Supplement to Courier ISSN 1013-7335

Africa – Caribbean – Pacific – European Union

ACP-EU

PARTNERSHIP

AGREEMENT

Signed in

COTONOU

On 23 June 2000

Poul Nielson

European commissioner for Development and Humanitarian aid

The new agreement will benefit the poorest

June 23 - the date on which the Partnership agreement was signed in Cotonou - represents a major historical and political event, for at least three reasons. Firstly it is the outcome of a long process, which started with the publication of the Commission's Green Paper, followed by a public debate and by the ACP-EU negotiations. Secondly, the signing of this new Agreement is a clear demonstration that after the disappointing results of Seattle, in a globalised world there is still room for a true and deep relationship between the North and the South. Thirdly, this date constitutes the beginning of a new era of a relationship based on a profound reform of the spirit, the objectives and the practice of our co-operation.

The Partnership Agreement will give a new momentum to the relationship between the ACP States and the European Union. It represents an important component of international efforts aimed at promoting sustainable development and reduc-ing poverty. It is a world-wide event. The ACP-EU partnership is a very dynamic and innovative one. This is demonstrated by the successful conclusion of a comprehensive negotiation round addressing a wide range of issues, at a time when many uncertainties exist on the international stage. Elaborating a new framework for a true partnership between the two groups of countries with a view to addressing together major challenges such as poverty, conflicts and wars, environmental threats, risks of economic and technological marginalisation, was not an easy task. It has been achieved thanks to a shared political willingness to give an ambitious response to these problems, building on the acquis of twenty-five years co-operation under the Lomé Conventions. The new Agreement marks a turning point for at least three key aspects: the objectives to be focused on, the ways and means to achieve them, and the nature of the partnership.

The objectives

We have agreed to develop a common and comprehensive strategy centred on the objective of reducing and eventually eradicating poverty, consistent with the objectives of sustainable development and the gradual integration of the ACP countries into the world economy. In defining this strategy further, the Agreement emphasises the economic, social, political, cultural and environmental dimensions of sustainable development. Equitable growth, the role of the private sector, issues related to access to productive resources, the core issues of social development the importance of regional integration and co-operation processes, the need to mainstream the objective of gender equality, the improvement of environmental sustainability, institutional reforms and capacity building, all form an integral part of this general strategy. This integrated approach reflects our respective international commitments many of us went to Geneva, for the review of the Copenhagen Summit. Recently the donor community, meeting within the Development Assistance Committee of the OECD, reaffirmed its commitment to implementing partnerships for poverty reduction. As a concrete model of such partnerships and of modern develop-ment cooperation arrangements, the ACP-EU Partnership Agreement can make a difference for the benefit of the poorest.

Ways and means

Rather than focusing on spe-cific and sometimes isolated initiatives, the ACP-EU partnership aims at influencing the context in which development can take place and be stimulated. The Cupertino strategy that has been agreed makes clear the link between development sup-port and the establishment of a policy framework favourable to trade development and investment. Under the Lomé Conventions, trade Cupertino largely took the form of prefer-ential tariffs. In future, our eco-nomic and trade Cupertino will consist of a more comprehen-sive set of arrangements. The new approach, aimed at establishing new trading arrange-ments, is crucial to improving the ACP countries' capacity in trade and to attract international private investment. It will be accompanied by appropriate support with a view to easing the transition and preparing for a more dynamic and equitable participation in the international economic system. The reform of the ACP-EU development finance co-operation system also represents a major step towards increased efficiency, flexibility and coherence. It will offer an, opportunity to optimise the use of resources available for devel-opment. The internal reforms underway within the European Commission will also contribute to improving the quality and effi-ciency of the process.

The nature of the partnership

Dialogue plays a key role in the success of development co-operation activities. It is at the heart of the relationship between the ACP group and the European Union. We will have to make all possible efforts to ensure that we tackle the real issues and potential difficulties at an advanced stage. Partnership goes hand-in-hand with ownership and mutual con-fidence. In a constructive and positive spirit we have decided to define good governance as a fundamental element of the new Agreement. This is a very encouraging signal that we are, together, sending to the legitimate beneficiaries of develop-ment cooperation and to the rest of the world. Each country must own and be accountable for its policies. The agreed framework for cooperation programming and implementation gives con-crete substance to the partner-ship approach and allows for progress in the co-ordination process. The association of civil society and the promotion of a more direct involvement of all stakeholders are also major components which doubtless will contribute to the success of the partnership. There are many sceptics watching what we are doing. It is wrong to say that our Partnership doesn't work. I came to Benin a few days early for the signing ceremony to see for myself what we are doing there. I saw road construction in progress, hospitals, newborn children in small clinics, people giving blood in a safe and con-trolled environment, and I saw a local market where 47 women now manage their own busi-nesses - and are prospering. I am confident that this is also what I could see in other ACP countries. Our partnership works, even if we all know it can be improved. We have achieved a highly important Agreement, which I fear can be undermined by the political situation in a lot of countries, by giving a wrong image of the ACP as a whole and of this special and privileged relationship with the European Union. We must show to the rest of the world that we have a shared vision of the future of this relationship and that we will deliver. One of the necessary conditions to do this is to work in an environment, which is politi-cally stable and respectful of human rights, democratic princi-ples, the rule of law and good governance. The Community will be behind the ACP countries to achieve this objective.

