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The Cotonou Agreement*

Tetteh Hormeku and Kingsley Ofei-Nkansah
The current AOA allows developed countries to provide a multiplicity of domestic support and export subsidy that depress food production in the south. Meanwhile developing countries' domestic support for small farmers has systematically been dismantled by the World bank/IMF over the last two decades

The Cotonou Agreement between the
European Union and the African, Caribbean and Pacific (ACP) countries will impede efforts at strengthening South-South economic collaboration. In the particular case of Africa it will decisively undermine the strategy for continent-wide collaboration for economic development and leave the decades old Africa in place. Despite a large dose of rhetoric about food security the Agreement, successor to the Lome Convention, is likely to reinforce the structural impediments to food security in the ACP countries.

The ACP-EU agreement signed in February 2000 contains provisions on the term of access of European investors and businesses to ACP economies, which, if enacted by the ACP, will remove the policy instruments these countries have put in place for a balanced development of their economies both individually and in relation to each other.

Under part 3 of the new agreement, the parties agree to start negotiations in the year 2002 for the purposes of what is called "economic partnership agreements" (EPAs) to come into effect by 2008. From then on, in its dealings with Europe, the ACP group as it exists will cease to have any importance as far as trade relations with Europe is concerned.

The Lome Agreement was a general trade and aid agreement applicable to all participating ACP countries. Under the post- Lome IV regime, Europe will be establishing differential relationships with these countries. Three broad country categories are envisaged: (a) least developed country (LDC) members of the ACP group; (b) non-LDC who feel able and ready to enter into EPA regime, and (c) and non-LDCs who do not feel able/ready to enter into the EPA regime.

Each category will entail different trade relationship with EU. The LDCs, which are supposed to the poorest of the poor, will continue to enjoy the non-reciprocal trade preferences for their products in the EU markets as they enjoy now.

In addition, the agreement commits the parties to a process which by 2005, will allow duty free access in EU markets for essentially all products from the LDCs. The phrase, essentially all, rather than all the products, is vigorously defended by the EU, and represents a formula by which it can keep out ACP products which may be in competition with EU products, but may be in areas where these countries need access to EU markets the most.

For non-LDC countries which are not able to enter in partnership agreement with the EU, the latter will, after assessing their situation in the year 2004, provide them with a "new framework for trade which is equivalent" to what they have now, but in full conformity with the rules of the WTO. This means basically, that such countries will lose their specific preferential status, as under the Lome Conventions. Whatever preferential access they get will be that which the EU grants to all developing countries.

Non-LDCs which are willing/able to enter into the EPA regime will then do so. The main content of these relationships will be the reciprocal removal of barriers to trade between the parties, that is to say each party -the EU and the respective ACP economies will grant equivalent access in their respective markets to products from the other party.

This categorisation does not mean that countries in the groups will necessarily have to negotiate jointly with the EU. This applies particularly to the non-LDCs. Countries can decide whether or not they are willing and able to enter into EPAs or other forms of equivalent arrangements. But even for those who want to enter into the agreements, it remains to be determined at what level and how commensurate with the stages of development and their developmental requirements.

African countries are by far the biggest bloc in the 71 country ACP grouping. The implications of the Cotonou Agreement for the continent's integration agenda are sharply illustrative.

The rationale and process to date of African efforts at economic integration, whether at the continental or regional levels, can be derived from particular weaknesses inherent in their economies. Most of these economies are too small to be viable. Of equal importance, the internal production, distribution, and other structures of these economies are unrelated to each other. This internal fragmentation is replicated at the continental level, where most countries export similar agricultural crops to (typically European) markets.

Therefore, the concern with economic integration, as elaborated for instance in the Lagos Plan of Action (LPA) and the latter Abuja Treaty, is to relate these economies to each other so as widen the markets for products and also link raw materials, capital and other factors of production to each other. Equally important is to ensure an equitable balance so that some countries, especially the small ones do not lose out.

Given the obvious difficulty of bringing such diverse economies and traditions together, it is understandable that the strategy of the LPA and Abuja treaty is to encourage the existing regional economic groupings like ECOWAS and SADC to serve as the building blocks for the gradual achievement of continent wide co-ordination of African economies.

