering group. A working group 
on environmental and climate change issues was set up in September 2011 in which all 
interested DGs participated. 

1.2. 

Consultation and Expertise 

Consultation  process:  In  June  2008,  the  Commission  issued  a  Green  Paper  on  the 
future  relations  between  the  EU  and  the  OCTs2,  which  launched  a  broad  public 
consultation  from  1  July  until  17  October  2008  via  'Your  voice  in  Europe'.  Thirty 
contributions were received, emanating from the OCTs, their Member States, a Member 
of the European Parliament, Non-Governmental Organizations and private individuals.  

To  question  number  4  "What  are,  in  your  view,  the  most  important  domains  of  mutual 
interest  for  cooperation  between  the  OCTs  and  the  EU?",  84%  of  the  contributions 
answered  that  environmental,  climate  change  and  disaster  risk  reduction  issues  should 
constitute  a  major  concern  for  the  future  EU-OCT  relations:  sustainable  use  and 
protection  of  OCTs  biodiversity  and  natural  resources,  environmental  security,  energy 
and  renewable  energy,  ecosystems  conservation,  fight  against  climate  change  impacts 
and  mitigation,  preparedness  and  response  to  disasters,  invasive  species,  sustainable 

1  

2  

EN 

Decision  2001/822/EC  of  the  Council  of  27  November  2001  on  the  association  of  the  overseas 
countries  and  territories  with  the  European  Community,  (OJ  L  314/1,  30.11.2001),  amended  by 
Decision 2007/249/EC (OJ L 109/33, 26.04.2007). 

COM(2008) 383 final of 25 June 2008 

63 

   EN 

 
 
                                                 
fisheries. The importance of international and regional engagement in those matters was 
underlined. 

In  July  2008  a  conference  on  "The  European  Union  and  its  Overseas  Entities: 
Strategies to counter Climate Change and Biodiversity Loss" was held in La Réunion 
Island  under  the  French  Presidency  of  the  European  Union.  This  event  gathered  the 
European Commission, Members of the European Parliament and public authorities and 
civil stakeholders from the OCTs, the outermost regions of the EU and from the Member 
States of the EU. A message – "the message from La Réunion Island" – was issued at the 
end of the conference, paragraph 13 of this document stated: "There is an urgent need for 
EU Member States and the European Commission, together with the ORs and OCTs, to 
establish a voluntary scheme for the protection of species and habitats, inspired by the 
Natura 2000 approach. This scheme should be easily accessible, flexible, adapted to the 
local  situation,  balance  conservation  and  development  needs,  as  well  as  take  into 
account  existing  mechanisms  and  tools.  The  implementation  of  the  scheme  should  be 
based on local commitment and shared financing". As a follow up of the message from 
La  Réunion  Island,  the  services  of  the  European  Commission  (DG  Environment) 
developed  a  programme  called  the  BEST  scheme  (Voluntary  scheme  for  Biodiversity 
and  Ecosystem  Services  in  Territories  of  the  EU  Outermost  Regions  and  Overseas 
Countries and Territories) and supported by EU funds3. 

In the framework of the consultation process, the Commission organized a stakeholders 
conference in October 2008 in Brussels. The event gathered around over 100 interested 
parties from the OCTs' authorities, Member States, the EU's institutions and bodies and 
civil society at large, both in the OCTs and in the EU. On this occasion, the role of the 
OCTs  as  representatives  of  a  global  environmental  heritage  and  rich  biodiversity  was 
pointed  out  as  a  possible  focal  point  for  future  EU-OCT  partnership  and  policy 
framework. 

The  outcome  of  the  consultation  process  as  well  as  the  Commission's  opinion  on 
essential  elements  for  the  future  partnership  between  the  EU  and  the  OCTs  were 
presented  in  the  Communication  from  the  Commission  of  6  November  20094.  
Environmental,  climate  change  and  disaster  risk  reduction  issues  were  recognized  as 
areas  of  mutual  interests  and  as  axes  of  cooperation  that  could  contribute  to  attain  the 
three  central  objectives  that  were  identified  for  the  future  partnership:  (i)  enhancing 
OCTs'  competitiveness,  (ii)  strenghening  their  resilience  and  (iii)  promoting  their 
cooperation with regional, national, EU and international partners. 

Since  2005,  the  future  relations  between  the  EU  and  the  OCTs  have  been  the  central 
themes  of  a  partnership  working  party  gathering  representatives  of  the  OCTs,  their 
Member  States  and 
the  European  Commission.  The  future  relations  are  also 
systematically  discussed  during  the  annual  EU-OCT  Forums  at  high  political  level 
(President of the executive power in the OCTs, Members of Governments of the Member 
States and EU Commissioner).  

The latest annual EU-OCT Forum was organized in March 2011. On this occasion, the 
OCTs and their Member States endorsed a Joint Position Paper on the future EU-OCT 

3  
4  

See section 2.1.3 b) of Annex 11. 
COM(2009) 623 final of 6 November 2009 "Elements for a new partnership between the EU and 
the overseas countries and territories" 

EN 

64 

   EN 

 
                                                 
relations  in  which  they  identified  environmental  issues,  climate  change  mitigation  and 
disaster risk reduction as main concerns. They requested a partnership in which the assets 
of  the  OCTs  as  well  as  the  challenges  they  face  in  these  areas  could  be  taken  into 
account. 

Expertise: In 2006, an independent study was commissioned from external consultants5 
in order to assess the environmental profiles of the OCTs. The final report, delivered in 
January 2007, identified the following main concerns in the OCTs:  

-  climate change,  
-  natural disasters,  
- 
- 
-  waste management, 
-  water supply and sanitation. 

threats to wildlife and biodiversity, habitat destruction 
illegal, unregulated and unreported fishing, 

In 2010, the Commission contracted an independent study6 to evaluate the strategies of 
cooperation  between  the  EU  and  the  OCTs  and  their  implementation  during  the  period 
1999-2009.  The  results  of  the  evaluation  were  presented  to  the  stakeholders  on  the 
occasion  of  the  annual  EU-OCT  Forum  in  March  2011.  The  evaluation  concluded  that 
environment and climate change adaptation are regarded as matters of vital importance to 
the OCTs. However, increased awareness in these issues has not been met with a relevant 
increase  in  EU  funds  or  interventions  for  this  sector.  The  main  findings  on 
environmental,  climate  change  and  disaster  risk  reduction  issues  are  presented  in  more 
details in section 2.2. 

Chapter 2: Problem Definition 

2.1. Description of the current framework 

2.1.1.  Objectives of the association of the OCTs with the EU 

According to the TFEU, the purpose of the association shall be to promote the economic 
and social development of the OCTs and to establish close economic relations between 
them and the EU as a whole. The association shall serve primarily to further the interests 
and  prosperity  of  the  inhabitants  of  the  OCTs  in  order  to  lead  them  to  the  economic, 
social and cultural development to which they aspire (Article 198 TFEU). 

The  OAD  stipulates  that  the  association  shall  pursue  the  objectives  laid  down  in  the 
Treaty, by focusing on the reduction, prevention and, eventually, eradication of poverty 
and on sustainable development.  

5  

6  

Study  executed  by  the  Joint-Venture  of  NIRAS  PINSISI  Consortium  partners.  The  main  report 
can be consulted on the following web page: 
 http://ec.europa.eu/development/icenter/repository/environmental_profile_main_report_en.pdf 
The study was carried out by a Consortium composed by ECO Consult, AGEG, APRI, Euronet, 
IRAM and NCG. 

EN 

65 

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2.1.2.  Structure of the current Overseas Association Decision7 

The  current  structure  of  the  OAD  does  not  address  environmental  and  climate  change 
issues  as  such  and  does  not  identify  areas  of  cooperation  specifically  dedicated  to 
environmental  issues,  climate  change,  prevention/preparedness/response  to  natural 
disasters.  The  provisions  of  the  OAD  concerning  these  areas  are  contained  in  articles, 
chapters or sections relating to productive sectors, trade in services, trade-related areas, 
social sectors, regional cooperation and integration, development finance cooperation. 

Furthermore,  the  current  OAD  does  not  confer  any  responsibilities  on  the  OCTs  to 
engage  effectively  in  climate  change  action,  environmental  protection  and  conservation 
activities according to EU standards, in the monitoring of fisheries activities, in effective 
pollution  control  measures  and  adequate  emergency  response  capacities  where  new 
commercial  possibilities  could  be  exploited,  or  in  scientific  cooperation  with  European 
research institutes and teams from Member States other than those to which the OCTs are 
linked. Finally, the OCTs are not always eligible to EU specific mechanisms or programs 
in these domains (Life + for example). 

2.1.3.  EU financial assistance to OCTs 

a) The European Development Fund 

Since the Treaty of Rome, the EU financial assistance to OCTs has been delivered under 
the  European  Development  Fund  (EDF).  The  repartition  of  the  amount  of  286  million 
Euros dedicated to OCTs under the 10th EDF is specified in annex I of the current OAD 
as follows: 

7  

See Annex 4 of the Impact Assessment. 

EN 

66 

   EN 

 
                                                 
Territorial envelope: 195 million Euros 

through 

This  envelope  is  distributed  among  OCTs  whose 
GDP  does  not  exceed  the  EU  average  GDP.  Only 
13  OCTs  are  eligible  to  this envelope  that must  be 
programmed 
Single 
Programming  Document  (SPD).  The  individual 
amounts  delivered  rank  from  2  million  Euros  to 
the  whole  period. 
for 
22.92  million  Euros 
Greenland  is  not  eligible  to  this  envelope,  bilateral 
cooperation  with  the  EU  being  financed  under  the 
budget. 

territorial 

a 

Regional envelope: 40 million Euros 

This  envelope  is  programmed  through  a  regional 
SPD that contains five sub-programs. Two of them 
are  thematic  and  concern  all  OCTs  (territorial 
strategies for innovation and technical assistance to 
the  OCT  Association).  The 
three  other  sub-
programs  concern  the  OCTs  located  in  Caribean, 
the Indian Ocean and the Pacific.  

Non allocated reserve: 15 million Euros 

-  humanitarian,  emergency  and  refugee  aid  for  the 
OCTs  and,  if  necessary,  the  additional  support  in 
the event of fluctuations in export earnings 

the 
-  new  allocations 
development  of  the  needs  and  performance  of  the 
OCTs 

in  accordance  with 

Grants  for  programmable  support  for  long  terms 
development,  humanitarian  aid,  emergency  aid, 
refugee  aid  and  additional  support  in  the  event  of 
fluctuations in export earnings as well as for support 
for regional cooperation and integration 

Total: 250 million Euros 

Investment  Facility  managed  by  the  European 
Investment Bank (EIB) 

30 million Euros 

Technical assistance managed by the Commission 

6 million Euros 

The criteria applied for the distribution of territorial allocations under the 10th EDF were 
the  size  of  the  population,  the  level  of  GDP  per  capita.  Territorial  allocations  were 
increased for least developed OCTs and remote OCTs – located in areas not included in 
one of the three regional subprograms for Caribbean, Indian Ocean and Pacific. 

The regional envelope was increased by 80%, compared to the 9th EDF, rising from 8 to 
40  million  Euros  whereas  the  non  allocated  reserve  decreased  from  35  to  15  million 
Euros (- 57%). 

EN 

67 

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Territorial and regional allocations are programmed in a Single Programming Document 
(SPD). Due to the limited amount of each allocation, the OCTs are requested to choose a 
unique focal sector. 

Greenland  is  not  eligible  for  an  EDF  territorial  allocation  but  receives  financial 
assistance of the EU under budget line 21 07 02 amounting 176.6 million Euros for the 
current  period.  The  EU-Greenland  partnership  focuses  on  education  and  vocational 
training.  

Greenland also concluded a fisheries agreement with the EU in which it perceives 17.8 
million Euros per year. 

b) EU budget lines and horizontal programs  

Article  25.2  of  the  current  OAD  stipulates  that  OCTs  can  benefit  from  certain  actions 
adopted for developing countries within the general budget of the EU and participate in 
some  programmes,  subject  to  the  rules  and  objectives  of  the  programmes  and  the 
arrangements applicable to the Member State to which the OCT is linked. 
Only one of the three budget lines8 identified in Annex II E of the OAD was mobilized 
for the OCTs. The Instrument for Development Cooperation (DCI) funded actions in the 
OCTs under the environment and sustainable management of natural resources including 
energy (ENRTP): 

- 

- 

In 2009, a call for proposals specifically targeted actions in favour of biodiversity 
conservation  and  fighting  against  invasive  species  in  Small  Islands  Developing 
States  and  in  OCTs.  The  projects  proposed  by  organisms  from  OCTs  were  not 
selected.  The  only  selected  project  that  concerned  OCTs  was  an  action  against 
invasive  species  in  French  Polynesia,  New  Caledonia,  Fiji,  Palau,  Cook  Islands 
and  Western  Samoa  for  which  Bird  Life  International  was  granted  1  163  984 
Euros in 2010. 

In May 2011, a technical seminar was organised in French Polynesia in order to 
raise  awareness  on  environmental  issues  and  the  possibilities  offered  by  the 
ENRTP.  Pacific  OCTs  and  ACPs  participated  in  this  seminar  which  was  co-
financed by the ENRTP with 150 000 Euros. 

Additional support:  

The Global Climate Change Alliance 

The  OCTs  are  not  eligible  for  the  Global  Climate  Change  Alliance  (GCCA).  Despite 
this situation, the European Commission took the decision to associate the Pacific OCTs 
with  the  joint  EU-Pacific  initiative  on  climate  change.  The  GCCA  financed  the 
participation of the representatives of these OCTs in the political dialogue, the ministerial 

8   Thematic  programmes  covered  by  Regulation (EC)  No 1905/2006 of  the  European  Parliament  and  of 
the Council of18 December 2006 establishing a financing Instrument for Development Cooperation  
(DCI) and providing direct support for the European Community development and cooperation policy. 
Rehabilitation  and  reconstruction  operations  as  covered  by  Regulation  (EC)  No  1717/2006  of  the 
European Parliament and the Council of 15 November 2006 establishing an Instrument for Stability. 
Humanitarian aid as provided for by Council Regulation (EC) No 1257/96 of 20 June 1996 concerning 
humanitarian aid. 

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conference and the GCCA training workshops that took place in Vanuatu in March 2011. 
In 2012, a specific training workshop for all OCTs will be organised in Brussels, back-to-
back  with  the  annual  EU-OCT  Forum,  and  the  Caribbean  OCTs  will  be  invited  to 
participate  in  the  regional  workshop.  In  total,  the  participation  of  the  OCTs  to  these 
different workshops might not exceed 50 000 Euros, but the important information is that 
even  though  GCCA  cannot  finance  projects  in  the  OCTs,  it  fosters  their  integration 
within regional networks. 

The BEST Scheme 

As  a  follow-up  to  the  conference  "  The  European  Union  and  its  Overseas  Entities: 
Strategies to counter Climate Change and Biodiversity Loss" that was held in July 2008 
in  La  Réunion  Island  under  the  French  Presidency  of  the  EU,  the  services  of  the 
European  Commission  (DG  Environment)  developed  a  programme  called  the  BEST 
scheme (Voluntary scheme for Biodiversity and Ecosystem Services in Territories of the 
EU Outermost Regions and Overseas Countries and Territories). This programme intends 
to promote the conservation and sustainable use of biodiversity and ecosystem services in 
European  overseas  entities,  drawing  on  the  experience  gained  with  EU  conservation 
programmes such as Natura 2000, from which the Overseas Countries and Territories and 
most outermost regions of the EU are excluded.  

In 2011, the European Parliament took the initiative of a preparatory action of 2 million 
euros9. The specific objectives of the preparatory action are: 

(1) 

promote  the  establishment  and  effective  management  of  marine  and  terrestrial 
protected  areas  (PAs)  in  the  EU  Outermost  Regions  and  Overseas  Countries  and 
Territories, also taking into account already existing PAs; 

(2) 

implement  sustainable  management  of  marine  and  terrestrial  resources,  which 
contribute  to protecting  important  species, habitats  and  ecosystem  functions  outside 
PAs; 

(3) 

strengthen  conservation  and  sustainable  use  of  biodiversity  and  ecosystem 

services in the EU Outermost Regions and OCTs by: 

– 

– 

– 

– 

addressing  the  wider  ecosystem  challenge  of  climate  change  by  maintaining 
healthy,  resilient  ecosystems  and  fostering  green  infrastructure  and  ecosystem-
based  approaches  to  climate  change  adaptation  and  mitigation  which  often  bring 
multiple benefits; 

strengthening capacities at a local and regional scale, including the neighbouring 
countries,  by  promoting  exchange  of  information  and  best  practice  amongst  all 
stakeholders including local administration, landowners, private sector, researchers 
and civil societies etc… ; 

strengthening  existing  nature  conservation  programmes  and  related  efforts 

within and outside conservation areas; 

broadening  the  knowledge  base  and  filling  the  knowledge  gaps,  including 

quantifying the value of ecosystem functions and services; 

9  

The  programme  is  financed  under  the  budget  line  07  03  27,  accordingly  with  Commission 
Decision C(2011) 1258 final of 1 March 2011. 

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(4) 

encourage  and  facilitate  transboundary  working;  addressing  issues  such  as 
invasive  alien  species,  the  impacts  of  climate  change  and  the  implementation  of 
international conventions; 

(5) 

develop  mechanisms  to  lever  resources  including  ‘payments  for  ecosystem-

services’(PES). 

2.2. 

Lessons Learnt 

The evaluation of the strategies of cooperation between the EU and the OCTs and their 
implementation  during  the  period  1999-2009  identified  the  following  sectors  supported 
by the EU under the EDF: 

-  management of water resources (both fresh water as well as marine, as the first has a 

direct impact on the second); 

-  OCTs disaster preparedness (only within their own regional context);  

-  OCTs environmental policy formulation and management capacities; 

- 

- 

local biodiversity monitoring; 

scientific research on biodiversity issues taking into consideration the unique setting 
of the OCTs and their location in areas of ecological fragility and high biodiversity. 

The  evaluation  study  underlined  that  despite  the  recognition  of  the  importance  of  the 
environment, the reality of climate change and the importance of disaster preparedness, 
only few concrete results of the EU-OCT cooperation were found in this field. According 
to the study, this situation is due to limited funding. The evaluation has concluded that 
environment  and  climate  change  adaptation  are  considered  by  the  OCTs  as  matters  of 
vital importance, as well as disaster preparedness. However, increased awareness in these 
issues  has  not  been  met  with  a  relevant  increase  in  EU  funds  or  interventions  for  this 
sector. 

The  study  recommends  that  for  the  post  2013  EU-OCT  partnership  the  association 
framework should be revisited in order to better respond to new and emerging priorities 
in the OCTs, such as energy and climate change challenges and to address new objectives 
such as sustainable management of natural resources and conservation of biodiversity.  

The necessity to foster cooperation with neighbouring countries was also identified as a 
means to reach efficiency. In this respect, the study highlights that cooperation between 
the OCTs and their neighbours (third countries, ACP States or outermost regions of the 
EU)  is  insufficiently  supported  by  the  EU,  notably  because  the  partners  must  mobilize 
different EU funds: the European Regional Development Fund (ERDF) for the outermost 
regions and the EDF for the ACP States and the OCTs. The main difficulties encountered 
are  due  to  the  fact  that  these  instruments  are  ruled  by  different  programming  and 
implementation  procedures,  according  to  their  positioning  inside  or  outside  the  EU 
budget,  and  to  the  insufficient  knowledge  of  these  procedures  from  the  different 
stakeholders.  Only  two  projects  supported  by  the  EU  could  be  successfully  carried  out 
under the 9th EDF in the Caribbean and the Indian Ocean, involving OCTs, ACP States 
and  outermost  regions.  One  of  them  focused  on  biodiversity  conservation  but  did  not 
involve OCTs. 

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2.3. 

The environmental situation in the OCTs 

This  section  is  mainly  based  on  information  contained  in  the  OCTs  environmental 
profiles10. 

2.3.1.  Biodiversity 

All the OCTs are characterised by a biodiversity that is much richer than in continental 
Europe  as  a  whole.  These  insular  and  remote  countries  and  territories  constitute 
privileged  locations  for  the  development  of  endemic  species,  whether  animal  or 
vegetable, terrestrial or marine. The OCTs are also important places for migrating species 
(eg.:  black-browed  albatrosses  in  the  Falkland  Islands,  in  South  Georgia  and  in  the 
French Southern and Antarctic Territories; humpback whales in French Polynesia). Thus, 
the OCTs are of major importance for world biodiversity balance. 

Biodiversity and ecosystem services are the basis of many island economies, which often 
heavily  depend  on  tourism  and  fisheries.  Without  the  protection  through  coastal 
ecosystems  such  as  mangroves  and  coral  reefs,  coasts  and  perhaps  entire  islands  risk 
becoming  inhabitable.  The  conservation  and  sustainable  use  of  biodiversity  and 
development  of  ecosystem  services  as  well  as  the  development  and  use  of  ecosystem 
based  approaches  to  climate  change  adaptation  and  mitigation  contribute  to  a  green 
economy  through  the  provisions  of  jobs  and  business  opportunities.  Most  OCTs  are 
located  in  regions  where  many  communities  depend  directly  on  natural  resources  for 
their livelihoods.  

Besides  the  significance  of  the  OCTs’  environmental  sustainability  for  their  own  well-
being, the preservation of the OCTs’ biodiversity is of major importance to the EU and 
for  the  world  at  large,  given  its  international  dimension  in  terms  of  research,  the 
sustainable  exploitation  of  natural  resources  and  the  fight  against  climate  change.  The 
OCTs  also  play  an  important  role  for  the  EU  as  they  help  to  achieve  the  EU's  global 
biodiversity 
targets  as  well  as  commitments  under  other  relevant  Multilateral 
Environmental Agreements (MEA). 

The  OCTs’  potential  as  regards  biodiversity  is  already  recognised  at  an  international 
level,  through  the  development  of  scientific  projects  to  gain  a  better  understanding  of 
ecosystems, the way they interact and their importance for the worldwide environmental 
balance.  These  research  projects  also  aim  to  find  solutions  to  safeguard  this  potential, 
which is highly threatened, for instance, by the introduction of non-endemic species that 
destroy  existing  habitats  or  supplant  endemic  vegetation,  or  by  the  impact  of  climate 
change  on  corals.  The  international  community  feels  increasingly  concerned  about  the 
loss of biodiversity. 

10  

Study  executed  by  the  Joint-Venture of  NIRAS  PINSISI  Consortium  partners.  The  main  report, 
delivered in January 2007, can be consulted on the following web page: 
 http://ec.europa.eu/development/icenter/repository/environmental_profile_main_report_en.pdf 

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2.3.2.  Climate Change 

OCTs are amongst the insular countries that have to face the impacts of climate change. 
The OCTs environmental profiles assessed these impacts. Depending on the geographical 
location of the OCTs, the effects of climate change will be different: 

In Greenland: 

-  Melting  of  sea-ice  will  deprive  some  important  species,  notably  seals  and  polar 
bears of habitat. This is likely to have harmful effects on the communities of these 
species and on local people who depend on them for food and livelihood.  

-  The  increased  melting  of  land-ice  will  affect  drainage  and  hydrology,  and  this 
will  also  have  an  effect  on  landscapes  and  habitats  on  the  territory.  It  will  also 
have an effect on sea salinity, and therefore possibly marine habitats and fisheries. 

-  Melting  of  the  permafrost  will  lead  to  damage  of  buildings  and  infrastructure 
which used the permafrost as bedrock on the assumption that, as its name implies, 
permafrost is permanent. 

-  Finally the increased temperature of the seas, together with changes in its salinity 
and  in  the  flux  of  nutrients  as  a  result  of  changes  in  sea  currents  may  generate 
changes in fish stocks; an issue of great importance to a territory dependent on its 
fisheries income. 

Source: OCTs environmental profiles – Main report – January 2007  

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In Antarctic OCTs: 

Compared  to  Greenland,  the  temperatures  in  the  Antarctic  OCTs  are  colder  and  no 
significant melting of the grounded ice is expected. On the contrary, expected increased 
precipitation  due  to  climate  change  will  induce  an  increase  of  the  ice-sheet.  The  most 
important impact of climate change that has been identified so far is a change in marine 
life in the Southern Ocean for similar reasons to those applying to Greenland (warming 
of the sea), which could have consequences for the important fisheries in this region. 

In temperate islands: 

According to the study, these OCTs will be the least affected by sea-level rise as most of 
them have steep rocky perimeters. The main effects of climate change identified in these 
territories are: 

- 

changes to fisheries; 

-  unpredictable  changes  in  flora  and  fauna,  including  the  threatened  and  endemic 
species. Biodiversity on small islands may find adaptation to climate change more 
difficult  than  continental  flora  and  fauna  because  there  is  no  opportunity  for 
species to gradually migrate latitudinally in order to compensate; 

- 

the  arrival  and  thriving  of  more  non-native  species  in  polar  regions,  some  of 
which may place pressures on endemic species. 

In tropical islands: 

The  study  assessed  that  tropical  OCTs  are  particularly  vulnerable,  physically  and 
economically, to the effects of climate change: 

- 

Increase  of  the  frequency  and  the  force  of  natural  disasters  linked  to  adverse 
impacts  of  climate  change:  hurricanes,  cyclones,  floods,  landslides  and  more 
generally  hydro-meteorological,  geophysical  and  oceanographic  triggers  events. 
Impacts  of  natural  disasters  on  human  beings  and  economic  activities  (see 
paragraph 2.3.3).  

-  Coral reefs bleaching due to the increase of the surface temperature of the sea and 
increase  of  CO2  concentration  in  the  sea  water.  This  phenomenon  threatens  the 
ecosystem  itself  and  thus  the  population  (food  resources),  the  local  economy 
(fishing, tourism). Threats on coral reefs also have impacts on shorelines as coral 
reefs have a coastal protection role. Ocean acidification is also a problem. 

-  Salinisation of freshwater aquifers due to the intrusion of seawater. 

-  Destruction or shoreward retreat of mangroves. 

To this identified threats must be added climate-induced migrants and related threats of 
mass displacement. 

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Source: OCTs environmental profiles – Main report – January 2007  

The conclusions of the study are presented in the following box: 

2.3.3.  Natural disasters 

The insular characteristics of the OCTs make them particularly exposed to environmental 
shocks  as  well  as  natural  disasters  whose  frequency  could  be  influenced  by  climate 
change. The OCTs are particularly vulnerable to climatic, seismic and volcanic risks and 

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to tsunamis. Such natural disasters can easily destroy the infrastructures and hamper the 
economic activities. Besides the risk of economic paralysis, these phenomena can cause a 
heavy  human  toll  and  lead  to  the  displacement  of  populations,  and  are  thus  likely  to 
disrupt the economic and social organisation of the OCTs. 

Against this background, the OCTs and the Member States to which they are linked have 
consistently indicated that the Overseas Association Decision should take better account 
of the OCTs’ vulnerability and that specific criterion and instruments should be identified 
in  line  with  their  specific  situation.  In  the  context  of  the  revision  of  the  Overseas 
Association  Decision  in  2007,  the  Council  and  the  Commission  stressed  that  greater 
coordination  between  support  at  regional  and  territorial  level  could  contribute  to 
enhancing  the  resilience  of  the  OCTs  towards  the  challenges  that  they  are  facing 
regardless  of  the  level  of  per  capita  GNP  or  other  elements  used  to  determine  the 
territorial  allocations.  Nonetheless,  the  Commission  did  not  propose  a  fundamental 
revision of the existing criteria and instruments, because it felt that such issues should be 
discussed in the context of a wider dialogue on the overall philosophy underpinning the 
OCT/EU  association  that  could  take  place  in  view  of  the  revision  for  the  post  2013 
period.  Moreover,  if  it  were  accepted  that  allocation  criteria  should  be  more 
vulnerability-oriented, the ancillary challenge of quantifying vulnerability in an objective 
way  on  the  basis  of  other  elements  than  those  already  taken  into  account  today  would 
require further reflection.  

2.3.4.  Energy 

The  OCTs  are  heavily  reliant  on  fossil  fuels  imported  at  high  transport  costs,  which 
makes  them  extremely  vulnerable  to  economic  external  shocks.  Moving  towards  a 
greener economy, resource efficiency and sustainable consumption and production would 
contribute to one of the objectives indicated in the Communication from the Commission 
of  6  November  200911,  namely  to  increase  the  OCTs  competitiveness.  While  the 
transformation may be hard-fought, a greener society would be expected to result in new 
economic  activities,  new  jobs  and  increased  competitiveness  on  the  market,  creating  a 
more efficient and sustainable economy. 

Energy could be one of the possible drivers of the renewed partnership between the EU 
and  the  OCTs,  by  promoting  both  EU's  interest,  such  as  research  activities,  investment 
opportunities,  and  those  of  the  OCTs,  such  as  development  of  local  know-how  and 
labour. 

2.3.5.  Water 

Unsustainable agricultural practices, industrial expansion and rising urban population are 
generating  demand  well  beyond  the  capacity  of  most  OCTs  to  provide  access  to  safe 
water.  

Safe  drinking  water  and  basic  sanitation  is  of  crucial  importance  to  the  preservation  of 
human health. Households with improved services suffer less from water-related diseases 
and  water-caused  mortalities.  Improved  water  services  reduce  health-related  costs  and 
save time that can be invested in other income generation activities, thus offering more 

11  

COM(2009) 623 final of 6 November 2009 "Elements for a new partnership between the EU and 
the overseas countries and territories" 

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productive  lives.  Water  projects  may  help  to  empower  the  powerless  to  participate  in 
community decision-making. 

Capacity  building  of  administrations  and  local  organisations  will  be  needed  to  sustain 
water  services.  More  effort  is  needed  to  boost  the  OCTs  water  catchment,  storage, 
treatment  and  distribution  capacity.  OCTs  should  put  more  emphasis  on  good 
legislative  framework  for 
environmental  management.  Complete  and  enforced 
environmental  conservation  and  management  is  needed  to  address  environmental 
problems adequately. 

2.3.6.  Waste 

The  OCTs  environmental  profiles  reflected  a  general  lack  of  data  on  the  situation 
regarding waste in the OCTs (volumes, trends and management). Nevertheless, the study 
could  assess  that  the  main  method  of  waste  disposal  is  dumping  the  waste  on  waste 
dumps, which are full or nearly full in at least half the territories. Consequently, informal 
and  unauthorised  dump  sites  have  developed.  Furthermore,  the  absence  of  toxic  and 
hazardous  waste  disposal  facilities  encourages  their  dumping  with  normal  waste.  The 
situation has damaging effects on surface and groundwater sources, rivers and the marine 
environment, but also on public health. The study stipulates that bad waste management 
practises  in  the  OCTs  have  degraded  ecosystems  such  as  mangroves,  salt  ponds  and 
marine  and  fresh  water  wetlands.  In  addition,  both  the  industrial  expansion  and  the 
intensification of tourism represent a pressure on local waste management. 

The main problems faced by the OCTs are: 

-  Lack  of  the  critical  size  to  reach  necessary  economies-of-scale  necessary  for 
modern  waste  management  techniques  -  sanitary  landfills,  safe  incinerators  - 
economic.  A  rule-of  thumb  in  industrialised  countries  is  that  a  minimum  waste 
catchment population of 50,000 is needed to make such facilities economic. Many 
OCTs  do  not  have  this  minimum  population,  but  there  is  further  fragmentation 
between different islands, with inter-island transport of waste not being feasible. 

-  Lack  of  facilities,  critical  size,  markets  to  make  recycling  and  composting 

feasible. 

-  Lack of public awareness about waste, need for prevention and reduction. 

-  Lack  of  facilities  for  dealing  with  hazardous  waste  including  infectious  clinical 

waste. 

-  Lack  of  suitable  space  for  building  waste  management  infrastructures  and 

resistance by inhabitants. 

2.4. 

Definition of the problem 

the  OCTs  and 

The  European  Commission, 
their  Member  States  recognized 
environmental,  climate  change  and  disaster  risk  reduction  issues  as  being  of  major 
concerns  in  the  OCTs12.  The  OCTs  continue  to  face  difficulties  to  integrate 
environmental  issues  within  their  local  development  policies  and  as  far  as  the 
environmental  pillar  of  sustainable  development  is  concerned,  the  objectives  of  the 
association of the OCTs with the EU have not been fully achieved. 

12  

See sections 1.2 and 2.7 of Annex 11 

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2.5. 

Underlying Drivers of the Problem 

– 

Insufficient legal and political basis/framework for action 

Constitutional / Institutional links with the Member States 

–  Depending  on  the  competences  national  Constitutions  procure  to  OCTs,  they 
might  not  have  the  ability  to  adhere  to  international  agreements  (eg:  Kyoto 
protocol)  and  thus  to  the  mechanisms  created  in  the  framework  of  these 
international agreements. 

-  Restricted  constitutional  capacities  of  OCTs  in  certain  areas  (eg.  illegal, 

unreported and unregulated fishing). 

Weak local framework 

–  Low administrative capacities of the OCTs.  

–  Lack  of  local  legislative  framework/standards  and  of  strategies/policies  in  these 

areas. Need for an improved environmental governance. 

–  Low regional cooperation with their neighbours. 

– 

Structural weaknesses 

Small-sized territories 

–  Small  territories  suffering  from  double  insularity  (remoteness  and  archipelagic 
characteristics)  facing  difficulties  to  create  scale  economies,  which  makes  it 
difficult to create structured activities in certain issues (eg: waste). 

–  Small  market  economies  where  it  is  difficult  to  develop  green  energy/economic 

activities for a reasonable cost. 

Extreme vulnerability 

–  to external shocks (eg: OCTs highly dependent on fossil energies imports); 

–  to natural disasters and impacts of climate change, even though the OCTs have a 

low share in greenhouse gas emissions; 

–  to  threats  on  terrestrial/marine  biodiversity.  The  OCTs  host  rich  endemic 
ecosystems  that  are  extremely  vulnerable  (eg:  invasive  species,  impacts  of 
climate change and natural disasters on economic activities). 

– 

Limitations of the EU/OCT association 

Lack of visibility of mutual interests in these issues 

-  Potential  and  assets  of  the  OCTs  not  taken  into  account  at  EU  level.  The 
OCTs  themselves  do  not  exploit  or  communicate  on  these  potentials  and 
assets. 

-  Lack  of  coordinated  intersectoral  management  of  environmental  issues.  The 
issue of Environment is scattered over the current AOD, thus diminishing the 

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visibility of the need and importance of adequately addressing environmental 
and climate issues. No visible link is introduced between the environment and 
increased competitiveness of OCTs based on green economy. 

-  EU  policies  in  these  areas  are  not  always  applicable  to  the  OCTs,  thus  EU 

interests are not visible nor pursued. 

Insufficient accessibility to EU mechanisms 

–  The OCTs are not eligible to all relevant EU horizontal programs and budget lines.  

–  OCTs are not eligible to the global funds (eg. GCCA) and/or the different sources 
of  funds  are  difficult  to  coordinate  (eg.  EDF/ERDF),  which  hamper  their 
integration in global initiatives.  

2.6. 

Legal Basis for EU Action and Policy Framework 

Part IV of the treaty on the functioning of the EU. 

2.7. 

EU Added Value 

An  enhanced  partnership  with  the  OCTs  in  the  field  of  environment,  climate  change 
adaptation and mitigation and disaster risk reduction will reinforce the role of the EU as a 
global  player.  This  positioning  of  the  EU  was  underlined  by  the  Commission  in  its 
Communication  of  29  June  2011.13  This  Communication  outlines  the  main  elements  of 
the  action  of  the  EU  as  a  global  player  for  the  period  2014-2020  and  underlines  the 
European  Commission's  view  that  the  instruments  can  "facilitate  the  EU's  engagement 
(…)  on  issues  that  are  of  global  concern,  such  as  climate  change,  environmental 
protection, irregular migration and regional instabilities, and allow the EU to respond 
rapidly and effectively to natural and manmade disasters". 

Chapter 3: Objectives 

3.1. General and Specific Objectives 

3.1.1.  The general objectives 

Article 198 of the TFEU specifies that the purpose of the association shall be to promote 
the  economic  and  social  development  of  the  OCTs  and  to  establish  close  economic 
relations between them and the EU as a whole. The association shall serve primarily to 
further the interests and prosperity of the inhabitants of the OCTs in order to lead them to 
the economic, social and cultural development to which they aspire. 
In  its  Communication  of  6  November  200914,  the  Commission  considered  that  the 
purpose of the association specified by the Treaty implies that the EU should promote the 

13 
14  

COM(2011)500 final- A Budget for Europe 2020 
COM(2009) 623 final of 6 November 2009 "Elements for a new partnership between the EU and 
the overseas countries and territories" 

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OCTs'  sustainable  development,  in  its  economic,  social  and  environmental  dimensions. 
The Commission identified the three following objectives that should underlie the future 
EU-OCT  partnership:  (i)  enhancing  OCTs'  competitiveness,  (ii)  strengthening  their 
resilience  and  (iii)  promoting  their  cooperation  with  regionnal,  national,  EU  and 
international partners. 

The  Commission  also  underlined  that  since  the  OCTs  are  closely  linked  to  the  EU  by 
way of their constitutional links with their Member States, the future EU-OCT relations 
should also ensure the promotion of the EU's values and standards in the wider world. In 
this  Communication,  the  Commission  considered  that  the  rationale  of  the  future 
relationship should be more reciprocal and based on mutual interests.  

3.1.2.  The specific objectives 

As  far  as  the  environmental  pillar  of  sustainable  development  is  concerned,  the 
legislative proposal relating to the next OAD should: 

Support  the  OCTs'  sustainable  development  by  ensuring  a  coordinated 
partnership  in  the  field  of  environment,  climate  change  and  disaster  risk  reduction, 
which  would  (i)  enable  the  OCTs  to  elaborate  policies  and  strategies,  (ii)  enhance 
their integration in regional networks and initiatives.  

Enhance  the  visibility  of  the  EU-OCT  partnership  on  environmental,  climate 

change and disaster risk reduction issues. 

Help the OCTs to promote the conservation and sustainable use of biodiversity 

and ecosystem service.  

• 

• 

• 

3.2. 

Consistency with Other EU Policies 

The Lisbon Treaty reinforced the principle of the necessary coherence between the EU's 
internal and external policies. External action instruments and initiatives are expected to 
take into account EU concerns, values, interests and objectives that are dealt with within 
the  EU's  internal  policies,  by  providing  the  possibility  of  giving  them  an  external 
dimension.  Issues  such  as  climate  change  and  environment  have  to  be  streamlined  into 
EU  external  actions  and  should  be  an  integral  part  of  the  EU's  dialogue  with  third 
partners.  Inversely,  internal  policies  are  expected  to  take  into  account  the  possible 
impacts certain measures and initiatives may have on the EU's partners. 

The  Europe  2020  Agenda  adopted  by  the  Commission  in  March  2010  provides  the 
strategic framework against which the coherence of EU policies and the promotion of EU 
values, standards and interest need to be checked15. For OCTs, the principle of coherence 
is of particular importance as the inhabitants of OCTs possess the EU citizenship.  

Integrating  a  specific  part  dedicated  to  environmental,  climate  change  and  disaster  risk 
reduction  issues  in  the  next  OAD  will  allow  meeting  the  coherence  with  other  EU 

15  

Commission Communication COM (2010) 2020, 3 March 2010. 

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policies. The OCTs are not eligible to the financing instruments of EU internal policies. 
Therefore, there is no risk of overlap.  

Chapter 4: Policy Options 

The different policy options are developed under the framework of the provisions of the 
TFEU. 

4.1. Policy Option 1 'Zero Option' (No EU action for environmental and climate 

change issues nor for disaster risk reduction) 

Under this option, no EU financial assistance will be delivered to OCTs to support their 
actions in the field of environment, climate change and disaster risk reduction.  

4.2. 

Policy Option 2 'status quo' 

Under this option, the future OAD will not comprise significant change comparing to the 
current OAD. The decision to use EU funds in order to tackle environmental and climate 
change  issues  as  well  as  disaster  risk  reduction  will  depend  on  the  willingness  of  the 
OCTs, as it is currently the case. 

- 

 Sub-option  2A:  the  structure  of  the  future  OAD  will  be  the  same  as  the 
current OAD. 

-  Sub-option 2B: the visibility of issues relating to environment, climate change 
and disaster risk reduction is enhanced in the structure of the future OAD. 

4.3. 

Policy Option 3 'A specific programme dedicated to issues relating to 
environment, climate change and disaster risk reduction' 

Under  this  policy  option,  the  next  OAD  will  be  modified  as  presented  in  order  the 
visibility of EU-OCT cooperation in these areas and to provide for a specific programme 
financed by EU funds dedicated environment, climate change and disaster risk reduction.  

-  Sub-option 4A: environmental, climate change and disaster risk reduction are 

tackled at individual OCTs level 

-  Sub-option 4B: environmental, climate change and disaster risk reduction are 

tackled at regional level 

-  Sub-option 4C: environmental, climate change and disaster risk reduction are 

a thematic subject 

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Chapter 5: Analysis of Impacts 

Consequences of biodiversity loss 

Loss  of  biodiversity  and  ecosystems  has  social,  environmental  and  economic 
consequences, which are summarised briefly below.   

There are strong ethical and moral arguments in favour of protecting biodiversity in its 
own  right,  for  its  intrinsic  value,  independent  of  its  instrumental  value  to  humans.  In 
addition,  biodiversity  loss  has  economic  costs  that  are  only  now  starting  to  be  fully 
appreciated. 

Ecosystems provide a number of services that contribute directly and indirectly to human 
well-being. There are four main types of ecosystem services: provisioning services (e.g. 
food, water, fuel); regulating services (e.g. flood and disease control); supporting/habitat 
services (e.g. nutrient cycling); and cultural services (e.g. recreation). These services are 
of benefit locally, nationally or globally. 

In general, the loss of ecosystems is equivalent to losing an important "natural" structural 
system whereas the loss of biodiversity is equivalent to losing a vital component of that 
structure. The former has direct human, social and economic costs whereas the latter is 
often more subtle – it makes ecosystems less stable and more vulnerable to collapse. 

These economic impacts are, of course, associated with impacts on jobs. Some jobs are 
directly  concerned  with  the  conservation  and  management  of  biodiversity  (e.g.  in  land 
management, protection of sites and species, provision of advice, and scientific research 
and  monitoring  activities).  More  numerous  are  jobs  dependent  on  the  provisioning, 
regulating and cultural services that biodiversity plays a role in delivering. Other social 
consequences include health, territorial cohesion, and social inclusion impacts. 

Impacts of climate change 

The OCTs are particularly vulnerable to climate change effects. Mostly tropical islands, 
they are generally small in size with limited resources; they are often isolated and largely 
exposed  to  cyclones  and  sea  level  rise.  Insular  ecosystems  are  particularly  rich,  with 
remarkable  endemism  rates,  but  they  are  also  extremely  fragile  and  often  highly 
deteriorated; therefore, their resilience to new aggressions is limited. Furthermore, island 
economies  strongly  rely  on  the  quality  of  their  natural  environment,  notably  through 
tourism,  fishing  and  subsistence  farming;  a  degradation  of  their  environment  could 
deeply  affect  local  communities.  European  territories  located  in  the  Polar  Regions  are 
particularly  threatened  as  well;  rises  in  temperature  projected  in  the  Arctic  are  twice 
higher than the global average. In summary, the European Union overseas entities seem 
to  be  “sentinel  territories”  or  indicators  testifying  to  the  effects  of  global  changes  on 
ecosystems and societies worldwide 

Importance of the environment for the OCTs economies 

The economies of tropical islands are highly dependent upon natural resources. Industrial 
activities  are,  as  a  general  rule,  poorly  developed  and  subsistence  agriculture  plays  an 
important role in the informal economy. Fishing and agricultural activities also occupy an 
important place in the balance of trade. Pearl farming has become the primary economic 

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activity in French Polynesia. A change in the state of the natural resources brought about 
by  climate  change  could  therefore  have  a  particularly  serious  impact  on  the  already 
fragile economies of these territories. 

Finally, tourism has become an important driver of the economy in most of the overseas 
entities. For many, it has become the most important economic pillar and the one offering 
the  greatest  potential  for  development.  In  the  tropical  islands,  tourism  is  directly 
dependent  upon  the  quality  of  the  environment,  especially  the  beaches  and  the  coral 
reefs. A degradation of these features as a result of climate change could make these less 
attractive  destinations  and  put  a  brake  on  economic  development.  The  repeated 
destruction of tourist infrastructure by ever more intense cyclones and the emergence of 
new infectious tropical diseases are likewise phenomena that could lead to a reduction in  

Natural  capital  –  our  ecosystems,  biodiversity,  and  natural  resources  –  underpins 
economies,  societies  and  individual  well-being.  However,  the  values  of  ecosystem 
services  and  underlying  biodiversity  are  all  too  often  overlooked  or  poorly  understood. 
Rarely are they reflected in price signals in markets, and taken into account in day to day 
decisions  by  business  and  citizens.  Nor  are  they  reflected  adequately  in  the  economic 
accounts of society. 

Decision-makers  with  better  access  to  information  on  ecosystem  service  values  and  on 
economic  policy  tools  will  be  better  placed  to  make  efficient,  cost-effective  and  fair 
choices  and  to  justify  their  reasons  for  taking  action,  or  for  choosing  between  policy 
options. 

For  example,  biodiversity  loss  and  land  degradation  is  undermining  food  security.  The 
collapse  in  fisheries  and  other  food  harvested  from  the  wild  is  a  major  problem  in  this 
regard.  The  loss  of  diversity  of  the  wild  races  of  domesticated  plants  and  animals  as  a 
result of habitat loss or of ancient domesticated varieties as farmers adopt fewer modern 
hybrids in their farming systems is similarly a serious concern. 

It  is  difficult  to  quantify  the  economic  and  social  impacts  of  the  future  OAD,  but  one 
could  expect  in  absolute  terms  the  following  benefits,  in  case  the  next  partnership 
provides tackles environment, climate change and disaster risk reduction: 

• 

• 

• 

• 

Environment, climate change and disaster risk reduction become priorities in the 
EU-OCT partnership. 

Substantial  health  impacts  both  from  the  investment  in  improved  natural 
environments and from improvements in environmental quality. 

A  sustainable  management  of  natural  resources  and  the  conservation  of 
ecosystems  will  have  an  impact  on  OCTs  economies.  For  example,  the 
conservation  of  lagoon  ecosystems  (coral  reef)  in  small  islands  is  essential  to 
ensure fish resources and thus the economic activities relating to the exploitation 
of these resources. 

It  is  expected  that  a  specific  programme  dedicated  to  environment,  climate 
change  and  disaster  risk  reduction  tends  to  create  and  retain  employment  in 
areas that are being depopulated and/or have lower relative incomes.  

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• 

Conservation  of  biodiversity  and  ecosystems  could  also  develop  a  green 
tourism, allowing for the creation of employment in this economic sector. 

Chapter 6: Comparison of Options 

6.1. 

Policy Option 1 'Zero Option' (No EU action for environmental and climate 
change issues nor for disaster risk reduction) 

Under  this  option,  no  EU  funds  from  the  11th  OCT-EDF  will  be  dedicated  to 
environmental,  climate  change  and  disaster  risk  reduction  issues.  No  complementary 
funds could be mobilised from EU budget lines and programs. 

As a consequence, the general and specific objectives identified in section 3.1 would not 
be  attained  and  the  solutions  to  the  difficulties  encountered  by  the  OCTs  will  not  be 
implemented with the support of the EU. There will be no EU added value in the field of 
environment, climate change and disaster risk reduction. 

6.2. 

Policy Option 2 'Status quo' 

This policy option proposes no substantial revision of the OAD regarding environment, 
climate change and disaster risk reduction. 

Sub-option 2A: the structure of the future OAD will be the same as the current OAD 

Under this sub-option, the current structure of the EU-OCT association will be renewed 
after  2013  and  the  future  OAD  will  still  not  specifically  address  the  environmental, 
climate change and disaster risk reduction issues. 

The utilisation of the territorial and regional allocations being based on the principle of 
ownership, the amount of EU funds mobilised on this field will depend on the political 
willingness of the OCTs, as it is currently the case. 

Unequal  involvement  of  the  OCTs  in  these  issues  with  the  support  of  the  EU  will 
continue  and  the  achievement  of  the  general  and  specific  objectives  in  section  3.1  will 
largely depend on their willingness. The underlying drivers identified in section 2.5 will 
not be addressed, unless the OCTs decide to mobilize their allocations on these issues. 

Mainstreaming will nevertheless be possible, but coordinated action will not be possible 
under this option, as a dedicated financial framework will not be set up.  

Sub-option  2B:  the  visibility  of  issues  relating  to  environment,  climate  change  and 
disaster risk reduction is enhanced in the structure of the future OAD 

This sub-option proposes that Part 2 of the future OAD is renamed 'The areas of OCT-
EU partnership' and consecrates a specific article to an EU-OCT partnership on the field 
environment, climate change and disaster risk reduction.  

The changes (in italics) introduced will be the following: 

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Current OAD 

Future OAD 

areas  of  OCT-EC 

PART  2:  The 
cooperation 
Article 10: Areas of Cooperation 
Article 11: Productive Sectors  
Article 12: Trade Development 
Article 13: Trade in Services  
Article 14: Trade-related Areas  
Article 15: Social Sectors  
Article  16:  Regional  Cooperation  and 
Integration  
Article 17: Cultural and Social Cooperation 

areas  of  OCT-EU 

PART  2:  The 
partnership 
Article 10: Areas of Partnership 
Article 11: Productive Sectors  
Article 12: Trade Development 
Article 13: Trade in Services  
Article 14: Trade-related Areas  
Article  15:  Environment,  climate  change 
and disaster risk reduction 
Article 16: Social Sectors  
Article  17:  Regional  Cooperation  and 
Integration  
Article 18: Cultural and Social Cooperation 

The  provisions  concerning  the  field  of  environment,  climate  change  and  disaster  risk 
reduction currently contained in articles 11, 13, 14, 15 and 16 will be positioned in the 
future article 15. 

Under  this  option,  article  10  will  remain  unchanged  and  will  still  provide  for  a 
partnership "in accordance with the priorities established in the development strategies 
for each OCT or, where appropriate, in the form of regional measures". 

As  a  consequence,  like  in  sub-option  2A,  the  utilisation  of  the  territorial  and  regional 
allocations being based on the principle of ownership, the amount of EU funds mobilised 
in  this  field  will  depend  on  the  political  willingness  of  the  OCTs,  as  it  is  currently  the 
case. 

Unequal  involvement  of  the  OCTs  in  these  issues  with  the  support  of  the  EU  will 
continue  and  the  achievement  of  the  general  and  specific  objectives  in  section  3.1  will 
largely depend on their willingness. The underlying drivers identified in section 2.5 will 
not be addressed, unless the OCTs decide to mobilize their allocations on these issues. 