I congratulate the ACP group, which, despite the difficulties and constraints encountered in a rapidly evolving international context, has been able to cele-brate its twenty-fifth anniversary.

Jean-Robert GOULONGANA

ACP Secretary General

Together we must take up the challenges of the Cotonou Agreement

After 18 months of long and difficult negotiations, the new ACP-EU Partnership Agreement - which, after the Lomé Conventions, is to cover the next 20 years of the relationship between the European Union and the ACP countries - was signed at a solemn ceremony in Cotonou, Benin, on 23 June 2000. This is an excellent opportunity for me to congratulate all the negotiators for their dedication and readiness to compromise. These qualities made it possible at crucial moments of the discussions to bring closer together sometimes diametrically opposed posi-tions and, ultimately, to achieve a mutually accept-able agreement.

Nevertheless, the hardest is yet to come: Many not inconsiderable challenges are waiting to be taken up, the most immediate being quite simply ratification and entry into force of the Agreement as rapidly as possible. Certainly, the recent adoption by the ACP-EU Joint Committee of Ambassadors of transitional measures valid as of 1 August 2000 has allowed the advance application of certain pro-visions of the Agreement. The notable exception is the financial protocol which will not enter into force until after completion of the procedure of ratifica-tion by two-thirds of the ACP countries (i.e. 51 states), the 15 Member States of the European Union, and the European Community. If past expe-rience is anything to go by, it will take, on average, 18 months to achieve the required quorum. The challenge in this case will be not to exceed this time period and, if possible, to significantly shorten it. The other challenges will become apparent when the Agreement is implemented, and will relate to the political dimension, the new actors involved in the partnership, the new commercial framework and financial cooperation.

The political dimension

Expansion of cooperation to the political sphere one of the principal innovations of the Cotonou Agreement. Political dialogue is the key element which must enable both parties to address al issues concerning one partner or the other. In this respect, the Agreement has set out a number c-1 general principles, without indicating the practical terms and conditions of their implementation. It will thus fall to the various bodies to attend to the details of provisions which will be truly operational. The ACP-EU Council of Ministers, in Cotonou on 22 June 2000, assessed the degree of urgency of the task to be accomplished, and gave a mandate to the Joint Committee of Ambassadors to prepare suitable proposals and to submit them to it. So, it is the practical application, which will validate the quality of the political dialogue to be established, and give substance to political cooperation.

The new actors involved in the partnership

The inclusion of civil society and economic and social actors in the ACP-EU partnership is a further new feature. The objective is to involve these parties in the definition of strategies and priorities, which hitherto were the exclusive jurisdiction of governments. The aim is therefore to establish mechanisms, which reconcile State responsibilities and recognition of the increasing role played by non State actors in the development process. The involvement of civil society in the partnership is not as simple as it might appear at first sight, but is a complex issue because of the disparity of the situa-tion of civil society in the different ACP countries. Imagination, flexibility and pragmatism will all therefore be required. In this exercise, the ACP Secretariat will make its contribution by organising private sector/civil society fora designed to elicit use-ful reflection from the interested parties themselves.

The new trade arrangement

The Cotonou Agreement provides for the setting up, in the long term, of a new trade arrangement characterised by the progressive abolition of obstacles to trade between the parties, in accordance with WTO rules. To achieve this objective, economic partnership agreements will be negotiated from September 2002 and will enter into force as of 1 January 2008. In the interim, the current non-reciprocal preferences and the regimes of the various protocols will be maintained. By relying on and promoting the speeding up of the regional integration initiatives currently in progress in the ACP countries, the new trade arrangement aims to assist those countries with their gradual, harmo-nious insertion into the world economy, to increase production, supply and the competitive nature of their products, and to attract inward investment.

As far as these objectives and the system devised in order to achieve them are concerned, it is not difficult to realise the extent of the task, which may be summed up as follows: for the dura-tion of the Agreement, the ACP countries must prepare themselves to face up to competition on the international market in order to shake off their current marginalised status and to eradicate the poverty, which is crushing their people.

Major adjustments will therefore be required. Definition and identification of the means to be implemented, to constitute the framework for future trade negotiations, will require painstaking preparation on both sides. In this respect, the ACP Secretariat envisages organising a series of meet-ings aimed at defining the strategy, programme and agenda for the negotiations. It is essential to know in advance who will be negotiating, in what sphere and according to what timetable.

