Statement by the Representative of the European Commission

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Post-Forum Dialogue Tarawa, Kiribati October 31, 2000

Mr. Friedrich Hamburger Director, Caribbean, Pacific and Indian Ocean

Mr. Chairman, Honourable Ministers, Ladies and Gentlemen,

1. On behalf of the European Union and the Commissioner for Development and Humanitarian Aid, Mr. Poul Nielson, I would like first of all to thank the Forum for inviting the European Union again to what is the most important political meeting between the Pacific Region and its main partners. We very much appreciate having the opportunity of keeping close contact with the Region, of meeting its key political figures for a lively exchange of views, which allow a better mutual understanding and thereby will lead to an even more effective co-operation. We are grateful to the Secretariat of the Forum for its efforts to enlarge and strengthen the framework of these meetings.

I also want to thank the Government of Kiribati for the splendid and efficient organisation of this year’s Post Forum. Having experienced the warm Pacific hospitality for a second time, I sincerely regret that I cannot enjoy it more often.

2. Mr. Chairman, the dawn of the New Century was a memorable event, which brought the Pacific and its Island States into the homes of the people all over the world. It is a happy coincidence that, as far as the development policy of the European Union is concerned, the new Century started with another memorable event. As you will be aware, I am referring to the new Partnership Agreement between the ACP and the European Community and its Member States. As this framework will govern our political and developmental co-operation with the developing countries in Africa, the Caribbean and the Pacific for the next 20 years, I think it is worthwhile to put the new Agreement into the centre of this year’s statement for this important meeting.

3. At a time when so many uncertainties exist with regard to globalisation, global and regional security and the democracy gap between rich and poor, elaborating a new framework for a true partnership with a view to addressing major challenges such as poverty, conflicts and wars, environmental threats and risks of economic marginalisation was not an easy task. Thanks to the long-standing political solidarity between the two groups, which has grown over time, and a shared political willingness, this challenge has been met and overcome. Thus, the signature of the ACP-EC Partnership Agreement represents a major political event, demonstrating that after some disappointing results in the area of North/South co-operation in recent times, there is stillroom to expand the true and deep relationship existing between these two parts of the world. We hope that the new agreement will constitute the beginning of a new era based on a profound reform of the spirit, the objectives and the practices of our co-operation. We also hope that, when it is evaluated at the end of its term, our successors will be able to proudly announce that this text and the practical work which has been based on it has led to a significant step forward in our objectives to eradicate poverty consistent with the objective of sustainable development and the gradual integration of the ACP economies into the world economy.

4. The renewal of the ACP-EU Convention has been the subject of intensive discussions since 1996, when the Commission initiated with governments, NGOs and civil society a public debate in the EU and in the ACP States on the basis of a Green Paper. The negotiations themselves between the EU and the ACP started in September 1998 and were brought to a successful conclusion early in February 2000.

The new ACP-EC Partnership Agreement builds on the experience of 25 years of co-operation under the successive Lomé Conventions but will bring about profound reform of the key aspects of the ACP-EC partnership. It defines a perspective that combines politics, trade and development and is based on five interdependent pillars. They are:

· a comprehensive political dimension,

· the promotion of a participatory approach,

· a strengthened focus on the objective of poverty reduction,

· the setting up of a new framework for economic and trade co-operation, and

· finally a reform of financial co-operation.

The Agreement has been concluded for twenty years, with a revision clause every five years. Also the volume of resources available for financial assistance will be granted for each five-year period in the life span of the Agreement.

The signature of the new Partnership Agreement took place on 23 June in Cotonou, Benin.

5. For the Pacific, the conclusion of this Agreement was of particular significance, as it implied the extension of the Pacific ACP Group to six new Members. Chairman, I am particularly happy to welcome the Cook Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, Nauru, Niue and Palau to the ACP family. With these accessions to the Agreement, our co-operation with the Pacific Region will be more comprehensive, as we are now covering all fourteen Island Member States of the Forum on an equal basis. This is also of particular importance for the trade relations the EU proposes to the Pacific Region.

Obviously, these new partner States are still relatively unknown territory for the European Union, and this may also be the case the other way round. These countries join an agreement the roots of which go back to the mid 70s. We should make every effort to become better acquainted with each other as quickly as possible. For this purpose, fact-finding missions from the Commission to the new ACP States will take place in the coming weeks. A seminar on the new Partnership Agreement will be organised from 21 to 23 November in Tonga.