Mainstreaming will nevertheless be possible, but coordinated action will not be possible 
under this option, as a dedicated financial framework will not be set up.  

The main advantage of sub-option 2B compared to sub-option 2A will be to enhance the 
visibility  in  the  field  of  environment,  climate  change  and  disaster  risk  reduction  as  an 
area  of  partnership  between  the  OCTs  and  the  EU.  This  sub-option  will  thus  address 
driver  number  3.a  identified  in  section  2.5  above  and  specific  objective  number  2 
describe in section 3.1.2. 

6.3. 

Policy  Option  3  '  A  specific  programme  dedicated  to  issues  relating  to 
environment, climate change and disaster risk reduction ' 

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Under  this  policy  option,  the  visibility  of  EU-OCT  cooperation  in  these  fields  will  be 
enhanced and an amount of EU funds will be specifically allocated in order to address 
these issues. 

Policy option 3 proposes to modify the next OAD in its Parts 2 and 3.  

The  changes  (in  italics)  introduced  in  Part  2  of  the  OAD  will  be  as  described  in  sub  - 
policy option 2A: 

Current OAD 

Future OAD 

areas  of  OCT-EC 

PART  2:  The 
cooperation 
Article 10: Areas of Cooperation 
Article 11: Productive Sectors  
Article 12: Trade Development 
Article 13: Trade in Services  
Article 14: Trade-related Areas  
Article 15: Social Sectors  
Article  16:  Regional  Cooperation  and 
Integration  
Article 17: Cultural and Social Cooperation 

areas  of  OCT-EU 

PART  2:  The 
partnership 
Article 10: Areas of Partnership 
Article 11: Productive Sectors  
Article 12: Trade Development 
Article 13: Trade in Services  
Article 14: Trade-related Areas  
Article  15:  Environment,  climate  change 
and disaster risk reduction 
Article 16: Social Sectors  
Article  17:  Regional  Cooperation  and 
Integration  
Article 18: Cultural and Social Cooperation 

The changes introduced in Part 3 of the OAD will be the following: 

-  The  article  relating  to  the  objectives  of  the  development  finance  cooperation 
(current  Article  18)  shall  make  a  specific  reference  to  the  specific  objectives 
identified in section 3.1.2 of the present report:  

o  Support  the  OCTs'  sustainable  development  by  ensuring  a  coordinated 
partnership  in  the  field  of  environment,  climate  change  and  disaster  risk 
reduction, which would (i) enable the OCTs, with the support of the EU, 
to  elaborate  policies  and  strategies,  (ii)  enhance  their  integration  in 
regional networks and initiatives.   

o  Enhance  the  visibility  of  the  EU-OCT  partnership  on  environmental, 

climate change and disaster risk reduction issues. 

o  Help  the  OCTs  to  promote  the  conservation  and  sustainable  use  of 

biodiversity and ecosystem service.  

-  The article relating to the scope of financing (current Article 21) already includes 
institutional  development,  capacity  building  and  integration  of  environmental 
aspects. This reference in the next OAD shall be enlarged to climate change and 
disaster risk reduction. 

The  current  structure  of  Part  3  –  Title  1  of  the  OAD  will  be  modified  in  order  to 
introduce a specific chapter dedicated to environmental, climate change and disaster risk 
reduction, as follows: 

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Current OAD 
Instruments 

1: 

20: 

and 

Single 

finance 

Development 

Programming 

of  OCT-EC 

PART 
3: 
cooperation 
TITLE 
cooperation 
Chapter 1: General Provisions 
Article 18: Objectives 
Article 19: Principles 
Article 
Documents 
Article 21: Scope of Financing 
Article 22: Eligibility for Financing 
Article 
Programming 
23: 
Implementation 
Article 24: The EDF-OCT Committee 
Chapter  2:  Resources  Made  Available  to 
the OCTs 
Article 25: Financial Assistance 
Chapter  3:  Private  sector 
support 
Article 26: Investment Promotion 
Article  27: 
Financing 
Chapter 4: Additional Support in the Event 
of Fluctuations in Export Earnings 
Article 28: Additional Support 
Chapter  5:  Support  for  Other  Actors  of 
Cooperation 
Article 29: Objectives and Financing 
Chapter  6:  Support  for  Humanitarian  and 
Emergency Aid 
Article 30: Objectives and Means 
Chapter 7: Implementation Procedures 
Article 31: Technical Assistance 
Article 32: Financial Control 

Investment  Support  and 

investment 

Indicative amendments  

1: 

20: 

and 

Single 

finance 

Development 

Programming 

Instruments  of  OCT-EU 

PART  3: 
partnership 
TITLE 
cooperation 
Chapter 1: General Provisions 
Article 18: Objectives 
Article 19: Principles 
Article 
Documents 
Article 21: Scope of Financing 
Article 22: Eligibility for Financing 
Article 
Programming 
23: 
Implementation 
Article 24: The EDF-OCT Committee 
Chapter  2:  Resources  Made  Available  to 
the OCTs 
Article 25: Financial Assistance 
Chapter  3:  Private  sector 
support 
Article 26: Investment Promotion 
Article  27: 
Financing 
Chapter  4:  Promotion  of  activities  in  the 
field of environmental, climate change and 
disaster risk reduction 
Article 28: Objectives and Means 
Chapter 5: Additional Support in the Event 
of Fluctuations in Export Earnings 
Article 29: Additional Support 
Chapter  6:  Support  for  Other  Actors  of 
Cooperation 
Article 30: Objectives and Financing 
Chapter  7:  Support  for  Humanitarian  and 
Emergency Aid 
Article 31: Objectives and Means 
Chapter 8: Implementation Procedures 
Article 32: Technical Assistance 
Article 33: Financial Control 

Investment  Support  and 

investment 

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Within this framework, three sub-options can be identified: 

Sub-option 3A: environmental, climate change and disaster risk reduction are tackled at 
individual OCTs level 

This sub-option could imply the introduction of a new criterion for the distribution of the 
territorial  envelope.  This  criterion  could  be  based  on  some  of  the  environmental 
indicators used by the European Commission in its annual environment policy review.16  

Under  this  sub-option,  environmental,  climate  change  and  disaster  risk  reduction 
activities will be funded within the territorial allocations of the OCTs.  

The OCTs will mobilize one part of their territorial allocations to support the focal sector 
they will choose in the framework of the policy dialogue with the Commission, and will 
use the other part of their territorial allocation in order to support activities in the field on 
environment, climate change and disaster risk reduction.  

In this hypothesis, two different approaches can be identified: 

-  The  territorial  Single  Programming  Documents  will  include  two  focal  sectors 

maximum. 

-  There  will  be  two  Single  Programming  Documents  per  OCTs  eligible  to  the 
territorial  allocations:  a  first  one  dedicated  to  the  focal  sector  identified  in  the 
framework  of  the  policy  dialogue  between  the  OCTs  and  the  European 
Commission,  a  second  one  for  environmental,  climate  change  and  disaster  risk 
reduction issues. 

This  hypothesis  requires  the  modification  of  Article  10  of  the  current  OAD  (Part  2)  in 
order to introduce an obligation to tackle environmental, climate change and disaster risk 
reduction in the strategies of each OCT. 

Under this sub-option, eligibility to EU budget lines and programs shall be maintained or 
reinforced  when  possible  (for  example  via  targeted  calls  for  proposals)  in  order  to 
support cooperation with other partners and networking. 

This  sub-option  could  also  provide  for  incentives  in  the  form  of  additional  funds  to  be 
released  after  the  mid-term  review  on  the  basis  of  the  performance  of  the  OCTs  in  the 
implementation of the focal sector concerning environment, climate change and disaster 
risk reduction.  

Sub-option 3A does not plead in favour of simplification. 

In the event in which a Single Programming Document would include two focal sectors, 
the  programming  exercise  will  not  progress  at  the  same  pace  for  the  two  sectors  as 
different local administrations and/or interlocutors will be involved in the exercise. 

In  case  of  two  separate  Single  Programming  Documents,  the  administrative  procedures 
on the Commission's side will be increased since all these documents will each require an 
adoption by the College. 

Sub-option 3B: environmental, climate change and disaster risk reduction are tackled at 
regional level 

16  

More information on these indicators on the Commission's annual environment policy review on 
the website of DG Environment http://ec.europa.eu/environment/indicators/index_en.htm  

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Under this option, the regional Single Programming Document will integrate a specific 
regional  sub-program  dedicated  to  environment,  climate  change  and  disaster  risk 
reduction will be proposed to all OCTs, including the OCTs which are not eligible to a 
territorial allocation as well as the uninhabited OCTs.  

In  order  to  address  the  drivers  identified  in  section  2.5,  this  regional  sub-programme 
should principally: 

- 

 accompany the OCTs in elaborating and implementing the necessary legal framework 
in  domains 
identified  as  priorities:  climate  change  mitigation,  biodiversity 
conservation,  preparedness  and  response  to  natural  disasters,  management  of  natural 
resources, waste and water management, green energy (driver 1);  

-  support the OCTs in joining regional initiatives (drivers 1 and 2). 

In  order  to  finance  the  perpetuation  of  the  BEST  scheme,  the  regional  sub-programme 
would  reserve  an  amount  dedicated  to  calls  for  proposals  that  would  allow  for  the 
involvement  of  civil  society.  Since  the  BEST  scheme  has  the  advantage  to  associate 
OCTs  and  Outermost  regions  of  the  EU  and  thus,  foster  cooperation  between  these 
regional  partners,  the  reserved  amount  and  the  related  calls  for  proposals  should  be 
managed by a service of the European Commission that can act for both the OCTs and 
Outermost regions.  

This  sub-option  requires  modifying  Article  10  of  the  current  OAD  (Part  2)  in  order  to 
introduce  an  obligation  to  tackle  environmental,  climate  change  and  disaster  risk 
reduction at the regional level. 

Under this sub-option, eligibility to EU budget lines and programs shall be maintained or 
reinforced  when  possible  (for  example  via  targeted  calls  for  proposals)  in  order  to 
support cooperation with other partners and networking. 

In terms of simplification, this sub-option allows reducing administrative procedures in 
integrating  the  environmental  and  climate  change  dimensions  in  already  requested 
programming documents.  

Sub-option 3C: environmental, climate change and disaster risk reduction are a thematic 
subject 

Under  this  sub-option,  a  specific  envelope  will  be  created  for  environmental,  climate 
change and disaster risk reduction issues. It will not be included within the territorial nor 
the regional allocations.  

All OCTs, including uninhabited ones, will be eligible for this envelope.  

This envelope would be implemented by the European Commission under the form of a 
Technical  Cooperation  Facility.  This  modality  allows  flexibility  (for  example,  an  OCT 
can rapidly join a regional initiative). 

In order to finance the perpetuation of the BEST scheme, this envelope would reserve an 
amount  dedicated  to  calls  for  proposals  that  would  allow  for  the  involvement  of  civil 
society. Since the BEST scheme has the advantage of associating OCTs and Outermost 
regions  of  the  EU  and  thus,  foster  cooperation  between  these  regional  partners,  the 
reserved amount and the related calls for proposals should be managed by a service of the 
European Commission that can act for both OCTs and Outermost Regions.  

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Under this sub-option, eligibility to EU budget lines and programs shall be maintained or 
reinforced  when  possible  (for  example  via  targeted  calls  for  proposals)  in  order  to 
support cooperation with other partners and networking. 

In terms of simplification, the administrative tasks of the European Commission will be 
increased  by  the  management  of  the  contracts  (preparation  of  terms  of  reference,  calls, 
contracting procedures, disbursements, closure of contracts). 

Main advantages of policy option 3 

-  Policy option 3, which proposes to use an amount of funds for environmental, climate 
change and disaster risk reduction activities, would enhance the EU added value as a 
global partner in the field of environment, climate change and disaster risk reduction. 

-  For the same reason, policy option 3 would enhance the visibility of the action of the 
EU  in  the  OCTs  in  this  field.  This  visibility  would  be  greater  under  sub-options  3A 
and 3B which ensure a coordinated action through programming. 

-  Sub-option 3A allows addressing the environmental, climate change and disaster risk 

reduction challenges an individual OCT faces. 

-  Sub-options  3A  and  3B  allow  addressing  the  environmental,  climate  change  and 
disaster risk reduction challenges in a coordinated way and will pave the way for an 
integration of these issues in OCTs' public policies and strategies. 

-  Sub-option  3B  does  not  increase  the  administrative  procedures  on  the  Commission's 
side  as  the  programming  and  implementation  of  the  sub-regional  programme  come 
within already existing procedures. 

-  Policy  option  3B  and  3C  would  foster  regional  cooperation  and  integration  of  the 

OCTs. 

-  Sub-options 3B and 3C allow for the continuation of the BEST scheme and builds on 
a  dynamic  initiated  in  2008,  developed  by  the  European  Commission,  supported  by 
the  European  Parliament  and  implemented  for  the  first  time  by  the  European 
Commission in 2011. 

-  Sub-options 3A and 3B allow the implementation of the programs by the OCTs. 

-  Sub-option 3C allows a real flexibility since activities are not programmed in advance 

for the whole period. 

Main drawbacks of policy option 3 

-  Simplification is not attained under sub-options 3A and 3C. 

-  Sub-option  3A,  which  tackles  environmental,  climate  change  and  disaster  risk 
reduction  at  the  territorial  level,  will  not  allow  for  the  perpetuation  of  the  BEST 
scheme which notably aims to gather OCTs and Outermost Regions of the EU. 

-  Sub-option 3C will not allow a coordinated action of the EU in the OCTs in the field 
of  environment,  climate  change  and  disaster  risk  reduction.  Indeed,  Technical 
Cooperation Facilities are managed under the principle: "First come, First served". 

EN 

89 

   EN 

 
 
Impacts of the policy options on EU added value identified in section 2.7 of Annex 11:  

Negative ranking from (---) to (-), Neutral (0), Positive ranking from (+) to (+++) 

Option 1 

Sub-option 2A 

Sub-option 2B 

Sub-option 3A 

Sub-option 3B 

Sub-option 43C 

(---) 

(-) 

(0) 

(++) 

(+++) 

(+++) 

Impacts of the policy options on the underlying drivers identified in section 2.5 of Annex 11:  

Negative ranking from (---) to (-), Neutral (0), Positive ranking from (+) to (+++) 

Drivers 

Option 1 

Sub-option 2A 

Sub-option 2B 

Sub-option 3A 

Sub-option 3B 

Sub-option 3C 

Insufficient  legal  and  political 
basis/framework for action 

Structural weaknesses 

Limitations  of 
association 

the  EU/OCT 

(---) 

(---) 

(---) 

(--) 

(--) 

(---) 

(--) 

(--) 

(---) 

(++) 

(++) 

(++) 

(+++) 

(+++) 

(++) 

(++) 

(++) 

(++) 

EN 

90 

EN 

 
  
 
 
 
 
 
Impacts of the policy options on the objectives identified in section 3.1 of Annex 11: 

Negative: ranking from (---) to (-), Neutral (0), Positive ranking from (+) to (+++) 

Objectives 

Option 1 

Sub-
option 2A 

Sub-
option 2B 

Sub-
option 3A 

Sub-
option 3B 

Sub-
option 3C 

Promotion of close economic and social development 

Serve  the  interests  and  prosperity  of  the  inhabitants  to  lead  them  to  the 
economic, social and cultural development to which they aspire 

Enhancing competitiveness 

Strengthening resilience 

Promoting cooperation with other partners 

Support  the  OCTs'  sustainable  development  by  ensuring  a  coordinated 
partnership  in  the  field  of  environment,  climate  change  and  disaster  risk 
reduction in order to enable the OCTs to elaborate policies and strategies and 
to enhance their integration in regional initiatives 

Enhance visibility of the EU-OCT partnership on these issues 

Help  the  OCTs  to  promote  the  conservation  and  sustainable  use  of 
biodiversity and ecosystem services 

(---) 

(---) 

(---) 

(---) 

(---) 

(---) 

(---) 

(---) 

(0) 

(+) 

(+) 

(+) 

(+) 

(+) 

(0) 

(+) 

(+) 

(+) 

(+) 

(+) 

(+) 

(+) 

(+) 

(+++) 

(---) 

(---) 

(++) 

(++) 

(+) 

(+++) 

(+++) 

(+++) 

(++) 

(++) 

(+) 

(+++) 

(++) 

(++) 

(0) 

(---) 

(++) 

(---) 

(++) 

(---) 

(+++) 

 (+++) 

(+++) 

(+++) 

EN 

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ANNEX  12  -  THEMATIC  REPORT  ON  TRADE  AND  TRADE  RELATED  ASPECTS  OF 
THE OVERSEAS ASSOCIATION DECISION 

1. 

INTRODUCTION 

The present paper regarding the trade and trade related aspects of the Overseas Association 
Decision has been prepared by a dedicated working group consisting of representatives of 
the European Commission in the context of the Impact Assessment of the revision of the 
Overseas  Association  Decision  which  the  European  Commission  conducted  between 
September 2011 and January 2012. Its purpose is: 

- 

- 

- 

to provide a detailed analysis of the economic and trade challenges to which OCTs are 
confronted and their underlying drivers; 

to  evaluate  the  trade  regime  which  the  EU  offers  OCTs  as  well  as  the  assistance  it 
provides to support OCT trade related activities; and 

to develop and compare possible options for EU policy towards OCTs in the field of 
trade and trade related issues. 

Sources 

The  paper  feeds  into  the  Impact  Assessment  report  prepared  by  the  Commission  Inter 
Service  Group  on  Overseas  Countries  and  Territories.  It  takes  into  account  findings  and 
recommendations of three kinds of sources:  

(a) EU official Documents 

-  Council,  Conclusions  (16710/09)  on  the  EU’s  relations  with  Overseas  Countries  and 

Territories (OCTs), 22 December 2009; 

-  Commission,  Green  Paper  COM(2008)  383  on  Future  relations  between  the  EU  and 

the Overseas Countries and Territories reference, 25 June 2008; 

-  Commission, Staff working document accompanying the green paper “Future relations 
between  the  EU  and  the  Overseas  Countries  and  Territories”  COM  (2008)  383, 
SEC(2008) 2067, 25 June 2008; 

-  Commission,  Communication  COM(2009)  623  on  Elements  for  a  new  partnership 

between the EU and the OCTs, 6 November 2009; 

(b) External studies 

-  BROOKS,  P.,  STONEMAN,  R.  and  RIOS,  R.  Enhancing  Atlantic  OCTs'  Trade  and 
Economic  Activity 
the  European  Union), 
EUROPEAID/11/9860/C/SV/multi  -  Lot  10,  No  2008/170783,  February  2010 
(hereafter: BROOKS, P., STONEMAN, R. and RIOS, R. (2010) ); 

(within 

region 

their 

and 

-  ECO  Consult  et  al.,  Region  Level  Evaluation:  Overseas  Countries  and  Territories 
(OCT), Contract N° EVA 2007/geo-acp, draft Final Report, July 2011 (hereafter: ECO 
Consult et al. (2011) );  

-  LUFF,  D.  et  al.,  the  Analysis  of  the  Regional  Economic  Integration  Processes 
(Caribbean,  Pacific  and  Indian  Ocean)  and  Recommendations  Aiming  at  Enhancing 

EN 

92 

   EN 

 
 
- 

- 

Trade  and  Economic  Activity  of  OCTs  within  their  Region  and  with  the  EC, 
Framework  Contract  BENEF  –  Lot  11,  No  2008/170791,  February  2010  (hereafter: 
LUFF et al. (2010) ); 

SALMON  J.M.,  OCT  Regional  Integration  Impact  Study,  Final  Report,  EC  Project 
No. FWC BENEF Lot 11– Specific Contract No. 2006/123116, July 20071 (hereafter: 
SALMON (2007) ); 

the  OCTs  and 
SPANNEUT,  C.,  Analysis  of 
Recommendations  Aiming  at  Enhancing  Statistical  Systems  of  OCTs,  Framework 
Contract  Beneficiaries  –  Lot  11,  N°  2010/253401/1,  Draft  Final  Report,  September 
2011 (hereafter: SPANNEUT (2011) ). 

the  Statistical  Systems 

in 

(c) Stakeholder consultations 

Following the publication of Green Paper COM(2008) 383 on Future relations between the 
EU and the Overseas Countries and Territories on 25 June 2008, a public consultation was 
held from 1 July to 17 October 2008. This included a stakeholder conference in Brussels 
on 3 October 2008. Subsequently consultations of stakeholders, notably the OCTs and their 
Member  States,  continued  to  be  organised  on  a  regular  basis  via  different  channels  and 
means.  A  more  extensive  discussion  of  these  consultations  is  provided  in  Chapter  5  of 
Annex 12. 

A list of references is provided at the end of this paper. 

Statistical Data 

The  analysis  is  based  on  both  qualitative  and  quantitative  data,  where  available.  An 
important  reservation  needs  to  be  made  regarding  the  latter.  The  analysis  below  mainly 
draws on data directly available to the European Commission, such as the imports of the 
EU  from  OCTs  or  its  exports  to  OCTs  (see  Annex  12.1).  Whereas  extensive  data  are 
available as far as the OCT/EU trade is concerned, this is not always the case where OCT 
trade with other third countries is concerned. LUFF et al. (2010) observed that with regard 
to  the  latter  there  is  a  general  lack  of  reliable  and  harmonised  trade  and  tariff  data 
regarding OCTs in international databases such as the United Nations' Commodity Trade 
Statistics  (COMTRADE)  database,  the  World  Bank's  World  Integrated  Trade  Solutions 
(WITS)  database  or  the  International  Trade  Centre's  Market  Access  Map  (MacMap) 
database2. Statistical capabilities of most OCTs were deemed to be insufficient to allow for 
a systematic analysis of trade flows.  

The  problems  encountered  above  were  confirmed  by  a  later  study,  SPANNEUT  (2011), 
specifically  dedicated  to  OCT  statistical  systems  and  capabilities.  The  study  found  that 
whereas  all  of  the  OCTs  that  responded  to  its survey  produced  statistics  relative  to  trade 
(exports  and  imports  in  broad  categories,  volume  and  value),  these  were  not  always 

1  

2  

EN 

See: 
http://ec.europa.eu/development/icenter/repository/OCT_Impact_Study_RegInt_and%20EPA_2007
0907_EN.pdf (accessed: 07/11/2010) 

et 

al. 

see: 
For 
LUFF 
http://comtrade.un.org/db/default.aspx. For the WITS database, see: http://wits.worldbank.org/wits/. 
For the MacMap database, see: http://www.macmap.org/ (accessed: 07/11/2011). 

COMTRADE 

database, 

(2010), 

23. 

the 

p. 

93 

   EN 

 
                                                 
publicly  available  (through  websites,  hard  copies  and/or  CD-ROM)3.  Among  the  reasons 
given to explain the lack of public availability of certain statistics (not only trade related) 
the  following  four  were  most  cited:  lack  of  demand,  provision  only  on  demand,  lack  of 
financial resources and unreliability or non-conformity with international standards. Where 
statistics were publicly available, their publication was not always timely and the reference 
periods  not  up  to  date.  Also,  the  available  statistics  were  not  always  in  conformity  with 
internationally  agreed  nomenclatures.  Spanneut  found  that  often  different  versions  and 
combinations  were  used,  at  different  levels  of  analysis,  of  national  and  international 
classification systems such as the Harmonised System (World Customs Organisation), the 
Standard  International  Trade  Classification  (UN)  and  the  Broad  Economic  Classification 
(UN)4.  

2. 

PROBLEM DEFINITION 

2.1. 

Purpose and Objectives of the OCT/EU Association 

Non-European Overseas Countries and Territories (OCTs) with constitutional links to four 
EU  Member  States  (Denmark,  France,  the  Netherlands  and  the  United  Kingdom)  are 
associated to the EU. The legal basis for the association has been laid down in Part Four 
(Articles  198-204)  of  the  Treaty  on  the  Functioning  of  the  European  Union  (TFEU)  and 
has  been  implemented  by  consecutive  Overseas  Association  Decisions  (OAD)5.  The 
purpose  of  this  association  relationship  is  to  foster  the  OCTs'  economic  and  social 
development and to create close economic ties between them and the EU as a whole (Art. 
198 TFEU). The association is intended to primarily further the interests and prosperity of 
the inhabitants of the OCTs, supporting them in achieving the economic social and cultural 
development they aspire to.  

The general objectives of the association's trade and economic cooperation part, as defined 
in the TFEU and the OAD are: 

- 

- 

- 

- 

3  

4  
5  

to ensure OCTs' access to the EU market (Arts. 199 – 202 TFEU);  

to  contribute  to  the  necessary  investment  for  the  economic  development  of  OCTs 
(ibid.); 

to put OCTs on a sustainable development path, tackle poverty and gradually integrate 
them in world economies (Art. 1 OAD); 

to  support  the  effective  integration  of  OCTs  in  the  global  economy  and  the 
development of their trade in goods and services to regional and world markets (Art. 
34 OAD). 

SPANNEUT  (2011),  pp.  43-44.  Where  statistics  are  publicly  available,  but  only  in  paper  or  CD 
ROM version, this may mean that access to relevant is de facto limited as it implies that the user has 
to physically go to the relevant agency/government department to retrieve the data or contact it and 
await the data. 

Idem, p. 52. 

Currently by the Council Decision of 27 November 2001 (2001/822/EC), OJ L 314 of 30.11.2001 as 
amended by the Council Decision of 19 March 2007 (2007/249/EC), OJ L 109 of 26.4.2007. 

EN 

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The general objectives of the trade related development assistance under the association, as 
defined  in  Article  18  of  the  OAD  are  amongst  others  to  support  and  promote  the  OCTs' 
own  efforts  to  achieve  sustainable  social,  cultural  and  economic  development,  by 
supporting: 

-  OCT efforts to achieve economic diversification; 

-  OCT private investment and private sector development; 

- 

- 

inter-OCT and OCT/ACP regional cooperation and integration; 

the establishment of more balanced economic and social relations between the OCTs, 
ACP countries, the EU and the rest of the world. 

2.2. 

Problem to be Addressed 

The  purpose  and  objectives  of  the  OCT/EU  association  have  not  been  fully  achieved. 
OCTs  continue  to  face  economic  and  social  problems  and/or  struggle  to  found  their 
economies on a sustainable basis. They are confronted with a number of challenges related 
to  their  insular  character,  remoteness  and  rich,  but  vulnerable  environments.  For  some 
OCTs,  economic  ties  with  the  EU  are  of  great  importance,  but  in  general  OCT/EU  trade 
tends  to  be  one-sided,  and  with  little  diversification.  For  other  OCTs,  the  economic  ties 
between them and the EU remain underdeveloped. 

2.3. 

Challenges for the Future 

The main challenge that the OCTs need to address consists in putting their economies and 
societies on a sustainable development path by: 

- 

- 

- 

increasing their competitiveness; 

reducing their vulnerability; and 

cooperating  with  their  neighbours  and  integrating  in  the  regional  and  world 
economies. 

To achieve this goal, the OCTs will have to be able to fully exploit the opportunities which 
their regional and international economic environments have to offer. Indeed, the regional 
and  international  economic  environment  of  the  OCTs  has  considerably  changed  over  the 
last  few  years.  This  is  partly  due  to  the  multiplication  of  bilateral  free  trade  agreements 
(FTAs) by leading trade powers such as the US, Canada and the EU. OCTs will need to 
adopt the necessary trade and industrial policies, develop the required expertise, capacities 
and infrastructure and be instrumental to the creation of an enabling/business environment 
that is supportive of trade activities, so as to be able to cope with these challenges. 

For  the  EU,  the  challenge  resides  in  supporting  the  OCTs  with  the  accomplishment  of 
these  goals,  via  the  framework  of  an  OCT/EU  association  relationship  that  is  adapted  to 
OCT needs, realities and particularities. 

EN 

95 

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2.4. 

Underlying Drivers 

The underlying drivers of the problems and challenges which the OCTs face relate to: 

- 

Increasing  divergence  between  OCTs  in  terms  of  wealth,  prospects  for  economic 
development, natural resources endowment and the correlating potential for economic 
development, demographic dynamics 

-  Geographic  characteristics  of  inhabited  OCTs6:  Arctic,  subtropical  and  tropical 

locations, remoteness, size of land mass and of exclusive economic zone 

-  Micro-economies  with  structural  weaknesses,  a  small  production  base,  with  exports 

concentrated in a few sectors 

-  Changes in trade patterns, including an increasing number of FTAs by the EU, the US 
and Canada (main  destination  markets for some OCTs), resulting in erosion of trade 
preferences for OCTs and increased competition for their exports 

-  Changing international regulatory environment 

- 

Size and capacities of OCT economic operators and OCT authorities 

-  Absence of industrial and trade policies 

-  Limited capacities, expertise and infrastructure in trade and trade related areas 

-  Limited  participation  in  regional  cooperation  and  integration  processes,  amongst 
others  due  to  their  specific  constitutional  status,  which  sometimes  impedes  OCTs  to 
take part in international agreements and initiatives 

Annex  12.2  provides  a  schematic  representation  of  the  problem  to  be  addressed  and  the 
underlying drivers in the form of a problem tree of the OCT trade regime. 

3. 

OCT TRADE POSITION  

3.1. 

Commonalities between OCT Economies and Trade Positions 

From  the  literature  it  appears  that  OCTs  have  a  number  of  economic  and  commercial 
commonalities7. They all constitute small island economies that are vulnerable to external 
shocks. Most OCTs are remote and/or at great distance from the European continent and 
their neighbouring markets, with low freight transport connectivity, irregular shipping and 
air  transport  services  and  high  transport  costs  as  a  consequence.  This  forms  a  major 
obstacle  to  the  OCTs'  participation  in  those  markets.  UNCTAD'  Liner  Shipping 
Connectivity  Index  (LSCI)  ECO  Consult  et  al.  (2011)  gives  an  indication  of  the  OCTs' 
weak integration into global liner shipping networks. 

Evolution of shipping lines connectivity index 2004-2009 

6  

7  

Of the 21 OCTs associated to the EU, mentioned in Annex II to the TFEU, four are uninhabited: the 
British  Antarctic  Territory,  the  British  Indian  Territory,  South  Georgia  and  the  South  Sandwich 
Islands, and the French Southern and Antarctic Territories 

The present chapter draws from the following studies: LUFF et al. (2010), BROOKS, STONEMAN 
and  RIOS  (2010)  and  SALMON  (2007)  studies.  See  list  of  references  in  Annex  1  of  the  Impact 
Assessment. 

EN 

96 

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2004 

2005 

2006 

2007 

2008 

Growth p. a 
2004 – 2008 

Aruba 
Cayman Islands 

Greenland 

French Polynesia 
Netherlands Antilles 

New Caledonia 

France 
Netherlands 

7.37 
1.90 

2.32 

10.46 
8.16 

9.83 

67.34 
78.81 

7.52 
2.23 

2.32 

11.14 
8.23 

10.34 

70.00 
79.95 

7.53 
1.79 

2.27 

8.91 
7.82 

9.00 

5.09 
1.78 

2.27 

8.60 
9.22 

8.81 

5.09 
1.78 

2.36 

9.01 
8.56 

9.23 

67.78 
80.97 

64.84 
84.78 

66.24 
87.57 

United Kingdom 

81.69 

79.58 

81.53 

76.77 

77.99 

Source: ECO Consult et al. (2011) p. 71. 

- 0.57 
- 0.03 

- 0.01 

- 0.36 
- 0.10 

- 0.15 

- 0.28 
2.19 

- 0.92 

2009 

3.52 
1.76 

2.27 

8.39 
8.57 

8.74 

67.01 
88.66 

84.82 

Growth 
2009/2008 

Rank 
2009 (161 
countries) 

- 1.57 
- 0.02 

- 0.09 

- 0.62 
0.01 

- 0.49 

0.77 
1.09 

6.83 

144 
158 

156 

95 
92 

90 

13 
4 

6 

The production bases of OCTs are generally small and as net importers most of them face 
structurally  negative  trade  balances,  even  if  between  2004  and  2008  OCT  exports  have 
been growing 9% annually from USD 1.2 billion to USD 1.8 billion. In the same period, 
however, OCT imports increased with 10% every year from USD 3.4 billion to USD 5.9 
billion8.  With  an  account  surplus  of  EUR  5.8  million  in  2007  (data  ECO  Consult  et  al. 
(2011), the Falkland Islands are an exception to this trend.  

The  tendency  for  OCTs  to  run  trade  deficits  is  also  reflected  in  OCT/EU  trade  flows.  In 
2010 the OCT/EU export ratio was approximately 1/2, with the value of EU27 exports to 
the  OCTs  amounting  to  over  EUR  2  billion  and  the  value  of  OCT  exports  to  the  EU27 
amounting  less  than  EUR  1  billion.  The  two  tables  below  give  an  overview  of  the  main 
products which the OCTs and the EU trade with each other9. While OCTs export mainly 
fishery  and  other  mineral  and  natural  products  to  the  EU,  the  EU  primarily  exports 
industrial products and some agro-food products to the OCTs. 

Within the tables,  main  exports  or  imports are understood as those  products  representing 
more than 1% of the total value of exports or imports10. The products are represented at 2-
digit level of the Harmonised Commodity Description and Coding System (or Harmonised 
System – HS). Annex 12.1 provides an overview (at HS 2 digit level) of all EU27 goods 
imports  from  OCTs  and  EU27  goods  exports  to  OCTs,  including  those  representing  less 
than 1 % of the imports and exports. It provides also additional information regarding the 
geographic distribution of EU27 goods imports and exports by the OCT concerned. 

8  

9  
10  

ECO Consult et al. (2011), pp. 75-76. These conclusions were confirmed by the results of a trade 
questionnaire that the European Commission sent to OCTs and their Member States in the Summer 
of 2011. See below. 

Source: European Commission data, Directorate General for Trade. 

The tables disregard the EU27 imports from OCTs of boats, ships and other floating structures as 
well  as  aircraft,  spacecraft,  and  parts  thereof  (HS  Codes  89  and  88  at  2  digit  level).  Though  they 
represent 24.6 % of the total value of EU 27 imports from the OCTs at 2 digit HS level, they do not 
constitute real export activities of OCTs, but rather re-exports. See discussion of Caribbean OCTs' 
exports in section 3.2 of Appendix 2. 

EN 

97 

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EU 27 Goods Imports from all OCTs in 2010 (values in 1,000 EUR) 

HS   Description 

totals (A)  % (A/B) 

03 

16 

Fish & crustaceans, molluscs & other aquatic invertebrates 

340.914 

34.5%

Preparations of meat, of fish or of crustaceans, molluscs  

27  Mineral fuels, mineral oils and products of their distillation 

71  Natural or cultured pearls, precious or semi-precious stones 

72 

Iron & steel 

75  Nickel & articles thereof 

Total value of main EU 27 imports from OCTs 

Total value of all EU 27 imports from OCTs* 

91.567 

35.774 

75.854 

158.556 

9.2%

3.6%

7.6%

16%

175.079 

17.7%

877.744 

88.6%

987.543 

(A) Value of EU 27 imports (at 2-digit level of the HS) from OCTs representing at least 1% of all EU 27 
imports from OCTs 

(B) Total value of all EU 27 imports from OCTs  

EU 27 Goods Exports to all OCTs in 2010 (values in 1,000 EUR) 

HS   Description 

totals (A)  % (A/B) 

04 

19 

21 

22 

27 

30 

39 

48 

73 

84 

85 

87 

90 

94 

Dairy produce; birds' eggs; natural honey 

Preparations of cereals, flour, starch or milk 

Miscellaneous edible preparations 

Beverages, spirits & vinegar 

Mineral fuels, mineral oils & products of their distillation 

Pharmaceutical products 

Plastics & articles thereof 

Paper & paperboard; articles of paper pulp 

Articles of iron or steel 

51.000 

50.410 

61.449 

119.445 

219.503 

179.710 

71.317 

43.412 

101.083 

Nuclear reactors, boilers, machinery & mechanical appliances 

422.780 

Electrical machinery and equipment & parts thereof 

Vehicles other than railway or tramway rolling-stock 

Optical, photographic, measuring, precision, medical 
instruments 

Furniture; bedding, mattresses, mattress supports, cushions  

295.648 

250.756 

96.063 

68.780 

1.7%

1.7%

2.1%

4.1%

7.6%

6.2%

2.4%

1.5%

3.5%

14.6%

10.2%

8.6%

3.3%

2.3%

Total value of main EU 27 exports to OCTs 

2.031.355 

69.8%

Total value of all EU 27 exports to OCTs *  

 2.884.688 

(A) Value  of EU 27  exports  (at 2-digit  level  of  the  HS)  to OCTs representing  at  least 1% of  all  EU 27 
exports to OCTs 

(B) Total value of all EU 27 exports to OCTs  

As  the  OCT/EU  export  trade  flows  described  above  demonstrate,  OCT  exports  of  goods 
and  services  tend  to  be  concentrated  in  a  few  specific  sectors  and  generally  target  high 

EN 

98 

   EN 

 
 
 
 
  
  
 
value  niche  segments  (tourism,  pearls,  natural  essences,  oil  refinery,  nickel)  in 
industrialised or industrialising countries. In some OCTs, with large reserves of natural and 
mineral resources there is a strong potential for developing exports of these materials. For 
instance,  in  Greenland  the  development  of  the  mineral  extraction  industry,  if  successful, 
has  the  potential  to  alter  the  structure  of  this  OCT's  economy  and  its  exports.  Services 
represent  an  important  part  of  the  economy  in  all  OCTs,  though  the  actual  percentage 
varies. 

Tourism  is  an  element  of  interest  to  almost  all  of  the  OCTs.  For  those  OCTs  that  are 
located in the Caribbean, Indian Ocean and Pacific ACP regions, LUFF et al. (2010) found 
that  the  impact  that  the  conclusion  of  Economic  Partnership  Agreements  (EPAs)  and 
interim  EPAs  would  have  on  their  economies  and  trade  environment  was  likely  to  be 
small.  OCTs  were  thought  to  gain  potential  benefits  from  the  impulse  that  the  EPAs  are 
likely to give to the different economic integration processes in their regions through the 
emergence of new export markets. 

Various  external  studies  pointed  out  that  few  OCTs  have  really  engaged  in  developing 
trade  and  export  oriented  policies.  Concerning  the  British  Caribbean  OCTs,  LUFF  et  al. 
(2011) commented that "no trade policy per se currently exists, and trade policy amounts 
to a laissez faire approach, except with regard to the collection of tariff revenue, where the 
government  imposes  certain  disciplines"11.  The  Dutch  OCTs  were  found  to  have  been 
more active in developing a trade and industrial policy and to have engaged in some degree 
of bilateral trade liberalisation12. Concerning the trade and economic policies of the French 
Pacific  OCTs,  LUFF  et  al.  (2010)  commented  that  their  trade  policy  tended  towards 
protection  of  domestic  product  and  import  substitution  through  tariffs  and  that  no  real 
export  oriented  policies  were  developed13.  BROOKS,  STONEMAN  and  RIOS  (2010) 
came to similar conclusions for the isolated Atlantic OCTs.  

Both  of  the  above  mentioned  studies,  commissioned  by  the  Association  of  Overseas 
Countries  and  Territories  of  the  European  Union  (OCTA),  formulated  a  number  of 
concrete  recommendations  and  steps  for  OCTs  to  develop  trade  and  export  oriented 
policies. In their evaluation study of OCT/EU cooperation in the period 1999-2009, ECO 
Consult et al. (2011) came to the conclusion that one year after its publication the LUFF et 
al. (2010) study "stays totally unknown by governments and professional organizations"14. 

3.2. 

Dutch and British OCTs in the Caribbean 

3.2.1.  Economic Structure, Trade Partners, Exports 

The Dutch and British Caribbean OCTs rely heavily on services for their economy, notably 
tourism  and  the  financial,  banking  and  business  services.  In  these  territories,  public 
services have a lesser importance than for instance in the French OCTs in the Pacific and 
Indian  Ocean  regions  or  in  the  isolated  Atlantic  OCTs  of  which  the  regional  economic 
hinterland is very limited (see below). 

11  
12  
13  
14  

LUFF et al. (2010), pp. 160-161, 184-185. 

Idem, pp. 176-180, 192-193. 

Idem, pp. 83-101. 

ECO Consult et al. (2011), p. 73. 

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In the case of the Cayman Islands and the British Virgin Islands, financial services are key 
to  the  economy.  With  an  estimated  value  of  USD  2.8  billion  and  USD  1.215  billion  in 
200815,  the  respective  GDPs  of  these  two  islands  are  high  for  the  size  of  their  territories 
and  populations.  Their  economies  attract  a  lot  of  foreign  investments  (USD  10.9  billion 
and  USD  3  billion  respectively  in  2008),  the  bulk  of  which  goes  to  the  financial  sector. 
Investment outflows are important as well. By contrast, productive investments in the real 
economy  are  modest,  especially  when  compared  with  other  OCTs  such  as  New 
Caledonia16. 

British OCTs in the Caribbean are generally oriented towards third markets for both their 
imports and exports, rather than to the EU. Dependency on the US is high, particularly for 
imports. In the case of the Turks and Caicos Islands, almost all of its trade takes place with 
the  US.  The  degree  to  which  the  OCTs  in  this  region  trade  with  their  neighbours  varies. 
Being part of the CARICOM, Montserrat is the OCT which is the most oriented towards its 
neighbours, at least for its exports. 

Of  all  the  OCTs,  the  Caribbean  OCTs  are  the  least  affected  by  the  problems  relating  to 
remoteness and insufficient transport freight connectivity17. In comparison to other OCTs, 
they are better connected with their main destination market, i.e. the US, which is closely 
located.  Also,  given  the  prominence  of  services  in  Caribbean  OCTs,  transport  freight 
connectivity is a less determinant factor for the Caribbean OCTs' trade. 

In most cases the products exported by these OCTs, notably the British OCTs, are in fact 
re-exports18.  For  instance,  some  of  Anguilla's  main  exports  products  are  transmission 
apparatus for radio-telephony and vehicles. For the Dutch OCTs, oil and by-products from 
oil  refining  still  have  a  certain  importance.  LUFF  et  al.  (2010)  identifies  possible 
opportunities for British and Dutch OCT goods exports in third markets, including the EU, 
in amongst others: fisheries and marine products (lobster, crab, conch, salt etc.), live stock, 
vegetables  and  fruit  preparations,  cosmetics,  essential  oils  and  other  artisanal  products 
(garments,  art  work  etc.),  beverages  and  spirits  such  as  mineral  water,  rum  and  rum 
products  as  well  as  all  kinds  of  services  (financial  services,  educational  services, 
professional  and  business  support  services,  recreational,  health  care  services,  culture  and 
sport services, environmental services etc.)19. 

15  

16  
17  
18  

Source: UN Statistics Division, Country Profiles for Cayman Islands and British Virgin Islands. 
See: http://data.un.org/. 

LUFF et al. (2010), pp. 163-65  

ECO Consult et al. (2011), pp. 70-72. 

LUFF  et  al.  (2010),  pp.  153-54.  This  observation  is  corroborated  by  the  findings  about  OCT/EU 
trade  flows  discussed  in  section  3.1.  As  mentioned,  boats,  ships  and  other  floating  structures  and 
aircraft, spacecraft, and parts thereof represent the bulk of OCT exports to the EU in terms of value. 
However, this does not represent real trade activity, but merely re-exports. OCT/EU trade statistics 
indicated  that  the  largest  re-exporters  of  boats  are  Caribbean  OCTs:  Cayman  Islands  (EUR  735.6 
million) and the British Virgin Islands (EUR 249 million). 

19  

Idem, pp. 180-83. 

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3.2.2.  Market Access and Business Environment 

In 2007, Salmon estimated that tariffs on imports in most of these OCTs lay between 10% 
and 20% of the value of imports20. The British Virgin Islands and the former Netherlands 
Antilles  maintained  tariffs  below  1%.  According  to  the  study,  the  Caribbean  OCTs  in 
general  did  not  impose  non-tariff  barriers  on  imports,  except  for  Montserrat  which  had 
compulsory import licenses. Luff's follow-up study commissioned in 2010 noted that in the 
British OCTs, businesses complained about the lack of transparency regarding the OCTs' 
domestic  rules  and  regulations  that  apply  to  imports  into  the  territories  and/or  exports  to 
third countries (e.g. arbitrary application of tariff rates, complicated and little known rules 
of the duty drawback system etc.)21. In general, the Caribbean OCTs seem to have fewer 
restrictions on foreign investment than other OCTs. 

3.2.3.  Regional Economic Perspectives 

The perspective on regional economic integration (see Annex 12.5 for an overview of OCT 
membership  to  regional  organisations)  varies  according  to  the  different  OCTs.  For 
instance, the political authorities of Aruba and Curaçao, the two Dutch OCTs located just 
above Venezuela, tend to look towards South America and the US for exports.  

Previously, Montserrat expressed the wish to further integrate in the region and participate 
in  the  CARICOM  Single  Market  and  Economy  (CSME)22.  A  2004  external  study 
commissioned by the government of Montserrat concluded that Montserrat's integration in 
the CSME was likely to have a positive impact on the OCT's development in the long run, 
dependent on the policies the government of Montserrat would adopt23. It was concluded 
that  in  the  short  run,  Montserrat's  integration  in  the  CSME  would  lead  to  substantial 
adaptation  costs  (increased  government  expenditure  and  reduced  revenues)  in  the  short 
term  (7-8  years).  Increased  investment  and  exports  through  lower  costs  of  production  in 
Montserrat  and  an  increased  economic  efficiency  were  identified  as  potential  positive 
benefits of Montserrat's participation in the CSME. For the time being, Montserrat does not 
participate either in the Economic Union that the sovereign members of the Organisation 
of Eastern Caribbean States (OECS) are in the process of setting up24.  

Though  only  an  associate  member,  Anguilla  has  largely  harmonised  its  tariffs  with  the 
common  external  tariff  of  the  CARICOM.  In  the  British  Virgin  Islands  and  the  Cayman 
Islands there seems little interest to participate in the existing regional integration schemes 
as  the  territories  seem  to  have  little  to  gain  in  such  schemes.  In  the  past,  the  Turks  and 
Caicos Islands, though (associate) member of several Caribbean organisations, have shown 
little interest in pursuing regional integration with their neighbours. As they are currently 
facing a major political and financial crisis, it is unlikely that this theme may move up the 
political agenda. 

20  
21  
22  
23  

24  

SALMON (2007), pp. 37-68. 

LUFF et al. (2010), p. 17. 

An authorisation to that purpose was  requested from the UK government, but was not granted 

HELLYER, M., CARICOM Single Market and Economy: Costs/Benefits Study, Final Report, June 
2004 

The  establishment  of  the  OECS  Economic  Union  is  foreseen  in  the  revised  Treaty  of  Basseterre, 
founding text of the organisation. Signature of the revised text occurred on 1 January 2011 

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Article  246  of  the  EPA  which  the  EU  concluded  with  CARIFORUM  foresees  the 
possibility of OCTs being brought within the scope of the agreement25. The impact of an 
accession of the Caribbean OCTs to the EPA was assessed by different external studies. In 
2007, Salmon came to the conclusion that the Caribbean OCTs had no immediate incentive 
neither to pursue membership of the EPA under negotiation nor to integrate the CSME and 
that  it  would  be  more  prudent  for  those  OCTs  to  adopt  a  wait-and-see  attitude  vis-à-vis 
both integration processes26.  

A  2008  study  of  the  United  Nations  Economic  Commission  for  Latin  America  and  the 
Caribbean (ECLAC) confirmed these conclusions, putting forward three reasons27. First, it 
was deemed that the growth of the Caribbean OCTs' main wealth creating sectors (tourism) 
was  independent  from  joining  an  EPA.  Second,  it  was  suggested  that  signing  up  to  the 
EPA might result in a loss of autonomy by Caribbean OCTs with regard to their offshore 
financial  policy,  as  the  EPA  includes  general  commitments  to  reinforce  transparency 
dialogue  and  collaborative  action  in  areas  such  as  tax  policy,  anti-corruption  and  the 
financing of terrorism. Third, the study thought it likely that if Caribbean OCTs expressed 
an interest in joining the EPA, the ACP partners were likely to make accession conditional 
on a liberalisation of the OCTs' markets. 

The  perspective  of  further  integration  of  the  Caribbean  OCTs  in  the  CSME  was 
discouraged for similar reasons. Due to the small size of their economies OCTs lacked the 
necessary  critical  mass  to  gain  from  acceding  to  the  regional  market.  Accession  to  the 
CSME would also mean the Caribbean OCTs granting CARICOM nationals free access to 
their labour markets; a condition which would likely increase immigration to the territory 
of qualified workers attracted by the prospect of high wages offered in the territories. The 
ECLAC  (2008)  study  therefore  concluded  that  a  functional  cooperation  as  associate 
members of the CSME was likely to be more beneficial for the Caribbean OCTs28. 

3.3. 

The Isolated Atlantic OCTs 

3.3.1.  Economic Structure, Trade Partners and Exports 

In  the  isolated  Danish,  French  and  British  OCTs  located  in  the  Southern  and  Northern 
Atlantic  Ocean,  activities  related  to  manufacture  and  (processed)  food  products  remain 
important29.  These  OCTs  are  generally  oriented  towards  the  EU  market  for  both  imports 
and exports. The public services sector tends to be important. This reflects the importance 
of  budget  transfers  from  the  Member  States  (e.g.  the  block  grant  from  Denmark  to 
Greenland representing approximately EUR 460 million p.a.). The Falkland Islands, being 
self sufficient, are an exception in this respect. Fish and fisheries products (shrimps, squid, 
cod, finfish, mackerel, lobster, scallop etc.) represent 96 % of total exports by the Falkland 

25  

26  
27  

28  
29  

For  the  full  text  of  the  Economic  Partnership  Agreement  with  the  CARIFORUM  States,  see: 
http://trade.ec.europa.eu/doclib/docs/2008/february/tradoc_137971.pdf (accessed 04/11/2011). 

SALMON (2007), pp. xiv-xv. 

ECLAC,  Review  of  CARIFORUM-EU  EPA:  Implications  for  the  British  and  Dutch  Caribbean 
OCTs, LC/CAR/L.176, September 2008, pp. 5-6. 

Idem, p. 9. 

The analysis of the Atlantic OCTs' economies in this section draws from BROOKS, STONEMAN 
and RIOS (2010), unless otherwise mentioned. 