Financial cooperation

With a view to improving efficiency, the Cotonou Agreement makes provision for only two financial instruments under the European Development Fund (EDF): an instrument for granting subsidies for long-term development support and an invest-ment facility to promote the private sector in the ACP countries, aimed at replacing the current financing mechanism of risk capital and interest subsidies. The programming system is also modi-fied: the allocation of resources to the ACID coun-tries will henceforth be based not only on their needs, but also on their performance levels. Moreover, the indicative nature of programming will be strengthened, in the sense that the amount of resources allocated to a country will not neces-sarily go to it - the amount may rise or, alterna-tively, fall, depending on the results of periodic joint evaluations. Finally, the Agreement recognises the need to increase the utilisation rate of finan-cial resources, to avoid an accumulation of con-siderable balances, which slow down upward readjustment of the EDF. For this, it provides for a simplification of management procedures and greater delegation of responsibilities from the European Commission towards, on the one hand, its delegations in the ACP countries and, on the other hand, national EDF authorising officers.

There are two types of challenge involved here: the insufficient nature of financial resources and the actual acceleration of the rate of absorption by the ACP countries.

The ACP countries have been disappointed by the level of resources under the 9th EDF (2000--2005), which was set at E13.5 billion, almost the same as the figure for the 8th EDF. Need we re-state that the Cotonou Agreement is aimed at poverty eradication in the ACP countries and their progressive insertion into the world economy? This requires much more sizeable financial resources, but this argument is thwarted by the existence of a remaining balance of E10 billion under the preceding EDFs. Hence the undertaking made by the European Union to work towards the ACP countries' absorbing at least E3.5 billion per annum. This is an enormous challenge for the ACP countries, which do not always have suffi-cient institutional capacity, nor sometimes the nec-essary human resources. Following the example of what some ACP countries have already done, there appears therefore to be a case for reorganising national authorising offices and calling on new skills, including seeking these in other ACP countries. However, the European Union also bears its share of responsibility insofar as it must genuinely pass on responsibility to its delegations in the ACP countries and endow them with ade-quate resources. Furthermore, it must ensure that current reforms of its development-aid policy do not relegate its special relationship with the ACP Group into second place.

As may be seen, the challenges facing the ACP countries are indeed huge, but not insurmount-able. Admittedly, enormous effort is required of them, and they will have to adapt to developments in today's world. They have the will to do this, and must build up and strengthen their capacities, rely-ing not only on their own resources but also on external assistance, such as that provided under the partnership agreement signed with the European Union. In this regard, the Cotonou Agreement constitutes, for the Group as a whole and for each individual country, an opportunity not to be missed.

The Cotonou Agreement - new orientations

by Françoise Moreau

The achievements of the Lomé Conventions

The renewal of the ACP-EU Agreement has been the subject of intensive discussion since 1996, when the Commission Green Paper on the future of relations between the European Union and the ACP countries was published. Wide-ranging public debate has made it possi-ble to assess the expectations and changes needed to breathe new life into the partnership. The new Agreement, signed in Cotonou on 23 June 2000, builds on the acquis of twenty-five years of experience. The successive Lomé Conventions have been a unique model in North/South relations, combining a negotiated system of trade preferences and considerable amounts of aid. But results have been mixed. Evaluations of Community aid to the ACP coun-tries have often demonstrated that insufficient account has been taken of the institutional and policy context in the partner country, and this has too often undermined the viability and effectiveness of cooperation. The impact of non-reciprocal trade preferences has also been disappointing. Although they have contributed to the commercial success of some countries. globally they have not prevented a decline in the ACP countries' share of the European mar-ket (from 6.7% in 1976 to 2.8% in 1999). Approximately 60% of total exports are concen-trated on only 10 products. Although the far-sightedness and the contractual nature of the Lomé Convention were acquis worth preserv-ing, there was also an obvious need to adapt to international and regional developments. The rise in poverty in a number of countries, demo-graphic developments and environmental pres-sures meant that objectives and cooperation practices needed to be reviewed. The rise in private direct investment flows to the develop-ing countries over the last 15 years has not benefited the majority of ACP countries.

The change brought about by the signature of the new Agreement also reflects an evolution of the political dimension. Dialogue plays a key role in the success of development cooperation activities, and the political dimension of poverty reduction strategies is now acknowledged to be an integral part of development processes. The new ACP-EU partnership aims particularly to promote closer involvement of civil society, the private sector and the economic and social actors These new approaches are factors inherent in the consolidation of democracy, which can improve the effectiveness and viability of cooperation policies.

The five pillars of the new Agreement

The new partnership makes a clear association between the political dimension, trade and development. It is based on five pillars:

The Agreement has been concluded for twenty years, with a clause allowing for revision every five years and a financial protocol for each five-year period. As regards the trade agreements, a specific timetable has been agreed between the parties, anticipating the various stages, which will lead to the effective setting-up of the new system. Certain aspects of the Agreement, particularly the sector-based policy guidelines defined in a "Compendium" or the procedures for implementing financial assistance contained in the annexes, can be adapted on a regular basis if necessary. The ACP-EU Council of Ministers, which in principle meets once a year, will be responsible for adaptations. This new approach embodies the dynamic nature of the partnership and gives the cooperation system greater flexibility.