The European Union has different priorities. African economies have always served a particular function for Europe: as sources of raw materials and markets for their products. But for European policy makers, the broad grouping of African (as well as Caribbean and Pacific) countries within which Europe has met these needs in the past is no longer necessary.

In part, this is because Europe is no longer dependent on African raw materials. In part, the sustained collapse of most African economies means that income levels in most of these countries do not make them effective markets for Europe's industrial goods. Europe's target markets are the so-called high-performing economies, in and outside Africa, and for these it is in competition with other industrial countries like the USA and Japan.

The proposed free trade agreements with these selected economies address its competitive need to secure these target markets (with the added advantage of dispensing with the administrative and financial burden of the former bigger groupings). Barely a month after concluding the new partnership agreement with the African, Caribbean and Pacific (ACP) countries in February 2000, the European Union concluded a free trade agreement with Mexico, a country which is already part of a free trade area with the USA and Canada.

Not only will these arrangements reinforce the distinctions in economic fortune among African countries, as the less successful economies are hived from the more successful and encouraged to deal with Europe, their main market, in separate ways. The whole point of economic co-operation arrangements, which group stronger and weaker economies together in order that they may reinforce each other in the removal of structural imbalances, is reversed.

In addition, for the more successful countries, the nature of the trade-relationship envisaged-reciprocal free trade -- is one that cannot be available in the relationship with other African countries. Thus a privileged relationship is established between the EU and the successful African economies which isolates the more successful economies from the less successful ones.

Finally it encourages the African countries to form themselves into different grouping other than the existing and more or less geographically "natural" ones, in order to deal with the European Union. Thus rather than deal together as ECOWAS or SADC, a number of countries from the same groupings may emerge to relate themselves to Europe. In the run up to the negotiations, there was already support in EU documentation for the strengthening of UEMOA at the expense of ECOWAS.

Apart from the fragmentation of the inter-relationships among the African economies, the new agreement between EU and the ACP undermines the prospects of regional integration in another way. This relates to provisions by which the parties will seek to regulate the access to, and operations of economic agents -e.g. investors- in each other's economies. Key among these rules are those relating to intellectual property protection, competition policy, and rights for the protection of foreign investors.

As far as intellectual property is concerned the provisions of the new agreement commits the parties to full compliance with the rules of the TRIPs agreement of the World Trade Organisation.

This is in stark contrast to the demands of most of the South. Ever since that WTO agreement was signed, developing country governments have been protesting against its unfair terms which entrench the monopoly of transnational corporations over technology, undermine measures to promote the transfer and adaptation of technology by developing countries to suit their needs, and opens up the traditional knowledge about medicine and other areas for piracy by European and other Western corporations. In fact at the time of the negotiations for the new partnership agreements, African countries have tabled the most comprehensive proposals for the review of the TRIPs in the WTO, with the support of most other developing countries.

With regard to competition policy, the provisions appear as though concerned with preventing market abuse. Yet as the language referring to market access and business friendly environment suggest, Europeans are pursuing here the same aim that they have been pursuing in the context of the WTO without much success. That is to commit ACP governments into giving the same, and in some senses better, access to European companies than they would grant to national companies especially in strategic areas such as privatisation of state enterprises.

In the case of investment protection, the provisions envisage among other things that the parties will adopt "general principles on the protection and promotion of investments, which will endorse the best results agreed in the competent international fora or bilaterally."

This basically refers to adopting standards for the promotion and protection of foreign investment which are contained in the bilateral agreements which Europe has been making efforts to adopt multilaterally, both with the failed MAI, and in the WTO. Again these have been opposed by ACP governments. These provisions in the new post-Lome agreement seek to entrench in ACP countries, protections for European investors. The effect of these provisions is that they will remove the ability of the governments to use trade and investment policies in support of strategies that will remove the structural imbalances in their economies in order to promote integrated development, both nationally and at the continental level. This is the reason why African and other developing countries' governments have opposed these provisions in other fora.

Food security is a long standing concern of most ACP countries. The new ACP-EU Partnership Agreement offers a large dose of rhetorical principles without addressing the decades-old structural impediments to food and security in the ACP countries.

