Development and the ACP countries
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Providing external assistance to developing countries is considered a core activity of the European Union. Such assistance typically comes in three forms: Official Development Assistance (ODA), trade and more general development cooperation. Its primary purpose is to reduce poverty, but it is also targeted at developing democracy and the rule of law, encouraging respect for human rights and freedom, and promoting ‘European values’.
Provisions for development and aid were originally made in the Treaty of Rome (1957)for former colonies of Member States. These provisions were extended in the series of Lomé Conventions (1976-1999) to include the majority of African, Caribbean and Pacific (ACP) countries. The Lomé Convention offered duty-free access to EC markets for most products, except agricultural ones deemed to be in competition with EC agriculture. For these, the EC offered preferential access, based on a quota system. The Lomé Convention also provided for an increasing amount of aid and investment expenditure to flow from the EC to ACP countries.
In 2000 the EU and ACP countries signed a new development accord, to replace the Lomé Convention, called the Cotonou Agreement (2000-2020). This introduced the principle of mutual obligation; that aid given to ACP countries should be linked to good governance, and involve non-state actors and local authorities. Most controversially it called for an end to non-reciprocal trade preferences for ACP countries, ruled illegal by the World Trade Organisation (WTO) in 1996. This means that both the EU and ACP countries should provide duty-free access to each other’s markets, which is currently being negotiated under Economic Partnership Agreements (EPAs). The Caribbean is the only region that has signed a full EPA, but a total of 35 ACP countries signed either a full or an interim EPA in 2007. The Cotonou Agreement is adapted every 5 years; the last revision took place in March 2010, when the Agreement recognised climate change for the first time.
How does EU development policy work?
The EU and ACP countries now have two common institutions: the ACP-EU Council and ACP-EU Joint Parliamentary Assembly, which were both established in 2003. These are formal bodies that provide for dialogue between the EU and ACP countries, and help guide development policy. However ODA distributed directly by the EU to ACP countries is managed and distributed by EuropeAid, a department of the Commission. This aid comes from either the EU budget or the European Development Fund (EDF), an intergovernmental body.
All development assistance is supposed to be provided in accordance with the European Consensus on Development (ECD), agreed in 2006. This defines a common framework for development policy, consistent with the aims of the Millennium Development Goals. The EU has agreed on six priority areas: aid for trade and development, transport, regional cooperation, access to social services, food security and good governance. The ECD also places a heavy emphasis on maximising aid effectiveness through tailoring aid to the needs of each country, and better coordination between the EU and its Member States.
This focus helped to rectify some of the problems the EU has had in providing effective leadership on development issues. However there remains a lack of consistency between certain EU policies and its other policies. For example, the Common Agricultural Policy, stringent hygiene and product standards, and restrictive Rules of Origin, make it difficult for ACP farmers and producers to access EU markets. ACP countries also fear that EPAs will undermine local producers, by giving more competitive EU exporters unfettered access to their markets too quickly. Despite the fact that aid has been promised to ease these concerns, such fears hindered EPA negotiations with ACP countries in 2007. However, the EU sometimes does not have complete control over its trade policy and in 2009 it had to cut favourable tariffs for ACP bananas because of complaints from the World Trade Organisation (WTO).
Facts and Figures
- An EU target aims for EU states to give 0.7% of GNI in ODA by 2015, yet many countries are not on course to reach this target; Italy’s aid is expected to reach only 0.2% and overall aid could be €10 billion short.
- EU countries gave €53.5bn in ODA in 2010, which amounted to 57% of global ODA.
- The European Development Fund (EDF) will distribute €22.7bn ODA during 2008-13. Of this amount, ACP countries will receive €21.2m.
- Only 51% of ODA from the EU goes to ACP countries. The remainder goes largely to countries either negotiating membership of the EU or part of the ENP.
- 99.5% of types of goods exported to the EU by ACP countries are admitted free of customs duties (e.g. rice is subject to duties. Sugar is due to be free of duties from 2015).
- The European Development Fund (EDF) will distribute €22.7 billion to ACP countries between 2008-13.
“One of the EU’s greatest challenges in development policy is to ensure a coherent and effective approach between 26 different actors, with 26 development policies.” – Jose Barroso, Commission President, 2005.
“No policy is more closely linked to the principles, values and objectives of the EU than development policy.” – Louis Michel, Commissioner for Development, 2007.
Economic Partnership Agreements (EPAs): Reciprocal free trade agreements currently negotiated between the EU and six regional blocs of ACP countries which were meant to be concluded by the end of 2007, but only ‘interim’ EPAs were agreed. Negotiations are on-going.
Millennium Development Goals: Eight goals to reduce worldwide poverty that the 191 UN members have agreed to try to achieve by 2015.
Aid for Trade: The provision of aid to help developing countries take advantage of free trade.
Rules of Origin: Criteria used to define where a product was made. Duty-free access is only granted to goods from ACP countries that do not contain parts, materials or ingredients from other countries.