The political dimension

Regular political dialogue should promote the consisten-cy and relevance of ACP-EU cooperation strategies and make it possible to address all issues of mutual interest. Important matters such as peace-building and conflict--prevention policies, and migra-tion, have been expressly introduced into the new Agreement. Respect for human rights, democratic prin-ciples and the rule of law, and good governance will be subjects for regular dialogue between regional and sub-regional organisations and representatives of civil society. The Joint Parliamentary Assembly is called upon to play a particularly important role in such areas. New consultation procedures are envisaged in the event of viola-tion of human rights, democratic principles and the rule of law, or in serious cases of corruption.

Civil society and the participatory approach

The general provisions aim to pro-mote the involvement of civil socie-ty and economic and social players within the context of the partner-ship. They stress the need for infor-mation; support for capacity build-ing; the principle of consultation of non-State players on reforms and economic, social and institutional policies to be supported by the Community; involvement of non State actors in the implementation of programmes and projects; and the encouragement of networking and strengthening of links between ACP and EU actors.

Development strategies: focus on poverty reduction

The partnership is centred on the objective of reducing and, in the long term, eradicating poverty, in line with the objectives of sustain-able development and progressive integration of the ACP countries into the global economy. The Agreement defines a general strategic framework reflecting international commitment and simultaneously taking into account the political, economic, social, cultural and environmental components of development. In contrast to previous Conventions, the new Agreement proposes a global strategy for development, which will require Community, Member States and ACP partners to work together establish a consolidated and operational cooperation framework. This will include qualitative and quantitative indicators to allow systematic evaluation of results. This approach takes into account the complexity and multidimensional nature of poverty. It concentrates on three priority areas of cooperation: economic development; social and human development; and regional integration and cooperation. In all these areas it envisages. the systematic consideration of three cross-cutting themes: gender equality; sustainable management of the environment and natural resources; and institutional development and capacity-building. This approach means that priorities will be established on a country- by- country basis and the focus on poverty reduction will now be a key element in cooperation. The new, approaches to these development strategies will be reviewed on a regular basis by means of the annual publication of a Compendium of reference texts which will allow the partnership to take account of best: development practices.

The new trade framework

Within the context of the Lomé Convention, trade cooperation was based essentially on preferential tariffs. In future, economic and trade cooperation will consist of a more complete set of arrangements. The EU and the ACP countries have agreed on an approach which aims to establish new trade agreements leading to the liberalisation of trade between the par-ties and which will include cooperation in areas linked with trade, such as competition policy, the protection of intel-lectual property rights, standardisation and certification, sanitary and phytosanitary measures, trade and the envi-ronment, trade and labour standards, and consumer poli-cy. The Agreement also includes provisions for ACP-EU cooperation in international fora.

The objective of economic and trade cooperation is to promote the progressive integration of the ACP countries into the global economy, by enhancing production and the capacity to attract investment, and ensuring conformity with WTO provisions, whilst taking account of respective development levels. The strategy adopted establishes a clear link between development aid, particularly support for modernisation of the economy, for the transitional period and for social policies on the one hand, and the setting-up of a regulatory and trade-policy framework to favour the development of trade and private investment on the other. The ACP-EU Agreement aims to support the mutually reinforcing effects of economic and trade cooperation and development aid.

As regards modalities and procedures, the ACP-EU Agreement envisages the introduction of new trade agreements after a preparatory eight-year period during which the current trade regime will be maintained. The negotiation of economic partnership agreements is due to start in September 2002 at the latest The period preceding the start of these negotiations will be put to good use in preparing for the negotiations, supporting regional integration processes and enhancing public and private sector capacities. In 2004, the parties will carry out an assessment of the situation of non-LDC ACP coun-tries not in a position to enter into economic partnership agreements, with a view to examining possible alterna-tives. In 2006, there will be an evaluation of progress made in the negotiation of economic partnership agreements to ensure that no additional time is needed for the negotiations. The new trade agreements will enter into force on 1 January 2008 at the latest, and the liberalisation of trade will be achieved during a transitional period of at least 12 years. The Community has also undertaken to liberalise practically all imports of products originating from the LDCs. LDC exporters will benefit from free access for essentially all their products to the EU market by 2005. Sugar and beef protocols will be provisionally maintained, but will be reexamined within the context of the negotiation of new trade agreements.