The Partnership Agreement articulates laudable objectives whose acclaimed objective is to reduce and eventually eradicate poverty consistent with the objectives of sustainable development and the gradual integration of the ACP countries into the world economy. Espousing the laudable principles of partnership and ownership of development strategies, participation, dialogue and the fulfillment of mutual obligations the Agreement puts the responsibility for development squarely on the ACP states.

Within the new framework the principal strategy for promoting food security is the provision of export refunds as contained in the Agreement's Article 54 on Food Security. This is nothing more than a palliative and suggests a non-commitment to addressing the realities of food insecurity on the ground.

Under Lome IV Convention STABEX and SYSMIN were principal instruments for export revenue stabilization. Notwithstanding their limitations they were important for ACP countries which are heavily dependent on agricultural export earnings. These have however been dismantled under the new Agreement and replaced with a system that seeks to provide financial support to ACP countries that experience dips in foreign exchange earnings.

The new system is however less transparent and weak in its criteria for operationalisation. Access to support would depend on the extent to which export revenue dip bears a relationship to decline in agricultural export earnings. Besides, compensation for the shortfall merely covers the nominal decline in the export earning without compensation for the consistent increases in the cost of needed imports. It is significant that even before the conclusion of the Agreement the European Parliament had expressed its concern to revise STABEX and SYSMIN and give "greater priority for food self-sufficiency as a key element in the selection of projects".

On the other hand, the post Lome Agreement provides a framework for a wider range of investment support. This could lead to a dearth of investments for food production given the unfavourable macro-economic environment for food production, the relatively lower returns and the risks associated with agriculture in general.

Discernible hope for food security may lie in the Agreement's provision on Gender. In seeking to create a framework for enhanced assess of women to productive resources like land and credit the Agreement seeks to improve food security given the preponderance of women in food production in the ACP countries. This however falls flat in the face of massive infrastructural support for ACP agriculture that favours male-dominated cash crop production for exports. Besides, adjustment support for diversification have so far meant diversification into the production and export of more cash crops and primary commodities, thus leaving the ACP states as importers of manufacture and food for domestic consumption.

ACP states are mostly dependent on the production and export of primary products, for the sustenance of their economies. The majority of the populations, particularly women, lives and works in rural areas with subsistence agricultural food production as their main means of livelihood. The dependence on primary commodity export for over fifty percent of the foreign exchange earnings of the ACP states has historically been its bane given the wide fluctuations in the revenue generation of these commodities. Besides, there is the inherent and growing imbalance of the terms of trade between the primary commodities of the ACP states and the imported manufacture. Food imports have doubled in the last three decades yet foreign exchange earnings have declined putting in question that food security strategy that seeks to earn hard currency through exports in order to meet domestic food needs of the population.

There can be no meaningful progress towards food security in the ACP countries in a situation where their northern partners hold on to a Common Agricultural Policy that employs expensive and wasteful protectionist instruments and mechanisms that are detrimental to agricultural and food production in the ACP countries. It is in that sense significant that even before the conclusion of the Agreement, the European Parliament had expressed its wish to make the common agricultural Policy, consistent with development policy.

The reiteration of commitment to WTO obligations in the new agreement means a commitment to an Agreement on Agriculture that weighs heavily against food security in the ACP countries. The current AOA allows developed countries to provide a multiplicity of domestic support and export subsidy that depress food production in the south. Meanwhile developing countries' domestic support for small farmers has systematically been dismantled by the World bank/IMF over the last two decades. They are now in practice debarred from applying support measures even in relation to food production. Again, it has been pointed out that the inclusion of food products in the disciplines of import control and domestic support effectively discourages domestic food production while favouring imports. For countries whose foreign exchange situation grows worse by the year this restriction stands in sharp opposition to the quest for food security. Another iniquity of the AOA cries out in the context of Article 13's due restraint provision as the subsidies covered by the relevant Annex are largely prevalent in the EU, whereas those prevalent in the developing countries do not enjoy a similar dispensation.

Indeed, the recent acceptance in principle of the multi-functionality of agriculture has given added credence to the need to protect smallholdings and family household farming. Meanwhile, the EU continues to promote the destruction of small farmers at home and rural producers abroad through its massive export subsidies, as forcefully articulated by the Geneva-based International Union of Food...(IUF). Also, putting in elements like rural landscape into the definition of multifunctionality raises the real danger that in the hands of the EU, this principle will become another vehicle for extending the wasteful protectionism of the CAP.