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Islands,  88.2  %  of  exports  by  Greenland,  94  %  of  total  exports  by  Saint-Pierre  et 
Miquelon,  and  9  %  of  Saint  Helena30.  Whereas  in  the  case  of  the  Falkland  Islands,  the 
fisheries  sector  is  a  major  contributor  to  the  Falkland  Islands'  GDP,  contributing  on 
average  USD  200  million  per  year  or  60  %  of  the  territory's  GDP31,  fisheries  make  less 
important  contributions  to  the  GDP  of  Saint-Pierre  et  Miquelon.  There,  the  sector 
contributes 4 % to the GDP and its exports almost 2 %32. Workers in the fisheries sector 
make  up  5  to  7%  of  the  total  workforce.  In  Greenland,  exports  of  fishery  products 
contribute 17.2 % to the GDP and 4.3 % to the labour force in 200733. 

Liner  shipping  connectivity  is  not  measured  for  OCTs  such  as  the  Falkland  Islands,  St 
Helena, Ascension Island and Tristan da Cunha, but if it were, it is likely that the resulting 
figure would be on the lower end of the Liner Shipping Connectivity Index, as is the case 
for Greenland34. In the case of Saint Helena, for instance, freight and passenger ships only 
make a stopover on the territory every six weeks or more. As export flows are low, cargo 
ships that pass by the Atlantic OCTs often return empty. As a consequence, port operations 
in those OCTs remain expensive35. 

3.3.2.  Market Access and Business Environment 

Except for a couple of products, the Falkland Islands do not seem to levy tariffs on their 
imports36.  They  do  maintain  some  non-tariff  barriers  to  protect  local  agricultural 
production. There are no restrictions on foreign investment, except for landownership. In 
contrast  with  the  Falkland  Islands,  Greenland  and  Saint-Pierre  et  Miquelon  have  rather 
high average tariffs on imports, which are in excess of 20% of their value. Saint-Helena, 
Ascension Island and Tristan da Cunha maintain tariff levels within the average range of 
10 – 20 %. 

3.3.3.  Regional Economic Perspectives 

Possibilities for regional integration and cooperation for the isolated OCTs are limited. The 
North Atlantic OCTs of Greenland and Saint-Pierre et Miquelon have relatively close ties 
and cooperate with Canada, but they still mainly look towards the EU. This situation might 
change  for  Greenland  in  the  near  future  due  to  raw  materials  and  oil  explorations.  The 
situation of the Falkland Islands is somewhat complicated due to the Argentine policy of 

30  
31  

32  

33  

34  
35  
36  

Source: European Commission data, Directorate General for Maritime Affairs and Fisheries. 

Source:  Falkland  Islands  government,  presentation  "EU  Rules  of  Origin  (RoO)  Issues,  Trade  and 
Regional Integration Workshop, 8th OCT/EU Forum, Brussels, 23 March 2010. 

KIRKPATRICK  et  al.  (2011),  A  Trade  Sustainability  Impact  Assessment  Relating  to  the 
Negotiation  of  a  Comprehensive  Economic  and  Trade  Agreement  (CETA)  between  the  EU  and 
Canada, Trade 10/B3/B06, Final Report, June 2011, pp. 106-108 (hereafter: KIRKPATRICK et al. 
(2011) ). 
See: 
26/10/2011). 
Based on Statistics Greenland, Greenland in Figures, 6th and 8th edition, June 2009 and May 2011. 
See: http://www.stat.gl/dialog/main.asp?lang=en&theme=Greenland in Figures&link=GF (accessed: 
26/10/2011).  

http://trade.ec.europa.eu/doclib/docs/2011/september/tradoc_148201.pdf 

(Accessed: 

ECO Consult et al. (2011), p. 70. 

Idem, pp. 70-72. 

SALMON (2007), pp. 103-114 

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claiming  sovereignty  over  the  islands.  Economic  cooperation  with  Argentina  is  not 
possible. Oil exploration activities are taking place here as well. The prospects for regional 
integration  and  cooperation  of  Saint-Helena,  Ascension  Island  and  Tristan  da  Cunha 
located several thousands of kilometres from the closest neighbouring African country are 
slim, given poor transportation connections and infrastructure. 

The  EU's  FTA  negotiations  with  Canada  may  impact  on  the  economic  situation  of 
Greenland  and  Saint-Pierre  et  Miquelon  as  Canada  has  indicated  that  it  wishes  a  full 
removal  of  tariffs  on  fish  and  seafood  (mostly  in  frozen  seafood).  A  sustainable  impact 
assessment study of the ongoing negotiations with Canada that was conducted in 2011 put 
forward that a full fisheries liberalisation could have a negative impact the fisheries sectors 
of  the  two  territories  as  Canada  is  one  of  their  main  competitors  in  certain  products37. 
Given  the  limited  economic  diversification  of  both  territories  and  their  dependency  on 
fisheries, the losses to the economies of Saint-Pierre et Miquelon and Greenland could be 
substantial. 

3.4. 

The Pacific OCTs 

3.4.1.  Economic Structure, Trade Partners and Exports 

As  with  the  isolated  OCTs,  the  Pacific  OCTs  are  oriented  towards  the  EU  market.  The 
importance of public services also tends to be high and reflects substantial budget transfers 
from the respective Member States. 

The production and exports of the French Pacific OCTs, in particular French Polynesia and 
New  Caledonia,  seem  less  concentrated  in  one  sector  and  include  for  instance  jewellery 
products,  natural  pearls  and  cultured  pearls,  oils  and  essential  oils  (French  Polynesia), 
nickel and nickel derivates (New Caledonia) as well as products of animal origin (French 
Polynesia  and  New  Caledonia)38.  The  production  and  exports  of  the  third  French  OCT, 
Wallis and Futuna, and the only UK OCT in the region, Pitcairn, are modest. 

As  the  French  Pacific  OCTs  export  manufactured  goods,  their  remoteness  and  isolation 
from  the  international  shipping  routes  and  their  main  export  markets  impacts  on  their 
competiveness.  Like  the  isolated  Atlantic  OCTs,  the  Pacific  OCTs  are  confronted  with 
high  transport  and  freighting  costs,  multiple  connections,  lack  of  economy  of  scale  and 
other like problems39. 

According to LUFF et al. (2010), possible opportunities in third markets, including the EU, 
for  the  French  Pacific  OCTs  may  lie  in  amongst  others:  fisheries,  crustaceans  and  sea 
products,  textile,  wood  (by-)  products,  vanilla,  textile  products,  air  transportation, 
engineering, mining services. 

3.4.2.  Market Access and Business Environment 

Of all OCTs, French Polynesia and New Caledonia constitute the biggest markets, due to 
the  relatively  big  size  of  their  respective  populations  (over  200.000  each)  Both  OCTs 

37  
38  
39  

KIRKPATRICK et al. (2011), pp. 105-119. 

LUFF et al. (2010), pp. 78-81, 102-107. 

ECO Consult et al. (2011), pp. 70-72. 

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pursue an industrial policy aimed at stimulating local production. In 2007 New Caledonia 
made use of relatively high average tariff barriers in excess of 20% to stimulate its food 
processing, plastics, wood and agricultural sectors, with an aim to satisfy internal market 
needs40. At the time, New Caledonia did not have a Value Added Tax system yet, but was 
considering its  introduction. Goods  imported from the EU, ACP countries and OCTs are 
exempted from customs duties. New Caledonia maintains non-tariff barriers as well, which 
mainly target agricultural and food products. Restrictions on investments also exist. French 
Polynesia's maintains lower tariff barriers which are within the 10 – 20% range. Since the 
introduction  of  a  Value  Added  Tax  system,  the  territory  is  less  dependent  on  customs 
duties for government revenues than New Caledonia is. Goods from the EU benefit from 
certain exemptions. French Polynesia regularly makes use of non-tariff barriers to protect 
the most sensitive sectors. However, imports from the EU are no longer targeted. 

3.4.3.  Regional Economic Perspectives 

Both New Caledonia and French Polynesia play an active role in the regional cooperation 
and  integration  schemes  in  the  Pacific  (see  Annex  12.5),  albeit  it  mainly  in  non-
commercial  areas  such  as  environment  and  civil  protection,  research,  education  and 
transportation.  SALMON  (2007)  indicated  that  regional  economic  integration  with  their 
neighbours  through  trade  liberalisation,  by  joining  the  Pacific  Island  Countries  Trade 
Agreement (PICTA) or by negotiating separate trade agreements with its members, could 
have  advantages  for  the  two  territories  if  such  liberalisation  would  include  trade  in 
services, where the territories have comparative advantages41. Such a scenario would only 
be possible, though, if New Caledonia and French Polynesia would be prepared to abandon 
(in part or in full) the protectionist aspects of their customs policies, unless exceptions or 
safeguards could be negotiated for specific products. The latter scenario would entail that 
the negotiations between PICTA members regarding the extension of agreement's scope to 
trade  in  services  would  be  concluded42.  LUFF  et  al.  (2010)  confirms  these  findings  and 
recommendations43.  A  variation  on  the  integration  scenario  would  consist  in  French 
Polynesia  and  New  Caledonia  joining  the  Pacific  Agreement  on  Closer  Economic 
Relations (PACER), a regional trade agreement driven by Australia and New Zealand and 
intended  to  be  supportive  of  PICTA  members'  economic  development  through  greater 
regional trade and economic integration. As with the PICTA, an extension of the PACER 
to include trade in services is being negotiated. 

With regard to the possibility of French Polynesia and New Caledonia joining the Pacific 
EPA44,  SALMON  (2007)  suggested  that  more  caution  was  warranted  as  such  a  scenario 
would lead to increased competition from European companies45. Unlike in the EPA with 
CARIFORUM,  the  Pacific  interim  EPA  does  not  contain  a  provision  which  allows  for 
bringing the region's OCTs within the agreement's scope. According to LUFF et al. (2010) 

40  
41 
42  
43  
44  

45  

SALMON (2007), pp. 69-95. 

Idem, pp. 123-125. 

The sixth round of negotiations between PICTA members took place in August 2011. 

LUFF et al. (2010), p. 206. 

For the full text of the EPA in the Pacific Region (Fiji and Papua New Guinea), see:  
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:272:0002:0715:EN:PDF 
(accessed 04/11/2011). 

SALMON (2007), p. 128. 

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the  possible  impact  of  the  interim  EPA  with  the  Pacific  ACP  countries  (Fiji  and  Papua 
New  Guinea)  on  the  region's  OCTs  would  likely  be  low,  if  the  latter  choose  to  remain 
outside of the agreement46. The territories may experience an increase in competition from 
their neighbours in the fisheries and the pearls sectors. Regarding fisheries, global sourcing 
might  increase  supply  of  raw  materials  from  third  parties  to  Papua  New  Guinea  and  Fiji 
and  it  might  have  adverse  consequences  for  the  OCTs'  potential  to  supply  fish  to  these 
countries.  In  practice,  the  increase  in  exports  by  the  two  ACP  States  might  not  be  so 
substantial47.  As  French  Polynesia  only  exports  10%  of  its  pearls  to  the  EU  market,  the 
increase of competition might not be so much felt. 

3.5. 

Indian Ocean OCT: Mayotte 

As  of  31  March  2011  Mayotte  has  become  a  French  Overseas  Department  within  the 
French  internal  order.  On  26  October  2011,  France  officially  requested  the  European 
Council  that  the  process  be  engaged  to  change  territory's  status  to  that  of  an  Outermost 
Region. France suggested 1 January 2014 as a tentative date for this change to enter into 
force48. Until such time, Mayotte will remain associated to the EU as an OCT. 

3.5.1.  Economic Structure, Trade Partners and Exports 

As in other French OCTs, public services represent an important share in both Mayotte's 
GDP  and  the  territory's  employment.  Like  for  most  of  the  isolated  Atlantic  OCTs,  this 
represents important budget transfers from France to the territory. The potential of tourism 
related  services  remains  largely  unexploited  as  Mayotte  mainly  attracts  touristic  visitors 
from its expatriate community and their friends. Farming still represents an important part 
of economic activity, but mainly takes the form of subsistence farming; thus contributing 
little added value. Fisheries and aquaculture have been on the rise in the last few years and 
constituted  the  mainstay  of  the  territory's  exports  in  200849.  Traditional  export  products 
such  as  essential  oils  based  on  ylang  ylang  and  vanilla  come  second.  In  2008  the  EU 
remained  Mayotte's  single  most  important  trading  partner,  both  for  exports  and  imports. 
According to LUFF et al. (2010), third markets may offer opportunities for Mayotte in the 
following areas: fisheries products and crustaceans, miscellaneous edible preparations and 
essential oils50. 

3.5.2.  Market Access and Business Environment 

Though  in  2007  Mayotte  on  average  applied  customs  duties  between  0%  and  15%,  the 
actual  imposition  rate  of  imports  was  around  30%  of  the  value  of  imports  due  to  the 
existence  of  a  consumption  tax  levied  on  imported  luxury  products  or  products  in 

46  
47 
48  

49  
50  

LUFF et al (2010), p. 78. 

SALMON (2007), p. 178. 

Article 355:6 of the Treaty on the Functioning of the European Union foresees in the possibility for 
the  Danish,  Dutch  and  French  OCTs  to  change  status  to  Outermost  Region  and  vice  versa.  Such 
change is decided upon by the European Council with unanimity, after consultation of the European 
Commission. It is up to the Member State to which an OCT is associated to submit a formal request 
to the European Council. 

LUFF et al. (2010), Annex 8, p. 1. 

Idem, p. 139. 

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competition with local products51. With no Value Added Tax system in place, these taxes 
represented approximately 68% of Mayotte's local tax revenues. 

3.5.3.  Regional Economic Perspectives 

Mayotte's regional environment is characterised by a proliferation of regional cooperation 
and  integration  organisations  such  as  the  Southern  African  Customs  Union  (SACU), 
Southern African Development Community (SADC), the Common Market for Eastern and 
Southern Africa (COMESA) or the Indian Ocean Commission. Mayotte's participation in 
these processes has been limited, to a large extent due to the existence of a bilateral dispute 
which opposes the Comoros and France over the sovereignty over the territory.  

Anticipating a French request for a change of the territory's status under EU law, a 2010 
external study assessed the potential impact the EPAs in the Southern and Eastern African 
region  could  have  on  the  island's  economy  once  these  agreements  have  come  into  force 
and  after  Mayotte  would  have  joined  the  EU  customs  territory.  The  study  found  that  as 
Mayotte has relatively little trade with its immediate neighbours, the impact would all in 
all be relatively small. Inclusion of Mayotte on the European side of the EPAs could bring 
the territory benefits in the area of services, mainly transport services and would allow for 
its fisheries sector to take part in regional production chains52. 

3.6. 

OCTs and Multilateral Trade Liberalisation 

The OAD trade regime has been notified at the General Agreement on Tariffs and Trade 
(GATT)  before  the  World  Trade  Organisation  (WTO)  was  established.  OCTs  are  not 
members  of  the  WTO  in  their  own  rights,  although  they  may  be  covered  by  the 
commitments  taken  by  their  Member  States.  According  to  Communication  COM(1999) 
163, those OCTs that were covered by GATT 1947 at the time of the creation of the WTO 
were included in the General agreement of 199453. The Kingdom of Denmark, for instance, 
has  included  Greenland  in  its  WTO  membership  and  most  of  the  WTO  multilateral  and 
plurilateral  agreements  (see  12.  6).  Aruba  and  the  (former)  Netherlands  Antilles  are 
members  of  the  WTO  through  the  Kingdom  of  the  Netherlands.  Aruba  is  part  of  the 
Government  Procurement  Agreement  (GPA).  Neither  the  WTO  Agreement  nor  the 
multilateral agreements apply to the British OCTs, but the plurilateral Agreement on Trade 
in Civil Aircraft applies to the Falkland Islands, Pitcairn St Helena, Ascension Island and 
Tristan  da  Cunha,  South  Georgia  and  the  South  Sandwich  Islands  and  the  Turks  and 
Caicos Islands54. As far as the French OCTs are concerned, the WTO Agreement, GATT 
1994, GATS and the TRIPS Agreement apply55. 

There is a certain degree of uncertainty on the extent to which multilateral and plurilateral 
trade rules and disciplines apply to OCTs. It would seem that in general the advantages of 

51  
52  
53  
54  

55  

SALMON (2007), p. 99. 

LUFF et al. (2010), p. 137. 

Commission, Communication COM(1999) 163, p. 42. 

Source: Foreign and Commonwealth Office, reply to Commission trade questionnaire sent to OCTs 
and their Member States, September 2011 

Source: French Overseas Ministry, reply to Commission trade questionnaire sent to OCTs and their 
Member States, October 2011. 

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successive  rounds  of  trade  liberalisation  only  accrue  to  them  indirectly.  It  appears  that 
OCTs would only benefit directly from these advantages on the condition that they acquire 
full  competence  to  enter  into  agreements  as  separate  customs  territories.  All  in  all,  the 
interest of OCTs to become fully engaged in the WTO seems to be limited or non-existent 
and thus the debate regarding the legal implications of such a move may be theoretical in 
nature. It has been suggested that unilateral harmonisation of OCT trade policies with the 
rules, disciplines and even tariff reductions agreed upon within the WTO in selected areas 
may  be  advisable  for  OCTs,  although  this  would  require  substantial  efforts  from  their 
side56. Such autonomous changes could have positive impact on the OCT trade activities. 
Tariff reductions, for instance, would contribute to reducing the price of finished products 
for exports and thus increase OCT competitiveness. Attracting investments in key services 
such  as  financial,  telecommunication  and  transport  services  would  not  only  contribute  to 
raising the competitiveness of these sectors, but also of OCT economies in general. LUFF 
et al. (2010) identified the following possible consequences from a successful conclusion 
of the negotiations of the Doha Development Agenda (DDA): 

-  more certain and possibly increased market access in other markets than the EU as far 
as  trade  in  goods  is  concerned  due  to  the  generalised  binding  or  lowering  of  Most 
Favoured Nation (MFN) tariff rates in all WTO members, and more disciplines with 
regard to none-tariff barriers (NTB), technical barriers to trade (TBT) and and sanitary 
and phtyo-sanitary SPS issues; 

- 

- 

- 

possible opportunities in the following sectors: fisheries and fisheries products, forest 
products,  gems  and  jewellery,  raw  material,  tropical/exotic  fruits  and  vegetables, 
pepper, organic coffee, tea, rice, rubber, and environmental goods and services; 

possibly greater protection for quality products produced in OCT through advances in 
the protection of intellectual property rights (Tahitian pearl and monoi  etc.); 

possible impact on agricultural subsidies. 

4. 

THE OCT TRADE REGIME AND EU TRADE RELATED SUPPORT 

4.1. 

Legal Framework and Characteristics 

4.1.1.  Part IV TFEU: OCT/EU Association 

The  historical  ties  between  the  EU  on  the  one  hand  and  the  Overseas  Countries  and 
Territories on the other are invoked in the Preamble to the Treaty on the Functioning of the 
European  Union  (TFEU),  which  refers  to  the  contracting  parties'  intent  to  "confirm  the 
solidarity  which  binds  Europe  and  the  overseas  countries  and  [desire]  to  ensure  the 
development of their prosperity". 

Part  IV  of  the  TFEU  lays  the  basis  for  the  OCT/EU  association  and  the  corresponding 
trade regime. In Articles 199 to 202 the Treaty offers OCTs a single, comprehensive and 
asymmetric  trade  regime.  OCT  exports  to  the  EU  benefit  from  duty  free  and  quota  free 
(DFQF) access to its market while EU exports to OCT markets may still be subjected to 
both  duties  and  quantitative  restrictions  for  reasons  set  out  in  the  Treaty.  The  resulting 
trade arrangements applied by an OCT to the EU may not be any less favourable than those 

56  

LUFF et al. (2010), p. 9. 

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it  applies  to  third  countries,  in  accordance  with  the  Most  Favoured  Nation  (MFN) 
principle, unless another OCT or developing country is involved. These arrangements may 
not give rise to any discrimination between Member States. This means that the treatment 
that an OCT grants to the EU Member State to which it is linked should be extended to all 
other EU Member States.  

The  detailed  rules  and  procedures  of  the  association  are  laid  down  in  an  Overseas 
Association Decision (OAD) which, according to Article 203 of the TFEU, is adopted by 
the Council with unanimity, following the special legislative procedure, upon proposal of 
the Commission and after consultation of the European Parliament. 

4.1.2.  Part V, Title II: EU Trade Policy 

The OCT trade regime is part of the EU's trade policy, as defined in Title II of Part V of 
the TFEU, which concerns the Union's External Action. According to Article 206, the EU's 
trade  policy  should  contribute  to  the  harmonious  development  of  world  trade,  the 
progressive abolition of restrictions on international trade and on foreign investment, and 
the  lowering  of  customs  and  other  barriers.  Article  207  states  that  the  EU's  trade  policy 
"shall be based on uniform principles, particularly with regard to changes in tariff rates, the 
conclusion of tariff and trade agreements relating to trade in goods and services, and the 
commercial  aspects  of  intellectual  property  right,  foreign  direct  investment,  the 
achievement  of  uniformity  in  measures  of  liberalisation,  export  policy  and  measures  to 
protect trade such as those to be taken in the event of dumping or subsidies". In addition, 
the EU trade policy "shall be conducted in the context of the principles and objectives of 
the Union's external action". 

4.1.3.  Overseas Association Decision: Trade Arrangements 

The  arrangements  for  goods  and  services  and  establishment  are  laid  down  in  Part  III 
(Instruments of OCT-EC Cooperation), Title II (Economic and Trade Cooperation) of the 
OAD.  Article  34  defines  the  general  objectives  of  the  association's  economic  and  trade 
cooperation as follows: 

- 

- 

to  promote  the  economic  and  social  development  of  the  OCTs,  in  particular  by 
establishing close economic relations between them and the EU as a whole; 

to  support  the  effective  integration  of  OCTs  in  the  global  economy  and  the 
development of their trade in goods and services to regional and world markets. 

Trade arrangements for goods and services are respectively contained in chapters 1 and 2 
of this Title. The rules regarding trade related areas, such as competition policy, protection 
of  intellectual  property  rights,  trade  and  environment  and  trade  and  labour  standards  are 
dealt with in chapter 3 of the OAD (Trade related areas). Chapter 4 deals with monetary 
and tax matters. 

The extent to which OCT products enjoy access to the EU is defined by the rules of origin 
laid down in Annex III to the OAD "concerning the definition of the concept of 'originating 
products'  and  methods  of  administrative  cooperation".  An  exception  is  provided  via  the 
special transhipment facility that is foreseen by the OAD, the specific rules of which are 
laid down by  Annex IV to the OAD on  the  "conditions for entry into the Community of 

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products  not  originating  in  the  OCT,  but  which  are  in  free  circulation  in  the  OCT,  and 
methods of administrative cooperation. 

4.1.4.  Overseas Association Decision: Trade and Trade Related Cooperation 

Areas of Cooperation 

Alongside  trade  rules  the  OAD  also  foresees  in  trade  and  trade  related  OCT/EU 
cooperation in its Part 3 (Areas of Cooperation). This cooperation takes financial and non-
financial forms and concerns: trade development (Art. 12), trade in services (Art. 13), trade 
related areas (Art. 14) and regional cooperation and integration (Art. 16). Chapter 3 (Trade 
Related  Areas)  of  Title  II  (Economic  and  Trade  cooperation)  of  Part  III  foresees 
cooperation in the areas of current payment and capital movements (Art. 47), competition 
policies  (Art.  48),  protection  of  intellectual  property  rights  (Art.  49),  standardisation  and 
certification  (Art.  50),  trade  and  environment  (Art.  51),  trade  and  labour  standards  (Art. 
52), consumer policy and consumer health protection (Art. 53). 

These  Articles  cover  a  wide  range  of  possible  cooperation  activities  in  numerous  fields, 
which  are  not  necessarily  limited  to  trade.  The  provisions  foresee  in  supporting  and 
cooperation activities that can help OCT public and private actors to develop the policies, 
strategies,  legal  and  institutional  frameworks  necessary  for  developing,  regulating  and 
exploring  markets,  developing  products  and  encouraging  investments.  They  also  foresee 
cooperation  with  OCTs  to  help  OCT  public  and  private  develop  the  necessary  skills, 
capacities  and  infrastructure  that  they  need  to  take  full  advantage  of  trade  opportunities 
presented to them. Such cooperation not only covers trade in goods and services, but also 
specific  themes  such  as  competition,  the  protection  of  intellectual  property  rights; 
consumer, animal and plant health; trade and labour standards; trade and environment and 
standardisation  and  certification.  In  services,  emphasis  is  put  on  sustainable  tourism  and 
trade  related  services  such  as  maritime  and  air 
transport  as  well  as 
telecommunication  and  information  technology  services.  The  latter  services  relate  to  the 
OCTs'  connectivity  and  accessibility  and  are  not  studied  in  detail  in  the  context  of  this 
paper. A more detailed overview of the elaborate list of specific objectives for and possible 
types  of  cooperation  that  can  be  envisaged  under  Articles  12,  13  and  14  goes  in  Annex 
12.4 of the present paper. 

traffic 

Financial Assistance 

OCT/EU  cooperation  in  trade  and  trade  related  areas  is  mainly  financed  from  the 
European Development Fund (EDF) following the principles and rules laid down in Title 
I  (Development  Finance  Cooperation)  of  Part  III  of  the  OAD  and  Annexes  II  A  to  II  D 
regarding the 9th and 10th EDF,  the investment facility of the European Investment Bank 
(EIB) and additional support in the event of short term fluctuations in export earnings. 

Traditionally, the EDF constitutes the main source of funding for EU financial assistance 
to the OCTs under the Overseas Association Decision (OAD). The EDF is outside to the 
EU  general  budget  and  is  constituted  on  the  basis  of  contributions  to  which  the  EU 
Member States agree between themselves in the context of Internal Agreement concluded 
within  the  Council57.  These  Agreements  establish  the  total  resources  and  the  broad  sub-

57  

The Internal Agreement  for  the 10th  EDF  was  signed  in  July  2006 (OJ L  247, 9.9.2006, p32)  and 
remains into force until 31 December 2013. 

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categories  for  a  given  programming  period  and  lays  down  provisions  regarding  its 
implementation and financial monitoring. The specific Greenland/EU partnership is funded 
from the EU general Budget (Chapter 4 of the EU budget, article 21 07 02) 58. 

In line with the principle of partnership, the use of the financial resources available under 
the European Development Funds has been jointly decided by the OCTs and the EU on the 
basis of the political priorities of OCTs. Since the 9th EDF, the EU's bilateral interventions 
(i.e. at the level of the territory) have been based on cooperation strategies and multiannual 
programmes which take the form of Single Programming Documents. In conformity with 
the principle of concentration which the EU's financial assistance needs to respect and in 
view  of  increasing  their  impact  and  effectiveness,  such  interventions  have  been 
concentrated on one to two sectors only.  

Article  58  of  the  OAD  lays  down  the  principle  of  OCT  eligibility  under  horizontal 
external  and  internal  programmes.  As  regards  the  other  external  instruments  to  which 
OCTs are presently eligible, Annex II E to the OAD mentions the following instruments 
and programmes: 

- 

- 

- 

the thematic programmes under the Development Cooperation Instrument; 

the rehabilitation and reconstruction operations under the Instrument for Stability; 

the EU humanitarian aid. 

Annex  II  F  to  the  OAD  provides  a  non-exhaustive  list  of  internal  programmes  to  which 
OCT  nationals  are  eligible  within  the  framework  of  the  quota  for  the  Member  State  to 
which the OCT is linked: 

- 

- 

- 

- 

- 

education and training programmes (lifelong learning, youth in action) 

the Competitiveness and Innovation Framework; 

programmes  under  the  seventh  Framework  Programme  of  the  EU  for  research  and 
development 

cultural and audio-visual programmes (MEDIA and other cultural programmes); 

the Human Resources Training programme in Japan. 

Annex  12.3  of  the  present  paper  provides  an  overview  of  the  trade  and  trade  related 
provisions in the OAD and its Annexes. 

4.1.5.  Overseas Association Decision: Dialogue on Trade and Trade Related Issues 

Alongside technical assistance, the OAD allows for the OCTs to regularly engage with the 
EU  on  trade  and  trade  related  issues  that  are  of  concern  to  them  via  the  dialogue  and 
partnership  instances  which  it  provides  for  in  its  Article  7.  This  provision  allows  for  a 

58  

This  partnership  is  the  subject  of  a  separate  impact  assessment.  See:  Staff  Working  Paper 
SEC(1484)  of  7  December  2011,  Impact  Assessment  accompanying  the  document  “Council 
Decision  on  relations  between  the  European  Union  on  the  one  hand,  and  Greenland  and  the 
Kingdom of Denmark on the other” (COM(2011)846). 

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broad-based exchange of views on the implementation of the OCT-EU association. Since 
1991,  such  dialogues  have  been  systematically  held  on  a  trilateral  basis,  i.e.  between  the 
EU,  the  OCTs  and  the  related  Member  States.  The  main  platforms  in  which  the  state  of 
association is discussed are the annual OCT/EU  Forums,  which  gather  representatives  of 
the  OCTs,  the  Member  States  and  the  Commission  at  ministerial  or  high  official  level, 
regular trilateral meetings between the OCTs, their Member States and the Commission as 
well as four thematic Partnership Working Parties, one of which is dedicated to trade and 
regional  integration.  Such  meetings  are  complementary  to  the  various  bilateral  meetings 
which the European Commission has with an individual OCT and its Member State. 

4.2. 

Justification of EU Intervention 

The Treaty on the Functioning of the European Union (TFEU) provides the legal basis for 
the  set-up  of  EU's  policies  vis-à-vis  the  OCTs.  In  the  first  place,  the  laying  down  of  the 
detailed  arrangements  of  the  provisions  in  Part  IV  of  the  TFEU  necessarily  have  to  take 
place at EU level as the purpose of the association, the social and economic development 
and close economic ties between the OCTs and the EU as a whole, could not be achieved 
via actions at Member States level. Moreover, as regards the OCT trade regime, Member 
States actions would not be possible as the EU's common commercial policy, as laid down 
in  Title  II  of  Part  V  of  the  TFEU,  falls  within  the  domain  of  the  EU's  exclusive 
competence. 

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4.3. 

Evolving Policy Context 

4.3.1.  EU Policy Agenda: External Relations and Europe 2020 

Coherence between Internal and External EU Policies 

With  the  entry  into  force  of  the  changes  the  Lisbon  Treaty  made  to  the  Treaties  on  the 
European  Union  and  on  the  Functioning  of  the  European  Union,  the  principle  of  the 
necessary coherence between the EU's internal and external policies has been more firmly 
established.  Both  types  of  policies  are  expected  to  take  into  account  each  other’s 
objectives. This means, for instance, that the EU's development cooperation under the 11th 
European Development Fund (EDF) should be coherent with and complementary to other 
types  of  external  cooperation  financed  from  other  external  instruments,  such  as  the 
Development  Cooperation  Instrument  (DCI),  the  Instrument  for  Nuclear  Safety  (INSC) 
and the Partnership Instrument (PI). 

In addition, external action instruments and initiatives are expected to take into account of 
the  EU  concerns,  values,  interests  and  objectives  that  are  dealt  with  within  the  EU's 
internal  policies,  by  providing  the  possibility  of  giving  them  an  external  dimension.  In 
other words, this means that issues such as climate change, environment, energy (including 
access  to  sustainable  energy),  fair  and  sustainable  production  and  trade  of  raw  materials, 
employment and social policy (including promotion of decent work, development of social 
protection  systems  and  respect  internationally  recognised  labour  standards),  immigration, 
fisheries, agriculture, health, research and innovation for smart, inclusive and  sustainable 
growth have to be streamlined into EU external actions and should be an integral part of 
the EU's dialogue with third partners. 

Inversely,  internal  policies  are  expected  to take  into  account  the  possible  impacts  certain 
measures and initiatives may have on the EU's partners. 

EU Values and Interests 

Besides  the  promotion  of  the  fundamental  interests  of  the  EU,  the  reinforcement  of  the 
principle  of  coherence  which  governs  the  EU's  external,  also  means  that  the  EU's 
normative agenda has gained in importance. Through its external action, the EU intends to 
project the values and principles which define it. Article 21 of the Treaty on the European 
Union  states  that  "[t]he  Union's  action  on  the  international  scene  shall  be  guided  by  the 
principles which have inspired its own creation, development and enlargement, and which 
it  seeks  to  advance  in  the  wider  world:  democracy,  the  rule  of  law,  the  universality  and 
indivisibility  of  human  rights  and  fundamental  freedoms,  respect  for  human  dignity,  the 
principles  of  equality  and  solidarity,  and  respect  for  the  principles  of  the  United  Nations 
Charter  and  international  law".  As  a  consequence  of  this  evolution,  the  inclusion  of  the 
principles  of  good  governance  has  become  a  standard  element  of  EU  cooperation  with 
third partners and partnership, responsibility and accountability have become key words in 
the EU's cooperation frameworks. 

The  Europe  2020  Agenda  that  was  adopted  by  the  Commission  in  March  2010  and 
subsequently  endorsed  by  the  Council  of  the  EU,  provides  the  benchmark  against  which 

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the coherence of EU policies and the promotion of EU values, standards and interest needs 
to  be  checked59.  For  OCTs,  the  principle  of  coherence  is  of  particular  importance  as  the 
territories and their inhabitants have a special status vis-à-vis the European Union. One the 
one hand, the OCTs are located outside of the EU territory and customs union and the EU 
legislation  does  not  apply.  As  indicated  above  the  OCT  trade  regime  is  part  of  the  EU's 
trade  policy  and  thus  the  relevant  chapter  of  the  EU's  external  action  applies.  From  this 
perspective, OCTs are external stakeholders of the relevant EU policies. On the other hand, 
the  inhabitants  of  OCTs  have  the  nationality  of  their  Member  States  and  thus  EU 
citizenship  is  conferred  upon  them60.  From  this  perspective,  the  OCTs  are  internal 
stakeholders of the relevant EU policies and actions. 

In  terms  of  support  to  the  OCTs,  its  citizens,  companies,  civil  society  and  other 
organisation, this double-natured relationship with the EU translates itself in the eligibility 
for  funding  outside  of  the  European  Development  Fund  (EDF)  from  horizontal  and 
thematic  programmes  and  budget  lines  under  external  action  instruments  such  as  the, 
Partnership  Instrument,  the  Development  Cooperation  Instrument  and  internal  policy 
instruments such as those dedicated to research and innovation. A coordinated use of the 
different  financial  instruments  to  which  the  OCTs  are  eligible,  is  likely  to  contribute  to 
reaching the objectives of the OCT/EU association because of the synergies it creates and 
the larger impact it has. It is likely that such use of EU funds will also contribute to obtain 
other  EU  goals  and  objectives.  For  instance,  having  interested  OCTs  such  as  Greenland 
participate  in  the  raw  materials  strategy  may  benefit  Greenland  through  an  intensified 
bilateral cooperation (see 4.3.3), contribute to the achievement of the EU's aim to ensure 
fair and sustainable production and trade of raw materials as well as to provide show cases 
of  the  EU  model  of  management  of  raw  materials, which includes strong innovation and 
recycling components. 

The  sustainable  management  of  fisheries  is  another  important  area  of  action  for  the  EU. 
The  reform  of  the  Common  Fisheries  Policy  (CFP)  which  is  underway  aims  to  ensure 
sustainable exploitation of marine living resources while working towards robust economic 
performance, inclusive growth and enhanced cohesion in coastal regions. In July 2011, the 
Commission adopted a Communication on the external dimension of the CFP, which may 
be  relevant  to  OCTs  and  which  translates  the  principles  of  the  proposed  CFP  reform  at 
international level61. Building on existing initiatives such as the comprehensive strategy to 
combat illegal, unreported and unregulated (IUU) fishing in EU and international waters it 
adopted  in  200862,  the  Commission  proposes  amongst  others  to  further  the  global  and 
multilateral  agenda  promoting  sustainable  fisheries,  to  strengthen  the  performance  of 
Regional  Fisheries  Management  Organisations  in  terms  of  the  conservation  and 

59  
60 

61  
62  

Commission Communication COM (2010) 2020, 3 March 2010. 

According  to  Article  20  of  the  Treaty  on  the  Functioning  of  the  European  Union,  every  person 
holding  the nationality  of  a Member  State shall  be  a  citizen of  the  Union. As  a  matter  of fact,  all 
nationals of Greenland, and the French and the Dutch OCTs also have the nationality of the related 
Member States automatically and are therefore EU citizens. As from 21 May 2002, the citizens of 
all the British OCTs are also British citizens, but they can renounce it in favour of remaining British 
overseas territories citizens only.  

Commission, Communication COM (2011) 424 final, 13 July 2011. 

Through,  amongst  others,  the  setup  of  elaborate  systems  of  surveillance  and  certification  and 
prevention  and  deterrence.  The  prevention  and  deterrence  system  has  been  set  up  by  Council 
Regulation (EC) N° 1005/2008 of 29 September 2008. 

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management  of  marine  living  resources  and  to  base  Fisheries  Partnership  Agreements 
(FPAs)  on  the  best  available  scientific  advice  and  ensuring  that  fisheries  agreements 
support better governance of the fisheries sector in the partner country. 

4.3.2.  Developments in EU Trade Policy  

The  OCT  trade  regime,  as  it  stands,  is  a  vector  of  EU  trade  policy.  Over  the  years,  this 
policy has evolved into a diverse and multifaceted policy, intervening at multilateral, inter-
regional  and  bilateral  levels.  There  have  traditionally  been  strong  parallels  between  the 
OCT  trade  regime  and  the  regime  for  African,  Caribbean  and  Pacific  (ACP)  countries 
under  the  Lomé  Conventions  and  Cotonou  Agreement,  which  served  development 
purposes. Since 2008 Economic Partnership Agreements (EPAs) are in place between the 
EU  and  several  ACP  countries  and  regions  with  a  view  to  furthering  their  sustainable 
development and regional integration. The only comprehensive regional EPA so far (in the 
Caribbean)  contains  a  clause  enabling  OCTs  to  be  brought  within  the  scope  of  the 
Agreement. 

At  the  same  time,  on-going  negotiations  and  agreements  with  different  regions  and 
countries (MERCOSUR, Central America, Colombia and Peru, Canada, etc.) have become 
two way streets based on mutual interests and benefits and on the recognition that all actors 
have rights as well as duties. In this context, OCTs are taken into account in the on-going 
negotiations  and  in  the  finalized  agreements  via  the  Impact  Assessments.  These 
agreements  go  beyond  trade  in  goods  and  embrace  also  regulatory  aspects  in  different 
areas,  including  services  and  investment,  public  procurement,  intellectual  property  rights 
and sustainable development (i.e. decent work, labour standards, environmental protection 
and other trade-related aspects, including in the area of fisheries). 

In addition, in May 2011 the Commission adopted a proposal for a new Regulation on the 
Generalised  System  of  Preferences  (GSP)63.  The  new  GSP  will  grant  specific  tariff 
preferences to fewer countries and it will aim to focus the benefits on those countries most 
in  need  and  on  those  which  effectively  implement  international  labour  standards  and 
principles of human rights, environmental protection and good governance. The OCTs will 
no  longer  be  eligible  to  the  new  GSP  because  they  have  already  their  own  trade  regime 
with  the  EU,  which  is  embedded  in  a  far-reaching  association  relationship  with  a 
developed block of countries.  
This exclusion is important from the point of view of 
the EU's international legal obligations. Granting OCTs GSP preferences treatment would 
mean  that  the  territories  would  OCTs  receive  preferences  despite  the  fact  that  they  are 
integrated in the structure of a developed country. Yet, the WTO allows GSP preferences 
only for developing partners. Under the current OAD, OCTs benefit from free access to the 
EU market (duty free quota free) and therefore do not need to benefit from GSP. 

In  November  2010,  the  Commission  adopted  a  Communication  on  "Trade,  Growth  and 
World Affairs"64 by which it announced the following set of policy initiatives: 

63  

64  

Commission  Proposal  COM(2011)  241  of  10  May  2011  for  a  Regulation  of  the  European 
Parliament and the Council applying a scheme of generalised tariffs. 

COM(2010) 612 of  9 November 2010. 
See: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0612:FIN:EN:PDF 
(accessed: 26/09/2011). 

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1. 

a  legislative  proposal  for  an  EU  instrument  to  secure  access  in  government 

procurement in developing and large emerging markets; 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

the completion of the internal EU debate on a new investment policy; 

the presentation of proposals on how to strengthen the links and coherence between 

Internal Market regulations and external trade policy; 

the adoption of a Communication on Trade and Development; 

a legislative proposal on the reform of the Generalised System of Preferences; 

the presentation  of a  Communication on possible support measures to  help  SMEs 

that want to develop their international activities; 

the adoption of a Green Paper on how to improve the EU's export control system; 

the launch of an annual trade and investment barriers report in view of providing a 

basis on which enforcement actions can be taken; 

the revision of the EU's strategy on the protection and enforcement of intellectual 

property rights. 

Of these initiatives, OCTs might have some interest in following the question of links and 
coherence between Internal Market regulations and external trade policy, which has not yet 
reached the stage of presenting proposals. 

4.3.3.  Additional Support in Trade and Trade Related Areas in EU Policies 

As  the  EU's  trade  policy  agenda  evolved  over  the  years,  going  beyond  trade  in  goods  to 
incorporate  various  other  themes,  so  did  related  policy  fields,  by  foreseeing  trade 
supporting measures available to economic operators from the EU and/or third countries. 
OCTs  being  in  principle  eligible  for  financing  from  external  and  internal  horizontal 
programmes and budget lines, some of these measures also apply to OCTs or consideration 
could  be  given  to  extending  their  scope  to  OCTs.  Some  of  the  measures  that  may  be  of 
interest to OCTs are listed below. 

Market Access 

A strategy for increasing market access for European businesses in important third markets 
is  one  of  such  supporting  initiatives65.  Through  increased  cooperation  and  coordination 
between business, Member State and Commission services, it seeks to tackle trade barriers 
in third markets.  

For producers from developing countries and territories which export to the EU, an Export 
Helpdesk  is  made  available  which  provides  information  on  tariffs,  import  measures  and 
requirements, internal taxes from the EU and its Member States66. OCTs could investigate 
possibilities to make use of both initiatives, either directly or via their Member States (in 
the case of the market access strategy). While the Export Helpdesk potentially constitutes a 
good source of market intelligence for OCTs, they seem little aware of its existence. 

65 
66 

EN 

COM(2007)183 of 18 April 2007. 

See: http://exporthelp.europa.eu/index_en.html (accessed: 08/11/2010). 

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Raw Materials 

In the last few years, raw materials have attracted increased political interest as access to 
these materials are often key to industrial production. The issue of raw materials touches 
upon  a  wide  range  of  policy  strands,  including  regulatory  frameworks  for  production, 
environment,  protection,  development  policy,  international  trade  and  research  and 
innovation.  In  2008,  the  Commission  adopted  a  Raw  Materials  Initiative  which  aimed  at 
bringing  together  the  available  policy  tools  in  a  coherent  manner67.  This  initiative  was 
further developed with the adoption in February 2011 of the Raw Materials Strategy68. The 
strategy  is  built  on  three  pillars  (1)  fair  and  undistorted  access  to  raw  materials  on  the 
global  markets  (2)  sustainable  supply  from  domestic  courses  and  (3)  resource  efficiency 
and  recycling.  This  strategy  could  offer  opportunities  for  bilateral  cooperation  to  those 
OCTs  that  either  produce  and  export  raw  materials  or  have  the  potential  to  do  so.  In 
Greenland  and  New  Caledonia,  for  instance,  deposits  of  raw  materials  critical  to  the  EU 
were  found  (aluminium,  nickel,  gold,  rare  earth  elements,  aluminium,  gold  etc.). 
Cooperation with the EU could include e.g. assistance in governance of natural resources, 
access to EU environmental laws enforcement expertise, assistance in geological mapping 
and  development  of  geological  skills  and  knowledge.  The  latter  already  comprises 
cooperation with third countries and developing countries, the cooperation with the African 
Union being a case in point. Cooperation could either take place  via the OCT’s Member 
State within the internal/domestic dimension of the strategy and/or within the raw materials 
diplomacy if the strategy’s external dimension, 

Business Support 

The “Competitiveness and Innovation Framework Programme” (CIP) adopted in 2006 and 
covering  the  period  2007-2013  supports  innovation  activities,  provides  better  access  to 
finance  and  delivers  business  support  services  in  the  regions,  with  SMEs  as  main  target. 
Two of its three sub-programmes, the EIP (Entrepreneurship and innovation programme), 
which  also  includes  the  Enterprise  Europe  Network  (EEN),  and  the  ICT  policy  support 
programme,  are  examples  of  existing  EU  instruments  for  which  the  OCTs  are  already 
eligible and which are relevant for trade related and accessibility issues. 

The  Enterprise  Europe  Network  (which  replaces  the  Euro  Info  Centres  and  Innovation 
Relay  Centres  set  up  under  the  predecessor  programme),  brings  together  more  than  580 
business  support  organisations  (chambers  of  commerce  and  industry,  technology  centres, 
research  institutes  and  development  agencies)  from  49  countries  with  a  view  to  help 
European  Small  and  Medium  Enterprises  (SMEs)  to  develop  their  business  in  markets 
within and outside of the European Single Market69. The objective of the EEN is to offer 
information  and  support  on  EU  matters  to  SMEs,  to  obtain  feedback  from  them,  and  to 
provide business cooperation, technology transfer and innovation services. 

The EIP and EEN are the main EU instruments to implement actions in favour of SMEs, 
including  entrepreneurship,  access  to  finance,  tourism  and  business  support.  The  OAD 
(Arts. 13 and 14) already covers possible actions in the field of tourism and e-Business. In 

67  
68  
69 

EN 

COM(2008) 699 of 4 November 2008, 

COM(2011)25 of  2 February 2011 

See: http://www.enterprise-europe-network.ec.europa.eu/index_en.htm (accessed: 08/11/2010). 

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its  Article  59,  the  current  OAD  refers  to  the  possibility  of  Euro-Info  Correspondence 
Centres  being  set  up  in  OCTs.  This  Article  was  not  updated  following  the  setup  of  the 
Entreprise European Network and OCTs never made use of the provision, though recently 
OCTs  have  shown  interest  in  this  kind  of  EU  initiatives.  Though  OCTs  are  in  theory 
already eligible to the programme, they have not been associated in practice. 

The  EEN  was  established  in  2008,  following  a  call  for  proposal  to  business  support 
organisation in the different Member States and partner countries concerned. The present 
EEN will remain operational until 2014. Calls for proposals for the next operational period 
(2014-2020) are likely to be organised in the course of 2013.  

OCTs could gain benefit from the EEN, either by cooperating with EEN members from the 
Member States to which  they  are  linked and/or respond to the next  call  for  proposals by 
submitting a work programme in line with the specifications contained in them. Thus, the 
OCTs  could  follow  the  example  of  Outermost Regions  such  as  Réunion,  Martinique  and 
Guadeloupe which have business support organisations that already participate in the EEN. 

With the CIP expiring in 2013, new programmes are being prepared. The Innovation part 
of  the  programme  will  be  covered  by  the  future  “Horizon  2020”  (successor  to  the  7th 
Research  Framework  Programme)  while  Entrepreneurship  and  access  to  finance  policies 
will be covered by a new programme “Business Competitiveness and SME Programme”. 

Sector Support 

Additional support for third partners in developing countries and territories in policy areas 
other than but related to trade is available as well. In the field of food and consumer safety, 
for  instance,  the  EU  provides  through  the  "Better  Training  for  Safer  Food"  (BTSF) 
programme trainings in the areas of food law, feed law, animal health and animal welfare 
rules, as well as plant health rules70.  

Other  examples  of  support  to  third  countries  and  territories  in  these  areas  are  some 
facilities targeting ACP countries within the Aid for Trade agenda such as the TradeCom 
Facility or the Strengthening Fishery Products Health Conditions in ACP/OCT Countries71. 

4.3.4.  Communication on Elements for a Revised OCT/EU Partnership 

The  EU  wishes  to  use  the  revision  of  the  Overseas  Association  Decision  (OAD)  as  an 
opportunity  to  redesign  and  modernise  the  association  arrangements,  so  as  to  bring  them 
more in line with OCT needs and realities. Over the last ten years discussions about this 
revision have taken a central place in the OCT/EU policy dialogue, since the adoption on 
20 May 1999 of the Commission Communication COM(1999) 163 on "the status of OCTs 
associated  with  the  EC  and  options  for  OCT  2000",  which  led  to  current  OAD.  On  6 
November  2009,  the  Commission  adopted  a  new  Communication  on  elements  for  a  new 
partnership between the EU and the OCTs, COM (2009) 623, in view of the expiry of the 
current OAD on 31 December 2013 and following extensive consultations of stakeholders 

70   
71  

See: http://ec.europa.eu/food/training_strategy/index_en.htm (accessed: 08/11/2010).  

For the TradeCom Facility, see: http://www.tradecom-acpeu.org/ (accessed 11/05/2011). For project 
entitled  the  Strengthening  Fishery  Products  Health  Conditions  in  ACP/OCT  Countries,  see: 
http://sfp.acp.int/ (accessed 11/05/2011)  

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(cf.  below).  The  conclusions  and  orientations  of  the  Communication  were  politically 
endorsed  by  the  Council  on  22  December  2009  in  its  conclusions  (16710/09).  These 
documents  identified  the  following  three  general  objectives  for  the  future  OCT/EU 
partnership:  

1.   to enhance OCT competitiveness,  

2.   to reduce OCT vulnerability, and 

3. 

to stimulate regional cooperation and integration. 

These three objectives are to be translated in five principles and axes, notably:  

- 

- 

- 

- 

- 

to contribute to the development of OCTs as centres of excellence; 

to stimulate trade and economic cooperation; 

to promote EU rules and standards; 

to cooperate on environmental issues and disasters; 

to contribute to OCT connectivity to the outside world. 

According  to  these  documents,  the  professed  goal  of  the  EU  is  to  make  use  of  the 
opportunity  of  the  revision  of  the  OAD  to  better  adapt  the  association  relation  to  the 
specific  situation  of  OCTs,  which  implies  moving  away  from  the  classic  development 
cooperation  approach  to  adopt  a  reciprocal  partnership  in  support  the  OCTs'  sustainable 
development, and whereby OCTs are expected to contribute to the promotion of European 
values  in  the  wider  world.  Key  words  in  this  light  are:  partnership,  mutual  interests, 
reciprocity,  rights  and  obligations  and  the  OCTs  as  outposts  of  the  EU  in  the  world.  A 
more  comprehensive  description  of  the  political  orientations  given  by  the  Council  is 
provided in the Impact Assessment report to which the present paper is attached. 

5. 