The reform of financial cooperation:

simplification of instruments and ongoing programming

The instruments of the European Development Fund (EDF) have been regrouped and rationalised. All available EDF resources will be channelled via two instruments: one envelope which will group together all non reimbursable aid, and one enve-lope providing risk capital and loans with a view to supporting the development of the private sector. The vulnerability of ACP economies resulting from a high level of dependence on export income in the agricultural or mining sectors will be taken into account and may lead to the granting of supplementary resources within the framework of the Community Support Strategy and of the Indicative Programme. A system of rolling programming accompa-nied by regular review will allow the support strategy to be continu-ally adapted as the situation in the country or region evolves, thereby guaranteeing the necessary flexi-bility. The consolidation of the various EDFs will make it possible to avoid parallel programming sys-tems. A review of support strategy, at mid-term and at the end of the period for application of the finan-cial protocol, may also involve adaptation of the level of resources allocated to the country or region in question.

The nature of Community aid will necessarily evolve more towards budget- and sector-based aid programmes. The primary responsibil-ity of the partner country (appropri-ation) is stressed in particular. Large-scale interventions will enhance the impact of cooperation and facilitate coordination with other donors. The allocation of resources will be based on an assessment of need and policy performance. Five-yearly financial envelopes will be purely indicative and will be subject to review on the basis of need and performance. This will make it possible to give more effective support to efforts at reform in particular, and to prevent sizeable resources being frozen in countries, which do not put them to good use. The involvement of non State actors in formulating and implementing support strategies must be guaranteed. The impor-tance of dialogue at local level and reexamination at specific intervals in the partner country are embod-ied in the new Agreement. Regional programmes will also be subject to a rolling-programming system and will be reexamined at mid-term and at the end of the 5-year period when account will be taken, in particular, of progress made and prospects for future regional cooperation and development.

Financial resources

A significant volume of financial resources will make it possible to support development strategies in the ACP countries: €13.5 billion for the 9th EDF, plus €9.9 billion in remaining balances from previous EDFs, ie a total of €23.5 billion for the period 2000-2007, plus the €1.7 billion from the EIB. This will allow a significant increase in annual flows of Community aid to the ACP countries.

40 years of Europe-ACP relationship

by Dominique David

From economic and commercial partnership to political cooperation

In a speech on 9 May 1950, Robert Schuman declared that "Europe would, with increased resources, be able to pursue one of its essential t3sks; the development of the African continent." The Treaty of Rome signed on 25 March 1957 made provision for the association of the OCTs (overseas countries and territories) with the embryo European Community. Since then, through the two Yaoundé Conventions and the four Lomé Conventions, we have now arrived at re new ACP-EU Partnership Agreement, signed in Cotonou, which covers over half the world's countries and more than one billion individuals. Initially conceived as incidental in the history of nations, development aid has survived to the present day. It has sometimes been badly used, as unearned income, with the result that essential reforms were postponed. Fortunately, it has also' been well used to facilitate the sustainable development of societies.

The historical evolution of the relationship between Europe and the ACP countries shows 9W it has not happened in isolation, but, on the contrary, by taking into account the progress of the European community and evolution of the overall international context. Expansion of the European Community to include new members such as the United Kingdom, Spain and Portugal obviously had a considerable influence on Lomé policy. The Maastricht Treaty, which enshrined development cooperation policy as one of the elements of the Common Foreign and Security Policy (CFSP), naturally laid the groundwork for the political dimension of the new Cotonou Agreement.

It is of course impossible to gain an understanding of the evolution of the partnership between Europe and the ACP countries without taking into account the context of decolonisation (Association of Overseas Countries and Territories and Yaoundé Conventions) or that of the new international economic order (Lomé model) or even the end of the Cold War (updated Lomé IV) or, finally, the effects of globalisation (Green Paper and Cotonou Agreement). The last 40+ years have thus seen a progression from a principally eco-nomic and commercial partnership to cooperation at a more global level within which political issues are addressed.

The OCT Association and Yaoundé Conventions I and II: the aftermath of decolonisation

European/African relations were in their initial stages: the OCT Association came into being with the Treaty of Rome and the setting-up of the first EDF (Development Fund for Overseas Countries and Territories). By 1960, the majority of the OCTs had gained their independence. Yaoundé 1 (1963) and 11 (1969) covered 18 AASMs (Associated African States and Madagascar).

These two Yaoundé Conventions constituted a learning process, not only in terms of partnership (the setting-up of joint institutions), but also in terms of contractual systems. Their field of action related essentially to trade and financial and technical cooperation. At a sectoral level, funding was granted principally to economic and social infrastructure projects. The development of Yaoundé's policy into that of Lomé was to result in a larger number of partners and a diversification of objectives.

From Lomé I to Lomé III: economic cooperation

The 1970s were characterised at one and the same time by a triumphant pro-Third World attitude, bitter East/West confrontation and rising commodity prices (first oil crisis). The political aspects of cooperation were still a taboo subject because of the international context of the Cold War. The first three Lomé Conventions were signed by ACP countries which found themselves not only in areas of communist and capitalist influence but also in the Non-Aligned Group. It was also one of the particular features of the Lomé Convention that dialogue with all these countries was able to continue. However, it was not until Lomé III that Article 4 of the Convention alluded to the importance of human dignity (and not human rights) and stressed economic, cultural and social rights (rather than civil and political rights). Regarding this era, the last word must go to Dieter Frisch, when he wrote that neutrality was during the time of the Cold War, in itself a political option.