The restrictive environment of the WTO goes beyond the AOA. The ACP-EU partnership Agreement commits the parties to adhere to international agreements on Trade Related Intellectual Property Rights (TRIPS). This flies in the face of hopes raised by the far-reaching demands of countries of the South for the reform of TRIPS. TRIPS, as has been pointed out again and again, threatens food security directly because it effectively seeks to make rural producers of the ACP countries dependent on Multinationals for seeds to grow food for their own consumption.

It is from this perspective that we should discern the full import of the otherwise laudable assertion of the principle of partnership that is mutually respecting of sovereignty. Placing full responsibility on the ACP countries for their own development strategies is nothing more than an attempt by the EU to disclaim responsibility that squarely rests on the EU.

The new Agreement also provides for dismantling the non-preferential trade arrangements over a period of eight years and a movement towards WTO compatibility. This unrealistic timeframe is far from being in furtherance of food security, as it is impossible for the ACP countries to adjust to play ball in the globalised market. The Economic Partnership Agreements (EPA) envisaged for regionally integrated economies of the ACP at the end of that timeframe runs counter to food security concerns. First, the ACP countries depending on primary agricultural production derive minimum gains from regional integration that is structured to meet the raw material needs of Europe. Nor does the EU show any sign of readiness to reduce the expensive infrastructural support that have sprang up in Europe through CAP.

The recognition of the declining terms of trade, growing food insecurity associated with ever worsening balance of payment difficulties have informed the quest for food security. Some have followed the line of relying on a strategy of increasing earnings to purchase food at more competitive prices. This however does not take into consideration the fact that most of the populations of the ACP countries are usually agrarian and tend to produce largely for their own subsistence. Nor does it recognise the fact that the national economies are making do with ever more severe foreign exchange constraints, and therefore cannot rely on a concept of food security that is strategically linked to a reliance on cheaper food imports.

As far back as November 1997, the first Summit of ACP Heads of States and Government Libreville, Gabon articulated clearly some of the key challenges, noting in particular the need to "develop food production so as to ensure food security for the populations". Again, come the first ACP Civil Society Organization Forum of November 1999, which took place in Douala, there was an unequivocal declaration for food security as a priority issue in ACP-EU Development cooperation. The Douala Declaration underscored the threat of recurrent hunger and famine particularly among women, children, ethnic minority and other marginalised groups. It consequently called for policies that promote domestic food production in particular. It also called for the promotion of coherent agricultural policies within the framework of Post Lome and that of the WTO emphasizing in particular food production which is the mainstay of marginalised rural poor.

Dashed hopes notwithstanding, there are those who entertain favourable outcomes for food security given the available space for elaborating compendium of texts that should accompany the Agreement and the much-touted provisions for the participation of labour organisations, civil society organizations and other non-state actors. Granted the possibilities, the fact that the EU managed to bulldoze its objectives throughout the negotiations is evidence of the inherent imbalance in the so-called partnership and a pointer to the high likelihood of EU railroading issues to its advantage. This ominous likelihood should be seen in relation to a EU which is under pressures from within to reform CAP and other policies. Indeed the ACP General Secretariat has officially lamented the fact that the agreement elaborates EU objectives whiles those of the ACP do not merit a mention.

The enhanced positions for the participation of civil society organisations as partners in the implementation of the Post-Lome IV Agreement offers some hope only to the extent that the civil society organisations redefine their participatory role in favour of policy advocacy and build credible alliances between ACP and EU CSOs. CSOs should see their role in removing distortions and imbalances that are structurally detrimental to the production especially of food for domestic consumption in the ACP countries.

This advocacy role should seek to secure commitment to removing protectionist measures within the framework of CAP to the extent that those measures depress domestic food production in the ACP states. It should also seek real commitment to diversification away from primary commodity production. It is the redefinition and reinforcement of ACP CSO roles as partners that could help reduce the integrity gap between the new agreement and the realities of structural impediments to economic development in ACP countries.

Third World Network-Africa (Red del Tercer Mundo-Africa) twnafrica@ghana.com

*Published in Social Watch


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