EVALUATIONS OF OCT/EU ASSOCIATION AND STAKEHOLDER CONSULTATIONS 

The OCT/EU association has been the subject of different evaluation exercises by different 
types  of  actors.  In  addition,  it  has  been  the  topic  of  various  stakeholder  consultations  in 
different  formats  and  at  different  times.  As  described  in  Chapter  4  of  this  paper,  the 
OCT/EU  association  foresees  a  wide  range  of  platforms  for  dialogue  and  cooperation  in 
which the OCTs, the Member States to which they are constitutionally linked and the EU 
can  discuss  trade  and  trade  related  issues:  annual  Forums,  regular  trilateral  meetings,  the 
partnership  working  party  on  trade  and  regional  integration  and  other  ad  hoc  meetings. 
These instances of discussion have often provided the setting in which the OCTs as main 
stakeholders  of  the  OCT/EU  association  could  be  consulted.  This  chapter  analyses  the 
content  of  the  different  consultation  moments  that  took  place  as  well  as  the  different 
assessments  that  were  made.  This  analysis  integrates  elements  of  the  assessment  and 
evaluation exercises of the OCT/EU association the Commission has conducted. 

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Availability of statistical data 

As  was  mentioned  in  the  introduction  to  this  paper  (see  Chapter  1),  the  analysis  and 
evaluation  of  the  OAD  has  been  complicated  by  the  paucity,  reliability  and  lack  of 
harmonisation of trade statistics concerning OCTs. Whereas data concerning OCT/EU 
trade flows (OCT exports to the EU, OCT imports from the EU), this is often not the 
case  where  OCT  trade  with  other  third  countries  is  concerned.  The  respective 
international  databases  of  the  United  Nations,  the  World  Bank  and  the  International 
Trade Centre, COMTRADE, WITS, MacMap, contain little information on OCT tariffs 
and  trade  flows.  As  was  experienced  by  evaluators  and  the  European  Commission 
incomplete. 
statistical  data,  where  available,  was  sometimes  fragmentary  and 
Responding  to  European  Commission  queries,  individual  OCTs  have  indicated  that 
their weak statistical capabilities prevented them from providing information on certain 
issues. 

5.1. 

Stakeholder Consultations 

5.1.1.  Public Consultation 

In 2008 the OCT/EU association was subject of a public consultation that ran from 1 July 
to  17  October  2008,  including  a  stakeholder  conference  in  Brussels  on  3  October  2008. 
The public consultation took place following the adoption on 25 June 2008 of the Green 
Paper COM(2008) 383 on future relations between the EU and the Overseas Countries and 
Territories. Ten questions (questions 7.1. to 10.3. of the Green Paper) were submitted on 
trade and trade related issues72. These took the purpose and objectives of the association as 
a starting point and covered various issues related to the OCT trade rules and trade related 
support. The questions addressed issues such as: 

- 

- 

- 

- 

possible  benefits  to  OCTs  of  the  progressing  world  trade  liberalisation  and  regional 
economic integration and the way in which the EU could facilitate OCT participation 
in regional trade; 

suggestions  for  the  modernisation  of  the  rules  of  origin  applicable  to  OCT  products 
and the added value and use of OCT-ACP cumulation of origin,  

the  added  value  of  cooperation  with  the  OCTs  in  trade-related  areas  and  possible 
improvements; 

the relevance or the added value of the transhipment facility and possible alternatives 
that could promote the development of transport infrastructure. 

The  2008  Green  Paper  was  instrumental  to  framing  and  giving  focus  to  the  OCT/EU 
dialogue  on  the  trade  and  trade  related  issues  which  ensued  in  the  following  years.  The 
results of the public consultation were summarised in Communication (2009) 623 (pp. 2-
4). 

Generally  speaking,  the  OCTs  called  for  a  stronger  OCT/EU  partnership,  based  on 
reciprocity  and  taking  due  account  of  the  OCT  specificities,  in  particular  their  economic 
and  social  development,  diversity  and  vulnerability,  as  well  as  their  environmental 

72  

COM(2008) 383, pp. 14-15. 

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importance. It was deemed that such a partnership would have to contribute to enhancing 
their  competiveness,  notably  in  the  regions  where  they  are  located.  Contributions  put 
forward the idea of OCTs being outposts of the EU in the world. As part of the partnership, 
contributions asked that OCTs would be given a greater involvement in EU policy making. 
With regard to trade and regional integration, contributions highlighted the diversity of the 
OCTs and expressed the wish of the OCT trade regime being more flexible so that specific 
challenges could be taken into account. At the same time, it was also deemed necessary to 
maintain  a  coherent  overall  framework  for  all  OCTs.  More  specifically,  several 
contributions  called  for  a  simplification  of  the  OCT  rules  of  origin  and  the  sanitary  and 
phyto-sanitary requirements for OCT exports to the EU. 

5.1.2.  OCT/EU Forums: High Level Discussions 

The Green Paper was extensively discussed at the 7th OCT/EU Forum which took place on 
28  and  29  November  2008  in  the  Cayman  Islands.  The  results  of  the  consultation  were 
subsequently  summarised  in  the  Commission  Communication  COM(2009)  623  on 
Elements for a new partnership between the EU and the overseas countries and territories, 
which  was  subsequently  discussed  at  the  8th  OCT/EU  Forum  which  took  place  in  March 
2010.  

At the OCTA Ministerial Conference which took place in New Caledonia on 28 February 
2011, the OCTs and their Member States adopted a Joint Position Paper, a substantial part 
of which was dedicated to the trade and trade related aspects of the OCT/EU association73. 
This document was substantially discussed in the days following the Conference at the 9th 
OCT/EU  Forum  which  also  took  place  in  New  Caledonia.  Members  of  the  European 
Parliament took part in the Forums of 2010 and 2011. 

Joint Position Paper of OCTs and their Member States 

In  their  Joint  Position  Paper,  the  OCTs  and  their  Member  States  subscribe  to  the  three 
objectives of competitiveness, resilience and cooperation put forward by the Commission 
in Communication COM(2009) 623 and endorsed by the Council, as well as the underlying 
philosophy of building a partnership based on mutual rights and obligations, shared values 
and the principle of good governance. OCTs and their Member States see the revision of 
the  OCT/EU  association  as  an  opportunity  to  reaffirm  the  OCTs'  belonging  to  the 
European family and to allow them to play a role as outposts for the EU in the world.  

The Joint Position Paper acknowledges the benefits that the OCT/EU association has been 
beneficial  to  the  OCTs'  social  and  economic  development,  identifying  the  trade 
arrangements as one of the main benefits. Support under the European Development Fund 
(EDF) is also deemed to have contributed to the OCTs’ development. The EU support to 
OCT innovation strategies and to Caribbean Small and Medium Sized Enterprises (SMEs) 
part of the 10th EDF regional programme are named as good examples of the cooperation 
initiatives in support of the competitiveness of OCTs which the EU is invited to replicate 

73  

Joint  Position  Paper  of  the  Governments  of  the  Kingdom  of  Denmark,  the  French  Republic,  the 
Kingdom of the Netherlands and the United Kingdom of Great Britain and Northern Ireland, and the 
Overseas  Countries  and  Territories  on  the  future  relations  between  the  Overseas  Countries  and 
Territories and the European Union, adopted at the Ministerial Conference of the Association of the 
Overseas Countries and Territories of the European Union, Nouméa, New Caledonia, 28 February 
2011 (hereafter: Joint Position Paper). 

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under  the  future  association  framework.  Reminding  of  the  structural  problems  and 
challenges  they  face,  the  OCTs  stress  that  continued  EU  assistance  is  needed  for 
formulating  policies  and  strategies,  for  strengthening  their  markets,  as  support  to 
regulatory reform processes and to stimulate OCT compliance with international and EU 
rules and standards, notably in the field of food safety and consumer health and to support 
the  setup  and  maintenance  of  necessary  infrastructures.  The  paper  suggests  that  this 
assistance  takes  the  form  of  continued  financial  and  technical  assistance,  information 
exchange  and  dialogue,  capacity  building  activities  access  to  capital  and  financing 
opportunities outside of the EDF (internal and external horizontal programmes). 

In the field of the trade, the OCTs and their Member States express their concern about the 
erosion  of  the  theoretical  benefits  which  the  asymmetric  trade  arrangements  offer  them, 
due to the on-going process of trade liberalisation. They ask for improved market access, 
amongst  others  through  modernised  and  flexible  rules  of  origin  and  regular  exchange  of 
information  and  market  intelligence.  The  paper  asks  that  OCT  interests  be  taken  into 
account in EU trade negotiations with neighbours of the OCTs.  

5.1.3.  Partnership Working Party: Technical Discussions 

Throughout 2008-2011, and even before that time, the trade and trade related aspects of the 
Association  were  also  discussed  at  technical  level  within  the  context  of  the  partnership 
working party (PWP) dedicated to trade and regional Integration. In this context and as a 
follow-up  to  the  discussions  which  took  place  at  the  9th  OCT/EU  Forum,  the  European 
Commission sent out a questionnaire in the Summer of 2011, which covered the following 
topics:  

- 

- 

- 

economic sectors and products of interests to OCTs (current and prospective); 

access, opportunities and possible obstacles to OCT access to third markets (including 
the EU); 

existing support to OCT exporters and additional needs for support; 

-  OCT interest in selected topics of the EU trade policy; 

-  OCT position in light of international trade law. 

Of  the  twenty  inhabited  OCTs  that  were  queried,  eleven  OCTs  located  in  the  Atlantic, 
Caribbean and Pacific responded to the questionnaire; which corresponds to a reply rate of 
55  %.  An  overview  of  the  answer  to  the  questionnaire  goes  in  Annex  12.7.  They  were 
discussed with OCTs and Member States at the meeting of the PWP on trade and regional 
integration that took place on 14 October 2011. The results confirmed the main findings of 
the external studies. 

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Interest in Export Markets 

It was found that OCT interests in third markets reflected trends in international trade, the 
European-North  American  axis  being  a  strong  focal  point  for  OCT  interest,  followed  by 
the  industrialised  and  industrialising  countries  in  Asia  and  Latin  America  and  the 
neighbouring countries of the Caribbean and Pacific OCTs. This trend also translates itself 
by the OCTs' geographic interest in EU trade agreements, which extends beyond their ACP 
neighbours. 

Interest in Goods Exports 

From the replies to the questionnaire, it could be deduced that OCTs had a marked interest 
in  exporting  agro-food  products74,  in  particular  fishery  products  and  beverages.  This  is 
valid for present markets as well as prospective markets and also applies to OCTs which 
traditionally  are  not  associated  with  fisheries  sectors.  Interests  in  this  sector  related  to 
several species: cod, scallops, shrimps, mussels, halibut, tuna, molluscs, crab and lobsters. 
To  a  lesser  extent  materials  (earth,  stones,  construction  materials  etc.),  chemicals  and 
plastics and ores, metals, minerals, precious metals, fuels and oils were marked as products 
of interest to the OCTs. 

Interest in Services Exports 

The results also confirmed the services sectors as a potential for growth for OCT. Tourism 
and related sectors (culture, recreation and sports) came out as drawing the most attention. 
Other  sectors  being  considered  by  OCTs  were:  (renewable)  energy  (consulting, 
engineering  etc.)  and  environment  services  (environment  protection  etc.)  as  well  as 
business,  telecommunication  and  other  supporting  services  (telephone  support  services, 
data storage, internet traffic relay etc.). 

Obstacles to Market Access in Third Countries and the EU 

The questionnaire confirmed that the main problems that OCTs face in accessing non-EU 
and EU markets relate to their remoteness and isolation on the one hand, and the small size 
and capacities of their enterprises on the other hand. To help their economic operators to 
overcome  the  challenges  with  which  they  are  confronted,  the  OCT  authorities  indicated 
that  they  mainly  provided  public  support  in  the  form  of  public  aids  and  support 
programmes. Support by the Member States was mentioned for only a number of OCTs. 

Policies and Support 

Little  mention  was  made  of  the  existence  of  export  strategies,  but  some  OCTs  indicated 
that they were considering adopting such strategies. OCTs seemed to agree that additional 
support could be foreseen in the form of capacity building and technical assistance, notably 
in fields such as food safety and consumer health (SPS) as well as other fields submitted to 
technical regulations (TBT), access to capital (commercial and concessional loans from the 

74  

In  this  context,  the  notion  of  agro-food  products  is  understood  to  cover  products  such  as  fishery 
products,  meat,  fruits  and  fruit  preparations,  vegetables,  beverages,  mineral  water,  rum,  dairy 
products, tobacco, coffee, tea and animal and vegetable oils. 

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EIB  and  other  financial  instances)  and  continued  support  programmes.  One  OCT 
highlighted the need for assistance for building the OCTs' statistical capacities. 

5.1.4.  Ad hoc Bilateral Meetings with Individual OCTs and their Member States 

In  addition  to  consultations  of  OCTs,  their  Member  States  and  other  stakeholders,  the 
European Commission has held ad hoc meetings with individual OCTs and their Member 
States,  to  discuss  issues  of  individual  concern  to  them.  Such  discussions  dealt  with  the 
progress of the EU's trade negotiations with selected partners, derogations to the rules of 
origin applicable to OCT products and autonomous trade measures of the EU. 

5.2. 

Overall Assessment Economic and Trade Cooperation of the OAD  

5.2.1.  External Assessment 

In their overall assessments of the OCT trade regime, OCTs, their Member States as well 
as  external  evaluators  all  agree  that  the  trade  and  economic  component  of  the  OCT/EU 
association has contributed to the sustainable social and economic development of OCTs 
by  providing  OCTs  a  secure  access  to  the  large  EU  market,  providing  numerous  export 
opportunities,  and  supporting  local  economies.  Echoing  the  conclusion  of  an  earlier 
external  evaluation  of  the  9th  EDF75,  ECO  Consult  et  al.  (2011)  stated  that  OCT/EU 
cooperation programmes and projects under the 8th and 9th EDF had been highly relevant to 
the individual OCTs' needs as well as coherent with both the association's objectives and 
the  OCTs'  own  priorities76.  As  regards  coherence  between  EU  support  to  the  OCTs  and 
other  EU  policies  (migration,  trade,  fisheries  etc.)  ECO  Consult  et  al.  (2011)  found  no 
marked contradictions or inconsistencies77. 

5.2.2.  OCT Trade Regime 

Overall Impact 

With  a  duty  free  and  quota  free  access  to  the  EU  market  since  the  1991  revision  of  the 
OAD,  the  OCTs  have  benefitted  from  the  most  generous  tariff  regime  that  the  EU  has 
offered,  with  larger  preferential  margins  than  those  traditionally  granted  to  developing 
countries; at least until full implementation of the Everything But Arms initiative and the 
Economic Partnership Agreements from 2008-2009 on. 

The  evolution  of  fishery  exports  from  Greenland,  Saint-Pierre  et  Miquelon  and  Falkland 
Islands to the EU are an example of the positive impact that the OCT trade regime has had 
on OCTs78. In the period from 2002 to 2010, exports of fishery products from Greenland to 
the EU steadily increased from 94,000 tonnes to 112,000 tonnes, amounting to EUR 280 
million in export value in 2010. EU exports of fisheries products to Greenland, on the other 
hand, represented only 436 tonnes in 2010 or EUR 3 million in export value. 90 % of the 
fish  exports  of  Greenland  target  the  EU  market  (notably  Denmark).  In  the  same  fashion, 

75  
76  
77  
78  

EN 

BURKE et al. (2006) 

ECO Consult et al. (2011), p. 38. 

Idem, pp. 81-83. 

Data  provided  by  the  European  Commission,  Directorate  General  for  Maritime  Affairs  and 
Fisheries. 

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exports of fishery products from Saint-Pierre et Miquelon to the EU rose from 142 tonnes 
in 2002 to 1,407 in 2008 (or EUR 6 million in value) to go down to 856 tonnes in 2009, 
even though the derogation of 1,290 tonnes for fishery products that entered into force in 
2007 applies until 2013. The EU, however, is not the only trade partner of Saint-Pierre et 
Miquelon regarding fisheries; Saint-Pierre et Miquelon fish is also exported to Canada (4 
%) and the United States (17 %). As indicated above, the value of the total catches in the 
Falkland  Islands  fishing  conservation  zone  average  USD  200  million  a  year  and  greatly 
contribute  to  the  Falkland  Islands'  GDP.  Most  of  the  Falkland  Islands'  fishery  exports 
target the EU. With exports worth EUR 70 million, the Falkland Islands are the EU's fourth 
largest provider of frozen Loligo squid after India (EUR 130 million), Thailand (EUR 90 
million) and China (EUR 90 million)79. 

To  support  existing  economic  activities  and  stimulate  the  creation  of  new  industries  in 
OCTs, the OCT trade regime has included certain flexibilities in its trade rules, which have 
allowed OCTs to  take advantage of  the export opportunities offered  by the regime. With 
derogations to the rules of origin granted to Saint-Pierre et Miquelon, Greenland and the 
Falkland Islands for their fishery products the EU has showed willingness to support these 
territories (see below). 

Considering the evolution of OCT exports and imports, ECO Consult et al. (2011) found 
an  encouraging  growth  in  exports  (from  USD  1.2  billion  in  2004  to  USD  1.8  billion  in 
2008),  which  it  linked  to  emerging  OCT  strategic  thinking  on  economic  diversification, 
stimulated by OCT/EU policy dialogue and EU support operations in the form of sector or 
general  budget  support80.  Despite  this  positive  development,  OCT  problems  with  trade 
balances that are structurally in deficit were not resolved as OCT imports grew as well and 
at a faster pace (from USD 3.5 billion in 2004 to USD 5.9 billion in 2008). 

Possible Improvements 

Even if the OCT trade regime has provided levers for the OCTs' economic development, 
certain areas of improvement were identified. LUFF et al. (2010) and others have pointed 
out  that  while  the  EU  offers  OCT  wide  market  access,  this  has  not  always  translated  in 
actual  trade  opportunities,  as  OCTs  faced  several  challenges  to  effectively  exploit  the 
market  access  that  was  offered.  The  challenges  not  only  relate  to  structural  difficulties 
OCTs face, such as the size of their economies and their enterprise, the remoteness of their 
territories or even the absence of OCT trade policies, but also have to a certain extent to do 
with the EU rules and conditions which define the OCTs' actual market access. The studies 
also point out that the relative worth of the OCTs' duty free and quota free market access is 
decreasing  as  a  result  of  progressive  trade  liberalisation  on  a  global  and  regional  scale. 
Finally, the studies highlighted that compared to the arrangements for trade in goods, the 
OAD  arrangements  for  trade  in  services  were  relatively  underdeveloped.  The  following 
chapter contains a more comprehensive discussion of the points just raised  

In  its  Green  Paper  COM(2008)  383  and  Communication  COM(2009)  623,  the  European 
Commission indicated that the OCT trade regime could be improved in certain areas, so as 
to  increase  its  utility  as  a  lever  for  the  OCTs'  social  and  economic  development.  For  the 
EU the expiry of the OAD provides an opportunity to bring the OCT trade regime in line 

79  
80  

Idem. 

ECO Consult et al. (2011), p. 75. 

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with the latest developments in EU trade policy and other related policies, while respecting 
the  specific  nature  of  the  OCT/EU  association.  Translating  the  notion  that  the  OCT/EU 
association  should  be  based  on  reciprocity,  mutual  interests,  rights  and  obligations,  and 
ensuring policy coherence between EU external and internal policies and with the Europe 
2020  Agenda,  mean  that  a  number  of  other  issues  with  the  present  OAD  other  than  the 
ones discussed in the next chapter are addressed as well. 

The OCT asymmetric trade regime is not fully aligned on other EU unilateral (GSP) trade 
arrangements  or  bilateral  agreements  (FTAs,  EPAs)  as  regards  measures  that  ensure  the 
effective  application  of  tariff  treatment  and  prevent/combat  fraud  and  irregularities.  In 
addition,  the  OCT  trade  regime  is  not  explicit  about  the  consequences  and  liabilities 
relating  to  administrative  errors  in  the  application  of  the  trade  regime  where  these  errors 
lead to losses of import duties. Standard EU policy for the management of all preferential 
regimes  is  to  include  strong  provisions  on  administrative  cooperation,  management  of 
errors and temporary withdrawal of preferences, so as to avoid and combat fraudulent use 
of the arrangements and loss of EU own resources81. Such provisions are indispensable for 
the  proper  management  of  EU  trade  preferences,  and  ultimately  allow  for  the  temporary 
suspension  of  tariff  preferences  for  goods  on  which  beneficiaries  are  not  providing  the 
necessary  cooperation  as  regards  origin  verification  or  assistance  with  enquiries. 
Preferential trade arrangements already containing provisions on the temporary withdrawal 
of preferences include the GSP (Article 16 of the current regulation, Article 21 of the post-
2014 proposal) 82, and the Market Access Regulation for ACP countries having negotiated 
EPAs  (Article  5)83.  Such  provisions  are  also  contained  in  the  Economic  Partnership 
Agreement between the CARIFORUM States and the EU and its Member States (Article 
20) and in all other EPAs negotiated/under negotiation. 

5.2.3.  OCT/EU Trade and Trade Related Cooperation 

As was mentioned above, the current Overseas Association Decision provides a wide range 
of cooperation possibilities with OCTs in the provisions concerning trade and trade related 
areas;  i.e.  Articles  12,  13,  14  and  16  as  well  as  Chapter  3  of  Title  II  of  Part  3.  This 
cooperation has non-financial and financial aspects. The present section will focus on the 
non-financial cooperation in these areas. The next section will be dedicated to the financial 
cooperation. 

OCT/EU cooperation and consultation on trade and trade related generally takes place in 
the context of the various instances of dialogue provided for under the OAD in its Article 7 
(See Chapter 4): annual Forums, trilateral meetings between OCTs, Member States and the 
EU  and  the  EU  and  the  partnership  working  party  on  trade  and  regional  integration.  As 

81  

82  

83  

Basis  for  the  standard  policy  is  based  on  Commission  Communication  COM(97)  402  of  23  July 
1997 on the Management of Preferential Tariff Arrangements. 

Council  Regulation  (EC)  N°  732/2008  of  22  July  2008  applying  a  scheme  of  generalised  tariff 
preferences  for  the  period  from  1  January  2009  to  31  December  2011  and  amending  Regulations 
(EC) No 552/97,  (EC) No  1933/2006  and Commission  Regulations (EC)  No 1100/2006  and  (EC) 
No 964/2007. Commission  Communication  COM(2011)  241 of 10  May 2011  on  a  proposal  for  a 
regulation from Council and Parliament applying a scheme of generalised tariff preferences. 

Council  Regulation  (EC)  N°  1528/2007  of  20  December  2007  applying  the  arrangements  for 
products  originating  in  certain  states  which  are  part  of  the  African,  Caribbean  and  Pacific  (ACP) 
Group  of  States  provided  for  in  agreements  establishing,  or  leading  to  the  establishment  of, 
Economic Partnership Agreements 

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described  above,  such  meetings  have  provided  the  OCTs  the  opportunity  to  express 
possible  concerns  they  may  have  had  with  regard  to  the  trade  and  economic  cooperation 
part of the OAD.  

However, the OCT/EU dialogue in this context has somewhat lacked focus as the agendas 
of these meetings were in general defined on a case by case basis, depending on what was 
the topic of interest for OCTs at a given moment. In general, no systematic follow-up has 
been given by OCTs to these topics whenever they were raised. In addition, the OCT/EU 
dialogue on trade and trade related issues has had the tendency to focus on aspects of the 
EU trade policy which the EU undertakes independently from the OCT/EU association. In 
particular the EU's trade negotiations and its unilateral trade measures have been prone to 
dominate OCT/EU discussions on trade and trade related issues. 

These  discussions  have  also  tended  to  lack  interaction  between  the  different  actors. 
Although the meetings of the partnership working party on trade and regional integration 
are  supposed  to  be  attended  by  technical  experts,  the  OCTs  usually  are  represented  by 
generalists  based  in  Europe  (Brussels  or  the  capitals  of  their  Member  States),  rather 
technical experts from their home administration. As a consequence, the OCT/EU dialogue 
has lacked certain depth as well. 

Given  its  tendency  to  go  one  way,  rather  than  two  ways,  the  OCT/EU  dialogue  has  not 
always provided the context in which mutual trade interests, such as raw materials, could 
be  taken  into  account.  Thus,  it  has  not  always  been  an  instance  based  on  reciprocity, 
partnership and mutual interests. 

In addition, the provisions contained in Chapter 3 of Title II (Trade Related Areas) of Part 
3, which foresee in administrative cooperation between the EU and OCTs in the fields of 
current  payments  and  capital  movements,  competition  policies,  protection  of  intellectual 
property rights, standardisation and certification, trade and environment, trade and labour 
standards  and  consumer  policy  and  consumer  health  protection  have  not  been  used, 
monitored or been the subject of dialogue or cooperation for the most part.  

The reasons for this are probably manifold. The theoretical justification for including the 
relevant  articles  during  the  2001  revision  of  the  Decision  seems  sound,  as  the  areas 
mentioned  are  increasingly  impacting  on  trade in  goods  while  traditional  trade  tools  (i.e. 
tariffs and quotas) keep losing relevance. Furthermore, while the articles were inspired by 
novel  wording  in  the  2000  Cotonou  Partnership  Agreement,  at  the  same  time  they  were 
adapted to the OCT context where the legal basis was not an international agreement but 
an  EU  Council  decision.  However,  in  the  process  the  relevant  provisions  became  very 
much  best-endeavour  clauses,  with  cooperation  foreseen  but  not  really  integrated  into 
existing  cooperation  instruments  (notwithstanding  the  requirement  that  development 
finance  cooperation  and  trade  and  economic  cooperation  under  the  OAD  should  be 
mutually supportive). 

To  a  large  extent,  the  problems  mentioned  above  relate  to  the  limited  administrative 
resources and technical expertise available to OCTs as well as the absence of OCT trade 
policies. 

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5.2.4.  EU Financial Support to OCTs in Trade and Trade Related Areas 

The present section focuses on the financial cooperation in trade and trade related areas in 
the  last  decade.  The  non-financial  cooperation  on  trade  and  trade  related  aspects  are 
covered in a separate section. 

8th-9th EDF 

In  a  preliminary  report,  external  evaluators  reviewing  the  financial  resources  committed 
and  allocated  to  OCT/EU  cooperation  in  the  period  1999-2009  (under  the  8th  and  9th 
European  Development  Funds  and  the  budget  lines  for  cooperation  with  Greenland  in 
education  and  fisheries)  found  that,  at  a  prima  facie  basis,  trade  and  trade  related  areas, 
were  part  of  only  a  small  minority  of  EU  financed  projects  and  programmes  (see  figure 
below)84.  Out  of  the  EUR  380  million  committed,  31  %  was  dedicated  to  education 
(reflecting  the  high  allocation  to  Greenland),  23  %  to  transport  infrastructure,  21  %  to 
water  and  sanitation  infrastructure,  9  %  to  environment  (management  and  protection  of 
resources, disaster preparedness and waste management), 7 % to a category entitled "island 
economies"  and  9  %  to  miscellaneous  activities  such  as  technical  assistance  and 
cooperation  on  trade  and  trade  related  areas.  What  the  difference  is  between  what  the 
authors  consider  as  trade  and  trade  related  assistance  and  assistance  to  the  island 
economies is difficult to know as they do not provide a definition for the latter and actually 
only use it once in their study. 

Source: ECO Consult et al. (2011), pp. 25-26 

- 

Examples of projects and programmes with a link to trade and trade related matters were:  
the  support  to  the  development  of  trade  in  services  in  Montserrat  under  the  9th  EDF 
(allocation:  EUR  17.2  million,  sector  budget  support):  private  sector  development, 
development  of  tourism  products  and  repositioning  of  Montserrat  as  a  tourism 

84  

ECO Consult et al. (2011), pp. 25-26. The data provided exclude regional programming, indicative 
allocations for the 10th EDF and funding for disaster relief. The consultants looked at output rather 
than  at  the  precise  source  of  financing,  as,  until  the  10th  EDF,  it  was  possible  to  transfer  unused 
funds from one EDF to another. The data provided were extracted from Commission databases. 

EN 

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- 

- 

destination,  development  of  institutional  and  regulatory  framework  and  ICT 
infrastructure85; 
the trade development support to the Falkland Islands under the 9th EDF (allocation: 
EUR  4.547  million,  sector  budget  support):  private  sector  development,  develop  key 
export sectors such as fisheries and aquaculture, meat production and tourism86; 
the reallocation to the 9th EDF of resources previously allocated to Falklands Islands 
under  the  STABEX  scheme  of  past  EDFs  to  mitigate  the  harmful  consequences  of 
instability  in  wool  export  earnings  (reallocation  EUR  2.466  million  –sector  budget 
support): improvement in the quality and returns from agricultural production through 
training  programmes  and  product  development  and  development  of  aquaculture 
activities in view of diversifying the Falkland Islands economy87; 

- 

STABEX  funds  allocated  to  Mayotte  (EUR  380,486)  for  the  development  of  vanilla 
and ylang-ylang essential oils marketing chains. 

Even if trade and trade related areas were little in focus in OCT/EU cooperation projects 
and programmes under the 8th and 9th EDF, the EU support activities in other fields were 
found  to  have  positively  contributed  to  the  development  of  trade  related  activities  in  the 
OCTs, notably in the tourism sector. Interventions such as support to the rehabilitation and 
extension of harbours, airports and/or road infrastructures in Saint-Pierre et Miquelon, St 
Helena,  Ascension  Island  and  Tristan  da  Cunha,  Anguilla,  New  Caledonia,  Turks  and 
Caicos  and  Montserrat  contributed  to  increase  OCT  connectivity  to  the  world,  mainly 
improving passenger traffic conditions, which is likely to be conducive to a greater influx 
of  tourists88.  Likewise,  the  vocational  and  education  training  interventions  in  New 
Caledonia  and  Greenland  contributed  to  increasing  employment  opportunities  for  OCT 
inhabitants and strengthening the skills base, notably in economic sectors with high export 
potential  such  as  the  mining  industry  (e.g.  nickel  extraction  in  New  Caledonia)89. 
Interventions in the field of environment such as the water sanitation project on the French 
Polynesian island of Bora Bora in order to preserve its lagoons or the development of the 
Arikok  national  park  in  Aruba  contributed  to  the  attractiveness  of  both  territories  as  a 
tourism destination. 

85  

86  

87  

88  
89  

Single Programming Document for Overseas Countries and Territories Submitted to the European 
Community by the Government of Montserrat, Montserrat 27 July 2004. 

Falkland  Islands  –  European  Community:  Single  Programming  Document  and  Indicative 
Programme for the Period 2004-2007, Brussels, 21 June 2004. 

Framework of Mutual Obligation (FMO) between the European Commission and the Government 
of Falkland Islands, STABEX Transfers Application Years 1990-1994, Stanley 18 July 2007. 

ECO Consult et al. (2011), pp. 48-50. 

Idem, pp. 59-60. 

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10th EDF 

Under the 10th EDF, EUR 286 million have been reserved for cooperation with the OCTs: 
EUR  195  million  for  territorial  programmes  and  projects:  EUR  40  million  for  a  regional 
programme; EUR 30 million for an OCT investment facility managed by the EIB, EUR 6 
million  for  technical  assistance  managed  by  the  European  Commission;  and  EUR  15 
million  for  contingency  aid  (disasters,  fluctuations  in  export  earnings).  In  addition,  EUR 
175  million  (2006  prices)  has  been  reserved  for  cooperation  with  Greenland  in  non-
fisheries  sectors  and  EUR  77  million  for  cooperation  in  the  fisheries  sector  (2007-2012) 
The  territorial  and  regional  programmes  and  projects  are  either  being  implemented  or  in 
the process of being committed.  

The areas on which  EU support will concentrate under the 10th EDF will roughly follow 
the  same  orientations  as  under  the  previous  EDFs,  with  a  strong  focus  on  education 
(Aruba,  Greenland  and  New  Caledonia),  infrastructure  (former  Netherlands  Antilles, 
Anguilla, Turks and Caicos Islands, Saint Helena, Ascension Island and Tristan da Cunha, 
French Polynesia and Wallis and Futuna) and environment (French Polynesia, Pacific and 
Indian Ocean projects). Trade and trade related matters will be given more attention via the 
general  budget  EDF  operations  in  Montserrat, Saint-Pierre  et  Miquelon  and  the  Falkland 
Islands in support of general government policies, all of which include trade components, 
as well as the Caribbean project targeting the development of the capacities of the Dutch 
and British OCT SMEs and business support organisations. In addition, the two horizontal 
projects  covering  all  OCTs  that  are  foreseen,  entitled  "Technical  assistance  to  the 
Association of Overseas Countries and Territories (OCTA)" and "Territorial Strategies for 
Innovation" are likely to bring benefits to the OCTs in the field of trade and trade related 
economic activities, amongst others by improving the OCTs' access to the EU's horizontal 
programmes and budget lines to which they are eligible. 

The various external studies provide some explanations for the relatively low interest that 
OCTs generally had in cooperating with the EU on trade, trade related areas and regional 
cooperation under the previous EDFs, notably: 

- 

- 

the  fact  that  regional  economic  integration  with  ACP  countries  does  not  necessarily 
bear much interest to OCTs (see SALMON (2007) and the analysis in chapter 3); 

the  absence  of  capacities,  infrastructure  and  political  will  to  engage  in  structural 
reforms and liberalisation (LUFF et al. (2010), ECO Consult et al. (2011). 

As  indicated  above,  ECO  Consult  et  al.  (2011)  noticed  that  OCT  attitudes  seemed  to  be 
changing  as  a  consequence  of  the  more  generalised  use  of  general  and  sector  budget 
support operations, which have stimulated OCTs to think about economic diversification in 
a  more  strategic  way,  trade  and  trade  related  issues  being  part  thereof90.  Concerning  the 
Atlantic  OCTs,  for  which  trade  issues  are  generally  more  important,  BROOKS, 
STONEMAN  and  RIOS  (2010)  concluded  that  in  future  these  OCTs  would  continue  to 
need  EU  financial  assistance  to  support  their  process  of  economic  diversification,  in  the 
form  of  development  aid,  facilitated  participation  in  the  EU  horizontal  programmes  and 

90  

ECO Consult et al. (2011), p. 75. 

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budget  lines,  and  access  to  concessional  and  commercial  loans  from  the  EIB  and  other 
financial instances91. 

EU Horizontal Programmes and Budget Lines 

As  was  demonstrated  above  with  the  example  of  OCT  involvement  in  the  Enterprise 
Europe Network, OCT participation in horizontal programmes and budget lines in support 
of  trade  development  and  related  activities  to  which  they  are  in  principle  eligible  often 
turns out to be very limited in reality. Another example of a programme of interest to the 
OCTs  is  the  current  Competitiveness  and  Innovation  Framework  Programme.  The 
statement  above  holds  true  for  both  the  internal  and  external  instruments  to  which  the 
OCTs are eligible. In part, the limited participation of OCTs can be related to the limited 
capacities of their businesses, organisations and authorities, but other factors play as well.  

For instance, cooperation with the relevant organisations and instances of Member States, 
which  are  supposed  to  cover  the  OCTs  is  often  complicated  because  no  real  links  exist 
between  them  and  the  organisations  and  instances  of  OCTs.  In  those  programmes  where 
funding is made conditional to the submission of proposals by consortia of organisations 
and instances from at least three different Member States or associated States, the absence 
of  well-developed  OCT  networks  plays  against  their  participation  as  well.  Often,  OCT 
businesses,  organisations  and  authorities  have  links  with  counterparts  in  their  Member 
States only. Cooperation between OCTs associated to different Member States is, for the 
time  being,  not  a  practice  that  is  established  enough  in  order  for  OCT  businesses, 
organisations and other instances to exploit eligibility in those cases. Thus, the absence of 
established  cooperation  networks  in  the  Caribbean  between  the  Dutch  and  the  British 
OCTs  and  the  French  Outermost  Regions  excludes  from  certain  parts  of  the  Seventh 
Framework  Programme  where  the  rule  of  the  consortia  composed  of  organisations  from 
three Member States applies. 

As a consequence of the limited OCT participation in the EU horizontal programmes and 
budget  lines  to  which  they  are  eligible,  the  EDFs  has  to  a  certain  extent  been  used  for 
financing activities that could have been financed via other financial instruments. Thus, the 
notion  that  financial  assistance  through  the  EDF  should  be  complementary  to  territorial, 
national  and  other  EU  financing  has  not  been  put  in  practice  and  the  potential  synergies 
that  could  have  been  created  by  combining  different  financial  sources  have  not  come 
about. 

The  problems  mentioned  above  relate  to  a  certain extent to particular  nature of  OCT/EU 
relations.  Whereas  the  territories  themselves  are  outside  the  customs  territory  and  the 
internal  market,  their  citizens  benefit  from  EU citizenship  and  the  rights  associated  to  it. 
This has led to a certain confusion about and tension between the territorial and personal 
scope of the EU law92. 

Some  of  the  projects  and  programmes  under  consideration  for  the  10th  EDF  intend  to 
address  the  problems  identified  above.  For  instance,  under  the  regional  programme 
technical  assistance  will  be  provided  to  the  Association  of  Overseas  Countries  and 
Territories  of  the  European  Union.  Through  this  association  the  OCTs  wish  to  reinforce 

91  
92  

BROOKS, STONEMAN and RIOS (2010) 

Communication COM(1999) 163, p. 41. 

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cooperation amongst themselves and develop networks within the EU institutions and with 
other  third  partners.  The  technical  assistance  will  also  support  OCTs  in  formulating 
proposals for financing under horizontal programmes. 

11th EDF 

According to the Commission proposal for an Internal Agreement between Member States 
regarding  the  11th  EDF  (envisaged  for  adoption  in  December  2011),  EUR  338.4  million 
would  be  reserved  to  finance  territorial  and  regional  programmes,  technical  assistance  and 
interventions  in  case  of  contingency  situations  in  the  period  2014-2020.  EUR  5  million 
would be allocated to the European Investment Bank (EIB) to finance interest subsidies and 
technical assistance in accordance with the Overseas Association Decision. 

5.3. 

Recommendations External Literature 

As mentioned above, between 2007 to 2010, the Association of the Overseas Countries and 
Territories  of  the  European  Union  made  use  of  technical  assistance  provided  for  by  the 
European Commission to finance external studies (SALMON (2007), LUFF et al. (2010), 
BROOKS, STONEMAN and RIOS (2010) dedicated to the impacts of the changes to the 
OCTs'  trade  environments  as  a  consequence  of  free  trade  and/or  economic  integration 
negotiations  negotiations  at  bilateral  (FTAs),  regional  (EPAs)  and  multilateral  (WTO) 
level.  An  additional  external  evaluation  of  OCT/EU  cooperation  from  1999  to  2009  was 
conducted by ECO Consult et al. A specific study (SPANNEUT (2011) was dedicated to 
OCT statistical systems and capacities. Several of these studies' findings have fed into the 
present paper. The list below concentrates on their recommendations relating to the OCT 
trade regime and the EU trade related support.  

The external studies recommend that the revised OCT/EU association would: 

- 

- 

- 

- 

- 

- 

review the trade in services treatment (in Part III, Title II, Chapter 2) of the OAD, so 
as to bring them in line with the trade in goods treatment of the OAD; 

review the rules of origin contained in Appendix 2 to Annex III to the OAD, so as to 
bring them in line with the rules of origin granted in the context of the Pacific EPA, in 
particular for fisheries products, and possibly for other products; 

foresee  enough  possibilities  for  trade  and  regulatory  reform  related  technical 
assistance  supportive  of  the  streamlining  trade  in  OCT  government  policies 
(formulation  of  trade  and  industrial  policies,  improve  and  harmonise  statistics 
gathering and analysis capacities, institutional support to trade actors, studies, etc.); 

provide  trade  related  technical  assistance  to  authorities  and  economic  operators  in 
areas related to tariff policy, rules of origin, services trade liberalisation, compliance 
with  international  and/or  European  norms  and  standards  concerning  technical,  food 
safety  and  consumer  health  regulations  (harmonisation  with  TBT  and  SPS 
agreements),  subsidies,  protection  of  intellectual  property  rights,  competition  policy, 
foreign direct investments. 

assist with the set up and costs related to the implementation of the dispositions related 
to the EU's food safety and consumer health regulations; 

support the economic adjustment of OCTs through the setup of a fisheries adaptation 
programme similar to the Sugar Adaptation programme for ACPs, which would aim at 

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improving  the  competitiveness  of  the  OCT  fisheries  sector,  assist  displaced  workers 
and encourage diversification; 

refocus  support  projects  in  the  field  of  trade  from  infrastructure  to  business 
development; 

facilitate OCT access to and knowledge about EU horizontal programmes and budget 
lines  to  which  OCTs  are  in  principle  eligible,  amongst  others  through  technical 
assistance and capacity building; 

facilitate OCT participation in other external programmes, such as Pro€invest for the 
development of the OCTs' touristic potential; 

ensure  that  OCT  interests  are  taken  into  account  in  the  context  of  EU  trade 
negotiations; 

continue the direct dialogue between the European Commission and the OCTs on inter 
alia trade and trade related issues. 

- 

- 

- 

- 

- 

6. 

IDENTIFICATION AND ANALYSIS OF SPECIFIC ISSUES 

6.1. 

Preference Erosion 

6.1.1.  Main Issues 

One of the concerns often expressed by OCTs is that the EU's active policy of free trade 
negotiations  as  well  as  autonomous  trade  measures  (e.g.  tariff  quotas  for  shrimps)  are 
decreasing the relative value of the trade preferences of which the OCTs have traditionally 
been benefitting93. Fisheries products are the prime subject of such concerns. Targeted free 
trade  negotiations  are  those  with  Canada  (Comprehensive  Economic  and  Trade 
Agreement, CETA). If the negotiations with MERCOSUR pick up, those may come to be 
targeted as SALMON (2007) pointed out that South American countries are competitors of 
Saint-Pierre  et  Miquelon  for  scallops.  The  Falkland  Islands  are  also  concerned  as  they 
compete with Argentina over the same resources: squid. 

6.1.2.  OCT Requests 

The OCTs are of the opinion that they are entitled to the best possible treatment under the 
OAD  and  that  this  means  that  the  EU  should  take  into  account  OCT  sensitivities  when 
negotiating  free  trade  agreements,  including  by  taking  them  into  consideration  in  impact 
assessment  exercises  concerning  such  agreements94.  Greenland  has  argued  that  the  EU 
should  compensate  for  the  possible  losses  that  OCTs  have  due  to  the  phenomenon  of 
preference erosion. 

6.1.3.  Commission Analysis of OCT Requests 

The ongoing liberalisation of world trade, in which the EU takes part and plays an active 
role, may potentially have consequences for the competitive position of OCTs on the EU 
market  as  regards  imports  into  the  EU,  because  an  increasing  number  of  the  EU's  trade 

93  
94  

EN 

See: Joint Position Paper of OCTs and their Member States, p. 3. 

Ibidem. 

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partners are obtaining improved access to the EU market. This transition is part of the EU 
trade  policy,  as  defined  in  Article  206  of  the  Treaty  on  the  Functioning  of  the  European 
Union (cf. above) and is a process that cannot be put on halt. It should be pointed out that 
the issue of preference erosion should not be exaggerated. It does not affect all OCTs and 
internal research by Commission services indicates that for the time being OCT products 
have not been affected by EU trade measures (cf. analysis of Greenland and Saint-Pierre et 
Miquelon exports to the EU in Chapter 5 of Annex 12). 

For  those  OCT  products  where  there  may  be  an  issue  in  the  future,  the  Commission 
entertains  a  dialogue  with  the  concerned  OCTs  and  derogations  from  the  rules  of  origin 
have  been  granted  on  several  occasions  and  for  several  OCTs  (see  below).  The 
Commission  has  upon  occasion  assured  his  OCT  interlocutors  that  it  would  continue  to 
take  into  account  OCT  sensitivities  in  the  EU's  trade  negotiations.  At  present,  the 
Commission  already  includes  OCTs  in  the  Impact  Assessment  and  Sustainability  Impact 
Assessment  exercises  it  conducts  in  the  context  of  free  trade  negotiations.  However,  the 
process by which the theoretical benefits offered to the OCTs under the current OCT trade 
regime  in  terms  of  preferential  access  to  the  EU  market  are  eroding  as  a  result  of 
progressive  trade  liberalisation  on  a  global  and  regional  scale  must  be  considered 
inevitable. 

6.2. 

Rules of Origin and Derogations 

6.2.1.  Main Characteristics and Issues 

For  a  number  of  OCTs,  rules  of  origin  applicable  to  OCT  products  and  in  particular  the 
derogations  from  these  rules  can  play  a  positive  role  in  relation  with  the  continuation  of 
their exports to the EU, the development of existing industries and/or the creation of new 
industries.  Within  the  context  of  international  trade,  the  notion  of  origin  refers  to  the 
"economic  nationality"  of  goods.  Origin  determines  whether  or  not  goods  which  are 
imported  into  a  certain  market  benefit  from  preferential  access  (reduced  or  zero  rate  of 
duty). The rules that are followed to determine the origin of an imported product are laid 
down  in  preferential  trade  agreements  or  arrangements.  The  rules  of  origin  that  apply  to 
OCT exports to the EU market are laid down in Annex III to the OAD. 

General Provisions and Product Specific Rules 

The OAD's general provisions on the rules of origin applicable to OCT products are based 
on  the  EU's  standard  general  provisions,  which  stipulate  with  which  conditions  and 
requirements  products  need  to  comply  in  order  for  them  to  acquire  the  origin  of  a 
beneficiary  country.  In  complementing  its  general  provisions  on  rules  of  origin  for  OCT 
products,  the  OAD  also  provides  for  product  specific  rules.  The  conditions  and 
requirements in the general and product specific rules are amongst others: 

- 

- 

goods need to be either wholly obtained or sufficiently worked or processed in OCTs 
(cf. Articles 3 and 4 of Annex III to the OAD and the list mentioned in its Appendix 2 
on the product specific rules);  

goods  need  to  be  transported  directly  from  the  OCT's  territory  to  the  EU's  and  this 
direct transport condition needs to be proved systematically by relevant documentary 
evidences (Article 12 of Annex III to the OAD);  

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- 

- 

fish  caught  beyond  the  territorial  waters  of  the  OCTs  needs  to  be  caught  by  vessels 
fulfilling four cumulative criteria (Article 3 of Annex III to the OAD); 

the  value  of  the  use  of  non-originating  materials  mentioned  in  the  list  of  Product 
Specific  Rules  is  allowed  up  to  a  limit  of  15%  of  the  ex-works  price  of  the  final 
product, provided that specific percentages given in the list of Specific Product Rules 
are not exceeded by the application of this value tolerance. 

Certification of origin is done by customs authorities of the OCTs, unless the exporter has 
been  formally  approved  by  the  same  customs  authorities.  For  the  purposes  of  the  OAD, 
OCTs are treated a single territory. 

OAD Specificities 

The  OAD  also  includes  specificities.  For  instance,  the  possibilities  of  cumulation  are 
extensive (Article 6 of Annex III to the OAD). Cumulation allows originating products of a 
country A which are further processed or/and incorporated into products of a country B, to 
be  considered  as  products  originating  from  B,  if  the  processing  goes  beyond  minimal 
operations. It allows the final product manufactured in the country B to fulfil more easily 
the applicable criteria. The OAD not only provides for bilateral cumulation with the EU, 
but also for diagonal and full cumulation with the OCTs and ACP States. Such cumulation 
does  not  apply  to  agricultural  products,  which  fall  within  Chapters  1  to  24  of  the 
Harmonised  Commodity  Description  and  Coding  System,  (Harmonised  System  –  HS), 
originating  in  the  EU  and  are  covered  by  an  export  refund  system.  In  addition,  special 
cumulation provisions apply on sugar and sugar products (HS Chapter 17, 1806 1030 and 
1806 1090) and rice (heading HS 1006).  

Derogations 

Apart  from  the  tolerance  level  for  non-originating  material  mentioned  above,  the  OAD 
foresees  additional  flexibility  by  providing  the  possibility  for  Member  State  or  OCT 
authorities  to  request  derogations  from  the  rules  of  origin.  Such  derogations  consist  in 
temporary  relaxations  of  the  rules,  allowing  preferential  treatment  to  be  accorded  to 
products  which  may  not  be  able  to  satisfy  the  usual  criteria.  According  to  Article  37  of 
Annex  III  to  the  OAD  derogations  may  be  granted  where  the  development  of  existing 
industries  or  the  creation  of  new  ones  justify  them.  The  same  Article  imposes  the  EU  to 
consider OCT requests with a positive bias, stating that it "shall respond positively to all 
the requests which are duly justified in conformity with [it] and which cannot cause serious 
injury  to  an  established  [EU]  industry".  The  Article  also  facilitates  the  acceptance  of  the 
request by the EU, by stipulating that derogations “shall be granted where the value added 
to the non-originating products used in the OCT concerned is at least 45 % of the value of 
the finished product”. 

In the past, the EU has positively responded to requests to accommodate OCT needs and 
has granted derogations to the rules of origin for several products. Recent examples are:  

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- 

- 

the  (former)  Netherlands  Antilles  to  allow  them  to  import  non-originating  sugar  and 
perform  small  processing  for  the  production  and  export  of  crystal  sugar  and  sugar 
lumps until 201395;  

the Falkland Islands allowing for more flexible vessels conditions until 30 November 
201296;  

-  Greenland so as to allow it to be able to import and process non-originating shrimps 

and prawns from third countries until 31 December 201397;  

- 

Saint-Pierre  and  Miquelon  to  import  and  process  non  originating  sprats,  shell-on 
scallops  and  scallop  meat, 
third 
countries/Canada until at least 31 December 201398. 

lobsters,  mackerel,  herring,  mussels  from 

6.2.2.  OCT Requests 

In the Joint Position Paper, OCTs put strong emphasis on the rules of origin, which they 
deem  to  be  instrumental  to  regional  integration  and  sustainable  development.  Particular 
attention  was  given  to  the  rules  of  origin  applicable  to  fisheries  products.  In  the  Joint 
Position Paper the OCTs invited the Commission to consider the possibility of: 

- 

- 

simplifying  the  existing  rules  of  origin  and  greater  flexibility,  even  if  no  specific 
request has been made by OCTs; 

replicating innovations related to rules of origin, notably those that were negotiated in 
the context of the Pacific and African EPAs, respectively global sourcing on one hand 
and  automatic  derogation  (for  tuna  and  tuna  loins)  and  extended  possibilities  of 
cumulation on the other99; 

- 

longer durations for the derogation (e.g. ten years and more); 

95  

96  

97 

98 

Commission Decision 2011/47/EU of 20 January 2011 on a derogation from the rules of origin set 
out in Council Decision 2001/822/EC as regards sugar from the Netherlands Antilles. The decision 
foresees  in  quota  that  progressively  decrease  until  2013:  5,000  tonnes  for  2011,  3,000  tonnes  for 
2012, 1,500 tonnes for 2013. The derogation was requested, as the sugar it used to import from ACP 
countries did no longer meet the quality requirements and because ACP States preferred to export 
their sugar directly to the EU causing a supply problem for raw sugar. 