6. Let me express on this occasion my regrets at the lost opportunity of having this historic document signed in Suva, the capital of the Republic of the Fiji Islands. The whole ACP/EU Community had agreed that this time it should be the Pacific’s turn to host this event and have the world’s attention focused on its people, their rich cultures and traditions, its unique environment and its unfolding economies. As you know, this common endeavour was destroyed by the unlawful acts of a few irresponsible individuals. I will come back to this issue under the agenda item on regional security, but I would like to express already now my appreciation for the progress made with the peace arrangements in Bougainville and the Solomon Islands. I am happy to see that the Forum Leaders have given priority to discussing the topic of security in the Pacific Region and the current crises and that a first diagnosis has been made by the Minister of Foreign Affairs of Papua New Guinea in order to identify the root causes of these problems. To deal with these problems effectively the peoples of these countries and of the whole region need to address potentially divisive issues with sensitivity, mutual respect and the determination to turn previous weaknesses into a source of strength. Equitable and lasting solutions will have to come, finally, from the political leaders and the peoples of the countries concerned. But I am sure that on the way to these solutions, assistance will be needed and I want to assure you that the EU stands ready to do everything in its means to assist you on this way.

7. This leads me to one of the major innovations of the Cotonou Agreement, where the two sides have agreed to place more emphasis on the key role of political dialogue than was the case during the Lomé era. The political dialogue should allow the ACP and the EU to address all issues of mutual concern. It should be conducted in a flexible manner, according to need, and take place within and outside the institutional framework at national, regional or ACP level.

An important innovation in this context is the inclusion of peace-building policies, conflict prevention and resolution in the Partnership by constructive dialogue and co-operation strategies. In this area, the partnership will focus in particular on regional initiatives and on the strengthening of local capacities.

The respect for human rights, democratic principles and the rule of law are, as was the case for the fourth Lomé Convention, are the essential elements of the Partnership. The consultation procedure of the new agreement puts more emphasis on the responsibility of the State concerned and allows for greater flexibility in the consultation process. In cases of special urgency - serious violations of one of the essential elements - measures can be taken immediately.

In addition, commitment to good governance has been included as a fundamental and positive element of the partnership. Both sides underline the importance attached to good governance and have made it a subject for regular dialogue and an area for active Community support.

8. We also decided to enlarge the framework of partnership. In future, a participatory approach will be promoted with a view to ensuring the involvement of civil society and economic and social players as actors in the Partnership. Such non-state actors will be provided with adequate information on the ACP-EU Partnership Agreement, in particular within the ACP countries, and will be systematically consulted on the economic, social and institutional reforms and policies to be supported by the EC. Moreover, non-State actors’ involvement in the preparation and implementation of programmes and projects will be facilitated as will access to support for capacity building.

9. The central objective of the new partnership is poverty reduction. The co-operation strategies will reflect international commitments with regard to agreed poverty targets. Through poverty reduction we hope to contribute to the stability in the region, which we see as a precondition to sustainable development.

In order to make the all-embracing objective of combating poverty operational, the Agreement maps out a consolidated and operational strategic framework to development. This integrated approach reflects the complex and multidimensional nature of poverty and will be conducive to a result-orientated approach that can be linked to qualitative and quantitative indicators to measure progress.

There will be three focal areas in which the financial support should be concentrated:

(1) Economic development, centering around private sector development and investment, macro-economic and structural policies and sectoral policies;

(2) Social and human development focusing on specific social sector policies, youth issues and cultural development; and

(3) Regional co-operation and integration.

Across all areas of co-operation, three crosscutting themes will be systematically mainstreamed. These are gender equality, environmental sustainability, institutional development and capacity building. Within this broad matrix, specific priorities will have to be established on a country-by-country basis in the context of the programming of financial assistance. Differentiation between and concentration on a very limited number of sectors will be key elements in the endeavour for efficient resource management.

10. The new trade arrangements draw the conclusions from the disappointing results of 25 years of non-reciprocal trade preferences under the Lomé Conventions. These preferences did not prevent the ACP share of the EU marked to decline from 6.7 % in 1976 to a mere 3 % in 1998, but also did not result in the desired diversification of exports. As a result, the underlying hypotheses that preferential market access alone will bring growth were falsified. Instead, a more comprehensive approach is needed, that takes account of a whole range of institutional and structural needs of a well functioning society, including an appropriate institutional and regulatory framework, public services and infrastructures and environmental protection bodies. These are the necessary conditions to enhance production, supply and trading capacities, to create new trade dynamics and foster investment and to ensure full conformity with WTO provisions.

The EU and the ACP States have agreed on a process to establish new trading arrangements. The parties will aim to maintain the previous – revised Lomé IV - trade regime, including the Protocols on sugar and on beef and veal, during a preparatory period foreseen to last until 2008. During this period, these protocols will be reviewed in the context of the negotiations of possible new trading arrangements.