The accession of the United Kingdom in 1973 obviously posed the problem of the destiny of the 20 developing Commonwealth countries in Africa. the Caribbean and the Pacific. After a long period of uncertainty and political negotiation, the first Lomé Convention was signed between 9 European countries and 46 ACP countries. At the time, it was seen as a new model for North/South development, based on partnership and solidarity.

The 1975 Georgetown Agreement institutionalised the ACP group and gave it a permanent structure: the General Secretariat. At a political level, it was proclaimed that each State has the right to determine its own policies; at a commercial level, non-reciprocal preferences were set up regarding ACP exports to the EEC.

Stabex was also set up as a system of com-pensation for the shortfall in export income on the part of the ACP countries because of price fluctuations. Finally, protocols favouring ACP exports were created in sectors such as sugar, beef and veal, and bananas.

At a sectoral level, Lomé I and Lomé II continued to address the issues of infrastructure and agricultural-programme funding.

This new model of internation-al solidarity is still regarded as exemplary, but doubt as to the effectiveness of aid began to creep in, resulting in a crisis of conscience about the legitimacy of development cooperation.

From then onwards, and par-ticularly from Lomé I 11, there was a concerted move towards pay-ing particular attention to improving the effectiveness of aid with a view to ensuring credibility.

Lomé II was signed in 1979, with 58 ACP countries. It coincided with a progressive "globalisation" of European cooperation, including, naturally, areas outside the ACP zone. This Convention was, in global terms, a continuation of the previous one, but with a new innovation the creation of Sysmin, a mechanism of the same type as Stabex but relating to mining product resources.

Lomé III was signed in 1984 between 10 European countries and 65 ACP countries. It coincided with an in depth review of the effectiveness of aid and the emergence of a political dimension, hence the importance given to policy dialogue, the progressive abandonment of the project approach and the need for concentration of Community aid on a sectoral basis. Priority was given to development founded on self- sufficiency and food security, and to combating desertification and drought. In parallel, infrastructure funding continued to be a prime necessi-ty.

Summary of the achievements of the Lomé policy:

The above achievements of Lomé policy are illustrated in Lomé IV.

Lomé IV: the consideration of human rights

Lomé IV was signed in 1989 between 68 ACP countries and 12 European states. For the first time, Lomé policy became genuinely political, with respect for human rights forming one of the fundamental clauses of the Europe-ACP relationship. Another innovation was that the term of the Convention was set at 10 years, to be reviewed upon expiry of the five-year financial protocol. It also marked Europe's conversion to supporting the structural adjustment process initiated by the Bretton Woods institutions, although with the stamp of the European model. In parallel, stress was placed on diversification of the ACP economies, promotion of the private sector and the increasing importance of region-al cooperation as a precursor to regional integration.

Updated Lomé IV and the Green Paper: the political dimension

The mid-term review of Lomé IV led to the signature of a new agreement in Mauritius (1995) between 15 European states and 70 ACP countries. Respect for human rights, democratic principles and the rule of law became an essential element, violation of which could be penalised by partial or total sus-pension of cooperation. Further-more, the objectives of the European Union in the Maastricht Treaty (1992) were taken into account:

For the first time, also, a direct link was confirmed between Community development coop-eration policy and the CFSP. Gradual implementation of programmes also allowed flexibility, taking account not only of needs but also of per-formance on the part of the ACP countries.

Finally, the role of civil society was taken into consideration, particularly through decentralised cooperation. At a more global level, in order to take account of the need for debt relief, special loans were converted into subsidies.

At the end of 1995, the European Commission embarked upon a process of reflection, which was to result in the "Green Paper on relations between the European Union and the ACP countries on the eve of the 21st Century - challenges and options for a new partnership." This initiative was particu-larly symbolic of the spirit of dialogue, given that post-Lomé negotiations were not set to begin until September 1998, and the fact that the Green Paper was more a raising of issues accompanied by proposals than a prefabricated response. Published in November 1996, it was to generate a whole range of consultation exercises in Europe and the ACP countries, involving all those with a role in development and including civil society.

The following aspects were acknowledged:

Consequently, the partnership had to be contin-ued but revitalised, particularly by virtue of the inclusion of the new members of civil society.

Future prospects: from policies to politics

The new 20-year Cotonou Agreement has just been signed between 15 European states and 77 ACP countries. It addresses two principal issues: that development is first and foremost political and that globalisation cannot be synonymous with poverty, inequality and exclusion.

Although economic strategy plays a major role, the development issue is more politically based. Indeed, development is generated through the establishment of stable relationships between players in a society in an evolving international context. Political dialogue, therefore, is a key ele-ment in the new partnership. This partnership can succeed only if it is accompanied by political analysis, not only of changes of regime but also of transformation of systems in our partner societies.