Commission  Decision  2007/767/EC of 15 November  2007  derogating  from  the  rules of origin  set 
out  in  Council  Decision  2001/822/EC  as  regards  certain  fishery  products  imported  from  the 
Falkland Islands. 

Commission  Decision  2009/776/EC  of  16  October  2009  on  a  derogation  from  Council  Decision 
2001/822/EC,  as  regards  the  rules  of  origin  for  prepared  and  preserved  shrimps  and  prawns  from 
Greenland. The Decision foresees in a quota of 2,100 tonnes p.a. 

The  derogations  granted  to  Saint  Pierre  et  Miquelon  are  covered  by  three  different  Commission 
Decisions:  Decision  2005/578/EC  of  27  July  2005  as  regards  meat  of  scallops  of  the  genus 
Placopecten  magellanicus  (250  tonnes  p.a.);  Decision  2007/167/EC  of  15  March  2007  as  regards 
cod, coalfish, haddock, redfish, hake and plaice (1,290 tonnes p.a. for each specifies) and Decision 
2011/122/EU of 22 February 2011 as regards lobster (225 tonnes p.a.), herring (600 tonnes p.a.) and 
mussels  (205  tonnes  p.a.).  It  is  worth  mentioning  that  Saint-Pierre  et  Miquelon  also  asked  for 
additional derogations for some other products of headings 0303 to 0305 (mackerel and herrings), 
but  these  requests  were  rejected  by  the  EU  as  it was  considered  that  the  operations  carried out  in 
Saint-Pierre et Miquelon on these products were minimal and did not create enough value added and 
employment opportunities. 

99  

Joint Position Paper, p. 4. 

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- 

less  cumbersome  procedures  while  applying  for  derogations,  for  which  technical 
assistance should be available. 

The  OCT  requests  mentioned  above  relate  to  specific  problems  which  OCTs  have 
encountered with the application of the rules of origin, in particular with regard to fishery 
products. Currently, the general provisions of the rules of origin determine that in order for 
the fish caught beyond the territorial waters of the OCTs to acquire OCT origin (and hence 
preferential  treatment),  the  vessels  and  factory  ships  concerned  need  to  fulfil  four 
conditions. In Article 3.2 of Annex III to the OAD these are listed as vessels and factory 
ships: 

-  which are registered or recorded in an OCT, in a Member State or in an ACP State; 

-  which sail under the flag of an OCT, of an EU Member State or of an ACP State; 

-  which  are  owned  to  an  extent  of  at  least  50  %  by  OCT,  Member  State  or  ACP 
nationals, or by a company with its head office in the OCT or one of these States, of 
which Chairman of the Board of Directors or the Supervisory Board, and the majority 
of  the  members  of  such  boards  are  OCT,  Member  State,  or  ACP  nationals  and  of 
which, in addition, in the case of partnerships or limited companies, at least half the 
capital belongs to Member States or ACP States or to public bodies or nationals of the 
said States, or of an OCT; and 

- 

of which at least 50 % of the crew, master and officers included, are OCT, Member 
State, or ACP nationals. 

Some OCTs have difficulties to fulfil these conditions. This is the case, in particular, for 
the Falklands Islands as regards the crew requirement. A derogation was needed to allow 
the territory to export its fish to the EU free of duty. In addition, the crew requirement and 
the ownership requirement have often caused problems of interpretation and it has proven 
to be difficult to verify that these requirements are met in practice. 

Another  concern  relates  to  the  general  provision  on  direct  transport,  which  is  relatively 
burdensome  as  it  implies  that  OCT  exporters  should  systematically  prove,  with  relevant 
documentary  evidences,  that  the  goods  have  been  transported  directly  from  the  OCTs  to 
the  EU  without  being  altered.  The  requirement  that  OCT  customs  authorities  certify  the 
origin  of  OCT  exports  sometimes  is  also  perceived  as  time  consuming  and  generating 
additional compliance costs. 

As already mentioned, the trade rules of the present OAD only allow for cumulation with 
all ACP States. This provision is relevant for OCTs which maintain regular trade relations 
with ACP countries, which is potentially the case for French Polynesia and New Caledonia 
with Fiji or Papua New Guinea and, the (former) Netherlands Antilles and British Virgin 
Islands with CARIFORUM EPA countries. However, for a number of OCTs trade relations 
with  ACP  States  are  non-existent  or  represent  only  a  small  part  of  their  trade. 
Consequently, cumulation with ACP States is not always relevant for these OCTs, which 
are  more  interested  in  cumulation  with  some  of  their  non-ACP  neighbours,  including 
developed  countries.  For  example,  French  Polynesia  has  significant  exchanges  with 
ASEAN  countries,  with  India,  with  Canada  and  with  MERCOSUR;  the  former 
Netherlands  Antilles  exchange  with  Canada,  Colombia,  Peru,  Central  America  and 
MERCOSUR. 

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With regard to derogations to the rules of origin, OCTs such as Saint-Pierre et Miquelon 
and the Falkland Islands have argued that the temporary character of this flexibility did not 
provide  the  necessary  incentives  for  significant  long  term  investment  as  derogations  are 
generally granted for short time spans (five years in general) and their prolongation is not 
guaranteed. In addition, procedures to grant derogations are considered to be burdensome. 

6.2.3.  Commission Analysis of OCT Requests 

Since  1st  January  2011,  the  EU  implements,  with  its  beneficiary  countries  new  rules  of 
origin which are more modern, simpler and more development friendly. The policy of the 
EU  is  to  promote  relaxation,  simplification,  transparency  and  coherence  between  the 
different  sets  of  EU  rules  of  origin.  For  instance,  some  EPAs  were  concluded  before  the 
revised  GSP  rules  of  origin  came  into  force  and  thus  do  not  apply  this  new  set  of  rules. 
Nevertheless, most of the EPAs now include a review clause which foresees that the rules 
of origin will be reviewed in order to take on broad improvements such as those introduced 
in the GSP rules of origin. 

the 

importance  of  simplification, 

As indicated in Communication COM(2009) 623, taking into account the on-going reform 
process  and 
transparency  and  manageability, 
modernisation of the OCT rules of origin could give rise to an OCT-specific set of rules of 
origin that would in principle apply to all OCTs. As was pointed out by the Commission 
Staff Working Document accompanying the 2008 Green Paper, the revised rules of origin 
should  provide  leverage  for  the  OCTs’  sustainable  development,  by  allowing  OCTs  to 
exploit  the  opportunities  offered  by  their  duty  free  and  quota  free  access  to  the  EU 
market100.  This  goal  will  not  be  accomplished  if  the  rules  of  origin  would  lead  to  OCTs 
merely becoming a platform for products of other countries trying to reach the EU market 
under the OCT preferences. 

When considering different solutions, it is worth reminding that differences between OCTs 
are  significant,  for  example  in  terms  of  relative  wealth,  actual  population  size,  natural 
resources,  geographical  characteristics,  physical  isolation,  climate,  possibilities  for 
economic  diversification,  etc,  even  within  a  same  region.  These  differences  should  be 
taken into account, whilst recognizing that OCTs could also have similar interests. Some 
elements of differentiation could then be foreseen.  

Improved rules of origin could help OCTs to diversify their exports. Products that OCTs 
may  be  able  to  export  are:  agricultural  products  (vanilla,  coffee,  sugar),  fisheries, 
aquaculture and marine products present in the waters in proximity (lobster, crab, conch, 
salt,  shrimps,  squid,  cod,  finfish,  mackerel,  scallop  etc.),  some  processed  agricultural 
products  (jams,  fruit  juices),  raw  materials  (salt,  nickel,  copper),  essential  oils  and  other 
artisanal products (garments, art work), rum and rum products, wool, apparel, wood pulp, 
pearls,  ferro-alloys,  some  machinery.  However,  it  is  important  to  note  that,  for  certain 
products, the impact of the rules of origin on the potential volume of exports is limited as 
the  territories  either  manufacture  them  entirely  in  their  territory  (e.g..  mutton  for  the 
Falklands  Islands;  reindeer  meat,  raw  materials  or  water  for  Greenland;  vanilla  or  pearls 
for  French  Polynesia,  vegetable  and  fruits  for  New  Caledonia)  or  because  the  products 
involved enter the EU duty free , irrespective of the preferential origin (e.g. precious metal 
or seaweed produced by Greenland).  

100  

Commission, SEC(2008) 2067, p. 33. 

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As  was  suggested  by  the  analysis  of  the  trends  in  fisheries  exports  by  Greenland,  Saint-
Pierre et Miquelon and the Falkland Islands in section 5.2, the existing EU-OCT rules of 
origin do not seem to pose insurmountable problems for the exports of fisheries products 
from the OCTs to the EU. As mentioned in section 6.2.1. these territories, as well as the 
(former) Netherlands Antilles, benefit from derogations to the rules of origin. In the case of 
Greenland  and  Saint-Pierre  et  Miquelon,  the  annual  quota  granted  under  the  different 
derogations  are  relatively  under-utilised.  For  instance,  in  the  period  2008-2011,  Saint-
Pierre and Miquelon did not make any use of its annual quota for sprats, shell-on scallops 
and scallop meat (250 tonnes p.a.). It does not make much use of  its derogation for  cod, 
coalfish, haddock, redfish, hake and plaice either (1,290 tonnes p.a. for each species). The 
authorities of Saint-Pierre and Miquelon have suggested that this is because the quotas are 
too low for reaching a production level that is significant enough to be viable (2,000 tonnes 
of cod would only allow the processing of 700 tonnes of final product). 

Nevertheless, the low utilisation rates seem to indicate that neither of the two territories are 
entirely dependent on these derogations for maintaining their position on the EU market. 
As  far  as  Saint-Pierre  et  Miquelon  is  concerned,  one  could  ask  whether  the  territory's 
problems with regard to competitiveness could be addressed by derogations as these do not 
seem  to  be  in  line  with  the  actual  needs  of  its  industry.  The  utilisation  rates  of  the 
derogations  suggest  that  an  update  and  simplification  of  the  procedures  for  granting 
derogations  to  rules  of  origin,  including  the  possibility  of  longer  application  periods  in 
order  to  increase  predictability  for  economic  operators,  could  contribute  to  address  OCT 
concerns.  A  condition  for  adopting  such  a  simplification  would  be  that  the  Commission 
would keep the possibility to carefully examine requests for derogations and their renewals 
in  the  light  of  economic  considerations  that  justify  them.  It  is  also  important  to  bear  in 
mind  that,  though  useful,  derogations  to  the  rules  of  origin  are  by  definition  meant  to 
provide exceptional flexibilities and not to create unlimited and permanent rules. 

An OCT concern which seems justified relates to the requirement, for OCT exporters, to 
systematically prove that goods have been directly transported from the OCTs to the EU, 
without being altered, which the OCTs deem too burdensome. The necessity to reduce the 
administrative burden in this field would be in line with the current EU policy to facilitate 
trade.  

The  extent  to  which  the  EU  can  take  into  consideration  OCT  requests  for  extending  the 
global  sourcing  for  processed  fishery  products  accorded  within  the  framework  of  the 
Economic  Partnership  Agreement  (EPA)  of  the  Pacific  region  is  determined,  amongst 
others,  by  whether  or  not  granting  such  extension  is  coherent  with  other  EU  policies, 
notably the EU's development cooperation. The global sourcing is a very sensitive matter 
for  the  EU,  considering  the  controversies  that  emerged  within  the  EU  following  the 
granting  of  this  flexibility  and  considering  that  this  rule  is  contested  by  various  EU 
stakeholders. In addition, it is worth mentioning that those rules of origin were negotiated 
in a specific bilateral setting, where the EU's partners provided a number of guarantees to 
the  EU.  For  example,  the  fisheries  chapter  that  is  being  negotiated  in  the  context  of  the 
comprehensive  EPA  with  the  ACP  Pacific  region  will  contain  provisions  supporting 
conservation  and  management  of  fisheries  resources  as  well  as  provisions  promoting 
responsible and sustainable fishing practices. Monitoring and surveillance provisions will 
be an essential part of the proposal.  

EN 

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Also,  the  special  rules  of  origin  applying  to  the  Economic  Partnership  Agreement  of  the 
Pacific region do not cover all fishery products. They concern solely processed prepared or 
preserved  fish  and  fishery  products  (HS  Headings  1604  and  1605)  which  need  to  be 
manufactured  in  on-land  premises  from  non-originating  fish,  crustaceans,  molluscs  and 
other aquatic invertebrates (HS chapter 03). It has been clearly established that they do not 
constitute a precedent for future free trade agreement negotiations with third countries. 

6.3. 

OCT Compliance with EU Standards and Regulations 

6.3.1.  Main Characteristics and Issues 

All OCTs have difficulties complying with EU standards, rules and regulations in sector of 
interest to them. Both LUFF et al. (2010) and BROOOKS, STONEMAN and RIOS (2010) 
found that exports in the fisheries sector may be - to diverging degrees – of interest to all 
OCTs, but that OCTs faced difficulties with complying with the requirements of the EU's 
regulatory framework in the area of food safety, because of the relatively large expenses 
they  entail  and  the  absence  of  the  necessary  knowledge  and  expertise,  capacities  and/or 
infrastructure (including legislation) in OCTs. For example, with regard to the possibility 
of Anguilla, Turks and Caicos and the British Virgin Islands exporting lobsters and conch 
to  the  EU,  the  cost  of  complying  with  the  EU  sanitary  and  phyto-sanitary  rules  and 
regulations  (SPS)  was  mentioned  as  a  disincentive.  Accreditations  and  certifications,  the 
financing of testing laboratories, the registering of freezer and factory vessels, compliance 
with  demands  concerning  Illegal,  Unregulated  and  Unreported  fishing  activities  and 
traceability are some of the concerns with regard to SPS and fisheries mentioned by OCTs. 
Both external studies put forward that in order for the OCTs to be able to exploit the export 
opportunities which the EU has to offer in the area of fisheries products, targeted technical 
and  financial  assistance  to  businesses  from  (territorial,  national  and/or  European)  public 
authorities would be needed. 

6.3.2.  OCT Requests 

In  the  Joint  Position  Paper  the  OCTs  called  for  increased  access  to  information  and 
technical and financial assistance in view of: 

- 

- 

possibly  updating  of  OCT  legislative  framework  with  regard  to  food  safety  and 
consumer health; 

supporting  the  necessary  skills,  expertise,  capacities  and  infrastructure  in  OCTs  in 
oder  for  them  to  be  able  to  setup  and  maintain  testing  laboratories  and  certification 
authorities. 

in 
information  and 
In  addition,  regularly  provided 
programmes  such  as  Strengthening  Fishery  Products  Health  Conditions  in  ACP/OCT 
Countries is requested. 

increased  OCT  participation 

6.3.3.  Commission Analysis of OCT Requests 

With  regard  to  OCT  concerns  about  supposed  non-tariff  barriers  related  to  technical 
regulations  and  regulations  regarding  food  safety  and  consumer  health,  no  easy  solution 
can  be  provided  to  overcome  these  obstacles  and  reduce  the  costs  or  efforts  needed  to 
overcome  them.  It  would  be  difficult  and  counter-  to  provide  rules  for  EU  and  third 

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country operators on the one hand and separate, more lenient rules for OCTs on the other 
productive,  as  nobody  would  want  to  buy  sub-standard  produce.  Compliance  with  the 
health and safety rules, standards and regulations governing the access of products on the 
EU market cannot be put into question. 

Rather than trying to bring down the EU standards, rules and regulations for OCTs, support 
activities  that  could  help  OCTs  with  bringing  up  the  quality  of  their  products  and  that 
would  provide  the  necessary  expertise,  capacity  and  infrastructure  to  comply  with  these 
standards  and  rules  in  areas  of  particular  interest  to  them  may  be  envisaged.  Given  the 
marked  interest  that  OCTs  have  shown  in  agro-foods,  in  particular  fisheries  products,  it 
could be considered to focus the EU's assistance on these sectors. Such assistance should, 
in  principle,  be  provided  for  under  the  dedicated  EU  horizontal  programmes  available  to 
OCTs, both internal and external. Under the 11th European Development (EDF), financial 
resources could also be mobilised to finance complementary actions. 

Under  the  10th  EDF,  financial  resources  could  already  be  used  for  such  purposes  as  the 
targeted  areas  are  included  as  possible  areas  for  cooperation  under  the  OAD.  The 
impression  that  not  enough  resources  were  available  for  cooperation  and  support  in  the 
field  of  food  safety  and  consumer  health  is  the  consequence  of  the  fact  that  the  total 
available  resources  for  territorial  and  regional  programmes  and  projects  as  well  as 
technical assistance are committed on the basis of an OCT/EU dialogue on joint priorities. 
As indicated above, the principle of concentration obliges the EU's financial assistance to 
OCTs to be concentrated on a limited set of sectors. If this principle is maintained for the 
next EDF, then the EDF resources available for cooperation on sanitary and phyto-sanitary 
issues will depend on whether or not OCTs would decide to give priority to it. 

6.4. 

Transhipment 

6.4.1.  Main Characteristics and Issues 

The current OAD foresees a provision that allows for transhipment activities which enables 
a product not originating in an OCT, but which is put in free circulation in that OCT, to be 
re-exported to the EU duty and quota free, provided that the OCT in question applied the 
EU's common external tariff (but on a slightly lower "cost, insurance, freight" basis); and it 
did not waive or repay any duties or taxes due (Article 36 OAD). 

This provision dates back to 1991. At the request of some Member States, the 2011 OAD 
added  the  possibility  for  the  Commission  to  authorise  public  financial  aid  to  those 
operating the transhipment procedure. The OAD also included a committee procedure for 
dealing with related OCT requests (Article 37 OAD). In following years, following OCT 
requests, the Commission clarified the conditions and criteria for transhipment. One OCT 
actually  requested  Commission  authorisation  for  public  financial  aid  but  withdrew  its 
request after in-depth discussion, including in meetings of the partnership working party on 
trade  and  regional  integration,  both  relating  to  the  request  itself  and  to  an  earlier, 
unsuccessful attempt to implement the transhipment article of the 1991 Council Decision. 
Both  the  new  request  and  the  earlier  case  were  characterised  by  the  absence  of  actual 
transhipment activity. 

The  Committee  foreseen  by  Article  37  OAD  has  never  met  as  there  have  been  no  OCT 
requests for authorisation of public financial aid to be examined. 

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6.4.2.  OCT Requests 

Some OCTs remain convinced of the facility's relevance and wish that it is maintained in 
the  revised  OAD.  Interested  OCTs  view  it  as  an  instrument  which  can  help  them  with 
developing trade and transforming their territories in regional hubs. 

6.4.3.  Commission Analysis of OCT Requests 

In  the  Commission  Staff  Working  Paper  accompanying  the  2008  Green  Paper,  it  was 
pointed out that transhipment had not yielded the expected results101. The original aim of 
the transhipment procedure was to promote the exploitation of existing infrastructures and 
create  local  economic  growth,  but  in  practice  it  has  led  to  creating  purely  artificial  trade 
routes that present no added value for third-country economic operators or OCTs.  

The  transhipment  facility  has  also  been  subject  to  fraud  involving  refund/drawback  of 
duties,  the  effective  charging  of  which  was  a  condition  of  importation  of  the  goods 
concerned  into  the  EU  without  further  application  of  duties.  Until  now  no  legal 
transhipment  has  taken  place  since  the  procedure  was  created  in  1991  or  since  it  was 
updated in 2001. 

6.5. 

Trade in Services and Establishment 

6.5.1.  Main Characteristics and Issues 

As indicated above, the OAD provisions on trade in services are limited. The TFEU refers 
to services and establishment in Articles 199:1-2 and 199:5 TFEU, which lay the basis for 
trade  between  Member  States  and  OCTs,  including  trade  in  services  and  for  the  right  of 
establishment of nationals, companies or firms. The detailed rules are subjected to specific 
conditions laid out in the OAD.  

The relevant Article 45:2:b of the OAD states that the EU shall apply GATS treatment to 
OCTs and that EU Member States are not entitled to discriminate between OCTs. At the 
same time, OCTs are expected to give to EU nationals, companies and enterprises no less 
favourable than the treatment accorded to the nationals, companies and enterprises of third 
countries  (Article  45:2:b).  As  GATS  only  covers  establishment  in  services  sectors,  the 
current  OAD  does  not  accord  any  rights  as  regards  to  establishment  in  non-services 
sectors. 

SALMON  (2007)  pointed  out  that  there  was  a  discrepancy  between  the  treatment  in  the 
field  of  the  trade  in  goods  (Article  40  OAD)  on  the  one  hand  and  the  trade  in  services 
(Article 45 OAD) on the other, notably in respect of what in an FTA would be called the 
MFN clause. Whereas the goods treatment allows the OCTs to grant preferential treatment 
to  other  partners  than  the  EU  -  developing  countries  and  other  OCTs,  with  a  view  to 
promoting  regional  and  South-South  integration  -  the  services  treatment  excludes  this 
option. The study therefore suggests that this situation be remedied. 

Furthermore,  the  EU  trade  negotiations  with  third  countries,  including  those  with  EPA 
regions, go further than the existing GATS commitments which stem mostly from Uruguay 
round (1995), and also cover establishment commitments in non-services sectors. Hence, 

101  

Commission Staff Working Paper SEC(2008) 2067, p. 38. 

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the  treatment  given  to  EU  trading  partners  with  whom  an  FTA  or  an  EPA  has  been 
concluded generally exceeds that provided to OCTs. 

LUFF et al. (2010) makes a further comment as regards OCT's service providers access to 
EU  services  market  and  in  particular  that  OCTs  service  providers  are  mostly  in  a  better 
position  than  their  competitors  in  developing  countries  as  regards  temporary  presence  of 
natural  persons  to  provide  services  within  the  context  of  a  services  contract  (mode  4)102. 
The study claims that the OCTs have already extensive market access in mode 4. 

In their replies to the trade questionnaire which the European Commission sent to them in 
the course of the Summer of 2011, the OCTs showed considerable interest in developing 
economic  activity  and  exports  in  their  services  sectors  as  a  way  to  diversify  their 
economies. Within the list of services to be developed, tourism related services ranks high. 
Amongst  others,  such  services  comprise  cruises,  food  serving  and  lodging  services. 
Contingent  services,  likely  to  increase  the  OCTs'  attractiveness  as  touristic  destination, 
such  as  the  recreational,  sports  and  cultural  services,  is  also  frequently  considered.  A 
second cluster of services of interest to OCTs is formed by the consulting and engineering 
services  in  the  field  of  renewable  energy  and  environmental  (protection)  services,  which 
relate  to  their  environmental  assets.  A  third  cluster  consists  of  business,  computer  and 
telecommunication  services  such  as  internet  traffic  relaying,  data  storage  and  telephone 
support services (call centres). Finally, medical and education services are also considered 
for development, alongside transport, distribution and financial services. 

6.5.2.  OCT Requests 

OCTs request a revision of the trade in services treatment within the OAD, so that OCTs 
would  be  allowed  to  be  able  to  take  part  in  regional  services  markets  in  their  respective 
regions, without having to grant Most Favoured Nation (MFN) treatment to the EU. 

6.5.3.  Commission Analysis of OCT Requests 

On  the  issue  of  the  MFN  clause,  the  Commission  already  indicated  in  the  2008  Green 
Paper that it was prepared to look at it in more detail. Furthermore, the treatment accorded 
to ACPs in the framework of EPAs as regards services and establishment is indeed more 
favourable than that accorded to OCTs under the current OAD. Regarding mode 4, those 
OCT  service  providers  that  have  EU  citizenship  indeed  do  have  an  advantage  over  their 
third  country  competitors,  as  they  do  not  need  a  visa  or  a  work  permit  to  be  able  to  be 
active on the EU's service market. However, access for OCTs to the EU services markets 
does not only depend on such formalities only. 

In  light  of  this  background  the  treatment  of  OCT  services  and  establishment  could  be 
brought in line with the treatments that have been negotiated in recent trade agreements. 

102 LUFF et al. (2010). 

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7. 

OPTIONS  FOR  A  RENEWED  OCT  TRADE  REGIME  AND  EU  TRADE  RELATED 
SUPPORT 

7.1. 

Policy Objectives 

Based on the analysis and evaluations made above, the outcome of consultations and the 
political orientations given by the Council, and taking into account the provisions of Part 
IV  of  the  Treaty  on  the  Functioning  of  the  European  Union,  the  following  overall 
objectives can be formulated for the next OCT/EU association framework: 

- 

- 

- 

- 

- 

to promote the OCT's sustainable economic development; 

to strengthen the economic ties of the OCTs with the EU; 

to enhance OCT competitiveness; 

to strengthen OCT resilience; 

to promote cooperation 

Within  this  framework,  the  general  objectives  of  the  OCT/EU  trade  and  economic 
cooperation regime can be resumed as follows: 

- 

- 

- 

- 

- 

to stimulate the OCT's integration in their regional economic environment; 

to support the process of diversification of OCT economies; 

to support OCT export/trading capacity; 

to  support  OCT  efforts  to  converge  their  local  legislation  with  the  EU  acquis  in 
relevant policy areas (notably in such areas as consumer and food safety); 

to provide possibilities for targeted trade and economic cooperation 

The  trade  and  economic  cooperation  component  of  the  revised  OCT/EU  association 
framework will need to translate these objectives in conformity with the principle of policy 
coherence  between  the  EU's  internal  and  external  policies,  taking  into  account  its 
strategic  interests  and  values.  This  would  mean  the  incorporation  or  strengthening  of  the 
following principles:  

- 

- 

- 

- 

- 

the  alignment  of  the  OCT  trade  and  economic  cooperation  regime  with  recent 
developments in the EU common commercial policy and other preferential regimes; 

the  promotion  of  joint  interests  through  a  more  reciprocal,  but  asymmetrical 
relationship, that takes into account the development level of OCTs; 

the facilitation of synergies with other EU policies 

the  adaptation  of  the  trade  and  economic  cooperation  regime  to  the  particularities  of 
the OCT/EU relations; 

the facilitation of the OCT/EU dialogue on trade and trade related matters 

7.2. 

Policy Options 

In light of the problems and challenges OCT face, the evolution of the policy context and, 
the policy objectives presented above could be translated the following four policy options 
can be envisaged: 

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Policy  option  1  would  consist  in  a  discontinuation  of  the  current  preferential  trade 
relations, without them being replaced by others. 

Policy  option  2  would  consist  in  keeping  the  status  quo,  i.e.  a  roll-over  of  the  current 
preferential trade relations under the OAD. 

Policy  option  3  would  consist  in  an  upgrade  of  the  current  trade  regime,  with  the  EU 
foreseeing in improved preferential relations. While asymmetric, the improvement of the 
trade  relations  would  also  encompass  a  better  representation  of  mutual  interests  in  areas 
such  as  raw  materials,  amongst  others  by  given  these  interests  more  prominence  in  the 
trade and trade related cooperation. 

Policy  option  4  would  consist  in  replacing  the  current  trade  arrangements  by  including 
OCTs in other trade agreements (FTAs or EPA's). This could imply that OCT products 
would get the same treatment as the EU trade partner(s) and that OCTs would necessarily 
have  to  grant  reciprocal  access.  It  might  also  mean  taking  OCTs  outside  of  the  scope  of 
Part  IV  of  the  TFEU,  to  the  extent  that  there  would  be  any  contradiction  between  the 
relevant provisions of the FTA and Part IV of the TFEU. 

These policy options are compared below and concentrate on a set of relevant trade issues 
highlighted in external studies and OCT positions, in particular: 

1. 

trade in goods; 

2. 

3. 

4. 

5. 

 rules of origin;  

 services and establishment; 

 support to trade related activities; 

 legal and policy framework 

For each of the policy options, the implications on the legal and policy framework are also 
indicated. 

The  policy  options  were  developed  on  the  basis  of  available  qualitative  and  quantitative 
data.  As  was  mentioned  in  the  introduction  to  this  paper  (see  Chapter  1),  the  paucity, 
reliability and lack of harmonisation of trade statistics concerning OCTs have been a 
complicating factor both for the analysis of the OCTs' trade situation and the evaluation of 
the  OCT/EU  trade  relations  and  cooperation  as  for  the  assessment  of  the  impacts  of  the 
different policy options. Some of the problems with regard to the latter will be discussed in 
the dedicated section below. 

7.2.1.  Policy Option 1: Discontinuation of Preferential Trade Relations 

Policy  option  1  would  consist  in  a  discontinuation  of  the  present  preferential  trade 
relations, without new preferential relations being put into place. It would mean that OCT 
goods  and  services  would  be  given  basic  third-country  treatment  for  OCT  goods  and 
services.  No  institutionalised  dialogue  on  trade  and  trade  related  matters  would  be 
organised between OCTs and the EU as both would not maintain privileged trade relations. 
OCTs would be considered as external stakeholders only. 

Trade in Goods 

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In this option, OCTs would not have duty free, quota free access to the EU market and no 
specific trade-facilitation measures would be foreseen for them. 

This  would  mean  that  OCT  exports  would  be  given  basic  third-country  treatment 
consisting in  the  application of the EU's Common External Tariff103.  The  "transhipment" 
facility  of  Article  36  OAD  would  be  discontinued,  as  would  the  provision  stating  that 
OCTs  do  not  discriminate  neither  between  EU  Member  States  nor  between  EU  and 
developed third countries. OCTs retain the right to decide about any further liberalisation 
of their imports and the application of duties or quotas to EU imports.104 

Rules of Origin 

Policy  option  1  would  not  necessitate  that  preferential  rules  of  origin  be  foreseen.  OCT 
exports  would  fall  under  the  non-preferential  rules  of  origin  defined  in  the  EU  Customs 
Code. 

Services and establishment 

Discontinuing  the  present  preferential  relations  in  the  OCT/EU  trade  in  services  would 
imply that: 

- 

- 

- 

companies  established  in  OCTs  would  no  longer  benefit  from  GATS  level 
commitments for services; 

those nationals of OCTs, who are EU citizens, would continue to benefit from the right 
of  establishment  in  the  EU  market  both  for  services  and  non-services,  but  no  longer 
from commitments as regards cross-border trade in services; 

companies  and  nationals  of  EU  Member  States  would  no  longer  benefit  in  OCTs  of 
most-favoured treatment for services and establishment. 

Trade Related Cooperation and Support 

Policy option 1 would also imply that the OCT/EU cooperation on trade and trade related 
issues would end and that no EU financial assistance would be given to OCTs. They would 
need  to  develop  their  trade  strategies,  capacities,  infrastructure  and  legal  frameworks  on 
their  own,  or  with  the  help  of  their  Member  States.  No  technical  assistance,  capacity 
building operations or support to sector policies or territorial development plans would be 
granted. OCTs would only be eligible to those EU horizontal programmes and budget lines 
which cover all possible third partners and which are open to EU citizens on an individual 
basis. There would be no framework for cooperating with the EU in the trade related areas 
listed in Chapter 3 of Title II (current payments, competition policies, intellectual property 
rights,  standardisation,  trade  and  the  environment,  trade  and  labour  standards,  consumer 
policy).  EU  involvement  in  the  development  of  relevant  OCT  policies  would  be  non 

103  

104  

Based  on  Council  Regulation  (EEC)N°  2658/87  of  23  July  1987  on  the  tariff  and  statistical 
nomenclature and on the Common Customs Tariff (OJ L 256, 07/09/1987, p. 1), as last amended by 
Council Regulation (EC) No 254/2000 of 31 January 2000 (OJ L 28, 03/02/2000, p. 16). 

As explained above in section 4.3.2, under Commission proposal COM (2011) 241, OCTs will no 
longer  be  eligible  to  the  Generalised  System  of  Preferences.  Nevertheless,  for  the  sake  of 
completeness, this document includes figures relating to the theoretical impact that GSP treatment 
would have on OCTs. 

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existent. The EU's capacity to promote  its  interests and values via the OCT/EU relations 
would  thus  disappear.  Where  the  EU  would  have  an  interest  in  developing  cooperation 
with  OCTs  in  new  areas,  such  as  raw  materials  (see  section  4.3.3),  this  would  not  be 
possible.  

Legal and Policy Framework 

Discontinuing  the  present  OCT/EU  trade  relations  would  entail  that  the  present  OAD 
expires on 31 December 2013 without it being renewed or replaced. This would mean that 
Part  IV  of  the  Treaty  on  the  Functioning  of  the  European  Union  would  not  be  given 
translation in the EU’s secondary legislation. Part IV and the Preamble to the Treaty may 
need  to  be  changed.  Other  legislative  acts applying  to  the  OCTs,  notably  concerning  the 
11th EDF might need to be amended as well. 

7.2.2.  Policy Option 2: Roll Over of Present Preferential Trade Relations 

Policy  option  2  would  consist  in  keeping  the  status  quo,  i.e.  a  roll  over  of  the  current 
preferential  trade  relations  under  the  OAD.  OCT  goods  and  services  would  continue  to 
receive access to the EU market under the same conditions. 

Trade in Goods 

The  rules  concerning  the  trade  in  goods  would  continue  to  provide  duty  free,  quota  free 
access  to  EU  market  for  goods  originating  in  the  OCTs.  The  individual  territories  would 
retain  the  right  to  decide  about  any  further  liberalisation  of  their  imports  and  the 
application  of  duties  or  quotas  to  EU  imports.  However,  discrimination  between  EU 
Member States or between EU and third countries or territories would still not be allowed; 
unless  the  latter  are  developing  countries  or  OCTs.  OCTs  would  continue  to  have  the 
possibility,  at  least  in  theory,  to  apply  the  "transhipment"  facility  of  Article  36  OAD  to 
products  not  originating  in  OCTs  but  in  free  circulation  there  and  re-exported  as  such  to 
the EU. The EU would retain the right to apply surveillance and safeguard provisions. 

Rules of Origin105 

Rolling over the current OCT trade regime would imply that the current rules of origin be 
maintained. OCTs would continue to be considered as one single territory and an identical 
single set of rules will apply to all of them. The product specific rules would also remain 
as  stringent  as  is  the  case  today.  Concerning  the  general  provisions,  no  change  would 
occur. For instance, for fishery products based on fish caught beyond the territorial waters 
of  the  OCTs  to  acquire  origin,  it  would  still  be  necessary  for  the  vessels  to  fulfil  four 
conditions: registration, flag, ownership and nationality of the crew (see section 6.2.2.). 

Cumulation opportunities between all OCTs and with ACP States would be kept in place. 
CP  States  to  OCTs  would  be 
The rules of origin applicable to inputs send from   A 
the ones applicable within the context of the bilateral relationship between the ACP State 
concerned and the EU. No provision on cumulation with neighbouring countries other than 

105  

A comparison of the differences between policy options 2-4 in terms of rules of origin is provided in 
Annex 10. 

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ACP States would be foreseen and such cumulation would only be possible by derogation 
from the rules of origin under Article 37:6 of the OAD. No changes would be made to the 
present rules and procedures for granting derogations from the rules of origin.  

Services and Establishment 

In terms of the OCT/EU trade in services and establishment, policy option 2 would consist 
in the EU continuing to grant OCTs its GATS commitments, while OCTs would continue 
to give to EU the most favourable treatment given to any third country or territory, both on 
non-discriminatory basis. OCTs would not have to further liberalise their services sectors 
and could continue to limit EU access to them but only as far as no trade commitments are 
taken in any trade agreements with third countries/territories. No commitments would exist 
as regards establishment in non-services areas. 

Trade Related Cooperation and Support 

The  OCT/EU  dialogue  on  trade  and  trade  related  issues  would  continue  to  take  place 
primarily  in  the  context  of  the  trilateral  meetings  of  OCTs,  Member  States  and  the 
Commission, the OCT/EU  Forums  and the meetings of the partnership working party on 
trade and regional integration. The agendas of these meetings would continue to be defined 
on an ad hoc basis.  

The OCT/EU association would continue to provide a wide range of possibilities for trade 
and trade related EU cooperation and assistance. These would correspond to the topics and 
themes presently covered in the OAD under Articles 12 (trade development), 13 (trade in 
services), 14 (trade related areas) and 16 (regional cooperation) and which include themes 
that relate to areas contingent to trade (e.g. safety of harbours, airports etc.), as well as the 
provisions of Chapter 3 of Title II ("Trade Related Areas). 

EU support to formulation and implementation of trade and export strategies, development 
of trade capacities and infrastructure and legal frameworks could take the form of support 
to  regional  cooperation  strategies,  territorial  development  strategies  or  sector  policies.  It 
could  also  take  the  form  of  a  specific  project  as  is  the  case  with  a  project  that  will  be 
funded  under  the  10th  European  Development  Fund  (EDF)  with  the  support  that  will 
provided to business intermediaries of Dutch and British OCTs in the Caribbean under the 
regional programme for OCTs. 

Under  policy  option  2,  OCTs  would  remain  eligible  in  principle  to  the  relevant  EU 
horizontal programmes and budget lines relevant to trade and trade related areas. Specific 
assistance to facilitate OCT participation could be provided at the request of individual or 
groups of OCTs, as is the case under the 10th EDF.  

As is presently the case, the coherence between EU and Member State support would be 
guaranteed through an indirect coordination via the OCT authorities themselves. No active 
coordination would be sought. 

OCTs would mainly be considered as external stakeholders, not fully as outpost of the EU 

Legal and Policy Framework 

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Rolling over the current OCT/EU relations would imply that only minor changes be made 
to the governing legal texts. Amendments would need to be made to the present OAD and 
the Commission Regulation implementing the OAD in order to extend their duration and 
adapt them to the setup of the 11th EDF. 

7.2.3.  Policy Option 3: Improved Preferential Trade Relations 

Policy  option  3  would  consist  in  an  upgrade  of  the  current  OCT/EU  preferential  trade 
arrangements. Where possible, OCT goods and services would access the EU market under 
better  conditions  and  more  opportunities  would  be  offered,  while  the  overarching  trade 
rules  would  be  modernised  and  brought  in  line  with  the  latest  developments  in  EU  trade 
policy. 

Trade in Goods 

Originating  OCT goods would continue to benefit from duty free, quota free access to the 
EU market. As in the previous scenario, the individual territories would retain the right to 
decide  about  any  further  liberalisation  of  their  imports  and  the  application  of  duties  or 
quotas to EU imports. No discrimination between EU Member States or between EU and 
third  countries  or  territories  would  be  allowed;  unless  the  latter  would  be  developing 
countries or OCTs. 

The transhipment facility of  Article  36  OAD  would  be  deleted  and could be replaced  by  
support  measures  aimed  at  overcoming  sanitary,  phyto-sanitary  or  technical  barriers  to 
trade, and at capacity-building in interested OCTs. The EU would retain the right to apply 
surveillance  and  safeguard  provisions,  as  well  as  provisions  dealing  with  administrative 
errors and fraud. 

Rules of Origin106 

Policy  option  2  would  entail  that  improved  rules  of  origin  be  introduced  based  on  those 
introduced in the GSP scheme. The latter are the most modern and development friendly 
that  the  EU  has  to  offer.  As  none  of  the  OCTs  appear  in  the  list  of  Least  Developed 
Countries (LDCs) drawn up by the United Nations Conference on Trade and Development 
(UNCTAD),  the  rules  of  origin  applicable  to  non-LDCs  would  serve  as  basis  as  the 
introduction  of  differentiated  rules  could  not  be  justified  on  the  basis  of  the  level  of 
development  of  the  OCTs.  For  reasons  of  simplification  and  coherence,  only  one  set  of 
rules would apply to all OCTs. The flexibilities of the rules of origin in the GSP are likely 
to sufficiently address the main concerns of the vast majority of OCTs.  

The  new  product  specific  rules  would  offer  extended  possibilities  of  sourcing  through 
higher  thresholds  of  non-originating  materials  (including  sugar).  The  relaxations  could 
increase the export potential of OCTs in goods that they already produce such as: coffee, 
chocolate,  jam,  fruit  juices,  rum,  oil,  essential  oils,  processed  base  metals,  ammonia, 
articles  of  plastics,  pottery,  aluminium,  machinery  and  mechanical  appliances,  handicraft 
and furniture. 

106  

A comparison of the differences between policy options 2-4 in terms of rules of origin is provided in 
Annex 11. 

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The  general  provisions  of  the  rules  of  origin  would  see  a  number  of  improvements  and 
simplifications: 

1.  With  regard  to  exports  of  fishery  products  based  on  fish  caught  outside  OCT 
territorial  waters,  the  requirement  regarding  the  nationality  of  the  crew  would  be 
deleted.  The  requirement  regarding  ownership  would  be  clarified  so  as  to  remedy 
problems with interpretation.  

2. 

3. 

4. 

5. 

To improve transparency and user friendliness of the new set of rules of origin, the 
list  of  wholly  obtained  products  would  be  amended  to  include  a  new  definition  of 
aquaculture  products,  which  so  far  are  treated  as  other  live  animals,  as  well  as  new 
provisions for products obtained from slaughtered animals. 

In  the  same  fashion,  the  list  of  minimal  operations  would  be  changed  to  update 
existing  minimal  operations  or  include  new  ones  regarding  sugar  products,  chemical 
products and textile and clothing. 

The  general  tolerance  applicable  to  non-originating  materials  would  remain  at 
15%. However, the value would now be calculated in percentage of the weight of the 
product  for  agricultural  products,  whilst  for  industrial  and  fishery  products  it  would 
continue  to  be  calculated  on  the  basis  of  the  value  of  the  final  product.  The  specific 
tolerance applying to textile and clothing would also remain the same.  

The  requirement  on  the  direct  transport  of  OCT  goods  would  be  reviewed  and 
documentary evidence that OCT goods imported in the EU are exactly the same as the 
ones  which  OCTs  exported  would  only  be  requested  from  OCT  exporters  when 
customs  authorities  would  have  reason  to  believe  that  the  requirement  was  not 
respected. 

Certification of origin of the final product by OCT customs authorities could be replaced 
by a system of self-certification by registered exporters.  This would imply  that exporters 
wanting to export to the EU would register with the customs authorities and ask that their 
data  would  be  included  in  a  database  available  to  EU  importers.  Via  this  database,  the 
latter  would  be  able  to  verify  whether  the  trade  partner  with  whom  they  consider  doing 
business  is  registered  and  entitled  to  deliver  proofs  of  origin  to  be  presented  at  the  EU 
border. The implementation of this system however, will require a transitory period, as it 
involves the creation, by the EU, of an electronic database complying with the principles of 
confidentiality. Its creation could be tentatively be expected for 2017. In the mean time, the 
current system of certification would be maintained. 

The  improved  rules  of  origin  would  foresee  several  possibilities  for  cumulation  with 
different  types  of  partners.  Cumulation  between  OCTs  and  with  EPA  States    would  be 
maintained, though with the specific exclusions for products originating from South Africa 
and  high  sugar  content  products  required  to  prevent  trade  circumvention.  No  specific 
provision  would  be  foreseen  allowing  for  cumulation  with  neighbouring  non-ACP 
countries, but the GSP type rules of origin would nevertheless provide additional sourcing 
possibilities  for  OCTs  by  granting,  upon  request,  cumulation  for  industrial  products 
originating in countries with which the EU has concluded an FTA (extended cumulation). 
Products within Chapters 1 to 24 of the Harmonised System (agricultural products, fishery 
products and processed agricultural products) would be excluded from this possibility.OCT 
rules regarding derogations would be based on those in the GSP scheme, but would also 
be adapted to extend the basis on which a derogation could be granted. The administrative 
framework  of  the  procedure  would  be  more  flexible  and  the  period  of  validity  of  the 

EN 

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derogation  would  be  established  on  a  case  by  case  basis.  In  addition,  the  EU  would  be 
allowed  to  propose  a  derogation  on  its  own  initiative  if  it  deems  it  necessary.  Granting 
derogations would be justified when: (a) internal or external factors temporarily deprive an 
OCT of the ability to comply with the rules of origin where it previously could do so; (b) 
an  OCT  requires  time  to  prepare  itself  to  comply  with  the  rules  of  origin;  or  (c)  the 
development of existing industries or the creation of new industries call for them. 

Lastly,  additional  flexibilities  could  be  foreseen,  on  a  case  by  case  basis,  upon  request, 
within the framework of the derogations, in support of diversification efforts by OCTs and 
to  stimulate  investment  in  their  productive  sectors.  They  could  be  used  to  address,  for 
example,  the  wish  from  Saint-Pierre  et  Miquelon,  to  take  better  advantage  of  its  specific 
relationship with Canada for fishery products. A similar opportunity could be foreseen for 
Greenland. 

Services and Establishment 

Under  policy  option  3  OCTs  would  be  guaranteed  a  treatment  for  trade  in  services  and 
establishment  that  would  be  similar  but  more  favourable  than  the  one  given  to  the  EU’s 
EPA partners via the inclusion of a simple asymmetrical MFN clause. This would mean on 
the  one  hand  that  the  EU  would  give  OCTs  the  most  favourable  treatment  for  trade  in 
services and establishment that it offers or has offered to any of its other trade partners. It 
would  apply  to  all  services  sectors  and  all  modes  of  supply  as  well  as  to  non-services 
establishment. On the other hand, OCTs would grant the EU the most beneficial treatment 
they give to other major trading economies107, but would not need to extend to the EU the 
preferential treatment they give to OCTs or developing countries that are not major trading 
economies.  

By  including  an  asymmetrical  MFN  clause  in  the  OCT/EU  trade  regime,  OCTs  would 
always benefit from the EU's best possible treatment in any given sector and mode, without 
the  need  to  negotiate  the  conditions  (as  would  be  the  case  in  FTA  negotiations)  nor  the 
need  for  harmonisation  with  EU  legislation  (which  would  be  needed  for  Internal  Market 
purposes).  For  example,  if  in  a  trade  negotiation  EU  would  give  best  treatment  in  cross-
border service provision to partner A, but not to partner B, while giving a better treatment 
in  establishment  in  another  sector  to  partner  B  but  not  to  partner  A,  the  OCTs  would 
benefit from both best treatments. 

Trade Related Cooperation and Support 

The OCT/EU dialogue and cooperation on trade and trade related issues would continue to 
take  place  in  the  context  of  the  annual  OCT/EU  Forums,  the  regular  trilateral  meetings 
between the OCTs, their Member States and the Commission and the partnership working 
party on trade and regional Integration. However, rather than defining agendas on a case by 
case basis, a joint work programme would be agreed upon by OCTs, Member States and 
the Commission. Such a work programme would provide the framework for the dialogue 

107  "Major trading economy" would mean any  country  accounting  for  a  share  of world  merchandise  exports 
above  1  %  in  the  year,  or  any  group  of  countries  acting  individually,  collectively  or  through  an  economic 
integration agreement accounting collectively for a share of world merchandise exports above 1.5 % in the 
year.  For  this  calculation  official  data  by  the  WTO  on  leading  exporters  in  world  merchandise  trade 
(excluding intra-EU trade) would be used. Merchandise trade would be used as data on trade in services in 
not available for many countries or not collected based on comparable methodology.  

EN 

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   EN 

 
                                                 
and  cooperation  between  the  three  parties  on  trade  and  trade  related  issues  by  listing  the 
specific  topics  and  themes  on  which  discussions  would  have  to  focus  within  a  given 
timeframe.  This  dialogue  would  also  envisage  exchange  of  views  concerning  the 
implementation  of  the  OCT/EU  association.  Taking  into  account  the  principles  of 
reciprocity and mutual accountability on which the renewed OCT/EU partnership would be 
based, the work programme should provide room for discussion of trade and trade related 
of mutual interest, such as for instance raw materials. A work programme could be adopted 
for either the whole operational period 2014-2020 or for only part of it (e.g. 2014-2016). 

Rather than maintaining the wide range of possibilities for cooperation as presently listed 
in  Articles  12,  13  and  14  of  the  OAD,  as  well  as  Chapter  3  of  Title  II  (Trade  Related 
Areas),  a  more  limited  set  of  areas  would  be  retained,  based  on  the  specific  interests 
expressed by OCTs. In this light, topics and themes relating to contingent areas, such as the 
safety  of  harbours,  road  and  airports  or  the  setup  of  telecommunication  and  information 
networks  would  not  be  part  of  the  OCT/EU  dialogue  and  cooperation  on  trade  and  trade 
related issues, but would fall under a different component of the OCT/EU association. EU 
policy  initiatives  such  ongoing  trade  negotiations  could  continue  to  be  part  of  the  work 
programme, the focus of the latter would be placed on topics that would be more directly 
relevant  to  OCT  efforts  to  develop  trade  activities.  These  could  include  the  following 
elements: 

-  macro-economic  policies,  trade  strategies  and  the  corresponding  legislative  and 
institutional frameworks, including the creation of enabling business environments in 
OCTs; 

- 

- 

- 

development of trade related capacities, human resources and professional skills 

support to SMEs and intermediaries 

trade and business promotion; 

-  market development and exploration and marketing and branding measures; 

- 

- 

- 

standardisation and certification and convergence with international and/or EU norms; 
with specific attention to quality management and conformity assessment; 

specific attention for products such as agriculture and fishery products, services such 
as tourism, business services and environment and energy services 

specific attention for sector specific issues such as compliance with international and 
EU rules regarding food safety and consumer health. 

Under policy option 3 the different types of trade and trade related EU assistance available 
to  OCTs  under  the  11th  European  Development  Fund  (EDF)  and  EU  horizontal 
programmes  would  be  better  coordinated.  The  principle  of  the  complementary  and 
additional nature of the 11th EDF would be strengthened and more explicitly put forward. 
This  would  mean  that  activities  for  which  funding  would  be  available  for  OCTs  in 
horizontal programmes and budget lines to which they are eligible, would in principle not 
be financed under the EDF. This could apply to certain types of support to OCTs relative 
to  private  sector  development,  tourism  promotion,  innovation,  development  of  skills, 
expertises,  capacities  and  infrastructure  in  specialised  fields  such  as  food  safety  and 
consumer  health.  Under  the  11th  EDF  technical  assistance  could  be  made  available  to 
OCTs in support of the development of their capacities to submit competitive proposals for 
financing under the relevant programmes and budget lines.  

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In  addition,  part  of  the  resources  for  technical  assistance  and  which  the  European 
Commission  manages  directly  would  be  reserved  for  a  limited  set  of  intervention  areas 
relating  to  trade  and  trade  related  issues.  The  joint  work  programme(s)  could  serve  as  a 
basis  to  define  these  intervention  areas.  Such  targeting  would  mean  that  technical 
assistance activities which would not be on the list of chosen intervention areas, would not 
be able to be financed by the technical assistance resources managed by the Commission. 

Via sector or general budget support operations, the EU would support the OCTs efforts to 
develop  their  trade  related  policies  at  a  macro-level.  Such  operations  would  support  the 
formulation  and  implementation  of  trade  and  export  strategies,  development  of  trade 
capacities  and  legal  frameworks  based  on  the  OCTs'  own  sector  policies,  territorial 
development  strategies  or  regional  cooperation  strategies  of  OCTs.  This  would  only  be 
possible if the OCTs would make trade and trade related issues a political priority for their 
cooperation with the EU. 