The creation of these new trading arrangements, Regional Economic Partnership Agreements (REPAs) as we call them, is the cornerstone of the future ACP-EC trade co-operation. These REPAs will encompass WTO-compatible free trade areas between the EU and different sub-regions in the ACP, building on existing initiatives for regional economic co-operation. The Pacific Regional Free Trade Area provides an excellent opportunity to create an EU/Pacific ACP REPA, should this be desired by the Pacific Region. The REPA will take account of the different levels of social and economic development of the EU on one hand and the ACP region on the other. In order to create an enabling and business friendly environment, the trade liberalisation policies will be flanked by co-operation in trade-related areas such as co-operation in international fora, trade in services, competition policy, protection of intellectual property rights, standardisation and certification, sanitary and phytosanitary measures, trade and environment, trade and labour standards, consumer policy and protection of consumer health.

Formal negotiations on REPAs will begin by September 2002 at the latest. In parallel, starting in 2000, the EU has committed itself to eliminating virtually all exceptions to duty-free and quota-free treatment for Least Developed Countries, on the basis of the Generalised System of Preferences. In 2004, the situation of non-LDC ACP countries that do not consider themselves in a position to enter into an EPA will be examined and in 2006, the overall progress in negotiation of EPAs will be reviewed. The new trading arrangements shall begin on 1st January 2008 at the latest. Its implementation will take place gradually during a transitional period of at least 12 years.

11. In order to improve the efficiency of the administration of the resources available, the instruments of the European Development Fund have been regrouped and rationalised. The totality of EDF resources available will be channelled through two instruments. There will be one single grant envelope for support to long-term development from which each country and region will get an indication of one lump sum of resources. A wide range of different types of operations can subsequently be financed from this allocation and no resources will be locked for a specific purpose. This will allow for greater flexibility and the possibility to re-deploy resources within a country programme and between country programmes as necessary. The resources from the grant facility will be allocated on the basis of an evaluation of needs and performance. All allocations will be indicative and may be reduced or increased during the course of implementation of the programme.

The second instrument will be an Investment Facility, which will replace the previous risk capital and interest-rate subsidy facilities. This facility will be managed by the European Investment Bank. It will function as a revolving fund and the returns accruing from its operations will flow back to the Facility. Loans and risk capital are in principle granted on market-related terms. A degree of concessionality will be granted for operations that fulfil special criteria.

Adapting to this new approach, the system of programming of these resources has been fundamentally reformed. The programming process is more continuous and result-orientated than has been the case in the past. At the outset of the programming process, one single Country Support Strategy (CSS) will be established for each ACP State for a period of five years. The CSS will cover the implementation of all operations financed from the grant envelope, and will be established in dialogue with the recipient country and all other donors (in particular EU Member States) present in the country. The CSS will identify a limited number of sectors where the Community is deemed to have a comparative advantage. The CSS will be complemented by an operational Indicative Programme (NIP), which will set out the concrete operations to be financed in the focal sector(s) and a timetable for their implementation.

A flexible and regular review mechanism will make it possible continuously to update the CSS, the volume of resources and the indicative programme to take account of developments in need and performance. There will be an annual review, which will consist of a stocktaking exercise to review the progress in implementation of the operational indicative programme. At the mid-term and the end of term of the Financial Protocol of the Cotonou Agreement, the review will be expanded to cover a renewed assessment of the relevance of the CSS in the light of developments in the country and if necessary a re-orientation of the NIP (rolling programming) including an adjustment of the financial envelope.

12. A total amount of € 13.5 billion has been allocated to the first five-year period of the Cotonou Agreement, covering the period of 2000–2005.

This amount will be divided into three envelopes of co-operation as follows:

· Long-term grants of a national level: € 10 billion

· Long-term grants for regional co-operation: € 1.3 billion

· Investment Facility: € 2.2 billion

Apart from the grant resources, the EIB will make available up to € 1.7 billion for loans from its own resources. Thus, the overall amount of the Community’s financial assistance to the ACP States shall be € 15.2 billion. To this sum must be added the remaining balances from previous European Development Funds, which amount at this moment in time to € 9.9 billion.

13. We are now facing the challenge of demonstrating that our partnership is able to transform these important resources into actual benefits for the peoples of your countries. A first step in this process is the establishment of the document describing the agreed Country Support Strategies. This document shall include an analysis of the political, economic and social context of the country and outline the country’s own development strategies. It shall also pay close attention to the activities of other donors. This analysis will then provide the starting point for deriving suitable orientations for the use of the resources the Community is providing. For the regional co-operation, the same approach applies.

14. Chairman, last year I concluded my statement with a word of optimism for and confidence into the new century. I think that the signature of the Cotonou Agreement constitutes a firm encouragement in this respect. We should now do our very best to fully use these opportunities and continue on this path which will lead us, as the Agreement puts it, to the greater well-being of the populations of the ACP countries. Thank you.

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