It is through being given greater autonomy that the least fortunate will gain the right to self-organisation. The fight against poverty and inequality at local level requires, first and foremost, consideration of this essentially political dimension.

The international context should not, however, be disregarded.

Paradoxically, it is because of globalisation that development cooperation has taken on a new dimension in international relations: although it generates further fragmentation, it also gives rise to new South/South and North/South interdepen-dent relationships. This is not without importance.

Given the above, development cooperation should not only flank the effects of globalisation but also anticipate them... or be condemned to a future role as an international social service.

Signing Ceremony in Cotonou

A new era of cooperation

by Kenneth Karl

The sports centre inside the vast 'Friendship Stadium' in Cotonou, Benin was the venue for the signing ceremony on 23 June of the new Partnership Agreement linking the countries of Africa, the Caribbean and the Pacific with the European Union for the next twenty years. Taking place two days after the ACP Council of Ministers and the ACP-EU Joint Council of Ministers, this official ceremony certainly lived up to all expectations. In a convivial atmosphere where hospitality, solidarity and above all hope pre-vailed, the representatives of the various countries party to the Agreement stepped up to the rostrum one by one to formally sign the imposing Treaty Book.

Everyone had expected this ceremony to take place in Suva, capital of Fiji, but in the end it was Cotonou, to the great delight of the Beninese. The sudden political upheaval in Fiji, coming just days before the scheduled signing of the new ACP-EU Agreement, forced the ACP Group to find in a hurry a new host country for the ceremony from among its Member States. According to the vast majority of those who attended the event, this ceremonious occasion was a remark-able success, especially in view of the lack of preparation time. In two short weeks, Benin managed to rise to the difficult challenge of organising the signing ceremony for the new ACP-EU Agreement at the very last minute, displaying to the numerous foreign delegations present its admirable capacity for mobilisation and organisation as well as its warm hospitality.

A historical turning point

23 June 2000: a date which will go down in the history of relations between the European Union and its ACP partners as a watershed and a his-toric moment. It sets the seal on a quarter of a century of cooperation between a number of partners from North and South, most of whom are bound by historical ties, and at the same time marks the beginning of a new era. A new era of cooperation where the keynotes are clearly hope and realism, drawing on the wealth of experience acquired during the 'Lomé years' but also adapting to a changing world. This grand signing ceremony is also part of that change, marking the culmination of a long process of negotiation between the EU and the ACP which began eighteen months previously, aimed at giving new impetus to their partnership. The challenge facing the partners in the next few years will be to improve the effectiveness of this cooperation so as to achieve better results and arrive at their clearly stated goal - the reduction of poverty. In a sports stadium packed to capacity, the different representatives reiterated their continued commitment to this unique relationship. Next to the rows of officials at the front, ordinary members of Beninese society - women, students, motor taxi drivers, shopkeepers and association representatives - also watched the entire ceremony from up in the terraces. The symbolism of this scene was notable, when one considers the remarkable strides towards democracy made by the host country, and the measures in the new agreement aimed at better integration of every-one working towards development ordinary citizens in particular.

The mood was festive as, against a backdrop of traditional singing and dancing, key figures came to the podium in turn to make a speech. In his welcoming address, S6v6rin Adjovi, Benin's Minister for Trade, Local Industry and Tourism, stressed the invaluable importance of this new cooperation framework for the development of the ACP countries, declaring that "the Cotonou Agreement will go down in the annals of ACP-EU cooperation as having contributed a new eco-nomic, political and social contract." The memo-rable nature of the occasion was underlined by Poul Nielson, European Commissioner of Development and Humanitarian aid, who saw the new agreement as evidence that there is still a place for genuine, deep-seated relations between North and South in the wake of the failure in Seattle. Luis Amado, Portuguese Secretary of State for cooperation and President of the EU Council, congratulated Benin on its organisation of the ceremony, and declared: "The contractual relations uniting the Union with its partners are part of our communal heritage and are based on fundamental principles - soli-darity, dialogue, transparency, equality, sover-eignty and contractuality - which give our relationship its strength and specificity. The consolidation of our partnership based on these principles is the Union's top priority." His ACP counterpart, Anicet-Georges Dologuele, Prime Minister of the Central African Republic, went on to express his satisfaction with the objectives of the new agreement - to eradicate poverty and enable the ACP States to adapt gradually to the liberalisation of trade. Almost all the participants were positive about the new framework for cooperation, because of the new opportunities it opens -p in so many different areas.