Within  the  financial  envelope  reserved  for  regional  cooperation,  resources  would  be 
allocated  to  supporting  OCT  participation  in  trade  and  trade  relevant  cooperation 
programmes  targeted  at  their  neighbours.  This  could  for  instance  cover  cooperation  with 
ACP  countries  and/or  Outermost  regions  regarding  trade  development  and  facilitation, 
capacity building, food safety and consumer health and like topics. 

The adoption of a joint work programme under policy option 3 would serve as a basis to 
engage with the Member States in a discussion about a possible distribution  of labour in 
terms of trade and trade related support to OCTs.  

Legal and Policy Framework 

Upgrading the current OCT/EU relations would imply that the legal texts governing them 
would  be  substantially  changed.  A  new  OAD  and  the  Commission  Regulation 
implementing the OAD would need to be adopted. It would involve making changes to the 
provisions presently contained in the OAD in the following subdivisions: 

- 

- 

Part II of the OAD (Areas of Cooperation); 

Part  III  (Instruments  of  OCT-EC  Cooperation),  Title  I  (Development  Finance 
Cooperation) and Title II (Economic and Trade Cooperation), Chapters 1 to 4; 

-  Annexes II A to F (financial assistance) 

-  Annexes III (rules of origin) and IV (Transhipment) 

The  new  OAD  would  enter  into  force  after  expiry  of  the  present  one  on  31  December 
2013. 

Certain  of  the  changes  proposed  under  this  policy  option  would  not  necessitate 
modifications to the legal bases as such. The choice of the intervention areas, for instance, 
would  have  to  be  determined  on  the  basis  of  discussions  with  OCTs  and  their  Member 
States at the onset of the operational period. 

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7.2.4.  Policy Option 4: Inclusion in Other Trade Relations 

Policy  option  4  would  consist  in  overhauling  the  current  trade  relations  by  including  or 
associating OCTs to other bilateral or regional trade relations (FTAs or EPAs), essentially 
by  negotiating  tri-  or  plurilateral  agreements  with  OCTs  as  separate  parties  of  an 
agreement  already  existing  or  under  negotiation.  This  could  imply  that  OCT  products 
would get the same treatment as the EU trade partner(s) and that OCTs would necessarily 
have to grant reciprocal access. 

Based  on  the  OCTs’  location  and  main  trading  interests,  the  following  theoretical 
opportunities exist: 

- 

- 

- 

- 

- 

- 

- 

integration or association of the British and Dutch OCTs located in the Caribbean to 
the EPA with CARIFORUM; 

integration  or  association  of  the  Dutch  OCTs  located  in  the  Caribbean  to  the  trade 
agreements with Central America or the Andean countries; 

integration or association of the French OCTs located in the Pacific (French Polynesia, 
New Caledonia and Wallis et Futuna) to the Pacific EPA;  

integration or association of Mayotte to the EPAs with ESA or EAC; 

integration or association of Saint Helena, Ascension Island and Tristan da Cunha to 
the EPA under negotiation with SADC; 

integration  or  association  of  Greenland  and  Saint-Pierre  et  Miquelon  to  the  CETA 
under negotiation; 

integration or association of the Falkland Islands to the FTA with MERCOSUR under 
negotiation. 

A number of scenarios seem purely theoretical, at least for the time being. Those OCTs for 
which  it  would  not  be  possible  to  integrate  into  one  of  the  other  trade  agreements,  third 
country/GATS  treatment  would  be  granted  if  the  EU  choose  not  to  replace  the  OAD.  In 
case the EU would want to maintain specific trade relations with OCTs which would not 
be able to be integrated in other trade regimes, policy options 2 or 3 could also apply.  

Trade in Goods 

In  the  case  of  Economic  Partnership  Agreements  (EPAs)  with  African,  Caribbean  and 
Pacific  (ACP)  States  and  regions,  duty  free  quota  free  access  applies  to  both  ACPs  and 
OCTs. In the case of other free trade agreements (FTAs), there are two sub-options at least 
in theory: 

1. 

OCT access to the EU market is aligned with the access of the EU trading partners 

involved; or, where this is found to be incompatible with Part IV of the TFEU;  

2. 

OCT duty free quota free access is maintained but with restrictions on OCT exports 

based on goods imported from the EU's trading partner. 

In addition, OCTs would gain access to the markets of the EU's trading partners. OCTs that 
would opt into an FTA/EPA would participate in trade liberalisation under the agreement, 
including  by  liberalising  imports.  The  precise  degree  of  OCT  liberalisation  vis-à-vis  the 
EU  and  the  EU's  trading  partner  would  be  subject  to  negotiation.  Under  this  scenario, 

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OCTs would have to provide preferential access to the EU without discriminating between 
EU Member States. 

The transhipment facility in Article 36 of the present OAD would disappear but the trade 
facilitation  provisions  of  the  FTA/EPA  would  apply.  Under  the  respective  agreements  in 
which the OCTs would be integrated or associated, the EU and OCTs would be allowed to 
apply  the  surveillance  and  safeguard  measures  provisions  included  in  the  specific 
FTA/EPA. 

Rules of Origin108 

Integrating  OCTs  in  trade  relations  other  than  the  ones  provided  under  Part  IV  of  the 
TFEU, would also mean that OCTs would no longer be considered as a single territory for 
the  purposes  of  EU  customs  policy.  In  other  words,  they  would  receive  differentiated 
treatment. 

OCTs would no longer benefit from the same set of rules of origin as the ones that apply in 
the EU’s trade agreements differ from one trade partner to another. These are typically the 
result of specific negotiations between the trade partners trying to accommodate and take 
into account their different sensitivities. 

As  far  as  the  product  specific  rules  are  concerned,  the  rules  of  origin  negotiated  in  the 
context of the EPAs currently provide for a number of relaxations of the conditions which 
applied previously, compared to what exists in the OAD. Relaxations have been introduced 
for fishery products (e.g. new definition of aquaculture), products in the agricultural sector 
(e.g.  products  with  a  high  sugar  content)  and  textiles  (e.g.  single  stage  transformation 
which allows for the manufacturing of garments on the basis of imported fabrics).  

If OCTs were to join an EPA today, they would benefit from the simplifications that were 
introduced in the general provisions. For fishery products, the requirement that products 
based  on  fish  caught  outside  territorial  waters  comply  with  the  nationality  condition 
regarding  the  crew  manning  the  vessels  has  been  deleted.  In  addition,  the  criterion 
regarding  ownership  of  the  vessels  was  clarified.  As  regards  the  definition  of  wholly 
obtained  products,  the  rules  of  the  EPA  would  include  a  new  definition  specific  to 
aquaculture.  Under  the  current  definition  of  the  OAD  OCT  aquaculture  products  have  to 
comply with the conditions applicable to other live animals. Under EPAs OCTs would also 
benefit from the improved general provision on minimal operations. The general tolerance 
applicable  to  non-originating  materials  would  remain  at  the  same  level  (15%  in  value  of 
the  final  product).  The  specific  tolerance  applying  to  textile  and  clothing  would  also 
remain the same.  

The  procedure  of  certification  by  customs  authorities  and  the  direct  transport  rule 
would remain the same as currently in the OAD.  

OCTs  which  would  join  the  Pacific  EPA  would  have  access  to  the  global  sourcing 
provision,  allowing  them  to  import  non-originating  fish,  crustaceans,  molluscs  and  other 
invertebrates (HS Chapter 03) for further processing into pre-cooked, packaged or canned 

108  

A comparison of the differences between policy options 2-4 in terms of rules of origin is provided in 
Annex 10 of Appendix 2. 

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products  (HS  headings  1604  and  1605)  and  benefit  from  preferential  treatment  upon 
importation in the EU. 

In  terms  of  cumulation,  integration  or  association  to  EPAs  would  offer  the  OCTs  to 
continue  to  apply  the  full  range  of  cumulation  possibilities  they  currently  have:  
cumulation with the EU, with other OCTs, with the ACP countries covered by the EPA to 
which the OCTs would have acceded, as well as cumulation with ACP countries covered 
by  other  EPAs.  Some  EPAs  (Pacific  and  Caribbean)  also  include  provisions  that  allow 
cumulation  with  neighbouring  countries  belonging  to  a  coherent  geographical  entity;  a 
possibility which is not provided by the current OAD. 

After they enter into force, the EPAs that are currently being negotiated will also offer the 
signatory  ACP  States  the  possibility  to  cumulate  materials  which  enter  the  EU  duty  free 
quota  free  under  MFN,  GSP  or  an  FTA  (for  the  production  of  industrial  goods).  This 
possibility  is  not  offered  under  the  previously  concluded  EPAs  in  the  Caribbean  and  the 
Pacific, but it may be included when the rules of origin of the EPAs are reviewed. 

Depending  on  the  EPA  which  they  would  join,  the  conditions  under  which  OCTs  could 
obtain  derogations  from  the  rules  of  origin  may  change,  Currently,  Article  37:6  of  the 
OAD stipulates that the EU shall accept requests for derogation when the value added by 
OCTs  to  the  non-originating  products  represents  at  least  45  %  of  the  total  value  of  the 
finished product. In addition, some EPAs (West Africa, Eastern and Southern Africa, East 
African Community) include the possibility of an automatic derogation for fixed quantities 
of tuna products. However, no OCT would be well placed to join any of these EPAs.  

Services and Establishment 

Under  policy  option  4  OCTs  would  be  granted  the  treatment  for  trade  in  services  and 
establishment that is given to the EPA or FTA partners concerned. The treatment given by 
OCTs would have to be negotiated for every single OCT separately, both for what is given 
to the EU or to the other trading partner(s). Furthermore, the trade regime between the EU 
and the other Party to the agreement would most likely have to be renegotiated to balance 
the  fact  that  the  other  Party  would  extend  its  treatment  to  territories  which  may  not 
necessarily  be  of  great  economic  interest  to  them.  In  particular,  the  treatment  for  the  so 
called  mode  4  –  movement  of  natural  persons  for  business  purposes  –  might  require 
compensation from EU.  

Finally, though trade negotiations in services and establishment do not require countries or 
territories  to  liberalise  their  services  sectors  or  privatise  public  services  companies,  any 
trade  in  services  agreement  will  have  to  comply  with  article  V  of  GATS  meaning  that  it 
cannot  exclude  any  modes  of  supply  and  has  to  have  substantial  sectoral  coverage. 
Assuming that substantial coverage means a majority of sectors, this may mean that OCTs, 
could  find  themselves  in  a  position  in  which  they  would  have  to  negotiate  commitments 
and binding trade liberalisation levels in over 80 services sectors. 

Trade Related Cooperation and Support 

Integrating OCTs in the other trade agreements would imply that the OCT/EU trade related 
cooperation would be channelled via the specific institutional set up of the agreements in 
which the OCTs would be integrated. In case OCTs would join the Economic Partnership 
Agreement  with  CARIFORUM,  the  OCT/ACP/EU  dialogue  would  take  place  in  the 

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context of the Joint CARIFORUM/EU Council (Art. 227 of the Agreement), the Trade and 
Development Committee (Art. 230), the CARIFORUM/EU Parliamentary Committee (Art. 
231),  the  CARIFORUM/EU  Consultative  Committee  (Art.  232)  and  the  Special 
Committee on Customs Cooperation and Trade Facilitation (Art. 36). 

Some of the general priorities of OCT/ACP/EU cooperation, as set out in Article 8 of the 
EPA, would be: 

- 

- 

- 

- 

the building of human, legal and institutional capacity; 

the  promotion  of  private  sector  and  enterprise  development,  in  particular  SMEs  and 
enhancing  the  international  competitiveness  of  firms  and  the  diversification  of  the 
OCT/ACP economies; 

the diversification of OCT/ACP exports of goods and services through new investment 
and the development of new sectors; 

the enhancement of  technological and research capabilities of the OCTs/ACP  States, 
to  facilitate  development  of  and  compliance  with  internationally  recognised  sanitary 
and phyto-sanitary measures and technical standards; 

- 

the development of OCT/ACP innovation systems and technological capacities 

In addition to such general priorities, the specific priorities for sectoral cooperation set out 
in  the  different  chapters  of  the  EPA  would  apply.  These  include  amongst  others 
cooperation with regard to: 

- 

- 

- 

- 

- 

- 

cooperation and dialogue regarding tariff matters, customs legislation and procedures, 
mutual administrative assistances, customs matters, rules of origin and administrative 
cooperation (Arts. 35-36 of the Agreement); 

the  improvement  of  the  competitiveness  of  ACP/OCT  agricultural  and  fishery 
products, the development of ACP/OCT export marketing capabilities in this area and 
compliance with international quality standards (Art. 43); 

the  promotion  of  ACP/OCT  enterprises  to  meet  regulatory  and  market  requirements 
related to technical regulations (Art. 51); 

the  provision  of  training  and  expertise  and  the  exchange  of  information  regarding 
sanitary and phyto-sanitary measures and the development of ACP/OCT enterprises in 
this area (Art. 59); 

cooperation  and  technical  assistance  for  internet  marketing  strategies  for  ACP/OCTs 
as  touristic  destination,  the  promotion  of  ACP/OCT  participation  in  international 
standard setting bodies for tourism and in tourism exchange and training programmes 
(Art. 117); 

cooperation  and  assistance  to  OCT/ACP  competition  and  innovation  policies  (Arts. 
130 and 135) 

As  the  free  trade  agreements  of  interest  to  OCTs  (mainly  Canada  for  Saint  Pierre  et 
Miquelon  and  Greenland)  are  still  under  negotiation,  the  institutional  setup  of  these 
agreements  is  not  known  yet.  With  those  OCTs  for  which  integration  or  association  to  a 
trade  agreement  would  not  be  an  option,  the  OCT/EU  trade  related  dialogue  and 

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cooperation would be organised along either of the proposals suggested in policy options 1 
to 3. 

In  the  case  where  OCTs  would  join  an  EPA  or  FTA,  the  EU  would  foresee  support  to 
OCTs  to  help  it  with  the  implementation  of  the  agreement.  Separate  financing  would  be 
foreseen for those OCTs that would not join a trade agreement in case policy options 2 or 3 
would be retained for them. If policy option 1 would be withheld, then no financing would 
be foreseen for these OCTs. 

All types of support would be financed from the 11th European Development Fund, but the 
envelope  reserved  for  cooperation  with  OCTs  under  this  financial  instrument  would  be 
split  into  two  or  three  different  envelopes  corresponding  to  the  different  types  of  trade 
relations which the OCTs would maintain with the EU.  

As  regards  internal  horizontal  programmes  and  budget  lines  of  the  EU,  those  OCTs  that 
would join a trade agreement would only be eligible to the programmes and budget lines in 
which all possible third partners can participate. They would continue to be eligible to the 
external horizontal programmes and budget lines as well as those geographic programmes 
and budget lines that cover the region in which they would be integrated. The OCTs which 
would not join a trade agreement would continue to be eligible in principle to all possible 
internal horizontal programmes and budget lines of the EU and the thematic components of 
external  programmes  and  budget  lines.  To  the  extent  that  natural  persons  can  apply  for 
financing  from  internal  horizontal  programmes  and  budget  lines,  inhabitants  of  OCTs 
would  remain  eligible  because  they  would  continue  to  have  EU  citizenship  regardless  of 
the relation of their territory vis-à-vis the EU. 

Legal and Policy Framework 

Integrating  or  associating  OCTs  to  other  trade  agreements  would  imply  legal  changes.  It 
might  mean  that  OCTs  would  want  to  join  another  bilateral  agreement,  would  have  to 
leave  the  framework  of  Part  IV  of  the  TFEU.  This  would  then  mean  that  their  Member 
States would have to  request that the OCTs concerned be removed from Annex II to the 
TFEU, which lists the OCTs associated to the EU, if the substantive FTA provisions would 
be incompatible with it. Inclusion of OCTs within the scope of EU trade agreements would 
be  subject  to  negotiations  between  the  EU’s  trade  partners,  representatives  of  the  OCTs 
themselves and the EU.  

After the Council would have given negotiating directives to the Commission, negotiations 
would  have  to  be  conducted  to  extend  the  trade  agreements  concerned  to  the  OCTs 
involved.  Negotiations  would  involve  not  only  the  OCTs,  the  EU  trade  partner(s) 
concerned and the Commission, but also the Member States to which the OCTs are linked. 
As OCTs are not sovereign States, the Member States would have to act as the agents of 
their territories and represent them in their negotiations with the EU and the trade partner 
concerned.  The  agreements  that  have  been  concluded  would  need  to  be  amended  to 
incorporate the OCTs and adapt them so as to cover the realities of the OCTs.  

For  services  and  establishment,  the  treatment  that  OCTs  would  give  to  the  EU  or  to  the 
other trading partner(s) would have to be negotiated separately, while the EU's treatment of 
the other trading partner(s) would probably also have to be renegotiated to compensate for 
the inclusion of OCTs. 

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In  case  policy  option  1  would  apply  to  those  OCTs  for  which  integration  or  association 
would not be an option, policy option 4 would imply that the present OAD and its Annexes 
would expire on 31 December 2013 without being renewed nor replaced. The Treaty might 
then have to be amended to delete Part IV and the relevant Annexes and Protocols of the 
TFEU.  If  not,  changes  would  need  to  be  made  to  the  legal  bases  as  described  in  the 
sections on policy options 2 and 3. 

In  case  three  different  types  of  trade  relations  (OCT  trade  regime,  EPA,  FTA)  would  be 
foreseen, it is likely that the legal bases for the 11th European Development would need to 
be adapted, including the Internal Agreement between Member States. 

7.3. 

Impact Assessment of the Different Policy Options 

The four  options  presented above  need  to be assessed in the light of: (a) Art. 198 TFEU 
(centred on the objective of social and economic development of OCTs) and (b) the three 
objectives which the Commission has put forward in Communication COM(2009) 623 and 
which  were  endorsed  by  the  Council  in  its  Conclusions  (16710/09):  strengthening  OCT 
competitiveness, enhancing their resilience and promoting cooperation. 

Methodological Considerations 

As was mentioned in the introduction to this paper (See Chapter 1), the lack of comparable 
and reliable statistics regarding OCT tariffs and trade flows with (non-EU) third countries 
has complicated the analysis of this paper. One OCT admitted that as far as its trade flows 
were  concerned,  it  did  not  have  any  statistical  data  itself.  As  a  consequence  of  this 
situation, assessing the impacts of the different policy options is challenging. The external 
assessors that conducted an external study on the sustainability impacts of a possible EU 
agreement with Canada, commented that the absence of data made it impossible to assess 
the  possible  social,  economic  and  environmental  impacts  of  this  agreement  on  the  OCTs 
most concerned (Greenland and Saint-Pierre et Miquelon) through economic modelling109. 

The  number  and  disparity  of  OCT  economic  profiles  adds  a  layer  of  complexity.  As 
discussed  in  Chapter  3  of  this  paper,  not  every  OCT  maintains  close  economic  relations 
with  the  EU.  In  fact  the  majority  of  OCTs,  i.e.  those  located  in  the  Caribbean,  hardly 
export to the EU. For those OCTs, exporting goods to the EU is more a potentiality than a 
reality.  Consequently,  assessing  the  impacts  of  the  proposed  changes  can  only  be 
hypothetical. 

For those OCTs for which currently the trade relations with the EU are important, fisheries 
is often the single most import export sector. The analysis below takes this sector as case 
study of the social and economic impacts that the different policy options could have on 
OCTs as far as the goods arrangements  are concerned.  

It  should  be  pointed  out  that  OCT  production  and  exports  in  the  fishery  and  aquaculture 
sectors  are  not  homogenous  either.  Exports  vary  from  white  fish,  to  crustaceans  and  to 
molluscs. Two OCTs account for more than 90 % of all OCT exports of fishery products to 

109  

KIRKPATRICK et al. (2011), p. 105. 

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the  EU110.  In  terms  of  value,  the  most  important  OCT  supplier  is  Greenland.  Greenland 
accounts  for  roughly  67  %  of  all  the  OCT  exports  of  fishery  products  to  the  EU.  The 
Falkland  Islands  represent  25  %.  The  remaining  percentage  is  composed  of  the  (former) 
Netherlands Antilles followed by the rest of the OCTs. 

Concerning specific fishery products, shrimps represent 66 % of the Greenland exports of 
fishery products to the EU. The remaining 33 % is taken up by white fish. Squid accounts 
for 80 % of the exports of the Falkland Islands to the EU.  

Regarding  the  economic  and  social  impact  for  the  EU  of  the  various  OCT  fishery  and 
aquaculture  products  imported  by  the  EU,  although  the  overall  EU  impact  could  be 
established to a certain level, any impact will not be homogenous, as it will vary from OCT 
to OCT, and within a given OCT from harvesters to processors. Such impact could even 
affect differently processors in a given OCT depending on the fishery product in question. 
Some  industries  in  some  EU  Member  States  use  OCT  imports  as  raw  material.  Other 
Member  States  and  industries  use  it  as  a  final  product,  directly  intended  for  final 
consumers  and  not  or  hardly  for  processing.  Thus,  for  some  fishery  products  imported 
from the OCTs there is major EU production of like  or directly competing products. For 
other  products  EU  production  is,  to  a  certain  extent,  favoured  by  the  consumers'  and 
processors' preferences (for example, chilled over frozen). This applies to certain product 
and market segments in some countries. In any event, it is unlikely that the impact on the 
EU  producers  and  the  EU  processing  industry  of  fishery  products  of  the  different  policy 
options would be alike. 

The  assessment  of  possible  environmental  impacts  equally  poses  a  problem  as  the 
problem regarding the paucity of statistical data on OCTs also concerns CO² emissions in 
OCTs111. Consequently, it is difficult, if not impossible to assess quantitatively the possible 
environmental  impact  that  the  different  policy  options  may  have.  Instead,  certain 
assumptions could be made.  

For instance, where policy options are likely to stimulate production and export of goods 
and services, these are likely to have a greater environmental impact, amongst others due 
to the emission of additional CO² in the production process and the transport from OCTs to 
the  EU  or  other  third  countries  or  vice  versa  (where  tourism  is  concerned).  This  rule  of 
thumb may not fully apply to all cases. For instance, the environmental impact related to 
transport is likely to be null in the case of isolated OCTs such as Saint-Helena, Ascension 
and Tristan da Cunha, from where presently cargo ships often return empty. 

Where policy options would have a negative environmental impact, this  impact  could be 
mitigated  by  OCT/EU  cooperation  and  EU  financial  assistance,  of  which  environmental 
issues are an integral part. Where possible and relevant, the assessment of policy options 
will indicate the possible environmental impacts of the different policy options. 

7.3.1.  Assessment Policy Option 1: Discontinuation of Preferential Trade Relations 

Trade in Goods 

110  

111  

All  data  contained  in  this  section  is  based  on  data  available  to  the  European  Commission, 
Directorate General for Maritime Affairs and Fisheries. 

SPANNEUT (2011) found that statistics about greenhouse gas emissions were collected in only one 
OCT (p. 44).  

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The  possible  impact  of  replacing  OCT  duty  free,  quota  free  access  to  the  EU  market  by 
access  based  on  the  EU's  Common  External  Tariff  (CET)  varies  per  OCT  because  it 
depends on their exports to the EU112. A simulation of the impacts which the introducing of 
CET  duties  would  have  on  the  goods  of  selected  OCTs  (see  12.8),  at  current  exports, 
shows that this would result in OCTs having to make duty payments of EUR 56.9 million. 
The average CET duty rate applicable to OCT goods would range from 14.78 % (for Saint 
Pierre et Miquelon) to 0.01 % (for Cayman Islands).  

The  OCTs  most  affected  would  be:  Falkland  Islands,  French  Polynesia,  Greenland, 
Netherlands Antilles and Saint Pierre et Miquelon. In fact, these OCTs would be paying 98 
% of the above mentioned total OCT duty payments under CET. Other OCTs would hardly 
be  affected  as  they  mainly  export  products  for  which  the  average  rate  is  zero  or  almost 
zero. The OCTs for which dutiable exports are negligible are: British Virgin Islands, New 
Caledonia,  Cayman  Islands  and  Anguilla.  In other  cases,  the  amount  of  duty  would  be  a 
small part of the value of their exports. Hence, they would not be much affected. This is 
the  case  for  Aruba,  Mayotte,  Montserrat,  Saint  Helena,  Pitcairn,  Turks  and  Caicos  and 
Wallis and Futuna, where the average duty rate would ranges from 4.57 % (for Wallis and 
Futuna) to 1.29 % (for Montserrat).  

When  considering  how  the  main  OCT  exports  would  be  affected  under  CET  rates,  OCT 
exports of fish and processed fish, sugar, industrial products and crude coconut oil come 
out as the products most likely to face significant customs duties. The OCTs most affected 
would be: Greenland, Saint-Pierre et Miquelon, Falkland Islands, the (former) Netherlands 
Antilles,  and  French  Polynesia.  Annex  12.9  shows  this  by  indicating  what  duties  would 
have to be paid on the main goods exports of OCTs under CET conditions as well as the 
average CET rates that apply to those products. Main goods exports are defined as totalling 
over EUR 100,000 in value.  

For Greenland fish and processed fish represent 89 % of total exports to the EU and are the 
products that would attract most of the CET duties of its exports to the EU. 99% of total 
CET  duties  would  be  paid  on  fish  and  processed  fish  products.  Among  these,  shrimp 
exports  would  be  affected  by  the  highest  CET  rates.  For  Saint-Pierre  et  Miquelon  cod 
exports  (51%  of  total  exports  to  the  EU)  would  attract  approximately  50%  of  all  duties 
under CET rates. For the Falklands Islands, fish and processed fish, representing 96.2 % of 
total Falkland Islands exports to the EU, would also be subjected to most of the CET duties 
(99%  of  total  duties).  Among  those,  some  products  such  as  frozen  hake  and  frozen 
saltwater fish would face considerable rates. In the case of the former Netherlands Antilles, 
the sampled products only amount to 26 % of exports to the EU, but would attract most of 
the  duties  under  CET  (92  %).  Tuna  and  raw  cane  sugar  would  be  the  products  most 
affected by CET rates. French Polynesian products that would be affected by CET duties 
are fish and crude coconut oil, on which 73 % of the CET duties would be paid113. 

The  increase  of  tariffs  duties  for  OCTs  exporting  fishery  products  to  the  EU  is  likely  to 
have  important  social  and  economic  impacts  on  the  OCTs.  These  are  likely  to  be 

112  

113  

For the sake of completeness, the impact of relegating OCTs to GSP treatment has been examined 
alongside the impact of MFN treatment to explore the –negative– impact both would have compared 
to the current situation. Full results are included in Annexes 6 and 7. However, as explained above 
in section 4.3.2, the specific status of OCTs means that their GSP eligibility should be discontinued.  
Fisheries, the main OCT export sector, is a clear case where the impact of CET and GSP treatment 
is very close as both CET and GSP duties are relatively high. 

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negative. OCTs would be exposed to increased competitiveness by other EU trade partners 
exporting similar products to the EU at CET or reduced duties (e.g. Norway in the context 
of  the  European  Economic  Area).  The  loss  in  competitiveness  may  be  even  more 
pronounced if direct competitors of OCTs (e.g. Canada) would gain better market access in 
the context of an EU trade agreement.  

It is therefore likely that policy option 1 would result in a decrease of OCT exports, which 
is  likely  to    negatively  impact  employment  in  the  fishery  sectors.  As  mentioned  above 
(Chapter 3 of the present paper), these sectors Saint-Pierre et Miquelon represent 5 to 7 % 
of  the  total  workforce,  but  11.4  to  16  %  of  the  privately  employed  workforce  (2007 
figures)114. In Greenland the fishery sectors represent 4.3 % of the total workforce, but 8.1 
% of the privately employed workforce (2007 figures)115.   

Given  the  strong  importance  both  territories  attach  to  these  traditional  activities  –  with 
Greenland  considering  it  as  an  integral  part  of  the  traditional  Inuit  way  of  living  –  any 
small  decrease  in  employment  opportunities  may  be  perceived  to  be  far  more  substantial 
than what the figures indicate. In addition, where jobs would be lost in the fishery sector, 
the  territorial  authorities  are  likely  to  have  to  increase  social  expenditure  in  the  form  of 
unemployment  benefits  (where  available).  Thus,  policy  option  1  is  likely  to  negatively 
affect the territorial budgets as well. Where OCTs would try to compensate for the loss in 
competitiveness  and  maintain  their  position  on  the  EU,  they  may  be  tempted  to  adopt  a 
number  of  measures  which  may  negatively  impact  on  the  working  conditions  of  the 
sector's employees. 

For  those  OCTs  which  are  not  dependent  from  access  to  the  EU  market  or  the  fishery 
sector, the impact of policy option 1 would be either null or very marginal. Potential levers 
for  economic  and  social  development  might  be  lost  to  them.  Indirectly,  policy  option  1 
may have a positive impact on the extent to which OCTs cooperate with their neighbours 
as they may want to replace the OCT/EU association by cooperation schemes with other 
third partners. The most vulnerable OCTs might not be able to benefit from this situation 
for lack of sufficient assets which would make them interesting as a partner to cooperate 
with. 

On the EU side, policy option 1 would have diverse effects. The EU could benefit from it 
as it would generate new revenues for the EU. Policy option 1 could generate a theoretical 
maximum  of  some  EUR  57  million  of  revenue  for  the  EU  via  the  duties  levied  on  the 
major OCT exports referred to above116, but only if one were to assume that current OCT 
export levels would be maintained. On the other hand, where policy option 1 would lead to 
a deterioration of the economic, social and fiscal situation of the OCTs, the governments of 
the  four  Member  States  might  be  impacted  as  well  as  this  situation  could  force  them  to 

114  

115  

Public employment in Saint-Pierre et Miquelon represent 44% of total employment. See: Institut des 
Emissions  des  Départements  d'Outremer,  Saint-Pierre  et  Miquelon:  Rapport  Annuel  2010,  Paris, 
2011, p. 28.  

Public  employment  in  Greenland  represent  47  %  of  total  employment.  Based  on  Statistics 
Greenland,  Greenland  in  Figures,  6th  and  8th  edition,  June  2009  and  May  2011.  See: 
(accessed: 
http://www.stat.gl/dialog/main.asp?lang=en&theme=Greenland 
26/10/2011). 

in  Figures&link=GF 

116 

See Annex 8 of Appendix 2 

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increase their financial transfers to the OCTs; an effect which could be aggravated by the 
fact that OCTs would no longer benefit from EU financial assistance. 

If major trade deflection would occur as a consequence of OCTs losing in competitiveness 
on the EU market in the fishery sector, this may have an impact on the EU's fishery sector. 
EU producers (harvesters)  of  like products (notably shrimps, squid and white fish) could 
gain  from  this  and  fill  the  gap  left  by  reduced  OCTs  imports.  In  addition  to  this,  there 
could  be  an  upward  pressure  on  EU  prices  due  to  the  reduced  supply,  depending  on  the 
country,  product,  market  and  the  form  in  which  the  fish  products  are  presented.  Policy 
option  1  may  also  lead  to  a  reduction  of  competitive  raw  materials  available  to  EU 
processors of fishery products, notably for shrimps, but also for white fish, and this could 
have a negative impact on production and employment in the EU processing industries in a 
number  of  EU  Member  States117,  depending  on  the  product  and  the  form  in  which  it  is 
presented. 

The environmental impacts of policy option 1 are likely to be small. On the OCT side, 
the  environmental  impact  of  OCT/EU  trade  may  actually  decrease  as  e.g.  CO²  emission 
would reduce with the decrease of production and exports to the EU. This effect may be 
annulled where EU producers and operators would replace OCT suppliers. Depending on 
the  respective  scales  of  production,  the  degree  to  which  the  production  processes  are 
polluting in both the EU and the OCTs and depending how polluting transport from OCTs 
to the EU is, the overall balance may be positive or negative. 

Rules of Origin 

In  the  absence  of  preferential  rules  of  origin,  rules  of  origin  are  not  a  factor  that  would 
affect the OCTs' economic and trade position. 

Services and Establishment 

The  practical  impact  of  discontinuing  the  current  OCT/EU  trade  relations  in  the  services 
sectors may be limited at first glance as in trade in services the autonomous liberalisation 
(i.e. the basic third country treatment as it is given in practice vs. the one to which a trade 
partner  has  internationally  committed)  may  be  and  often  is  more  liberal  than  the  trade 
commitments.  This  may  mean  that  discontinuing  the  preferential  trade  relations  does  not 
lead to great change in actual market access.  

However,  the  legal  certainty  for  businesses  would  be  considerably  reduced  as  both  sides 
could  unilaterally  worsen  the  trade  treatment  of  the  other.  This  is  most  important  for 
investments  (establishment  both  in  services  and  non-services  sectors),  where  long-term 
financial  commitments  may  have  been  taken  by  businesses.  Unilateral  changes  in 
regulation that would worsen the market access or national treatment conditions could be 
adopted  for  reasons  of  legitimate  policy  objectives,  but  also  for  protectionism.  While 
within the GATS framework, Article XXI allows for the possibility of withdrawing certain 

117 The United Kingdom is one such Member State that is dependent of shrimp imports from Greenland to 
sustain its processing industry. See: DÖRING, R. and GUILLEN, J. (ed.), Report of the Working Group on 
the  evaluation  of  data  collected  on  the  fish  processing  sector  (SGECA  10-04),  Joint  Working  Group  on 
Economic Affairs (SGECA), of the Scientific, Technical and Economic Committee for Fisheries (STECF), 
Ispra, 11-15 October 2010, pp. 166-7. 

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commitments  provided  that  compensation  be  given  so  as  to  ensure  similar  level  of  trade 
openness, OCTs would not benefit from such compensation. 

Policy option 1 would also mean that there would not be any regulation of trade in services 
and establishment between the EU and the OCTs other than that in the respective Member 
State  legislation  and  would  hence  not  fulfil  the  objectives  set  in  the  Article  199  of  the 
TFEU. 

Trade Related Cooperation and Support 

Discontinuing OCT/EU cooperation is likely to negatively impact on the OCT capacities to 
exploit  the  remaining  market  access  opportunities  in  the  EU  and  possibly  other  markets. 
The  sustainable  social  and  economic  development  of  OCTs  would  not  be  actively 
promoted  by  the  EU  and  the  objective  of  establishing  close  economic  ties  between  the 
OCTs and the EU would thus be difficult to achieve. OCT competitiveness and resilience 
to economic shocks would not be strengthened and are likely to reduce under this policy 
option as they would face stronger competition in the EU market, with having being able to 
prepare for this situation and without additional support to their limited administrative and 
trade capacities being available. 

Though this policy option may give an impulse to regional cooperation and integration as 
OCTs  may  look  to  their  developed  and  developing  neighbours  to  replace  the  OCT/EU 
cooperation, it is likely to do so, based on a negative motivation.  

Discontinuing OCT/EU cooperation in trade and trade related matters is likely to result in a 
loss of EU involvement inn OCT economic policies, regulatory models and the like. The 
absence  of  financial  and  administrative  cooperation,  such  as  currently  provided  (but  not 
used) under Chapter 3 of Title II of Part 3 of the OAD may also lead to a deterioration of 
the environment of OCTs as they may develop trade policies which take little account of 
environment. The idea of OCTs as outputs of the EU in the world would not be achieved in 
this policy option. It would result in a situation in which EU interests and values would not 
be actively promoted. 

Legal and Policy Framework 

Discontinuing preferential relations for OCTs may be contrary to the Preamble and Part IV 
of  the  TFEU,  which  emphasise  the  solidarity  between  the  EU  and  the  OCTs  and  which 
stipulate  that  the  purpose  of  the  association  is  the  sustainable  social  and  economic 
development of the OCTs. This policy option could therefore necessitate a Treaty change.  

Policy  coherence  would  not  be  an  issue  as  in  principle  no  specific  policy  towards  OCTs 
would  be  foreseen.  OCTs  would  benefit  from  EU  policies  only  to  the  extent  that  third 
partners without any privileged relation with the EU can take part in them.  

However,  such  a  stance  would  not  be  consistent  with  the  political  orientations  regarding 
the  revision  of  OCT/EU  relations  in  its  conclusions  the  Council  laid  down  in  its 
conclusions  (16710/09)  of  22  December  2009  and  which  endorsed  the  three  objectives 
proposed by the Commission in its Communication COM(2009) 623. 

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7.3.2.  Assessment Policy Option 2: Roll Over of Present Preferential Trade Relations 

Trade in Goods 

In  the  status-quo  scenario,  all  applicable  provisions  would  remain  unchanged.  Therefore, 
any  impact  would  stem  from  the  improved  market  access  to  the  EU  for  non-OCT 
exporters,  e.g.  the  EU's  FTA  partners  ("preference  erosion").  Analysis  of  the  products 
exported  by  the  OCTs  and  recent  EU  FTA  negotiations  (see  above)  shows  that  fish  and 
processed  fish  are  the  products  most  at  risk  of  such  preference  erosion.  The  OCTs 
potentially most affected are: Falkland Islands, French Polynesia, Greenland, Saint Pierre 
et Miquelon and the (former) Netherlands Antilles. The increased competition of non-OCT 
exporters  could  lead  to  similar  economic  and  social  impacts  (job  loss,  increased  social 
expenditure) as described in policy option 1, though to a lesser extent. 

No major impact on the EU producers or the EU processing industry would occur as the 
present  competitive  positions  of  OCT  suppliers  and  EU  producers  would  be  maintained. 
Where  OCTs  would  lose  in  competitiveness  to  the  benefit  of  other  trade  partners,  this  is 
likely to result in a status quo for the EU producers. This would for instance be the case if 
the EU free trade negotiations with Canada would result in the Comprehensive Economic 
and  Trade  Agreement  (CETA)  being  concluded.  According  to  KIRKPATRICK  et  al. 
(2011), this agreement will have no noticeable impact on employment in the EU, even if it 
might  have  some  negative  impact  in  some  specific  industries  in  specific  EU  Member 
States. As the EU's fishery processing industry is concerned, a positive impact is expected 
as it would gain access to raw materials at more competitive prices. 

In  terms  of  environmental  impacts,  the  status  quo  under  policy  option  2  is  unlikely  to 
lead to an increase of such impacts. If policy option 2 would be implemented during the 
next operational period, increases of e.g. CO² emissions are likely to be the consequence of 
factors  independent  from  EU  interventions  (e.g.  government  policy).  Where  the  OCT 
partner  would  choose  to  use  EU  financial  resources  in  support  of  trade  and  trade  related 
priorities,  the  streamlining  of  environmental  issues  in  the  EU's  financial  assistance    is 
likely to have a mitigating effect (see below). 

Rules of Origin 

As far as rules of origin are concerned, the status quo would avoid adaptation costs as OCT 
economic  operators  would  not  have  to  get  used  to  a  new  set  of  rules  of  origin  and  the 
possible uncertainties that may accompany them. 

OCT trade flows, in particular to the EU, are likely to remain either the same or to decrease 
as no new incentive for investment would be provided. In the mean time, as the EU would 
continue  to  conclude  FTAs  with  new  trade  partners  who  could  possibly  be  OCT 
competitors  (e.g.  Canada  versus  Saint-Pierre  et  Miquelon  and  Greenland),  the  effect  of 
erosion of preferences would become more marked. 

In the absence of a relaxation of the product specific rules the prospects of diversification 
of OCT exports would be limited.  

As  no  changes  would  be  made  to  the  general  provisions,  the  procedures  would  remain 
burdensome,  mainly  as  regards  with  the  certification  by  the  customs  authorities  and  the 
documentary  evidences  to  be  submitted  as  proof  that  the  goods  have  been  transported 

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directly from the country of origin to the EU. Compliance costs (i.e. costs incurred for the 
delivery of a proof of origin) would also remain the same. 

Though  cumulation  possibilities  with  OCTs  and  ACPs  would  be  maintained,  trade 
opportunities  are  likely  to  decrease  with  EPAs  granting  ACP  signatories  the  same  tariff 
treatment  as  the  OCTs,  thus  reducing  their  incentive  to  send  their  products  to  OCTs  for 
further  processing  (sugar  products  for  example).  In  the  absence  of  a  provision  on 
cumulation  with  non-ACP  neighbouring  countries,  the  prospects  to  strengthen  the 
relationships with these countries would not be furthered. 

As no changes  would be made  to the rules and procedures for granting  derogations, the 
issue of predictability would remain. 

Services and Establishment 

Maintaining the present OCT/EU trade relations would entail the automatic improvement 
of  the  treatment  the  EU  gives  to  OCT  services  if  and  when  it  would  upgrade  its 
commitments under GATS following WTO negotiations.  

However, as the status and progress of the ongoing DDA negotiations is unclear, so is the 
ambition  of  the  current  GATS  commitments  which  were  made  in  1994.  Moreover,  the 
treatment  accorded  in  WTO  to  all  WTO  153  members  is  not  reflecting  the  special 
relationship between EU and OCTs as foreseen by Part IV of the TEU. Furthermore, since 
2000  the  EU  has  entered  into  several  bilateral  preferential  trade  agreements  which  also 
cover  trade  in  services  and  establishment  and  which  accord  a  treatment  more  favourable 
than the one the EU offers under the GATS.  

In  the  context  of  the  Economic  Partnership  Agreement  (EPA)  that  was  concluded  with 
CARIFORUM  and  the  ongoing  negotiations  regarding  with  other  ACP  regions  a  more 
favourable treatment has been or will be granted to neighbouring countries of OCTs. Even 
if  autonomous  liberalisation  in  Member  States  presently  rarely  differentiates  between 
service  providers  and  investors  on  the  basis  of  country  of  origin,  except  for  EU  Internal 
Market  purposes  and  in  the  context  of  the  European  Economic  Area,  the  possibility  for 
such  differentiation  to  happen  in  the  future  or  in  particular  sensitive  sectors  still  exists. 
Thus,  the  main  issue  at  hand  is  again  the  legal  certainty  for  investments,  but  also  cross-
border  trade  in  services  some  of  which  are  very  important  to  certain  OCTs  (such  as 
financial services to British Virgin Islands or Cayman Island). 

As pointed out in previous studies, the current OAD regime is not balanced as EU grants 
the  OCTs  GATS  treatment,  while  OCTs  are  giving  the  EU  full  MFN  including  the 
treatment  they  accord  between  themselves  and  to  developing  partners.  In  the  status  quo 
option (option 2) it would not be possible to redress this problem, which has been raised as 
the most serious problem in the area of trade in services. 

As GATS does not foresee a specific  treatment for OCT services,  policy option 2 would 
not allow the OCTs to benefit from liberalisation driven economic development in sectors 
of  interest  to  them,  unless  they  would  decide  to  adopt  a  development  strategy  based  on 
autonomous  trade  liberalisation  and  attracting  investment.  They  would  have  the  same 
treatment as the other 153 WTO members. For non-services establishment, no trade regime 
would be foreseen at all.  

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Consequently,  the  economic  and  social  impacts  of  the  services  and  establishment 
component  of  this  option  would  be  limited  or  non-existent.  Furthermore,  the  impact  on 
OCTs  would  partly  depend  on  the  trade  agreements,  if  any,  OCTs  conclude  with  other 
partners as currently they are committed to give to EU the best treatment they give to any 
other third country. This would mean that OCT South/South agreements with neighbouring 
countries would all have to be extended to EU.  

Under policy option 2, EU funding could be used in support of the implementation of the 
relevant strategies for the development of OCT services sectors, should that be the wish of 
the OCT governments concerned. If the sectors relevant for tourism would be marked as 
sectors for development, their increased attractiveness as a touristic destination may have 
an environmental impact as it could lead to increased pollution through air and transport 
by  ships.  Here  as  well,  EU  financial  assistance  may  be  a  mitigating  factor  as  it  could 
influence OCT policies through its obligation to take into account environmental issues. 

Trade Related Cooperation and Support 

By rolling over the present cooperation and support arrangements the EU would continue 
to  support  the  reinforcement  of  OCT  capacities  to  exploit  the  generous  market  access 
opportunities  in  the  EU  and  possibly  in  other  third  countries,  in  those  instances  of 
cooperation where trade and trade related areas are in focus. Thus, the EU would continue 
to promote the sustainable social and economic development of OCTs. 

As the agenda for the OCT/EU dialogue on trade and trade related issues would continue 
to be defined on an ad hoc basis, it would likely lack focus. Maintaining the wide range of 
topics  covered  by  Articles  12,  13,  14  and  16  of  the  OAD  would  likely  contribute  to  the 
diffuseness of the OCT/EU trade and trade related dialogue and cooperation. 

For  OCT/EU  cooperation  under  the  11th  European  Development  Fund  (EDF)  to  have  an 
impact  on  OCT  trade  and  trade  related  issues,  the  political  priorities  would  need  to  be 
translated  by  dedicated  financial  allocations  as  11th  EDF  operation  would  continue  to  be 
linked  to  OCT  priorities.  In  such  a  scenario  EU  interventions  in  trade  and  trade  related 
areas would have a more lasting impact if they would be integrated in regional, territorial 
or sector (development) strategies. Cooperation in the form of ad hoc projects or technical 
assistance would have a more limited impact. 

By continuing to provide financial assistance to OCTs in the area of trade and trade related 
matters, the EU would continue to actively support OCT efforts to put in place measures in 
these  areas  which  are  intended  to  strengthen  the  competitiveness  of  their  economies  and 
decrease their vulnerability to external shocks. 

Coordination  of  EU  and  Member  State  interventions  through  OCT  authorities  would 
continue to have beneficial impacts, but potential synergies might not be exploited. 

The extent to which OCTs would be able in practice to benefit from these programmes and 
budget lines would to a large extent be dependent of the capacity of their beneficiaries to 
formulate  competitive  proposals.  The  success  rate  of  OCT  beneficiaries'  participation  in 
these programmes would likely remain low. By providing technical assistance on demand, 
the EU might indirectly have a positive impact on this. 

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As  a  consequence  of  the  low  utilisation  by  OCTs  of  the  EU  horizontal  programmes  and 
budget  lines,  it  is  likely  that  the  11th  EDF  would  remain  the  main  source  for  financial 
assistance  in  support  of  OCT  efforts  to  develop  their  private  sectors,  to  formulate 
innovation strategies and to develop their capacities and infrastructure in specialised fields 
such  as  food  safety  and  consumer  health.  Thus,  rather  than  being  supportive  of  OCT 
participation in EU horizontal programmes, the EDF might in effect continue to function as 
substitute  to  those  programmes.  The  potential  for  synergies  between  the  two  types  of 
financial instruments would remain underused. 

By continuing to support the development of OCT strategies, capacities, infrastructure and 
legislative  frameworks,  the  EU  would  continue  to  exert  an  influence  on  their  policies, 
regulatory models and the like. In case the provisions concerning trade related areas such 
as  environment  and  labour  states  foreseen  in  Chapter  3  of  Title  II,  Part  3  of  the  OAD 
would  be  put  into  effect,  the  OCT/EU  administrative  cooperation  could  have  a  positive 
social and environmental impact by influencing the relevant OCT policies. Thus, the EU 
would  continue  to  actively  contribute  to  the  promotion  of  EU  interests  and  values  in  the 
world. Such support may stimulate convergence of OCT legislation with the EU acquis. 

Legal and Policy Framework 

A roll over of the present OCT/EU relations would be consistent with Part IV of the Treaty 
on  the  Functioning  of  the  European  Union  and  its  Preamble,  but  not  with  the  shared 
ambition of OCTs, their Member States and the Commission to reshape and modernise the 
OCT/EU relations. 

Policy coherence would be assured under this option, but the OAD would not incorporate 
any of the policy evolutions in trade and trade related provisions over the last ten years. 

The option would not be consistent with the political orientations regarding the revision of 
OCT/EU relations in its conclusions the Council laid down in its conclusions (16710/09) of 
22 December 2009 and which endorsed the three objectives proposed by the Commission 
in its Communication COM(2009) 623 of 6 November 2009. 

7.3.3.  Assessment Policy Option 3: Improved Asymmetric Trade Relations 

Trade in Goods 

As the room for improving duty free, quota free access is very small, the impact on OCT 
exports in this scenario would depend on:  

1. 

the degree to  which the simplification  and relaxation of the rules of origin would 

contribute to developing OCT trade; 

2. 

3. 

the  degree  to  which  the  further  opening  of  the  EU's  services  market  to  OCT 

operators would increase actual business opportunities for these operators; 

the effectiveness of support measures that could be put in place to help OCTs  in 
overcoming  problems  they  face  complying  with  sanitary,  phyto-sanitary  or  technical 

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rules  that  apply  to  their  goods  exports,  in  particular  their  fish  and  processed  fish 
exports118. 

The discontinuation of the transhipment facility mentioned in Article 36 of the OAD would 
have no practical effect as the provision has never been implemented successfully. In other 
words, transhipment operations have never given rise to EU duties being waived, because 
the provision's conditions have never been fully met. Similarly, the Commission has never 
approved any OCT transhipment scheme under paragraph 2 of that Article. The feasibility 
of  a  functioning  transhipment  scheme  under  Article  36  of  the  OAD  has  never  been 
demonstrated. 

Rules of Origin 

The proposed changes to the rules of origin under policy option 3 would likely result in a 
more effective use by OCTs of the export opportunities which the OCT trade regime offers 
them,  by  improving  the  conditions  under  which  OCT  goods  access  the  EU  market.  This 
would  have  a  positive  social  and  economic  impact  on  the  OCT,  notably  in  the  fishery 
sector.  In  doing  so,  the  economic  ties  between  the  OCTs  and  the  EU  would  be 
strengthened  and  the  OCTs'  competitiveness  stimulated.  Simplifying  and  relaxing 
conditions, strengthening transparency and coherence with the rules of origin of other trade 
partners is likely to result in efficiency gains and reduce administrative burdens. 

The new product specific rules would likely increase market opportunities for OCTs by 
providing  additional  sourcing  opportunities  through  higher  thresholds  of  non-originating 
materials. The relaxations could increase the export potential of OCTs in goods that they 
already  produce,  chocolate  (New  Caledonia),  jam  (British  Virgin  Islands),  fruit  juices 
(French  Polynesia),  rum  (British  Virgin  Islands),  oil  (Greenland),  essential  oils  (French 
Polynesia),  processed  base  metals  (New  Caledonia,  Greenland,  British  Virgin  Islands), 
ammonia  (Greenland),  articles  of  plastics  (French  Polynesia),  pottery  (British  Virgin 
Islands), aluminium (Greenland), machinery and mechanical appliances (New Caledonia), 
handicraft  (British  Virgin  Islands,  Saint  Helena,  Ascension  Island  and  Tristan  da  Cunha) 
and furniture (British Virgin Islands). 

