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The Lomé Convention

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The Lomé Convention

The Lomé Convention sets out the principles
and objectives of the Union (at the time Community) cooperation
with ACP countries. It's main characteristics are: the partnership
principle, the contractual nature of the relationship, and the
combination of aid, trade and political aspects, together with
its long-term perspective (5 years for Lomé I, II, and III,
and ten for Lomé IV).

Lomé I
Signed in 1975, coinciding with the
fourth EDF (3 BECU), the first Lomé Convention
is aimed at including, after the accession of Britain
to the Community, some of the Commonwealth countries
in the cooperation program.
Its main characteristics are:

  • the non-reciprocal preferences for most exports
    form ACP countries to EEC;
  • equality between partners, respect for sovereignty,
    mutual interests and interdependence;
  • the right of each state to determine its own policies;
  • security of relations based on the achievements
    of the cooperation system.

It also introduces the STABEX system (to compensate ACP
countries for the shortfall in export earning due to
fluctuation in the prices or supply of commodities).

Lomé II
Signed in 1979 and corresponding
to the fifth EDF (4.542 BECU), it does not introduce
major changes, except for the SYSMIN system (help to
the mining industry of those ACP countries strongly dependent
on it).

Lomé III
Signed in 1984 and corresponding
to the sixth EDF (7.440 BECU), it shifts the main attention
from the promotion of industrial development to self-reliant
development on the basis of self-sufficiency and food
security.

Lomé IV
This is the first Convention to cover
a ten-year period, even though the attached financial
protocol has a duration of five years. The first financial
protocol (1990 to 1995) provides 12 BECUS, 10.8 of which
from the seventh EDF, the rest form EIB. The second goes
from 1995 to 2000 and supplies 14.625 BECU through the
eighth EDF.
A Mid-Term Review of the Convention is also scheduled for 1995.
Great emphasis is put on: the promotion of human rights, democracy
and good governance; strengthening of the position of women;
the protection of the environment; decentralized cooperation;
diversification of ACP economies; the promotion of the private
sector; and increasing regional cooperation.

Revised
Lomé IV
The Mid-term review takes place in
1994-1995, in the context of major economic and political
changes in ACP countries (democratization process, structural
adjustment), in Europe (enlargement, increasing attention
to East European and Mediterranean partners), and in
the international environment (Uruguay Round Agreement).
The main amendments introduced are:

  • the respect for human rights, democratic principles
    and the rule of law become essential elements of
    the Convention. This means that ACP countries that
    do not fulfill these criteria risk the retrieval
    of allocated funds;
  • for the first time EDF is not increased in real
    terms;
  • phased programming is introduced, with the aim
    of increasing flexibility and improving performances
    from ACP countries.
  • more attention is given to decentralized cooperation
    in the form of participatory partnership including
    a great variety of actors from civil society.

