Select Committee on International Development First Special Report

Memorandum submitted by the Department for International Development


(Fourth Report, 1997-98)

The Government agreed with many of the Committee's recommendations for the content of the draft EU Mandate. The detail on the implementation of Cotonou is laid out in both the Cotonou Agreement itself, finalised on 3 February 2000, and in the Internal Agreement (between the EU Member States) on Financing and Administration of Community Aid, which was finalised in September 2000. DFID worked closely with the Foreign and Commonwealth Office, the Department of Trade and Industry and other Government Departments during the negotiations.

The central objective of the Cotonou Agreement is reducing and eventually eradicating poverty. The Agreement is 'underpinned' by the International Development Targets.

Development Co-operation

Under the terms of the Cotonou Agreement country allocations will be based on needs and performance. The Commission has recently published draft methodology for resource allocation, which will need to be agreed by the Member States in the EDF Committee. The allocation will comprise a basic programme, together with an additional component to cover unforseen needs. Country allocations will be published and, following mid-term and end-of-term reviews, can be revised based on a re-assessment of needs and performance. The review process will focus on results achieved measured against programme targets and indicators.

The new Agreement includes provision for additional financial support where countries' development efforts are jeopardised by short-term fluctuations in export earnings.

There is strong emphasis in the Agreement on better co-ordination of support. The Internal Financing Agreement requires EC strategies to be coherent with country-led development strategies including Poverty Reduction Strategy Papers and the Comprehensive Development Framework. Co-operation will include programmes to ensure the equal participation of men and women in all spheres of life.

The new Agreement emphasises support for sectoral policies, including through budgetary support. The draft Development Policy Statement which covers all EC programmes further promotes the move from project to sector support.

There is strong emphasis in the Agreement on pursuit of peace-building policies, conflict prevention and resolution. There is also an improved role for civil society in the implementation of the Agreement. While there is no specific forum where the voices of non-state actors can be heard, they should be consulted on EC country strategies, receive support to strengthen their capacity, and be involved in implementing projects and programmes.

There is no scope in the agreement for an annual report on the implementation of Cotonou. However, the Government continues to press for an annual report on all EC development assistance as follow up to the Council Conclusions on the evaluation of EC aid.

Trade Co-operation

The Cotonou trade regime is aimed at fostering the smooth and gradual integration of the ACP into the world economy, so as to promote their sustainable development and contribute to poverty eradication.

The Cotonou Agreement recognises the importance of supply-side constraints to ACP participation. Both financial and technical assistance will be specifically focussed on supporting strategies for promoting investment and private sector development, including through risk capital and loans via the new Investment Facility.

Under the new Agreement, until 2008 there will be a preparatory period during which the existing preferential trade arrangements will be maintained. The EU and ACP have applied to the WTO for a waiver for this period. After 2008 there will be new WTO-compatible arrangements, mostly comprising regional economic partnership agreements (REPAs), essentially free trade areas. Negotiations on these will start in 2002. Initially the new REPAs will be heavily assymetric. Thus, fully reciprocal free trade with the EU is unlikely for a long period, perhaps fifteen years after the REPAs come into effect in 2008.

The Government shared the Select Committee's concern, and that of the Governments of many ACP countries, that some ACP countries would be unable to enter REPAs. This would not be a problem for Least Developed Countries (LDCs), as the EU confirmed in the Cotonou Agreement its commitment to provide duty-free market access for essentially all LDC products by 2005 at the latest. On 20 September the Commission published a proposal to extend duty and quota­free access to the EU for all products (except arms and munitions) for all LDCs, from 1 January 2001. Three sensitive products ­ rice, sugar and bananas ­ will be subject to phased liberalisation over 3 years. The Government has welcomed this proposal.

For non-LDCs that are unable to enter REPAs there is a safety net under Cotonou whereby the EU has committed to explore all possibilities to provide a new, WTO-compatible trading framework with benefits equivalent to those under Lomé.

The EC agreed under Cotonou to help the ACP States to participate, negotiate and implement agreements in the WTO and in other international organisations. The EC is currently assisting the ACP establish a presence in Geneva with this objective.

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