The  changes  to  the  definition  of  wholly  obtained  products,  as  part  of  the  changes  to  the 
general  provisions,  would  contribute  to  making  the  rule  more  transparent  and  user 
friendly. The inclusion of operations relating to textiles and clothing in the list of minimal 
operations  could  have  an  impact  for  the  determination  of  the  country  of  origin  of  the 
product  within  the  cumulation  context.  Nevertheless,  exports  from  OCTs  of  processed 
textiles  products  are  very  low  and  consequently  the  impact  would  be  limited  (the  main 
export interest for textile and clothing involves wool, so cumulation would not be used for 
these  products  and,  in  addition,  these  materials  enter  the  EU  at  CET-zero,  so  the 
preferential rules of origin would not be used anyway). 

118  

 The OCTs that stand to benefit most from provisions aimed at overcoming sanitary, phyto-sanitary or 
technical barriers would be Falkland Islands, Greenland, Saint-Pierre et Miquelon, Netherlands Antilles 
and French Polynesia. 

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While  changes  to  the  rules  of  origin  proposed  under  policy  option  3  is  likely  to  have 
positive  social  and  economic  impacts  on  OCTs  in  the  fishery  sector,  the  impact  on  EU 
producers  and  processing  industries  of  fishery  products  would  vary.  The  most  important 
impact  would  likely  be  the  elimination  of  the  crew  requirement,  notably  for  Falkland 
Islands. On the EU side, the impact would be more felt by the EU processing industry than 
for the EU producers. However, as the Falkland Islands currently benefit from a derogation 
for the crew requirement, the impact in the short-term may not differ from the status quo 
offers.  Similarly  the  improved  text  on  the  vessel’s  ownership  could  facilitate  trade  for 
OCTs. The social and economic impact on the EU would likely  be negligible taking into 
account the number of cases where this question was raised in the past.  

More  difficult  to  assess  is  the  possible  impact  more  flexible  derogations  would  have.  It 
would  depend  on  the  duration  of  the  derogations,  the  products  concerned,  the  producers' 
and  customers'  preferences  (chilled,  frozen  or  processed)  and  the  volumes  as  well  as  the 
actual utilisation rates. Here as well, the impact would vary between EU producers and EU 
processors,  with  EU  processors  being  able  to  gain  access  to  raw  materials  at  more 
competitive  prices  and  being  able  to  maintain  production,  and  jobs  and  EU  producers 
witnessing the entry of competitive products in case of the EU production of like products. 

Diversification of the cumulation possibilities would allow an improvement of the sourcing 
opportunities.  Cumulation  with  EPA  countries  will  allow  maintaining  significant  trade 
links  with  some  EPA  countries.  For  example  French  Polynesia  with  Fiji  Islands,  Papua 
New Guinea or Ghana, the (former) Netherlands Antilles and British Virgin Islands with 
CARIFORUM  EPA  countries,  New  Caledonia  with  Pacific  EPA.  In  the  same  fashion, 
extended  cumulation  would  allow  OCT  countries  to  take  better  advantage  of  the  current 
trade  flows,  for  example  French  Polynesia  has  significant  exchanges  with  ASEAN 
countries,  with  India,  with  Canada  and  with  Mercosur;  the  (former)  Netherlands  Antilles 
have exchanges with Canada, Colombia, Peru, Central America and Mercosur; Greenland 
is interested by sourcing in ASEAN. 

Services and Establishment 

The  inclusion  of  an  asymmetrical  MFN  clause  would  mean  that  the  current  services  and 
establishment treatment of OCTs would be considerably improved, while at the same time 
OCTs  would  be  allowed  to  have  greater  autonomy  regarding  the  type  of  treatment  they 
would give to the EU. OCTs have stressed the importance of the latter point (see chapter 
6),  as  it  is  instrumental  to  enabling  South/South  agreements  in  trade  in  services.  The 
services  and  establishment  treatment  would  also  be  more  favourable  than  the  treatment 
given  to  ACP  partners  in  EPAs,  as  it  would  cover  both  past  and  future  EU  agreements 
(while CARIFORUM agreement for example covers only future agreements).  

The benefits which would accrue to the OCTs under policy option 3 would be considerable 
and would increase with every new further trade liberalisation of the EU commitments in a 
bilateral or multilateral context. In comparison to the current GATS commitments, policy 
option  would  result  in  almost  doubling  the  EU's  market  openness  to  OCTs.  Taking  into 
account both the sectors for which commitments have been taken and the limitations that 
were introduced (see box below), the weighted average openness of the EU under GATS 
corresponds  to  a  factor  34  for  modes  1,  2  and  3.  Under  the  EPA  with  CARIFORUM  it 
corresponds to a factor 57 (and 74 for establishment). 

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The weighted openness index is the count of weighted average commitments by all EU divided 
by the number of sectors that can be listed.  

155

∑

j

=

1

Open

mi

=

27

∑

i

=

1

N

i

+

27

∑

=

1

w
i

P
i

27

155

, for m=1,3; i= 1,…,27; j=1,….,155,  

Where m, i and j are indices for mode of supply, EU member state and services sector respectively, N is 
None’s and P is partial commitments (bounds) and w is the given weight. 

Weighted Openness Index 

The sectors which would benefit most from removal of limitations (the number of sectors 
committed remains the same as EU commits almost all sectors) would be the construction 
services,  environmental  services,  recreational  services  and  other  services.  The  lowest 
opening would occur in the health and educational services, as these are sensitive for the 
EU for consumer (patient) protection reasons.  

By  opening  its  services  sectors  to  OCT  operators,  the  EU  would  stimulate  the  further 
development  of  new  or  existing  sectors  by  offering  additional  opportunities  for  exports, 
including  for  cross-border  trade  through  modern  communication  technologies.  Thus,  the 
social and economic impacts of this policy option would likely be positive. Ensuring that 
OCTs automatically extend to the EU the treatment they give to major economies such as 
US or China would respect the spirit of the special relationship between EU and OCTs and 
would be a translation of the principle of reciprocity. It would also give legal certainty for 
EU  investors,  which,  in  turn,  could  contribute  to  attracting  Foreign  Direct  Investment 
(FDI) to the OCTs.  

EU funding could be used in support of the implementation of the relevant commitments to 
further  increase  the  services  capacity  and  infrastructure  as  well  as  to  ensure  a  legal 
environment  that  would  support  the  investments.  Most  importantly,  as  improvements  of 
OCT treatment would be granted automatically when the EU would upgrade the services 
treatment in other of its agreements, the implementation of this policy option would not put 
additional strains on the limited administrative capacities of OCTs, which would not have 
to face the prospect of long and complex negotiations. EU financial assistance, if directed 
to  sectors  where  commitments  are  taken,  could  be  a  mitigating  factor  for  any 
environmental impact through its obligation to take into account environmental issues. 

Trade Related Cooperation and Support 

Upgrading  the  present  OCT/EU  trade  related  cooperation  and  support  would  likely 
reinforce  OCT  capacities  to  exploit  the  improved  access  to  the  EU.  Thus,  the  EU  would 
continue to promote the establishment of close economic ties between the OCTs and the 
EU.  Via  policy  option  3  the  EU  would  also  likely  contribute  to  strengthening  the  OCTs' 
position  in  other  third  markets.  The  trade  related  cooperation  and  support  under  policy 

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option  3  would  therefore  contribute  to  the  promotion  of  the  sustainable  social  and 
economic development of OCTs. 

The revision of the areas of cooperation, presently covered by Articles 12, 13, 14 and 16 of 
the  OAD,  and  their  limitation  to  a  specific  set  of  areas  would  increase  focus  of  the 
OCT/EU  trade  related  cooperation  and  support  and  to  facilitate  the  monitoring  of  its 
impact.  The  adoption  of  the  joint  work  programme,  the  concentration  of  EU  technical 
assistance  in  selected  areas  of  intervention  related  to  trade  could    have  a  similar  effect. 
Where possible and relevant the coordination of EU and Member State interventions would 
increase  the  impact  of  both.  By  strengthening  the  principle  that  the  11th  European 
Development Fund be complementary to funding available to OCTs under the horizontal 
programmes and budget lines relevant to trade, duplication would be avoided and potential 
synergies between the two types of financing would be exploited. 

Where the 11th EDF financial assistance to OCTs sues would be foreseen in trade and trade 
related areas, this assistance would have a more lasting and systemic effect where it would 
take the form of general or sector budget support.  

The continued, targeted and coordinated support to OCT strategies, capacities, legislative 
and  institutional  frameworks  proposed  under  policy  option  3  would  likely  increase  the 
involvement that the EU would have in OCT policies, regulatory models and the like. Such 
involvement  could  extend  to  the  OCT's  labour  policies  and  the  environmental  aspects  of 
their  trade  policies  and  activities  by  activating  the  provisions  concerning  OCT/EU 
cooperation on trade and labour standards and trade and environment. Thus, policy option 
3  would  have  a  positive  social  and  environmental  impact.  The  inclusion  of  trade  and 
trade  related  issues  of  mutual  interest,  such  as  raw  materials,  would  be  an  active 
contribution to the promotion of EU interests and values in the world. Such support may 
stimulate convergence of OCT legislation with the EU acquis.  

Under this option, OCTs would not only be considered as external stakeholders, but also as 
internal stakeholders and could play to a certain extent a role as outpost of the EU. 

Legal and Policy Framework 

Policy option 3, which would consist in upgrading the current asymmetric trade relations, 
would be consistent with Part IV of the TFEU and its Preamble.  

It would also translate the political orientations regarding the revision of OCT/EU relations 
which  the  Council  laid  down  in  its  conclusions  (16710/09)  of  22  December  2009  in 
endorsement  of  the  three  objectives  proposed  by  the  Commission  in  its  Communication 
COM(2009) 623 of 6 November 2009. 

Policy coherence would be ensured under this option would be strengthened. 

7.3.4.  Assessment Policy Option 4: Inclusion in other Preferential Trade Relations 

The impact of OCTs adhering to EU FTAs or EPAs depends to a large extent on: 

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1. 

The proximity and interest of the EU's trading partners in developing trade relations 

with OCTs. 

2. 

3. 

The duties and/or quotas applicable to the OCTs involved. Even if one assumes that 
access  to  the  EU  would  remain  duty  free,  quota  free,  access  to  the  EU's  trading 
partners would be subject to negotiation and vary by partner. This would give rise to 
unspecified new export opportunities, but which are currently constrained by limits to 
OCT export capacity and diversification. 

The  precise  degree  and  definition  of  OCT  liberalisation  vis-à-vis  the  EU  and  the 
EU's trading partner. This would also be subject to negotiation and vary from case to 
case.  One  would  have  to  distinguish  competition/competitiveness  and  net  revenue 
effects.  Cheaper  imports  would  put  pressure  on  OCT  local  industry,  some  of  which 
might suffer negative consequences, but they would lead to lower costs for consumers 
and producers as a whole. Customs revenues might go down while alternative sources 
of revenue collection could increase, especially if revenue reform can be implemented. 

4. 

The effectiveness of any capacity building measures. 

An overview of the factors determining the likeliness of individual OCTs being included 
another EU trade agreement is given in 12.10. 

Rules of Origin 

The integration or association of OCTs to EU trade agreements that have been concluded 
or  are  under  negotiation  is  likely  to  promote  OCT  insertion  in  their  regional  economic 
environments,  as  the  rules  of  origin  applicable  to  OCTs  would  be  the  same  as  those 
applying to their neighbouring countries or regions, within the joint set-up of the FTA or 
EPA in question. Trade between the countries and territories included in the agreement is 
likely to increase as cumulation possibilities could provide an incentive to set up regional 
production  chains.  Such  benefits  would  most  likely  accrue  to  larger  OCTs,  such  as  New 
Caledonia, French Polynesia, Aruba and Curaçao. 

However, these beneficial effects may not come about if the rules of origin are not adapted 
to  the  specific  needs  and  sensitivities  of  the  OCTs  concerned.  When  joining  an  EPA  or 
FTA, OCTs would be submitted to a set of rules of origin which were negotiated without 
them in mind. Thus, and unless the OCTs would be able to reach an  understanding with 
other trade partners and address a common request to the EU for a review of the rules of 
origin  that  were  negotiated,  the  OCTs  would  have  to  comply  with  rules  of  origin  which 
may not be fully adapted to their specific situation. However, a few strategic adaptations 
might go a long way in meeting OCT interests given the limited range of their exports. 

The improved product specific rules under the EPAs would offer OCTs improved or new 
export opportunities in the fishery, agricultural and textile sectors. In its reply to the trade 
questionnaire  on  specific  trade  interests,  which  the  European  Commission  sent  to  OCTs 
and  their  Member  States  in  the  Summer  of  2011,  the  British  Virgin  Islands  indicated  to 
have an interest in developing textile and garment production. However, for other products 
of interest to the OCTs, the EPA rules may still be too stringent.  Consequently,  regional 
integration  in  an  EPA  may  therefore  offer  only  limited  advantages  and  might  not 
compensate  the  adjustment  costs  and  other  costs  attached  to  membership  of  these 
agreements (reform of tariff and revenue policy, etc.). 

EN 

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Some of the conditions laid down in the general provisions would be improved under the 
regime of an EPA or FTA. Under the EPAs the definitions of wholly obtained products and 
minimal operations would also be improved for OCTs. Neither change would have a major 
impact, apart from the increased transparency and user friendliness they have introduced. 
For fish caught outside of territorial waters it would no longer be necessary for the crew to 
have the nationality of an OCT, an ACP country or an EU Member State. This would make 
it  easier  for  OCTs  to  comply  with  the  rules  in  the  case  of  EPAs  or  other  relevant  FTAs 
where such a rule exists. As the certification of origin would still be undertaken by OCT 
authorities,  OCT  exporters  would  continue  to  face  high  compliance  costs.  However,  the 
alternative system of exporter certification might also be introduced, at least under rules of 
origin review for the EPAs. In any event it will remain untested until 2017. 

It remains to be seen whether by including them in the Pacific EPA the OCTs in the region 
would  be  able  to  really  benefit  from  the  global  sourcing  provision.  In  order  for  this  to 
happen, French Polynesia and New Caledonia, the two OCTs most likely to benefit from 
this provision, would need to invest in the development of fish processing industries. The 
profits which such operations could generate may not be substantial enough to offset the 
costs of setting up the industries themselves and/or the costs linked to membership of the 
EPA. 

Where the Pacific OCTs would be able to maximize the opportunities offered by the EPA 
and  develop  a  fisheries  and  processing  sector,  the  social  and  economic  impact  of  their 
inclusion on the EU is likely to follow the same trends as the ones previously identified for 
this specific EPA. The inclusion of OCTs in the Pacific EPA could contribute to attracting 
EU investment in the Pacific OCTs and the region. Such investment may lead to a decrease 
in investment in other markets where the EU is established (GSP+ and ACP countries) in 
other to create liquidity for investment and reinforce the shifting trend in supply for the EU 
industry.  

The EU's tuna  processing industry  could benefit from policy option 4  if it  would lead to 
more  favourable  supply  conditions  of  raw  materials  (OCTs  and  Pacific  ACP  countries 
would  be  competing  for  the  same  supply  in  a  scenario  of  limited  tuna  stocks),  a 
competitive  workforce  in  the  OCTs  and  a  certain  vertical  integration  of  the  different 
industries.  Ifpolicy  option  4  would  lead  to  these  developments,  it  could  result  in  a 
controlled flow of tuna exports to the EU, notably of tuna loins, that would supply the EU 
processing industry. Thus, the impact on employment for the EU tuna processing industry 
would be limited as the situation in this sector depends on the degree of concentration of 
the  loins  processing  and  the  economies  of  scale  that  could  be  created.  However,  these 
developments  might  negatively  affect  the  EU  fleet  (operating  in  the  Atlantic  and  Indian 
Oceans) providing frozen tuna to the EU processing industry (as opposed to tuna loins). 

In a more negative scenario, the EU's tuna harvesting and processing industries could both 
be negatively impacted through job loss and the closing of factories in certain EU Member 
States and the cessation of production activities. 

The wide range of cumulation possibilities under the EPA would not only allow the OCTs 
to maintain and develop their current trade links with ACP countries and the EU, but also 
may offer the opportunity to develop economic relations outside of this group (e.g. Central 
and Latin America) and engage in regional production of goods aimed at the EU market, at 
the condition that this possibility is explicitly foreseen in the EPA. However, the two EPAs 

EN 

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   EN 

 
which  are  of  most  interest  to  the  OCTs,  the Caribbean and Pacific  EPAs,  do not  include 
such possibility. Thus, the potential benefits of this kind of measure would only materialise 
for  OCTs  if  and  when  in  the  future  the  parties  to  these  EPAs  would  decide  to  have  it 
included  in  their  agreement.  Until  that  date,  the  Caribbean  EPA  offers  the  possibility  of 
cumulation with neighbouring developing countries (in Latin America) on request. 

The effects of a possible, but currently unlikely inclusion of Saint-Pierre et Miquelon in the 
CETA  with  Canada,  would  have  no  noticeable  impact  beyond  the  one  described  in  the 
Sustainability Impact Assessment that was made of the CETA negotiations119. As indicated 
above, the impact of this agreement on EU overall employment is likely to be limited. 

The  impact  of  including  Greenland  in  the  same  agreement  might  have  a  bigger  impact. 
Although Greenland already has duty free quota free access to the EU market seemingly it 
has resorted in the past to derogations on rules of origin in order to have access to more 
competitive  Canadian  raw  materials.  Taking  into  account  that  Greenland  has  a 
consolidated  performing  shrimp  industry,  the  EU  as  its  primary  market  for  fishery 
products,  a  large  volume  of  competing  fishery  exports  to  the  EU,  a  vertically  integrated 
industry,  economies  of  scale,  a large  share  of  the  EU  imports  for  some  fishery  products, 
existing  EU  distribution  networks  in  combination  with  the  additional  advantage  of  its 
relatively close proximity to the EU market, the social and economic impacts on the EU of 
a possible cumulation with Canada could be larger than the ones estimated in the external 
study  mentioned  above.  In  this  regard,  in  terms  of  employment,  the  impact  could  be 
negative for the EU producers of like products. This impact may be more pronounced in a 
number of EU Member States which are already experiencing difficulties as a consequence 
of  such  imports  (including  full  cessation  of  activity  in  some  sectors,  reduction  of 
production  activities  in  other  countries  combined  with  drop  in  prices).  Inversely,  the 
impact for the EU fish processing industry is likely to be positive in terms of supply and 
probably in terms of employment depending of the presentation of the final product. 

As regards derogations, the absence in the Caribbean EPA of the provision allowing the 
granting of the derogation when the threshold of 45 % OCT/ACP added value to the non-
originating materials is met, is likely to make it more difficult for Caribbean OCTs to be 
granted the derogations, compared to the current rules of origin. 

Services and Establishment 

The inclusion of OCTs in EPAs or FTAs would entail OCT-specific services commitments 
both  vis-à-vis  third  countries  and  the  EU.  Apart  from  legal  considerations,  capacity 
constraints both for negotiations as well as for implementation of the commitments would 
be  a  real  concern  for  most  OCTs  as  negotiations  regarding  trade  in  services  and 
establishment are very burdensome and time consuming.  

The treatment given by OCTs would have to be negotiated with multiple partners (EU and 
third  partners)  and  for  each  OCT  separately.  This  would  mean  double  negotiations  for 
OCTs as they would have to decide which treatment they give to the EU as well as which 
treatment they would give in every sector for the other partner(s). Furthermore, as the third 
partner(s) would have to extend to the OCTs the treatment it gives the EU – an amendment 

119  

KIRKPATRICK et al. (2011). 

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   EN 

 
                                                 
to  the  initial  agreement  in  which  it  may  not  have  a  high  interest  –  this  treatment  would 
probably have to be renegotiated as well to compensate for the inclusion of OCTs.  

This means that three sets of negotiations would have to be foreseen regarding:  

- 

- 

- 

the concession OCTs would need to make towards the EU 

the concessions they would need to make towards the other partner(s) 

the concessions the EU would need to make towards the other partner(s) in exchange 
of the inclusion of OCTs 

Market access commitments would probably improve both for OCTs and their FTA/EPA 
partners. As the negotiating leverage of OCTs would be low, it could be that OCTs would 
have  to  take  more  extensive  commitments  than  the  other  partner  –  unless  the  concerned 
Member States would agree to compensate for this themselves; which is unlikely given the 
already far reaching liberalisations they have offered in bilateral contexts.  

Hence, the economic and social impacts of this option would depend on the outcome of a 
hypothetical  negotiation  and  actual  additional  market  opening  occurring  in  addition  to 
current  autonomous  liberalisation.  OCTs  would  benefit  from  further  opening  of  the  EU 
market  and  other  markets  their  service  providers  and  investors  both  in  the  services  and 
non-services are 
as.  However,  implementing  these  commitments  in  the  long  list  of 
services  sectors  could  be  very  costly.  Also,  as  the  interest  of  investors  of  neighbouring 
countries  in  OCT  markets  is  likely  to  be  higher  than  the  interest  of  EU  investors,  OCTs 
opening their market for the neighbours might bring in more foreign direct investment or 
temporary service providers, depending on which and how many sectors every OCT will 
choose to liberalise.  

As  mentioned  above,  OCTs  suffer  from  low  administrative  capacity  for  negotiations  and 
low  negotiating  leverage,  meaning  that  close  cooperation  and  support  with  the  Member 
States  to  which  they  are  linked  wouldl  be  needed  also  during  negotiations  with 
neighbouring partners in order to ensure WTO compatibility of all agreements and to avoid 
liberalisation of sectors where domestic regulation has not been sufficiently developed to 
ensure consumer protection in sectors such as financial services, health, education, tourism 
etc. 

The environmental impact of opening to a neighbouring country could also be potentially 
higher  than  when  opening  to  the  EU  alone,  as  for  the  latter  one  could  expect  that  the 
preferred  mode  of  supply  would  be  the  so  called  mode  1,  i.e.  cross-border  trade  over 
communication channels, while for neighbouring countries actual movement of people and 
resulting transport related impacts can be expected. The net impact (compared to the status 
quo and the improved arrangements under option 3) would differ by OCT, the agreement 
to which it would be associated and the situation in the OCTs in specific services sectors 
prior to negotiations. 

Trade Related Cooperation and Support 

While this policy option 4 may stimulate the integration of OCTs in regional cooperation, 
it could lead to OCT priorities and needs being given less attention as the trade agreements 
were  conceived  with  other  trade  partners  in  mind.  The  concerns  of  the  bigger  trade 
partner(s),  and  in  case  of  the  EPAs,  the  developing  partners  would  likely  dominate  the 

EN 

176 

   EN 

 
trade related cooperation. For those OCTs that would join or would be associated to a trade 
agreement,  policy  option  4  would  come  down  to  the  end  of  the  privileged  relations 
between  the  OCTs  and  the  EU.  This  would  be  the  case  for  all  OCTs  if  policy  option  1 
would  be  retained  for  those  for  which  integration  into  another  agreement  would  not  be 
possible. 

Those  OCTs  that  would  join  EPAs  would  gain  access  to  nominally  larger  amounts  of 
financial assistance under the  11th  European  Development  Fund, but they would have no 
guarantee  that  sufficient  financial  resources  be  dedicated  to  cover  their  needs  as,  here  as 
well,  the  interests  of  the  bigger  partners  and  the  developing  countries  may  prevail.  This 
effect may be counteracted if the OCTs would ally themselves within their region with the 
ACP States such as Antigua and Barbuda, Fiji, Guyana and Palau, which are Small Island 
Developing  States  and  face  similar  challenges  as  the  OCTs120.  While  gaining  access  to 
these  funds,  the  OCTs  would  be  cut  off  from  potential  other  sources  of  financing  from 
which  they  benefitted  under  the  OAD,  such  as  the  internal  horizontal  programmes  and 
budget lines of the EU. This would be the case as well for OCTs that would be integrated 
or associated to trade agreements. However, for them this loss would not be compensated 
by access to additional funds under external programmes covering their region. 

Policy  option  4  might  therefore  not  be  conducive to strengthening the OCT capacities to 
exploit market access opportunities in the EU and thus to close economic ties between the 
OCTs and the EU. It could have a positive impact on the OCTs' trade relations with their 
developing and developed countries, but these benefits might be offset by the costs which 
adhering to the agreement might bring. 

Via  the  inclusion  of  the  OCTs  in  the  trade  and  trade  related  dialogue  with  other  trade 
partners and providing support, the EU could continue to have influence on OCT policies, 
regulatory  models  and  the  like,  albeit  in  a  less  direct  manner.  Implementation  of  policy 
option 4 would mean that OCTs would mainly be considered as external stakeholders and 
not as outposts of the EU in the world. 

Legal and Policy Framework 

By integrating or associating OCTs to other trade agreements, some of the objectives of the 
OCT/EU association ight be met. However, this would be done outside of the association 
as such. If for those OCTs for which integration into another trade agreement would not be 
an  option,  policy  option  1  would  be  retained,  then  the  combined  effect  of  both  policy 
options would be the end of the OCT/EU association. 

By integrating OCTs in other trade agreements the associated countries and territories with 
constitutional links to Member States would legally and effectively cease to be OCTs. As 
the  implementation  policy  option  ight  result  in  the  EU  having  to  work  out  solutions  for 
setting  up  three  different  types  of  relations  of  a  group  of  more  than  twenty  entities,  the 
legal process would be very complicated and is also likely to result in confusion as regards 
to  their  status  and  that  of  their  inhabitants.  Certain  rules  currently  contained  or  being 
considered  in  the  different  agreements  might  not  apply  to  OCT  inhabitants  to  the  extent 
that they are EU citizens. Thus, the implementation of policy option 4 could amplify the 
tension that exists between the territorial and personal scope of the TFEU. 

120  

EN 

the  UN 

For 
rep/ohrlls/sid/list.htm (accessed 04/11/2011). 

list  of  Small 

Island  Developing  States,  see:  http://www.un.org/special-

177 

   EN 

 
                                                 
While  some  OCTs  might  win  in  the  process, those OCTs for which integration is not an 
option  could  lose  out,  if  the  alternative  option  is  discontinuation  of  the  association. 
However,  if  option  2  or  3  could  apply  to  those  OCTs  remaining  outside  the  EU’s 
agreements, the impacts would be as described above. 

Implementing this policy option might translate some of the political orientations regarding 
the  revision  of  OCT/EU  relations  which  the  Council  laid  down  in  its  conclusions 
(16710/09) of 22 December 2009 in endorsement of the three objectives proposed by the 
Commission in its Communication COM(2009) 623, but not in the form foreseen. 

EN 

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   EN 

 
7.4.  Weighing of the Policy Options 

Effects 

Option 1 

Discontinuation 

Option 2 

Roll Over 

Option 3 

Option 4 

Improved Asymmetric Relations 

Other Trade Relations 

Mark 

-- 

Mark 

0 / - 

Mark 

++ 

Mark 

+ / - 

Overall objectives of the OAD 

OCT sustainable 
social & 
economic 
development 

Loss of privileged EU market access 
may adversely affect the OCTs' 
socioeconomic development; no clear 
impact on the environment; no support 
to mitigate the impacts 

Free market access to the EU & 
untargeted cooperation & support are 
maintained; but this may not be 
sufficient to prevent stagnation or 
worsening of the OCTs' socioeconomic 
development no clear impact on the 
environment unless dedicated support 
is foreseen 

Improved market access conditions 
(amongst others through simplified 
trade rules) for goods & services  & 
targeted support could contribute to 
maintaining OCT growth & 
socioeconomic development; no clear 
impact on the environment unless 
dedicated cooperation & support is 
foreseen 

OCTs inserted in regional economic 
environment, cooperating with the EU & 
neighbouring countries; may have 
positive impacts on the socioeconomic 
development of the OCTs involved but 
not for those OCTs left or staying outside 
such arrangements; no clear impact on 
the environment unless dedicated 
cooperation is foreseen in the FTA 

Mark 

-- 

Mark 

+ / 0 / - 

Mark 

++ 

Mark 

+ / - 

OCT/ EU 
economic ties 

Loss of preferences is likely to affect 
OCT exports to the EU, thus weakening 
economic ties 

OCTs continue to benefit from export 
opportunities in the EU market; 
increase of exports and economic ties 
possible if trade is a political priority 
for cooperation; risk of stagnation & 
worsening of relative position viz. their 
competitors (preference erosion) 

Improved market access conditions 
may allow OCTs to better exploit 
existing export opportunities & explore 
new economic activities; targeted 
cooperation & support facilitate this 
process of strengthening OCT/EU 
economic ties 

OCT insertion in an agreement with the 
EU & third partner(s) likely to affect & 
alter OCT/EU economic ties, depending 
on the effects of trade reciprocity with 
the EU & third partners respectively: 
substitution of OCT trade with the EU by 
regional trade or increase of OCT trade 
with the EU 

EN 

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EN 

 
  
 
Effects 

Option 1 

Discontinuation 

Option 2 

Roll Over 

Option 3 

Option 4 

Improved Asymetric Relations 

Other Trade Relations 

OCT 
competitiveness 

Mark 

-- 

Mark 

+ / 0 

Mark 

++ 

Mark 

+ / - 

Overall objectives of the OAD (ctd.) 

Increased loss of competitiveness due 
to loss of both preferences and 
cooperation with the EU 

Possibility to maintain or increase 
competitiveness if trade is a political 
priority for cooperation, but not 
because of improved market access 
conditions 

Increased competitiveness through 
improved market access conditions & 
targeted cooperation & support 

Positive or negative effects on 
competitiveness depending on whether 
or not FTA allows them to exploit their 
advantages & adapt to increased 
competition from both EU and third 
countries, which may work with lower 
wages and standards 

OCT resilience  

Mark 

-- 

Mark 

+ / 0 

Mark 

++ 

Mark 

+ / - 

Increased vulnerability to economic 
shocks due to loss of both preferences 
and cooperation with the EU 

Possibility to stimulate resilience if 
trade is a political priority 

Improved market access & cooperation 
& support may contribute to OCT 
capacity to deal with economic shocks 

OCT  insertion  in  an  agreement  with  the 
EU  &  third  partner(s)  may  diversify 
export markets and products, but greater 
trade  openness  may  also 
increase 
vulnerability or lead to adjustment 

General objectives trade and economic cooperation 

OCT regional 
integration 

Mark 

+ / - 

Mark 

+ / 0 / - 

Mark 

+ 

Mark 

++ 

May lead to OCT/EU trade relations 
being replaced by other trade relations 
including regional ones 

No real stimulus for OCTs to engage 
with their neighbours, unless dedicated 
cooperation & support is foreseen 

Aligning of OCT rules of origin with 
other sets of rules of origin & dedicated 
cooperation & support may stimulate 
regional integration 

OCTs fully inserted in a coherent 
integration scheme 

EN 

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EN 

 
  
 
Effects 

Option 1 

Discontinuation 

Option 2 

Roll Over 

Option 3 

Option 4 

Improved Asymetric Relations 

Other Trade Relations 

OCT economic 
diversification 

OCT 
export/trading 
capacity 

Mark 

-- 

Mark 

+ / 0 / - 

Mark 

++ 

Mark 

+ / - 

General objectives trade and economic cooperation (ctd.) 

Reduced  export  opportunities  are  a 
disincentive to develop new sectors; no 
support available to do so 

in 

No  fresh  incentive  for  OCTs  to  make 
access 
existing  market 
of 
use 
opportunities 
the  EU  &  other 
markets  to  develop  new  sectors  & 
products  to  be  exported  to  the  EU; 
unless dedicated cooperation & support 
is foreseen 

New  export  opportunities  in  the  EU 
would  present  themselves  to  OCTs, 
allowing  them  to  explore  &  possibly 
develop new sectors; with possible EU 
support 

in 

the 

regional 

Positive  impacts  where  the  insertion  of 
economic 
OCTs 
environment & increased reciprocity lead 
to  the  OCTs  being  able  to  develop  new 
markets  &  products;  possibly  negative 
impacts  if  there  is  no  regional  demand 
for  OCT 
increased 
products  & 
competition  on  other  products  following 
regional liberalisation 

Mark 

-- 

Mark 

+ / 0 

Mark 

+ 

Mark 

+ / - 

Reduced market access may affect 
OCT export & trading capacity, which 
would be no longer supported 

No fresh impetus for OCT trading 
capacity; unless dedicated cooperation 
& support is foreseen 

Targeted cooperation & support may 
positively impact OCT trading capacity 

Depends on the content of the 
cooperation & support provided by the 
EU and possibly arrangements 
negotiated with the third partner(s) 

Mark 

-- 

Mark 

+ / 0 

Mark 

+ 

Mark 

+ 

Convergence 
with EU acquis 

In the absence of cooperation & 
support, no EU involvement in OCT 
policies or legal frameworks 

Where trade & trade related matters 
become part of the OCT/EU 
cooperation, the EU may stimulate 
convergence of OCT legislation with 
the EU acquis 

Targeted support could be made 
available to help OCTs to upgrade 
legislation in relevant areas in line with 
the EU acquis 

Targeted support could be made 
available to help OCTs to upgrade 
legislation in relevant areas in line with 
the EU acquis, which may also be 
promoted through the trade agreements 
involved 

EN 

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EN 

 
  
 
Effects 

Option 1 

Discontinuation 

Option 2 

Roll Over 

Policy Context 

Option 3 

Option 4 

Improved Asymetric Relations 

Other Trade Relations 

Alignment trade 
& economic 
cooperation/ 
developments EU 
trade policy 

Promotion of 
mutual interests 
& reciprocity 

Mark 

-- 

Mark 

- 

Mark 

++ 

Mark 

++ 

Third country treatment would go 
against the trend in EU trade policy to 
strengthen trade & economic 
cooperation with its privileged partners 

OCT trade & economic cooperation 
may not be in tune with the latest 
developments in EU trade policy 

OCT trade & economic cooperation 
would be in tune with the latest 
developments in EU autonomous trade 
policy 

OCT trade & economic cooperation in 
tune with the latest developments in EU 
bilateral trade policy 

Mark 

-- 

Mark 

0 

Mark 

+ 

Mark 

++ 

No mutual interests defined 

Notions of mutual interests & 
reciprocity would remain 
underdeveloped due to lack of focus 

Activation of certain parts of the 
association's trade & economic 
cooperation, as well as greater targeting 
of that cooperation through the 
adoption of a work programme could 
lead to greater reciprocity, better 
identification of mutual interests (e.g. 
raw materials) 

EU trade agreements provide a coherent 
framework for dialogue & cooperation 
regarding mutual interests on a reciprocal 
basis 

Facilitation of 
the OCT/EU 
dialogue on trade  No dialogue mechanisms would be 

Mark 

-- 

foreseen 

Mark 

+ / 0 

Mark 

+ 

Mark 

+ / - 

Dialogue on an ad hoc basis would be 
maintained 

Joint work programme would provide 
focus & facilitate exchanges 

OCT concerns may or may not be well 
reflected in the dialogue in foreseen in 
the relevant trade agreements 

Adaptation to 
particularities of 
the OCT/EU 
relations 

Mark 

-- 

Mark 

0 

Mark 

+ 

Mark 

+ / - 

Unadjusted treatment, given the socio-
economic difficulties & fragility of 
OCTs 

Concerns about OCT/EU association 
not being enough adapted to OCT 
particularities  

Particularities of OCT/EU relations 
would be better reflected 

OCT insertion in an agreement with the 
EU & third partner(s) and reciprocity 
would reflect regional realities but would 
not be adapted to the needs of most 
OCTs; OCTs included in a regional trade 
agreement would have to compete for 
attention 

EN 

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EN 

 
  
 
Effects 

Option 1 

Discontinuation 

Option 2 

Roll Over 

Option 3 

Option 4 

Improved Asymetric Relations 

Other Trade Relations 

Facilitation of 
synergies with 
other EU policies  No synergies with other EU policies 

Mark 

-- 

Policy Context (ctd.) 

Mark 

+ / 0 

Mark 

+ 

Mark 

+ 

Policy coherence would be ensured 
through OAD implementation; ad hoc 
synergies through OCT participation in 
horizontal programmes 

Policy  coherence  would  better  be 
ensured  through  the  OAD  text  and 
implementation; 
facilitation 
through  promoting  OCT 
synergies 
participation in horizontal programmes 

active 

Coherence with the EU's bilateral trade 
policy would be actively pursued. No 
OCT participation in internal horizontal 
programmes, except for those open to 
individual EU citizens, OCT eligibility 
for external horizontal programmes  

EN 

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EN 

 
  
 
 
7.5. 

Preferred Option 

Based on the analysis and comparison of the different policy options above, policy option 
3 seems to be the policy option that, for OCTs as a whole, would best reflect: 

(a) 

the purpose and overall objectives of the OCT/EU association as set out in 
Part  IV  of  the  TFEU  and  as  suggested  in  Council  Conclusions  (16710/09)  on  the 
EU’s relations with OCTs; 

(b) 

(c) 

the  general  objectives  for  OCT/EU  trade  and  economic  cooperation  into 

which the association's purpose and overall objectives are translated; 

the  shared  ambition  of  OCTs  and  the  EU  to  modernise  the  OCT/EU 
association,  and  to  establish  a  more  reciprocal  partnership,  based  on  mutual 
interests and taking into account the various structural challenges OCTs  face (see 
Chapter 2). 

Other  policy  options  would  not  translate  these  objectives  as  well  as  policy  option  3. 
Neither  would  they  present  as  good  a  balance  of  social,  economic  and  environmental 
impacts as policy option 3. 

Policy Option 1: Possibly Contrary to OCT sustainable development  

Contrary  to  policy  option  3,  policy  option  1  is  unlikely  to  contribute  to  achieving  the 
overall objectives of the OAD and the general objectives of OCT/EU trade and economic 
cooperation;  unless  one  would  assume  that  these  objectives  would  be  reached  by  the 
sudden  exposure  of  OCT  economies  to  increased  competition  by  discontinuing  trade 
preferences  and  cooperation,  which  would  force  OCT  governments  to  review  their 
economic  policies  in  view  of  maintaining  the  competitiveness  of  OCT  businesses.  The 
inherent  structural  problems  OCTs  face,  such  as  the  size  of  their  populations  and 
economies  and  the  limited  capacities  available  to  them,  suggest  that  such  a  scenario  is 
unrealistic. 

Instead, it is more likely that policy option 1 would negatively impact the position of OCTs 
in global, regional and EU markets. Due to the loss of preferential access to the EU market, 
OCT exports to the EU are likely to fall, with all possible negative impacts on employment 
that  this  might  entail.  Thus,  rather  than  providing  the  necessary  levers  for  promoting  the 
sustainable social and economic development of OCTs, policy option 1 would more likely 
result in a declining social and economic trend for OCTs. 

Indirectly, policy option 1 could have a positive impact on regional cooperation as OCTs 
might  want  to  replace  the  OCT/EU  association  by  cooperation  schemes  with  other  third 
partners. Where this would occur, the most vulnerable OCTs could be left in the cold for 
lack of sufficient assets which would make them interesting as a partner to cooperate with. 
In the absence of a framework for OCT/EU dialogue, policy option 1 would also entail that 
the EU would not be able to promote its values and interests in the world via its relations 
with OCTs. As it would not actively engage with OCTs, the EU would not be involved in 
OCT trade related policies in which it may have a particular interest, such as the access to 
raw materials or the respect of labour standards. 

EN 

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   EN 

 
 
Policy Option 2: Likely to Lead to Stagnation 

As was discussed in Chapter 5, the present OCT/EU association arrangements have proven 
to be beneficial for OCT social and economic development, by providing free access to the 
large  EU  market  and  the  possibility  of  support  for  exploiting  the  wide  range  of  export 
opportunities  this  represents.  An  external  evaluation  study  that  was  conducted  in  2011 
found that the  OCT/EU  cooperation in the period  1999-2009 to  have  been coherent with 
both  the  association's  objectives  and  the  OCTs'  political  priorities  and  concluded  that  no 
marked contradictions or inconsistencies had occurred between OCT/EU cooperation and 
other  EU  policies.  In  light  of  this  assessment,  policy  option  2  could  legitimately  be 
considered as a valid option for the future OCT/EU association relation.  

However,  the  present  arrangements  for  the  OCT/EU  association  date  back  to  2001,  and 
underwent  only  some  small  amendments  in  2007.  Since  then,  the  trade  and  economic 
environments  in  which  OCTs  operate  have  been  changing  substantially  with  the 
multiplication  of  free  trade  negotiations  and  agreements  by  major  trading  countries  and 
blocks such as the EU, the US and Canada (thus contributing to OCT preference erosion) 
and the corollary progress of international cooperation of trade related areas such as public 
procurement,  intellectual  property  rights  and  sustainable  development.  While  the  present 
OCT/EU association arrangements already provide opportunities for the OCTs and the EU 
to cooperate on these issues, these are either rudimentary or largely remain inactive. 

Rolling over the present OCT/EU arrangements might not also be fully consistent with the 
increased emphasis that has been put on the necessary coherence between EU external and 
internal policies following the entry into force in December 2009 of the amendments to the 
Treaties on the European Union and on the Functioning of the European Union that were 
introduced by the Lisbon Treaty. Policy option 2 would not be fully in line with the Europe 
2020  Agenda  that  was  adopted  in  March  2010  as  it  would  mean  that  rather  than 
introducing a more reciprocal partnership, in which EU interests could be better taken into 
account,  the  donor/beneficiary  rationale  which  has  traditionally  underpinned  OCT/EU 
relations would be maintained. 

While it would be possible to work towards the achievement of the three central objectives 
of competitiveness, resilience and cooperation under policy option 2, this would have to be 
done without OCTs being able to benefit from some of the innovative elements that were 
recently  introduced  or  are  considered  to  be  in  other  fields  of  EU  trade  policy:  improved 
market access conditions through a reform of the rules of origin, a reduction of non-tariff 
barriers  or  further  EU  market  opening  in  the  services  sectors.  While  OCTs  would  not 
benefit  from  these  innovations,  other  EU  partners,  including  OCT  competitors  would. 
Consequently, the positive effects that for instance OCT/EU cooperation on trade and trade 
related issues may have on OCT competitiveness may be cancelled out by the OCTs' loss 
of relative competitiveness vis-à-vis other EU trade partners. Hence, policy option 2 could 
be  an  option  in  which  OCTs  would  stagnate  economically  and  socially,  rather  than 
maintaining the status quo. 

Policy Option 4: Theoretically Possible Only for a Few 

Though  it  would  be  a  possibility  to  consider  policy  option  4  for  structuring  the  future 
OCT/EU trade relations, it is unlikely that it could constitute a systemic solution covering 

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all  OCTs.  Instead,  it  would  likely  be  a  policy  option  that  would  befit  only  a  few  OCTs. 
Implementation of this policy option would be subject to the following conditions: 

(a) 

OCT political commitment to regional cooperation and integration and their 

long term anchoring in their regional economic environment; 

(b) 

(c) 

(d) 

OCT economic interest in regional cooperation and integration; 

legal and institutional limits to OCT integration; 

EU  and  third  partner  political  will  to  promote  OCT  inclusion  in  other  EU 

trade agreements. 

As  discussed  in  Chapter  3  of  this  paper,  OCT  engagement  with  their  neighbours  and 
interest in further regional cooperation and integration is uneven. Montserrat, for instance, 
is deeply involved in regional cooperation and integration processes in the context of the 
OECS  and  CARICOM  and  has  repeatedly  expressed  an  interest  to  take  further  steps. 
However,  other  OCTs  have  no  opportunities  and/or  interest  in  taking  part  in  regional 
cooperation, amongst others due to their remoteness (e.g. Saint Helena, Ascension Island 
and Tristan da Cunha) or for other reasons, including political reasons (Falkland Islands). 

The OCTs' own economic analysis would also be determinant in their choice in favour of 
inclusion  in  other  EU  trade  agreements.  OCTs  might,  at  the  end  of  the  day,  come  to  the 
conclusion  that  the  costs  of  membership  of  another  EU  trade  agreement  outweigh  the 
benefits of this membership. In those cases where OCT and third partner political interests 
and  economic  analyses  would  meet,  policy  option  4  may  effectively  contribute  to  the 
overall  objectives  of  the  OCT/EU  association  and  its  trade  and  economic  cooperation 
component; even if it would be implemented by other means than the type of arrangements 
currently provided in the OAD. 

As explained in the sections of this chapter regarding policy option 4, its implementation 
would  be  a  heavy  and  complex  process  for  OCTs,  their  Member  States,  the  EU  trade 
partner(s) and the EU alike. This process would have to be reiterated for every single trade 
agreement  that  would  need  to  be  amended  to  include  specific  OCTs.  Those  OCTs  that 
would  be  included  in  one  of  the  EU's  other  bilateral  agreements  might  run  the  risk  of 
facing heavy competition by the  larger trade  partner(s) for  having their  voices heard  and 
concerns taken into account.  

In addition, the compatibility of policy option 4 with EU and international law would need 
to be checked. The substantial overhaul of OCT/EU relations that this option would imply 
might mean that an effective end would be put to the current association to the EU of the 
OCTs concerned. Thus, policy option 4 may lead to a multiplication of the types of trade 
relations  the  EU  would  maintain  with  OCTs;  even  if  this  would  be  mitigated  by  their 
insertion in existing trade agreements. 

Finally,  a  variant  of  this  option,  which  would  combine  the  possible  benefits  of  policy 
options  3  and  4.  It  would  consist  of  the  OCTs,  represented  by  their  Member  States, 
negotiating  free  trade  agreements  with  the  EU's  trade  partner(s),  independently  from  the 
agreement  the  latter  has  with  the  EU.  This  would  create  a  trilateral  trade  configuration, 
wherein  the  OCTs  would  continue  to  benefit  from  the  treatment  grants  them  on  the  one 
hand  and  the  one  they  get  from  the  other  third  partner(s)  on  the  other.  In  this  scenario, 
OCT  concessions  would  only  have  to  be  made  towards  the  third  partner(s).  Such 

EN 

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negotiations would not involve the EU and thus the ramifications of this scenario have not 
been taken into account in the context of this paper. 

EN 

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LIST OF REFERENCES 

Council Decisions, Regulations and Other Texts 

-  COUNCIL,  Regulation  (EEC)N°  2658/87  of  23  July  1987  on  the  tariff  and 
statistical  nomenclature  and  on  the  Common  Customs  Tariff  (OJ  L  256, 
07/09/1987, p. 1), as last amended by Council Regulation (EC) No 254/2000 of 31 
January 2000 (OJ L 28, 03/02/2000, p. 16). 

-  COUNCIL,  Decision  (2001/882/EC)  of  27  November  2001  on  the  association  of 
the  OCTs  with  the  European  Community  (OJ  L  314  of  30  November  2001)  as 
amended by Council Decision (2007/249/EC) of 19 March 2007 (OJ L 109 of 26 
April 2007) 

-  COUNCIL,  Decision  (2006/526/EC)  of  17  July  2006  on  relations  between  the 
European  Community  on  the  one  hand,  and  Greenland  and  the  Kingdom  of 
Denmark on the other(OJ L 208 of 27 July 2006)  

-  COUNCIL,  Regulation  (EC)  N°  1528/2007  of  20  December  2007  applying  the 
arrangements  for  products  originating  in  certain  states  which  are  part  of  the 
African, Caribbean and Pacific (ACP) Group of States provided for in agreements 
establishing, or leading to the establishment of, Economic Partnership Agreements 
(OJ L 348, 31 December 2007). 

- 

Internal  Agreement  between  the  representatives  of  the  Member  States,  meeting 
within  the  Council,  on  the  financing  of  Community  aid  under  the  multiannual 
financial framework for the period 2008 to 2013 in accordance with  the  ACP-EC 
Partnership  Agreement  and  on  the  allocation  of  financial  assistance  for  the 
Overseas Countries and Territories to which Part Four of the EC Treaty applies (OJ 
L 247, 9 September 2006, p32). 

-  COUNCIL,  Regulation  (EC)  N°  1005/2008  of  29  September  2008  establishing  a 
Community  system  to  prevent,  deter  and  eliminate  illegal,  unreported  and 
unregulated fishing, amending Regulations (EEC) No 2847/93, (EC) No 1936/2001 
and  (EC)  No  601/2004  and  repealing  Regulations  (EC)  No  1093/94  and  (EC)  No 
1447/1999 (OJ L 286, 29 October 2008, p. 1). 

-  COUNCIL,  Regulation  (EC)  N°  732/2008  of  22  July  2008  applying  a  scheme  of 
generalised tariff preferences for the period from 1 January 2009 to 31 December 
2011  and  amending  Regulations  (EC)  No  552/97,  (EC)  No  1933/2006  and 
Commission Regulations (EC) No 1100/2006 and (EC) No 964/2007.  

-  COUNCIL,  Regulation  (EC)  N°  1528/2007  of  20  December  2007  applying  the 
arrangements  for  products  originating  in  certain  states  which  are  part  of  the 
African, Caribbean and Pacific (ACP) Group of States provided for in agreements 
establishing, or leading to the establishment of Economic Partnership Agreements, 

-  COUNCIL,  Conclusions  (16710/09)  of  22  December  2009  on  the  EU’s  relations 

with Overseas Countries and Territories (OCTs), 

Commission Documents (Communications, Green Papers, Working Documents) 

EN 

188 

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-  COMMISSION,  Communication  COM(97)  402  of  23  July  1997  on 

the 

Management of Preferential Tariff Arrangements. 

-  COMMISSION, Communication COM(1999) 163 of 20 May 1999 on the status of 

the OCTs associated with the EC and options for “OCT 2000”, 

-  COMMISSION,  Decision  2001/822/EC  as  regards  the  rules  of  origin  for  meat  of 
scallops of the genus Placopecten magellanicus from Saint Pierre and Miquelon (OJ 
L 197 of 28 July 2005), 

-  COMMISSION,  Decision  2007/167/EC  of  15  March  2007  derogating  from  the 
rules of origin set out in Council Decision 2001/822/EC as regards certain fishery 
products imported from Saint Pierre and Miquelon (OJ L 76 of 16 March 2007). 

-  COMMISSION,  Communication  COM(2007)  183  of  18  April  2007  on  Global 
Europe: a stronger partnership to deliver market access for European exporters. 

-  COMMISSION, Decision 2007/767/EC of 15 November 2007 derogating from the 
rules of origin set out in Council Decision 2001/822/EC as regards certain fishery 
products imported from the Falkland Islands (OJ L 310 of 28 November 2007). 

-  COMMISSION, Green Paper COM(2008) 383 of 25 June 2008 on Future relations 

between the EU and the Overseas Countries and Territories. 

-  COMMISSION, Communication COM(2008) 699 of 4 November 2008 on the raw 
materials initiative — meeting our critical needs for growth and jobs in Europe 

-  COMMISSION,  Staff  working  document  SEC(2008)  2067  of  25  June  2008 
accompanying the green paper “Future relations between the EU and the Overseas 
Countries and Territories” (COM (2008) 383). 