Five generations of ACP-EC agreements
The new partnership agreement between the 15 European Union
(EU) member states and the African, Caribbean and Pacific (ACP)
states marks five generations of agreements between ACP-EC sovereign
states. It is the world's largest financial and political framework
for North-South cooperation.
This special partnership is characterised by its non-reciprocal
trade benefits for ACP states including unlimited entry to the
EC market for 99 per cent of industrial goods and many other
products, especially for the Least Developed Countries (LDCs)
which number 39 in the ACP grouping. In addition, aid packages
for each ACP country and region are regularly updated.
A unique feature of the ACP-EC accord is dialogue and joint
administration of its content by the Community and the ACP. ACP
states are free to table requests which are mutually negotiated
with the EC.
Institutions ensure a permanent dialogue; an annual ACP/EU
Council of Ministers, regular meetings of the Committee of ACP
Ambassadors which receives technical support from a permanent
Brussels-based ACP Secretariat. ACP Parliamentarians and Members
of the European Parliament meet twice annually in a Joint Assembly,
where issues on the partnership are debated.
A 'National Indicative Programme' (NIP) is mutually negotiated
by the European Commission and an ACP state and sets development
targets e.g. in primary education or health and contains a five
yearly spending pledge for each country tailored to meeting those
needs. The NIP is funded out of the European Development Fund
(EDF), the financial protocol to each agreement, to which EU
member states contribute.
The EDF has also traditionally provided funds for regional
cooperation, for the EU's remaining Overseas Countries and Territories
(OCTs), humanitarian and emergency aid and for Non Governmental
Organisations. Additional loans from the European Investment
Bank (EIB), largely for infrastructure, have become a feature
of cooperation too.
The Lome "acquis"
The much valued partnership is based on a corpus of shared
objectives and principles, as well as the trade and financial
benefits, which have expanded overtime to become the Lome 'acquis'.
Yet, the partnership has kept apace with an ever changing international
environment to best respond to ACP needs.
Yaounde to Lome
ACP-EC Cooperation dates back to the birth of the European
Treaty of Rome establishing the European Economic Community 1957,
which expressed solidarity with the colonies and overseas countries
and territories and a commitment to contribute to their prosperity.
The first association of ACP and EC member states (1963-69)
Yaounde I, was drawn up in the Cameroonian capital. Yaounde II
(1969-75), also signed in the Cameroonian capital, pledged the
lion's share of EDF financial support to French-speaking Africa
to build infrastructure in the wake of decolonisation. But the
Yaounde accords importantly sewed the seeds for the new generation
of Lome accords.
Lome I
Membership of the United Kingdom to the then EEC in 1973 led
to the signing of the wider reaching Lome I agreement between
46 ACP and the then 9 EEC member states (1975-80). At that time,
the UK was keen to put its special trading preferences for bananas
and sugar under the EC umbrella and extend its assistance to
some former colonies beyond bilateral support.
Separate trading 'protocols' on sugar, beef and veal and bananas
became a feature of successive Lome Conventions. The banana protocol
has ensured duty-free entry to the EU market for specific quotas
of bananas and has been a lifeline for many small island Caribbean
states.
Under the sugar protocol, the Community agrees to buy a fixed
quantity annually of sugar from ACP producers at attractively
high guaranteed prices aligned to EU's own internal sugar price
and establishes annual quotas for sugar producers, a preference
which has been valuable to the economic development of certain
ACP states - Mauritius, Fiji, Guyana and Barbados. The beef and
veal protocol permits a 90 per cent refund of tax normally paid
on beef imports from several ACPs and has especially benefited
Southern African exporters.
Lome I also prioritised infrastructure; road building, bridges,
hospitals and schools and sustainable agriculture (4th EDF -
3.072 billion ECU). These priorities continued under Lome II
1980-85 (5th EDF - 4.725 billion ECU).
Stabex & Sysmin
In the 1970s, new EDF instruments were introduced to cope with
the commodity crisis, demonstrating Lome's flexibility to adapt
to new circumstances in ACP states.
The stabilisation of export receipts on agricultural products
(STABEX) gave funds to offset losses on a wide number of agricultural
products; cocoa, coffee, groundnuts, tea and others, as a result
of crop failures and price falls.
Sysmin was also an innovation of the'70s. A country heavily
dependent on a particular mineral and suffering export losses
could access Sysmin loans which were designed to lessen a country's
dependency on mining.
Under Lome III (1985-1990), whilst infrastructure funding was
still required, people were still dying of hunger and rural development
projects became a focus of funds for the 6th EDF (7.4 billion
ECUs) to promote food security and combat desertification and
drought.
Lome IV
The signing of the ten year Lome IV (1990-2000) marked another
turning point in Lome's history. The then European Community
(EC) embarked on dialogue with the World Bank and International
Monetary Fund (IMF) on how best to support structural adjustments
as a means to economic growth.
Several ACP and EC nations agreed on balance of payments support
in their National Indicative Programmes (NIPs) and sectoral and
general import programmes which raised money for health and education
projects by the sale of goods in short supply on the local market
were financed with Lome IV's initial five year financial protocol
( 7th EDF 10.8 billion ECUs). The EC now provides 10-30 percent
of total adjustment aid to ACP economies, notably to education
and health programmes.
Other key changes under Lome IV included the banning of toxic
waste movements between ACPs and EC member states and more EDF
monies for decentralised cooperation and diversification of the
economy.
Human rights - an 'essential' element of cooperation
Signalling the Convention's flexibility, Lome IV became the
first development agreement to incorporate a human rights clause
as a 'fundamental' part of cooperation (article 5).
Further changes were made at Lome's IV revision five years
later (1995-2000). An updated clause confirmed human rights as
an 'essential element' of cooperation, meaning that any violation
could lead to partial or total suspension of development aid
by then European Union after prior consultation of other ACP
nations and the abusing party. It was the first development agreement
to set such a standard.
Other novelties in the revised Lome IV included a 'protocol'
for the protection of ACP forests allowing the 8th EDF budget
1995-2000 (12.9 b ECU) to be tapped, for example, for the preservation
of tropical forests.
In the interests of debt alleviation, all uncommitted special
loans under previous Lome Conventions were transformed into grants.
Further, to speed up the efficiency and effectiveness of grants,
a 70 per cent allocation only would be committed at the signing
of the NIP, with a further 30 per cent earmarked only on assessment
of how the initial tranche had been spent.
New millennium - new accord
The expiry of the Lome IV in the new millennium was the opportunity
for deeper changes to EU-ACP cooperation whilst preserving the
Lome 'acquis.' In 1997, then Commissioner for Development, Joao
de Deus Pinheiro, called for root and branch reform.
The backdrop was that in spite of Lome's successes, ACP-EU
cooperation could do better and needed to adapt to a different
geostrategic situation after the demise of the East-West power
blocs.
Statistics indicating that generous trade preferences were
not enough for economic take off were detailed in a 'green paper'
published by the European Commission in 1997, ahead of the 1998
talks on a new agreement:

  • ACP countries' share of the EU market had declined from 6.7
    per cent in 1976 to 3 per cent in 1998 with 60 per cent of
    total exports concentrated in only 10 products, with just a
    handful of nations registering economic growth as a result
    of the trade protocols and preferences notably; Ivory Coast,
    Mauritius, Zimbabwe and Jamaica.
  • Per capita GDP in sub-Saharan Africa grew by an average of
    only 0.4 per cent per annum 1960-1992, compared with 2.3 per
    cent for developing countries as a whole.
  • Only 6 per cent of African trade was with other countries
    of the continent.

Anti-poverty measures such as access to drinking water, improved
health and education services were still a priority. And improved
access to productive resources especially for women; to land,
capital, credit and training, were all vital for growth.
The green paper also pondered that economic developments had
gone hand in hand in some countries with the social disintegration,
mounting conflicts and humanitarian disasters, etc undermining
development policies and which had deflected donor focus to emergency
aid and crisis management.
On the aid front, the assessment was that there had been insufficient
account of the institutional and policy context of the partner
country, undermining the viability and effectiveness of aid.
And there was a need to speed up disbursal of EDF monies and
simplify the Convention's clauses, considered as too numerous
and sometimes leading to unnecessary duplication of work.
Waning international donor support for developing nations,
falling over ten years from 0.33 of donors' GNP in 1988 to 0.23
per cent in 1998, was of concern too. And this worry was heightened
by an increasingly negative public reaction to cooperation, some
European taxpayers viewing corruption as endemic in African nations
and calling for better and more efficient use of funds.
In addition, within the European Community, the 1992 Maastricht
Treaty on European Union had redefined Europe's development priorities;
promotion of democracy, the fight against poverty, improved commercial
competitiveness and aid effectiveness.
Further, a series of United Nations (UN) thematic conferences
in the 1990's on; the Environment, Population, Human Rights,
Social Development, Women, and the World Food Summit had set
new standards to be met by donors and developing nations alike.
Globalisation of the economy and development of the market
economy and growing regionalism in ACP nations also had to be
addressed. A buzzing private sector in many ACP states, seen
as an engine for economic development, merited extra support.
The new millennium was a timely opportunity for the restatement
of the EC's political commitment to the ACPs.


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