-  COMMISSION,  Decision  2005/578/EC  of  27  July  2005  derogating  from  Council 

D 

-  COMMISSION, Decision 2009/776/EC of 16 October 2009 on a derogation from 
Council  Decision  2001/822/EC,  as  regards  the  rules  of  origin  for  prepared  and 
preserved shrimps and prawns from Greenland (OJ L 278 of 23 October 2009). 

-  COMMISSION,  Communication  COM(2009)  623  of  6  November  2009  on 

Elements for a new partnership between the EU and the OCTs. 

-  COMMISSION,  Communication  COM(2010)  2020  of  3  March  2010  on  Europe 

2020: a Strategy for Smart, Sustainable and Inclusive Growth 

-  COMMISSION,  Communication  COM(2010)612  of  9  November  2010  on  Trade, 
Growth  and  World  Affairs:  Trade  Policy  as  a  Core  Component  of  the  EU's  2020 
Strategy 

-  COMMISSION,  Decision  2011/47/EU  of  20  January  2011  on  a  derogation  from 
the rules of origin set out in Council Decision 2001/822/EC as regards sugar from 
the Netherlands Antilles (OJ L 21 of 25 January 2011) 

- 

 COMMISSION Decision  2011/122/EU of 22 February 2011 on a derogation from 
the  rules  of  origin  set  out  in  Council  Decision  2001/822/EC  as  regards  certain 
fishery products imported from Saint Pierre and Miquelon (OJ L 49 of 24 February 
2011). 

EN 

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-  COMMISSION,  Communication  COM(2011)  241  of  10  May  2011  on  a  proposal 
for  a  regulation  from  Council  and  Parliament  applying  a  scheme  of  generalised 
tariff preferences. 

-  COMMISSION, Communication COM (2011) 424 of 13 July 2011 on the external 

dimension of the Common Fisheries Policy. 

-  COMMISSION,  Communication  COM(2011)  846  of  7  December  2011  on  a 
proposal  for  a  Council  Decision  on  relations  between  the  European  Union  on  the 
one hand, and Greenland and the Kingdom of Denmark on the other. 

-  COMMISSION,  Staff  Working  Paper  SEC(1484)  of  7  December  2011,  Impact 
Assessment  accompanying  the  document  “Council  Decision  on  relations  between 
the European Union on the one hand, and Greenland and the Kingdom of Denmark 
on the other” (COM(2011)846). 

Documents from Other Instances 

- 

Joint Position Paper of the Governments of the Kingdom of Denmark, the French 
Republic,  the  Kingdom  of  the  Netherlands  and  the  United  Kingdom  of  Great 
Britain  and  Northern  Ireland,  and  the  Overseas  Countries  and  Territories  on  the 
future  relations  between  the  Overseas  Countries  and  Territories  and  the  European 
Union,  adopted  at  the  Ministerial  Conference  of  the  Association  of  the  Overseas 
Countries  and  Territories  of  the  European  Union,  Nouméa,  New  Caledonia,  28 
February 2011 

Prior and Ongoing Studies 

-  BROOKS, P., STONEMAN, R. and RIOS, R. Enhancing Atlantic OCTs' Trade and 
the  European  Union), 

Economic  Activity 
EUROPEAID/11/9860/C/SV/multi - Lot N° 10, N° 2008/170783, February 2010 

(within 

region 

their 

and 

-  BURKE,  S.J.,  KIROSINGH,  M.,  Overseas  Countries  and  Territories  Technical 
Assistance  for  the  Mid  Term  Review  (MTR)  2006,  Final  Report,  Framework 
Contract  Lot  N°  4  –  Sectoral  and  project  evaluations  –  Specific  Contract  No 
119860/C/SV/multi, 18 December 2006 

-  ECLAC,  Review  of  CARIFORUM/EU  EPA:  Implications  for  the  British  and 

Dutch Caribbean OCTs, LC/CAR/M.176, 4 September 2008 

-  ECO  Consult  et  al.,  Region  Level  Evaluation:  Overseas  Countries  and  Territories 

(OCT), Contract N° EVA 2007/geo-acp, draft Final Report, July 2011. 

-  HELLYER,  M.,  CARICOM  Single  Market  and  Economy:  Costs/Benefits  Study, 

Final Report, June 2004 . 

-  KIRKPATRICK et al. (2011), A Trade Sustainability Impact Assessment Relating 
to  the  Negotiation  of  a  Comprehensive  Economic  and  Trade  Agreement  (CETA) 
between the EU and Canada, Trade 10/B3/B06, Final Report, June 2011. 

-  LUFF, David et al., the Analysis of the Regional Economic Integration Processes 
(Caribbean, Pacific and Indian Ocean) and Recommendations Aiming at Enhancing 
Trade  and  Economic  Activity  of  OCTs  within  their  Region  and  with  the  EC, 
Framework Contract Beneficiaries– Lot 11, N° 2008/170791, February 2010. 

-  SALMON  Jean  Michel,  OCT  Regional  Integration  Impact  Study,  Final  Report, 

Framework Contract Beneficiaries - Lot 11 N°. 2006/123116, July 2007. 

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-  SPANNEUT,  C.,  Analysis  of 

the  OCTs  and 
Recommendations Aiming at Enhancing Statistical Systems of OCTs, Framework 
Contract Beneficiaries – Lot 11, N° 2010/253401/1, Draft Final Report, September 
2011. 

the  Statistical  Systems 

in 

EN 

191 

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ANNEX 12.1: OCT/EU IMPORTS & EXPORTS (2010) 

EN 

192 

EN 

 
  
 
EN 

193 

EN 

 
  
 
EN 

194 

EN 

 
  
 
ANNEX 12.2: PROBLEM TREE OF THE OCT TRADE REGIME 

EN 

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Annex 12.3: OAD Provisions and Annexes Relevant to the OCT Trade Regime 

Part./Title/Chapter 

Article 

Part II: Areas of Cooperation 

Art.12: Trade development 

Art. 13: Trade in Services 

Art. 14: Trade Related Areas 

Art. 16: Regional Cooperation & Integration 

Part III: Instruments of OCT-EC Cooperation 

Title II: Economic & Trade Cooperation 

Art. 34: Objective 

Art. 35: Free Access for Originating Products 

Art. 36: Transhipment of Non-Originating Products 

Art. 37: Committee Procedure 

Art. 38: Quantitative Restrictions and Measures 

Chapter 1: Arrangements for trade in goods

Art. 39: Waste 

Art. 40: Measures by OCTs 

Art. 41: Surveillance Clause 

Art. 42: Safeguard Measures 

Art. 43: Committee Procedure 

Art. 44: General Objective 

Chapter  2:  Trade  in  Services  &  Rules  of 
Establishment 

Art.  45:  General  Principles  of  Establishment  and 
the Provision of Services 

Art. 46: Maritime Transport 

Art. 47: Current Payments and Capital Movements 

Art. 48: Competition Policies 

Art. 49: Protection of Intellectual Property Rights 

Chapter 3: Trade-Related Areas 

Art. 50: Standardisation & Certification 

Art. 51: Trade & the Environment 

Art. 52: Trade & Labour Standards 

Art.  53:  Consumer  Policy  &  Consumer  Health 
Protection 

Art. 54: Prohibition of Disguised Protectionism 

Art. 55: Tax Carve-Out Clause 

Art.  56:  Tax  &  Customs  Arrangements  for  EU 
Funded Contracts 

Art. 58: Programmes Open to OCTs (notably those 
listed in Annex II F) 

Art. 59: Euro Info Correspondence Centres 

Chapter 4: Monetary & Tax Matters 

Chapter  5:  Vocational  Training,  Eligibility 

EN 

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for EU Programmes & Other Provisions 

Art. 60: CDE & CTA 

Annex  II:  EU  Financial  Assistance  to 
OCTs 

Annex III: Rules of Origin 

Annex IV: Transhipment 

EN 

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ANNEX 12.4: TRADE AND TRADE RELATED AREAS OF COOPERATION IN ARTICLES 12, 13 AND 14 OF THE OAD 

Trade Development (Art. 12) 

Trade in Services (Art. 13) 

Trade Related Areas (Art. 14) 

Support for developing the necessary 
macroeconomic policies, trade strategies and the 
corresponding legislative frameworks 

Support to developing trade related services: 
maritime transport, air traffic and 
telecommunications* 

Support OCT capacities to handle all areas related 
to trade, including the institutional framework  

Support to the development of trade related 
infrastructure, capacities, human resources, 
professional skills and intermediaries 

Support to the formulation of sustainable tourism 
policies and the development of information 
systems on tourism 

Cooperate on the promotion and protection of 
investments, support the formulation and 
development of policies and legal frameworks in the 
areas of competition and the protection of 
intellectual property (a.o. geographical indications) 

Support to market development and exploration, 
product quality improvement 

Support to the development in the field of tourism 
of markets, human resources & professional 
management capacities, marketing and branding 
measures, tourism infrastructure and tourism 
products, to measures encouraging investments 

Support OCT efforts with regard to standardisation 
and certification, based on internationally agreed 
standards and norms, with specific attention to: 
quality management, metrology, conformity 
assessment and standardisation 

Support to measures aimed at encouraging 
investments 

Support to Least developed OCTs' participation in 
international trade fairs 

Support OCT public and private capacity with 
regard to human, animal and plant health measures 

Support OCT policies and capacities relative to 
consumer health protection 

Cooperate with OCTs on the mutual supportiveness 
of trade and environment policies and on trade and 
labour standards 

Support public and private sector efforts deployed in 
the field of information technology and 
telecommunications* 

*  Issues  related  to  the  OCTs'  connectivity  (transport  infrastructure,  telecommunications  etc.)  are  subject  of  the  part  of  the  Impact  Assessment  dedicated  to 
accessibility issues 

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EN 

199 

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ANNEX 12.5: OCT MEMBERSHIP TO REGIONAL ORGANISATIONS 

CARIBBEAN REGIONAL ARCHITECTURE

OECS*
Anguilla
Antigua and Barbuda
British Virgin Islands
Dominica
Grenada
Montserrat
St. Kitts and Nevis
St. Lucia
St. Vincent and the Grenadines

CARICOM*
+OECS countries1 
Barbados
Belize
Guyana
Haiti
Jamaica
Suriname
Trinidad and Tobago
The Bahamas

CARIFORUM**
+CARICOM countries2
Cuba
Dominican Republic

ACS**
+CARIFORUM countries 
Aruba
France
Columbia
Venezuela
Panama
Nicaragua
Netherlands Antilles
Costa Rica
El Salvador
Guatemala
Honduras
Mexico

OECS: Organisation of Eastern Caribbean States
CARIFORUM: Forum of Caribbean ACP States

CARICOM: The Caribbean Community and Common Market
ACS: Association of Caribbean States

*Regional Integration Organisations
**Regional Cooperation Organisations

1except Anguilla and British Virgin Islands
2except Montserrat

EN 

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Source: European Community – Caribbean Region, Regional Strategy Paper and Regional 
Indicative Programme 2008-2013; Strasbourg, 15 November 2008 

Source: Association of the Overseas Countries and Territories 

EN 

201 

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INDIAN OCEAN AND ISOLATED TERRITORIES 

Falkland Islands 

None 

Greenland 

Member of the Nordic Council  

Member of the Nordic Atlantic Cooperation and the West Nordic Foundation  

Participant in the Arctic Council 

Member of the Inuit Circumpolar Conference 

Mayotte 

None 

Saint Pierre et Miquelon 

None 

Saint Helena, Ascension Island and Tristan da Cunha 

None 

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ANNEX 12.6: WTO OBLIGATIONS OF OCTS - GREENLAND 

Treaty 

Denmark   Greenland

Marrakesh Agreement establishing the World Trade Organisation 
Annex 1A: Multilateral Agreement on Trade in Goods 
General Agreement on Tariffs and Trade 1994 
Agreement on Agriculture 
Agreement  on  the  Application  of  Sanitary  and  Phytosanitary 
Measures 
Agreement on Textiles and Clothing 
Agreement on Technical Barriers to Trade 
Agreement on Trade related Investment Measures 
Agreement  on  Implementation  of  Article  VI  of  the  General 
Agreement on Tariffs and Trade 1994 
Agreement  on  Implementation  of  Article  VII  of  the  General 
Agreement on Tariffs and Trade 1994 
Agreement on Preshipment Inspection 
Agreement on Rules of Origin 
Agreement on Import Licensing Procedures 
Agreement on Subsidies and Countervailing Measures 
Agreement on Safeguards 
Annex 1B: General Agreement on Trade in Services 
Annex  1C:  Agreement  on  Trade  related  aspects  of  Intellectual 
Property Rights 
Annex  2:  Understanding  on  Rules  and  Procedures  Governing  the 
Settlement of Disputes 
Annex 3: Trade Policy Review Mechanism 
Annex 4: Plurilateral Trade Agreements 
Agreement on Trade in Civil Aircraft 
Agreement on Government Procurement  
International Bovine Meat Agreement 

x 
x 
x 
x 
x 

x 
x 
x 
x 

x 

x 
x 
x 
x 
x 
x 
x 

x 

x 
x 
- 
x 
- 

x 
x 
x 
x 
x 

x 
x 
x 
x 

x 

x 
x 
x 
x 
x 
x 
x 

x 

x 
x 
- 
- 
- 

x: Covered by the Agreement  

– not covered by the Agreement 

Source: Denmark, Ministry of Foreign Affairs, reply to Commission trade questionnaire to OCTs and their 
Member States, October 2011 

EN 

203 

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ANNEX 12.7: OCT TRADE INTERESTS 

Current Markets 

Respondents  % Respondents 

Future Markets 

Respondents 

% Respondents 

EU 

US 

Caribbean  

Far East 

Japan 

Far East (other) 

Pacific 

China 

Latin America 

Canada 

Europe (other) 

Oceania 

9 

9 

5 

3 

3 

2 

2 

2 

2 

1 

1 

82% 

82% 

46% 

36% 

27% 

27% 

18% 

18% 

18% 

18% 

9% 

9% 

EU 

US 

Latin America 

Far East  

China 

Caribbean 

Canada 

Japan 

Far East (other) 

Pacific 

Europe (other) 

Oceania 

Middle East 

Africa 

9 

8 

4 

4 

3 

3 

3 

2 

2 

1 

1 

1 

1 

1 

82% 

73% 

36% 

36% 

27% 

27% 

27% 

18% 

18% 

9% 

9% 

9% 

9% 

9% 

EN 

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EN 

 
  
 
 
 
 
 
 
Current Goods Exports 

Respondents  % Respondents 

Future Goods Exports 

Respondents  % Respondents 

Agro-food 

Fisheries 

Beverages 

Materials 

Chemicals & plastics 

animal/veg prods (other) 

Live animals 

Handicraft, household 

Fruits and vegetables 

Metals, minerals, ores, fuels, oils 

Machinery 

Textiles 

Fruit preparations 

9 

6 

5 

4 

3 

2 

2 

2 

2 

2 

2 

2 

1 

82% 

55% 

45% 

36% 

27% 

18% 

18% 

18% 

18% 

18% 

18% 

18% 

9% 

Agro-food 

Fisheries 

Beverages 

Fruit preparations 

Animal/veg prods (other) 

8 

7 

6 

3 

3 

Metals, minerals, ores, fuels, oils  3 

Handicraft, household 

Live animals 

Materials 

1 

1 

1 

73% 

64% 

55% 

27% 

27% 

27% 

9% 

9% 

9% 

EN 

205 

EN 

 
  
 
 
  
 
 
  
 
 
  
  
 
Current Services Exports 

Respondents  % Respondents 

Future Services Exports 

Respondents  % Respondents 

Tourism Services 

Construction Services 

Transport Services 

Business Services 

Financial Services 

Distribution Services 

Recreation, sports, culture  

6 

2 

2 

1 

1 

1 

1 

55% 

18% 

18% 

9% 

9% 

9% 

9% 

Tourism 

Recreation, sports, culture 

(renewable) energy 

Business services 

Telecommunication 

Education 

Transport services 

Medical Services 

Distribution Services 

Environment Services 

Computer Services 

Financial Services 

Construction Services 

9 

6 

5 

5 

5 

4 

3 

3 

3 

2 

2 

2 

1 

82% 

55% 

45% 

45% 

45% 

36% 

27% 

27% 

27% 

18% 

18% 

18% 

9% 

EN 

206 

EN 

 
  
  
 
  
 
  
  
 
  
  
 
  
  
 
  
  
 
  
 
Obstacles non-EU 

Respondents  % Respondents 

Obstacles EU 

Respondents  % Respondents 

Logistics 

Transport, freighting costs 

Connectivity 

Access to capital 

Marketing/branding 

Cooperation 3rd countries 

Standards/rules (SPS/TBT) 

Administrative procedures 

Infrastructure 

Exchange rate 

Size/capacity companies 

Labour costs 

Labour skills 

Visibility 

8 

7 

4 

4 

4 

3 

3 

3 

2 

2 

2 

1 

1 

1 

73% 

64% 

36% 

36% 

36% 

27% 

27% 

27% 

18% 

18% 

18% 

9% 

9% 

9% 

Logistics 

Transport, freighting costs 

Standards/rules (SPS/TBT) 

Marketing/branding 

Access to capital 

Administrative procedures 

Connectivity 

Infrastructure 

Size/capacity companies 

Labour costs 

Visibility 

Labour skills 

Cooperation EU/ EU MS 

6 

5 

5 

4 

4 

4 

3 

2 

2 

1 

1 

1 

1 

55% 

45% 

45% 

36% 

36% 

36% 

27% 

18% 

18% 

9% 

9% 

9% 

9% 

EN 

207 

EN 

 
  
 
 
 
 
Support provided by territories, Member States, others 

Possible additional support 

Public aids/ support programmes  6 

55% 

Technical assistance, training, capacity building 

7  64% 

Trade promotion/ business support 5 

45% 

Public aids/ support programmes 

Support participation fairs 

Support to intermediaries 

Economic representations 

SME support 

Legislative/ regulatory framework 

Dedicated training 

Export certification 

Infrastructure 

3 

3 

3 

2 

2 

2 

1 

1 

Export strategy (under development)  1 

Market intelligence 

1 

27% 

27% 

27% 

18% 

18% 

18% 

9% 

9% 

9% 

9% 

Access to capital/ investments 

Marketing/branding 

Market intelligence, info on calls for tenders 

Participation in trade fairs 

Infrastructure 

Conformity international/EU standards 

Legislative/regulatory framework 

Facilitation market access 

4  36% 

4  36% 

3  27% 

3  27% 

2  18% 

2  18% 

2  18% 

1  9% 

1  9% 

Support intermediaries, participation business networks 1  9% 

EN 

208 

EN 

 
  
 
  
  
 
Interest in EU trade negotiations 

Areas of Interest in EU trade negotiations 

Caribbean 

CETA 

Central America 

Andes 

Chile 

Mexico 

Pacific 

ASEAN 

4 

2 

2 

2 

2 

2 

1 

1 

18% 

18% 

18% 

18% 

18% 

9% 

9% 

36% 

Preference erosion (Caribbean, Pacific, CETA) 

Regional integration (Caribbean) 

SPS/TBT (Pacific) 

Rules of Origin (Pacific) 

Cooperation (Pacific) 

Development dimension (Pacific) 

Tariff liberalisation and method (Pacific) 

Reciprocity 

Tax and development 

Special Differential Treatment 

3 

2 

1 

1 

1 

1 

1 

1 

1 

1 

27% 

18% 

9% 

9% 

9% 

9% 

9% 

9% 

9% 

9% 

EN 

209 

EN 

 
  
 
  
  
 
 
 
 
 
  
  
 
ANNEX 12.8: TREATMENT OF OCT GOODS IMPORTED INTO THE EU UNDER CET/GSP RATES 

OCT (all figures for 2010) 

Imports* 
(A) 
(€ 1000)** 

Dutiable Imports
(B) 
(€ 1000) 

CET Duties 
(C) 
(€ 1000€) 

GSP Duties 
(D) 
(€ 1000) 

AVE CET*** 
Total (C/A) 
% 

AVE GSP 
Total (D/A) 
% 

Cayman Islands 
New Caledonia 
Greenland 
Virgin Islands (British) 
Netherlands Antilles 
Falkland Islands 
French Polynesia 
Mayotte 
Aruba 
Saint Helena 
Saint Pierre et Miquelon 
Montserrat 
Pitcairn 
Turks and Caicos Islands 
Anguilla 
Wallis and Futuna Islands 
Total 
*: Total value of EU imports 

872,367
343,875
316,672
155,862
144,533
112,444
23,028
5,016
3,993
1,608
1,314
1,222
592
344
289
50
1,983,211

2,808
7,350
297,796
5,762
56,487
110,740
12,683
1,766
2,172
252
1,311
410
490
207
17
34
500,285

63 
461 
37,587 
223 
9,105 
7,696 
1,268 
143 
119 
25 
194 
15 
18 
15 
0 
2 
56,937 

11
205
21,247
125
7,176
3,529
814
64
27
17
172
5
4
9
0
1
33,406

0.01
0.13
11.87
0.14
6.30
6.84
5.51
2.86
2.99
1.56
14.78
1.24
3.09
4.46
0.17
4.57
2.87

0.00 
0.06 
6.71 
0.08 
4.97 
3.14 
3.54 
1.28 
0.68 
1.04 
13.12 
0.39 
0.70 
2.54 
0.04 
2.22 
1.68 

**: Thousands of Euros 
***:Ad Valorem Equivalent 
The average rate is calculated by dividing dutiable exports by total exports. Pitcairn, Turks and Caicos and Wallis and Futuna exports are so small that all three OCTs combined would 
face duties between EUR 35,000 and 14,000, taking into account that their combined exports to the EU represent only EUR 1million. 

EN 

210 

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ANNEX 12.9: MAIN DUTIABLE OCT PRODUCTS ON IMPORT IN THE EU 

Greenland (Fish and processed fish) 

frozen shrimps and prawns (…) 
shrimps and prawns in packaging > 2 kg (…) 
frozen lesser or Greenland halibut (…) 
shrimps and prawns in airtight container (…) 
frozen fillets of cod (…) 
frozen fillets of saltwater fish (…) 
fish livers and roes, dried, smoked (…) 
frozen crabs (…) 
frozen redfish (…) 
frozen fillets of haddock (…) 
shrimps and prawns in packaging < 2 kg (…) 
frozen saltwater fish, edible (…) 
frozen fillets of coalfish (…) 
Sub total of fish and processed fish 
% of total EU imports from Greenland 

Saint Pierre et Miquelon (fish) 

Imports 
(A) 
(€ 1000)  

CET Duties 
(B) 
(€ 1000)  

GSP Duties 
(C) 
(€ 1000)  

AVE CET 
(B/A) 
% 

AVE GSP 
(C/A) 
% 

85,526
57,042
55,995
32,586
15,084
14,985
7,390
5,809
2,772
1,430
1,372
1,205
652
281,848
89

10,263
11,408
4,200
6,517
1,131
1,708
813
436
208
107
274
149
49
37,263
99

3,592
3,993
4,200
6,517
392
1,184
554
151
208
107
96
63
49
21,106
99

12
20
7.50
20
7.50
11.40
11
7.51
7.50
7.48
19.97
12.37
7.52

4,20 
7,00 
7,50 
20,00 
2,60 
7,90 
7,50 
2,60 
7,50 
7,48 
7,00 
5,23 
7,52 

Imports 
(A) 
(€ 1000) 

CET Duties 
(B) 
(€ 1000) 

GSP Duties 
(C) 
(€ 1000) 

AVE CET 
(B/A) 
% 

AVE GSP 
(C/A) 
% 

cod (…) salted or in brine only (excl. fillets) 
Sub total 
% of total EU imports from SPM 

683
683
51

EN 

89
89
45

211 

13,03

13,03 

89
89
51

EN 

 
  
 
 
 
 
  
 
 
 
 
 
Falkland Islands (Fish and processed fish) 

squid 'loligo patagonica' (…) 
squid 'loligo spp.', frozen (…) 
frozen saltwater fish, edible (…) 
illex spp.', with or without shell (…) 
frozen argentine hake (…) 
frozen pink cusk-eel (…) 
frozen fillets of saltwater fish (…) 
frozen meat (…) 
frozen cape hake (…) 
frozen fillets of argentine hake (…) 
Sub total of fish and processed fish 
% of total EU imports from Falkland Islands 

(Former) Netherlands Antilles 

jet fuel, kerosene type 
frozen yellowfin tunas (…) 
raw cane sugar (…) 
frozen skipjack or bonito (…) 
frozen bigeye tunas (…) 
parts of gas turbines (…) 
waters, incl. mineral and aerated (…) 
Sub total 

EN 

Imports 
(A) 
(€ 1000) 

CET Duties 
(B) 
(€ 1000) 

GSP Duties 
(C) 
(€ 1000) 

AVE CET 
(B/A) 
% 

AVE GSP 
(C/A) 
% 

65,445
22,504
8,263
4,804
4,720
1,118
817
231
160
132
108,194
96.2

3,927
1,350
1,025
384
708
84
93
17
24
10
7,622
99

1,636
563
430
216
543
29
65
6
18
5
3,511
99

6
6
12.40
7.99
15
7,51
11.38
7.36
15
7.58

2,50 
2,50 
5,20 
4,50 
11,50 
2,59 
7,96 
2,60 
11,25 
3,79 

Imports 
(A) 
(€ 1000) 

CET Duties 
(B) 
(€ 1000) 

GSP Duties 
(C) 
(€ 1000) 

AVE CET 
(B/A) 
% 

AVE GSP 
(C/A) 
% 

16,404
9,738
5,418
4,505
1,161
684
438
38,348

771
2,142
4,139
991
255
28
42
8,368

212 

0
1,802
4,139
833
215
0
27
7,016

4.70
22.00
76.39
22.00
21.96
4.09
9.59

0,00 
18,50 
76,39 
18,49 
18,52 
0,00 
6,16 

EN 

 
  
 
 
 
  
 
 
 
 
  
% of total EU imports from N. Antilles 

26

92

97

French Polynesia 

crude coconut oil 
fresh or chilled fillets and other fish 
vanilla 
frozen fish fillets (…) 
fruit and other edible parts of plants (…) 
articles of jewellery and parts (…) 
Sub total 
% of total EU imports from F. Polynesia 

Imports 
(A) 
(€ 1000) 

CET Duties 
(B) 
(€ 1000) 

GSP Duties 
(C) 
(€ 1000) 

AVE CET 
(B/A) 
% 

AVE GSP 
(C/A) 
% 

4,133
1,470
943
905
797
616
8,864
35

264
265
57
163
166
15
930
73

91
213
20
131
138
0
593
73

6.39
18.03
6.04
18.01
20.83
2.44

2,20 
14,49 
2,12 
14,48 
17,31 
0,00 

EN 

213 

EN 

 
  
 
 
 
 
  
 
 
ANNEX 12.10: PROSPECTS FOR INCLUSION OF OCTS IN OTHER TRADE AGREEMENTS 

OCTs 

EU trade partner(s) 

State of play negotiations 

Prospects inclusion OCT 

Possible impact 

Greenland 

Canada 

Well advanced 

Small: outstanding legal questions 

Access to Canadian 
market, with reciprocity 

Saint-Pierre et Miquelon 

Caribbean OCTs 

Caribbean 

EPA concluded; provisional 
application, pending full ratification 

EPA Article 246: possibility of 
bringing OCTs within the scope of 
the EPA 

Access to 15 countries, 
with reciprocity 

Central America; 
Colombia, Peru 

Negotiations concluded; agreements 
moving towards signature and 
ratification 

Small: outstanding legal questions 

Falkland Islands 

MERCOSUR 

FTA negotiations ongoing 

Slim: political reasons (Argentina) 

Mayotte 

Eastern and Southern 
Africa 

Interim EPAs negotiated; but not 
applied 

EPA negotiations well advanced 

Perspective disappears if and when 
Mayotte becomes an Outermost 
Region  

Access to Central 
American and 2 Andean 
countries, with 
reciprocity 

- 

- 

New Caledonia 

Pacific 

French Polynesia 

Wallis et Futuna 

Interim EPA applied with Papua 
New Guinea; pending with Fiji; 
regional negotiations ongoing 

If interim EPA membership is 
widened, OCTs could be included; 
idem for possible regional EPA. 

Access ranging from 2 
to 15 countries, with 
reciprocity 

EN 

214 

EN 

 
  
 
 
Vessels conditions 

Tolerance non-
originating 
materials 
Direct transport 

Derogations 
(excluding possible 
derogations to the 
PSR granted 
through separate 
annexes) 

ANNEX 12.11: COMPARISON RULES OF ORIGIN UNDER POLICY OPTIONS 2-4 

Option 2: Status Quo 

Option 3: Improved Treatment 

Option 4: Other Trade Relations 

4  criteria  (flag,  registration,  ownership, 
nationality of the crew) 
15% in value (except textile and clothing) 

General provisions 
3 criteria (flag, registration, ownership) 

3 criteria (flag, registration, ownership) 

15%  in  value  or  weight  depending  on 
products (except textile and clothing) 

15% in value (except textile and clothing) 

Direct transport rule 

Non-manipulation clause 

Direct transport rule 

- OCT or Member State initiative  
the  development  of  existing 
-  For 
industries or the creation of new industries 
-  EU  accepts  requests  by  OCTs  that  are 
duly justified and when the value added by 
OCTs  exceeds  45  %  of  the  finished 
product 

-  OCT,  Member  State  or  Commission 
initiative 
-  Granted  when  necessary 
the 
development  of  existing  industries  or  the 
creation of new industries  
-  When  OCT  cannot  fulfil  the  rule  for 
temporary reasons or needs time to prepare 
itself to comply with the rules 

for 

the 

- Existence of an automatic derogation for 
fishery products for some EPAs (cf. EAC, 
Central Africa…), under quota 
- EPA country initiative 
-  Granted  when  necessary 
for 
development of existing industries or 
the creation of new industries  
-  EU  shall  respond  positively 
to  all 
requests  by  ACP  States  which  are  duly 
justified 
-  In  some  EPAs,  the  EU  accepts  request 
when  the  value  added  by  OCTs  is  higher 
than 45% of the finished product 
OCT authorities 

Certification 

OCT authorities 

Self certification from 2017 

EN 

215 

EN 

 
  
 
 
 
 
 
 
 
Option 2: Status Quo 

Option 3: Improved Treatment 

Option 4: Other Trade Relations 

Cumulation 

-  Full  cumulation  with  the  EU,  all 
OCTs  and  all  ACP  countries,  but  with 
certain exclusions  

Cumulation 

- Bilateral cumulation with the EU; 

-  Full  cumulation  with  all  OCTs  and 
with  ACP  countries  under  EPAs,  but 
with certain exclusions  

-  Diagonal  cumulation  upon  request 
with  EU  FTA  partners,  for  industrial 
products 

-  Full  cumulation  with  the  EU,  all 
OCTs, with countries of the same EPA 
and with other EPA countries, but with 
certain exclusions 

-  Diagonal  cumulation  upon  request 
with  neighbouring  countries  for  EPAs 
concluded  

-  cumulation  with  materials  which 
enter  the  EU  DFQF  under  MFN,  or 
under GSP or EBA for the EPA under 
negotiations, 
certain 
exclusions  

but  with 

-  Diagonal  cumulation  for  products 
which  enter  the  EU  DFQF  under  an 
FTA, upon request, with exclusions  

EN 

216 

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Option 2: Status Quo 

Option 3: Improved Treatment 

Option 4: Other Trade Relations 

agricultural 
products 

“old  type’  standard  rules    (i.a.  with 
allowance  of  non-originating  sugar  up 
to 30% value of the final product) 

 Modern  GSP 
list  rules  (i.a  with 
allowance  of  non-originating  materials 
up  to  40%  based  on  weight  for  sugar, 
milk, etc.)  

Product Specific Rules 

“old  type’  standard  rules    (i.a.  with 
allowance  of  non-originating  sugar  up 
to 30% value of the final product), with 
the  review  clause  the  list  rules  will  be 
specific 
updated.-  Relaxations 
agricultural  products  under  separate 
annexes,  dependent  on  the  specific 
EPAs.  

for 

industrial 
products 

Textile and 
clothing 

Max. 40 % non-originating materials  Max. 50 % - 70 % non-originating 

Max. 40 % non-originating materials 

materials, depending of the products 

Double transformation rule 

Double  transformation  rule,  but  with 
modern drafting 

Single transformation rule 

EN 

217 

EN 

 
  
 
 
 
 
 
 
ANNEX 12.12: GLOSSARY 

African  Caribbean  and  Pacific  Group  of  States  (ACP):  The  denomination  ACP  States 
refers  to  a  group  of  developing  countries  located  in  Africa,  the  Caribbean  and  the  Pacific 
regions, with which the EU has maintained special formal relations since its establishment in 
1957.  The  group  mainly  consists  of  countries  that  formerly  were  colonies  of  individual 
Member States of the EU. The term ACP States was coined by the Georgetown Agreement of 
1975  which  formally  established  the  ACP  Group  of  States.  The  ACP/EU  Partnership 
Agreement  or  Cotonou  Agreement  of  2000  provides  the  basis  for  ACP/EU  cooperation  and 
political  dialogue.  Under  the  Cotonou  Agreement  it  is  foresee  that  the  economic  and  trade 
component  of  ACP/EU  relations  will  be  enshrined  in  Economic  Partnership  Agreements 
(EPAs) 

Caribbean  Community  (CARICOM):  The  Caribbean  Community  and  Single  market  and 
Economy  (CARICOM)  was  first  established  in  1973  and  is  composed  of  15  Caribbean 
countries.  CARICOM  aims  to  promote  economic  integration  and  cooperation  between  its 
members  in  view  of  improving  standards  of  living  ,  attaining  full  employment  of  labour 
coordinating and sustaining economic development; expanding trade and economic relations 
with  third  States;  enhancing  levels  of  international  competitiveness,  production  and 
productivity;  .  The  five  associate  members  to  the  CARICOM  are  all  British  overseas 
territories  (Anguilla,  Bermuda,  British  Virgin  Islands,  Cayman  Islands,  Turks  and  Caicos); 
although it is a British overseas territory, Montserrat is a full member of CARICOM.  

CARICOM  Single  Market  and  Economy  (CSME):  With  the  CARICOM  Single  Market 
and  Economy  (CSME),  the  members  of  the  Caribbean  Community  (CARICOM)  seek  to 
establish a customs and economic union between themselves by ensuring freedom of goods, 
services,  labour  and  capital,  the  right  of  establishment,  the  setup  of  a  common  trade  policy 
and  a  common  external  tariff  and  through  coordinated  and  harmonised  policies  and 
legislation. 

Common  External  Tariff:  The  Common  external  Tariff  is  the  tariff  rate  agreed  by  all 
members of a customs union on imports of a product from outside that same customs union. 

Competitiveness and Innovation Framework Programme (CIP): The Competitiveness and 
Innovation Framework Programme (CIP) is an EU programme funded under the EU general 
budget 2007-2013 which provides support innovation activities (including eco-innovation) by 
European small and medium sized enterprises (SMEs), provides better access to finance and 
delivers business support services. It encourages a better take-up and use of information and 
communication  technologies  (ICT)  and  helps  to  develop  the  information  society.  It  also 
promotes the increased use of renewable energies and energy efficiency. The CIP runs from 
2007 to 2013 with an overall budget of € 3621 million. 

Duty Drawback System: One of the two variants of the inward processing procedure under 
which  the  import  duties  are  paid  at  release  for  free  circulation  and  refunded  when  the 
processed  products  or  the  goods  in  the  unaltered  state  are  re-exported.  Many  free-trade 
agreements do not allow drawback if a preferential proof of origin is issued. 

Doha  Development  Agenda:  The  Doha  Round  is  the  latest  round  of  multilateral  trade 
negotiations  within  the  WTO  membership.  Its  aim  is  to  achieve  major  reform  of  the 

EN 

218 

   EN 

 
 
 
international trading system through the introduction of lower trade barriers and revised trade 
rules. The work programme covers about twenty areas of trade. The Round is also known as 
the Doha Development Agenda based on the fact that a fundamental objective is to improve 
the trading prospects of developing countries. 

Economic Partnership Agreements: The Economic Partnership Agreements (EPAs)  aim at 
promoting trade between the between the EU and groups of countries that are member of the 
group  of  African,  Caribbean  and  Pacific  States    through  trade  development,  sustainable 
growth  and  poverty  reduction.  Since  2002,  six  regional  groupings  negotiate  EPAs  with  the 
EU  to  replace  the  trade  chapters  of  the  Cotonou  Agreement.  These  EPAs  aim  at  reciprocal 
free trade, comprising of duty free and quota free market access, asymmetric gradual market 
opening of ACP markets for EU exports and simpler rules of origins. Only one full EPA has 
been  concluded  so  far  with  CARIFORUM,  interim  EPA  are  thus  in  place  with  the  ACP 
countries  of  the  Southern  African  Development  Community,  East  and  Southern  Africa  and 
key trading partners in the Pacific. 

Enterprise Europe Network: The Enterprise Europe Network (EEN) is a network of more 
than  580  business  support  organisations  (chambers  of  commerce  and  industry,  technology 
centres, research institutes and development agencies) from 49 countries with a view to help 
European Small and Medium Enterprises (SMEs) to develop their business in markets within 
and outside of the European Single Market. The objective of the EEN is to offer information 
and support on EU matters to SMEs, to obtain feedback from them, and to provide business 
cooperation, technology transfer and innovation services. 

Export  Helpdesk:  The  Export  Helpdesk  is  an  online  service,  provided  by  the  European 
Commission, to facilitate market access in particular for developing countries to the European 
Union. 

Free Trade Agreement  (FTA): Free trade agreements (FTAs) are international agreements 
by  which  two  or  more  countries  or  customs  territories  agree  to  substantially  open  their 
respective  markets  to  one  another  and  improve  the  conditions  under  which  the  products  of 
their  partner(s)  access  their  markets.  Free  trade  agreements  are  an  exception  to  the  WTO 
principle of the Most Favoured Nation, which states that any concession that WTO members 
cannot discriminate between WTO members when granting trade concessions. Article XXIV 
of the GATT and Article V of the GATs allow exemptions for customs unions and free trade 
areas,  provided  that  the  members  of  such  entities  have  liberalised  substantially  all  the  trade 
between them. 

Traditionally,  FTAs  focused  on  reducing  the  barriers  to  trade  in  goods,  both  of  a  tariff  and 
non tariff (NTB) nature. Since the 1990's, the trade agenda has expanded to include services 
and  other  topics  such  as  investments,  intellectual  property  rights,  public  procurement, 
standards, but also trade related areas such as competition policy, trade and environment and 
labour  rights.  The  comprehensive  FTAs  that  the  EU  has  negotiated  or  is  negotiating 
encompass this agenda.  

General Agreement on Tariffs and Trade (GATT): the General Agreement on Tariffs and 
Trade (GATT) is an international trade agreement by which the contracting parties commit to 
progressively  liberalise  the  trade  in  goods  by  reducing  tariffs  and  abolish  quota  on  trade  in 
goods.  The  GATT  is  one  of  several  multilateral  agreements  attached  to  the  Marrakesh 
Agreement or Agreement Establishing the World Trade Organisation (WTO). All members of 
the  WTO  are  contracting  party  of  the  GATT.  The  agreement  contains  a  set  of  rules  and 

EN 

219 

   EN 

 
disciplines regarding the use of restrictive measures such as tariffs and quota, which all of the 
WTO members need to respect. It also contains a list of commitments for each of the WTO 
members,  which  indicates  the  extent  to  which  they  are  prepared  to  open  their  markets  to 
foreign goods on a non-discriminatory basis 

General  Agreement  on  Trade  in  Services  (GATS):  The  General  Agreement  on  Trade  in 
Services  (GATS)  is  one  of  the  multilateral  agreements  that  are  annexed  to  the  Agreement 
Establishing the World Trade Organisation (WTO). It states to which extent foreign service 
providers  have  access  to  specific  sectors  of  the  services  markets  of  WTO  members.  It  also 
includes a list of types of services of individual WTO members to which individual member 
the Most Favoured Nation principle of non-discrimination does not apply. 

Generalised  System  of  Preferences  (GSP):  The  Generalised  System  of  Preferences  is  an 
autonomous  trade  measure  of  the  EU  through  which  the  EU  offers  non-reciprocal  trade 
preferences  to  support  developing  countries  exporting  to  the  EU.  The  GSP  is  based  on  the 
1979 GATT enabling clause and is composed of three components with increasing benefits: 
GSP, GSP+ and EBA. The general arrangement of the GSP system allows for duty free access 
for  non  sensitive  products  and  tariff  reductions  for  sensitive  products.  GSP+  gives  wider 
market access to developing countries, with duty free access to up to 90 % of tariff lines, but 
this access is conditioned to the respect of certain basic principles and legal texts regarding 
sustainable  development  and  good  governance.  Everything  But  Arms  (EBA)  is  a  special 
arrangement for least developed countries, offering duty free and quota free access to all their 
products except for arms. 

(GPA):  The  Agreement  on  Government 
Government  Procurement  Agreement 
Procurement  is  one  of  the  plurilateral  agreements  of  the  World  Trade  Organisation.  This 
means that not all WTO members are a signatory to it. The GPA contains a number of rules 
and disciplines which the signatory members need to obey in the procurement procedures of 
their national and sub-national government bodies (see public procurement). 

Harmonised  System:  The  Harmonised  Commodity  Description  and  Coding  System  is  an 
international nomenclature developed by the World Customs Organisation, which is arranged 
in six-digit codes allowing all participating  countries to classify traded goods on a common 
basis. Beyond the six-digit level, countries are free to introduce national distinctions for tariffs 
and  many  other  purposes.  The  Combined  Nomenclature  of  the  EU  integrates  the  HS 
Nomenclature  and  comprises  additional  8-digit  subdivisions  and  legal  notes  specifically 
created to address the needs of the EU. 

International  Labour  Standards  :  Since  1919,  the  International  Labour  Organization  has 
maintained  and  developed  a  system  of  international  labour  standards  aimed  at  promoting 
opportunities  for  women  and  men  to  obtain  decent  and  productive  work,  in  conditions  of 
freedom,  equity,  security  and  dignity.  The  WTO  recognise  ILO's  international  labour 
standards as set of internationally recognized “core” standards and the ILO as the competent 
body to set and deal with these standards. 

Liner Shipping Connectivity Index (LSCI): The Liner Shipping Connectivity Index (LSCI) 
aims at capturing how  well countries  are connected to global shipping networks. The Index 
takes into account: a) number of ships; (b) the container-carrying capacity of those ships; (c) 
the maximum vessel size; (d) the number of services; and (e) the number of companies that 
deploy containerships on services from and to a country’s ports. 

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Mercado  Común  del  Sur/Mercado  Comum  do  Sul  (MERCOSUR/  MERCOSUL):  The 
Mercado Común  del Sur is  an international  agreement between Argentina, Brazil, Paraguay 
and  Uruguay.  Ratification  of  Venzuela's  accession  to  the  customs  union  is  still  pending. 
Bolivia,  Chile,  Colombia,  Ecuador  and  Peru  have  associate  member  status.  Alongside  free 
trade,  the  MERCOSUR  seeks  to  promote  political  cooperation  between  its  members.  The 
agreement foresees in the free movement of goods, services and factors, the establishment of 
a  common  external  tariff  and  the  adoption  of  a  common  trade  policy  as  well  as  the 
coordination of economic and other policies. 

Most Favoured Nation (MFN): The most favoured nation (MFN) treatment is a fundamental 
non  discrimination  principle  of  the  WTO  trading  system,  it  entails  that  each  member  of  the 
WTO to treat all other members equally as their most favoured trading partner. This principle 
ensures  non  discrimination  between  imported  foreign  products  guaranteeing  imports  from 
lowest cost foreign suppliers. 

Non-Tariff Barriers (NTB): The notion of Non-Tariff Barriers (NTBs) refers to restrictions 
that  result  from  prohibitions,  conditions,  or  specific  market  requirements  that  make 
importation or exportation of products difficult and/or costly. NTBs also include unjustified 
and/or  improper  application  of  Non-Tariff  Measures  (NTMs)  such  as  Sanitary  and  Phyto-
Sanitary (SPS) measures and other technical barriers to Trade (TBT). 

OECS  Economic  Union:  In  January  2011,  the  revised  OECS  founding  treaty  came  into 
force,  laying  the  foundation  for  an  Economic  Union  between  the  sovereign  members  of  the 
OECS. It foresees in freedom of goods and services, labour and capital between the different 
members of the OECS. 

Organisation of Eastern Caribbean States (OECS): The Organisation of Eastern Caribbean 
States is a regional organisation set up by six sovereign States and three British OCTs of the 
Caribbean with an aim to foster cooperation and solidarity between its members, to coordinate 
and  harmonise  foreign  policies  and  to  promote  economic  integration.  Anguilla,  the  British 
Virgin Islands and Montserrat are members or associate members of the OECS. The Eastern 
Caribbean  Dollar  is  the  common  currency  for  seven  out  of  the  nine  OECS  members  or 
associate  members.  All  nine  OECS  members  share  a  judiciary:  the  Eastern  Caribbean 
Supreme Court.  

Pacific  Agreement  on  Closer  Economic  Relations  (PACER):  The  Pacific  Agreement  on 
Closer  Economic  Relations  is  a  framework  agreement  between  all  members  of  the  Pacific 
Islands  Forum  (PIF),  including  Australia  and  New  Zealand  that  foresees  in  the  gradual 
establishment  of  a  regional  single  market  within  the  Pacific  region.  As  a  stepping  stone 
towards this goal, it foresees the establishment of a regional free trade agreement covering all 
Pacific Islands Forum members. In the meantime, regional economic integration between the 
members  that  are  developing  countries  takes  place  within  the  context  of  the  Pacific  Island 
Countries Trade Agreement (PICTA) 

Pacific  Island  Countries  Trade  Agreement  (PICTA):  The  Pacific  Island  Countries  Trade 
Agreement  (PICTA)  is  a  free  trade  agreement  set  up  between  the  fourteen  members  of  the 
Pacific  Islands  Forum  that  are  developing  countries:  Cook  Islands,  Fiji,  Kiribati,  Marshall 
Islands,  Micronesia,  Nauru,  Niue,  Palau,  Papua  New  Guinea,  Samoa,  Solomon  Islands, 
Tonga,  Tuvalu  and  Vanuatu.  Not  all  of  the  countries  involved  have  signed  and  ratified  the 
agreement. It mainly covers goods, but negotiations on services are ongoing. 

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Pacific Islands Forum (PIF): The Pacific Islands Forum is an international organisation that 
seeks  to  promote  cooperation  between  the  different  countries  and  territories  of  the  Pacific 
region.  It  includes  both  developing  and  developed  countries  and  terrorise  amongst  its 
membership:  Australia,  Cook  Islands,  Fiji,  Kiribati,  Marshall  Islands,  Micronesia,  Nauru, 
New Zealand, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and 
Vanuatu. New Caledonia and French Polynesia are associate members. Wallis and Futuna is 
an  observer.  The  Pacific  Islands  Forum  Secretariat  is  located  in  Nouméa,  New  Caledonia. 
Two  free  trade  agreements  have  been  set  up  between  PIF  members:  the  Pacific  Island 
Countries  Trade  Agreement (PICTA), covering only developing countries, on the one hand, 
and  the  Pacific  Agreement  on  Closer  Economic  Relations  (PACER),  covering  all  PIF 
members, on the other. 

Pro€invest:  PRO€INVEST is  a support programme to  ACP countries, which is financed by 
the EU under the 8th European Development Fund and which has as an objective  to promote 
investment  and  technology  flows  to  enterprises  operating  within  key  sectors  in  ACP 
countries.  This  will  be  achieved  through  the  support  to  Intermediary  Organisations    and 
professional associations and through the development of north-south and south-south inter-
enterprise partnerships. 

Public  Procurement:  The  purchase  of  goods  and  services  and  the  ordering  of  works  by  a 
public  authority  such  as  a  national  government,  a  local  authority  or  their  dependent  bodies, 
are public contracts. 

Rules  of  Origin:  Within  the  context  of  international  trade  agreements  and  unilateral  trade 
preference schemes, rules of origin are essential to ensure that preferences (lower or reduced 
tariff rates) are only extend to those goods coming from countries for which the preferences 
were initially foreseen. The rules of origin determine the economic nationality of a good on 
the basis of a set of general and product specific criteria and conditions with which imported 
goods need to comply. 

Sanitary  and  Phyto  Sanitary  (SPS):  Measures  dealing  with  food  safety  and  animal  and 
plant health. 

Small  and  Medium  Enterprises  (SMEs):  The  EU  qualifies  as    small  and  medium-sized 
enterprises (SMEs) those enterprises which employ fewer than 250 persons and which have 
an  annual  turnover  not  exceeding  EUR  50  million,  and/or  an  annual  balance  sheet  total  not 
exceeding EUR 43 million. 

STABEX (Système de Stabilisation des Recettes d'Exportation): Stabex was previously a 
financial  scheme  from  the  EU  which  could  provide  additional  support  to  ACP  States  and 
OCTs  to  remedy  the  harmful  effects  of  instability  of  export  revenue  from  agricultural 
products. The SYSMIN (Système pour les Minerais) fulfilled a similar function for products 
from the mineral extraction industry. 

Strengthening Fishery Products Health conditions in ACP/OCT Countries: The purpose 
of the project is to improve the access of ACP/OCT countries fish and fishery products to the 
world market and help these countries to fall in line with the EU's complex regulations. The 
SFP Programme provides support in the (export) health control and in improving production 
conditions  of  fishery  products.    The  beneficiary  countries  of  the  SFP  Programme  are  ACP 
countries  (Africa,  Caribbean  &  Pacific),  signatories  to  the  Lomé  Convention,  and  Overseas 
Countries  and  Territories  (OCT)  of  The  Netherlands  and  the  United  Kingdom.  The  overall 

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amount  of  EU  financing  for  the  Programme is EUR 44 860  000, including EUR  2  184 800 
funded by The Netherlands and the United Kingdom for their OCTs.  

Technical  Barriers  to  Trade  (TBT):  The  notion  of  technical  barriers  to  trade  refers  to 
technical regulations, standards, testing and certification procedures with which products need 
to conform before they can be placed in a given market and which could obstruct trade. The 
WTO’s TBT Agreement aims to ensure that these do not create unnecessary obstacles. 

TradeCom Facility: The TradeCom programme, also referred to as the TradeCom Facility, is 
an  ACP  Group  Programme  financed  by  the  European  Development  Fund.  It  is  divided  in 
three main, complementary, components, each with its specific beneficiaries and results: (1) 
formulation of trade policies, (2) trade negotiations and (3) implementation of trade policies 
and international trade agreements. 

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