Towards a renewed partnership

The conclusions of the Commission's Green paper on ACP-EU cooperation, and the results .he widespread debate which ensued, meant that simply maintaining the status quo was no longer an option. For this reason, the signatories :o the Cotonou Agreement have jointly undertaken a radical reform of their partnership. From now on, it will proceed along the lines of an intensified political dialogue, incorporating many different aspects of cooperation such as good governance and the prevention and management of conflicts, alongside human rights, democracy and the rule of law, issues already central to it. As far as economy and trade are concerned, measures have been taken and negotiations are scheduled to enable the ACP countries to start to take their place in the world economy. These are goals, which can be achieved by means of a global and integrated approach. New trade agreements compatible with WTO regulations are planned, strengthening cooperation in areas relating to trade. Help towards making the ACP States more competitive and support for regional integration and development of the private sector will be stepped up. In addition, in an effort to implement the new agreement more effectively, financial cooperation will be improved through rationalisation of the instruments and programming and simplification of procedures. For the first time, thanks to the new measures, civil society takes Centre stage in the partnership, and the battle against poverty is explicitly made the partners' first priority. The Cotonou Agreement undoubtedly provides new perspectives for the various States and all those working towards development but, as one of the participants in the Ceremony pointed out, the task will be far from easy. In the words of Benin's President, Mathieu K6r6kou: "When it comes to implementation there will doubtless be difficulties, either of our own making or because of the international situation around us. No difficulty should surprise us, however, nor be insurmountable if we are all resolved to put into practice the global political dialogue contained in the Cotonou Agreement."

Bernard Petit

Director, European Commission

"The Cotonou Agreement is the only one of its kind in the world"

Responsible for chairing the Task Force for the post-Lomé negotia-tions, Bernard Petit led the discussions with the ACP countries, which resulted in the conclusion of the Cotonou Agreement. The new direc-tions embodied in this Agreement present challenges that the two groups of partner countries will have to take up if optimum results are to be achieved With long years in the service of devel-opment, and aware of the size of the task ahead, in this interview Mr Petit throws some light on the stakes involved in the partnership with the ACP countries and the role of the European Union.

The basic philosophy underlying ACP-EU cooperation has not essentially changed. This is to define, in the long term, a framework agreement of privi-leged relationships, founded on three pillars: the political dimension, trade and development aid. Past experience and the need to adapt the partnership to upheavals at an international level required a fundamental review of the spirit, objectives and implementation of our cooperation, so that we could revitalise the partnership and give it new aspirations and, above all, increased chance of success.

One of the principal lessons of the debate arising out of the Green Paper relates to the considerable added-value which involvement of non-State actors and civil society can bring. It is important both in terms of the consolidation of democratic processes and in the formulation of our cooperation strategies. It was absolutely essential to break away from the logic of a government-to-government relationship, and you are quite right in stating that this new approach will not be easy to implement. We are entering into a process which will greatly depend on the manner in which the players themselves seize the opportunities available under this Agreement The framework has been set up not only for consultation of these actors and their association in the definition of cooperation strategies, but also to promote their direct access to a share of EDF resources. The EU is also prepared to lend them institutional support to enable them to fulfil the role expected of them.

When we embarked on the negotiations, the EU's objectives were quite clear. We had to define a framework, which in the long term would enable the ACP countries to play a full part in a liberalised inter-national trade system, but also to facilitate the transi-tion, taking into account the particular problems experienced by each country. The unilateral prefer-ential trade arrangements granted under the previ-ous Conventions did not produce the expected results, so our aim was to develop an economic partnership, which went beyond simple trade arrange-ments and the problem of the lowering of tariffs. This approach involves developing close cooperation in all fields connected with trade and envisages the setting-up of a transparent and forecastable framework that is attractive to investors, mobilises the private sector and revitalises trade. The new arrangement also makes provision for flanking measures in the form of institutional and financial support, to help the ACP countries set up the new commercial framework.

Such fears are understandable in the face of this generalised liberalisation process. Certain ACP coun-tries' economies are poorly diversified, particularly in the LDCs where there are major problems of capacity, supply and competitiveness, and these will have to be overcome in the twenty years during which this trade liberalisation process will develop. Liberalisation, as envisaged in a regional context under the Cotonou Agreement, or in a multilateral context, is irreversible. We thought it was easier to confront these constraints at regional level rather than multilaterally, because it is easier to take into account the specific nature, needs and particular problems of each country.

The challenge is considerable, given that, if appropriate measures are not taken, and irrespective of anticipated long-term advantages, globalisation could marginalise certain regions for two reasons firstly because of the erosion of their trade preferences, and secondly because those trade preferences cannot be adapted rapidly enough to benefit from globalisation, Clearly, all those boxing in the globalisation ring are not in the same class. Nevertheless, irrespective of what one might feel about market forces, this is an irreversible process and we have to work with those forces and attempt to influence them by adopting measures to guarantee more equitable development. That is precisely the spirit of the Cotonou Agreement, and the synergies it offers between the commercial arrangements on the one hand and development strategies and development aid on the other. The EU has demonstrated a great open-mindedness in these negotiations to the enable the ACP countries to take part, in the long term, in this irreversible move to globalisation. It has made political undertakings to its partners who can now be assured of the Union's support in international fora and particularly vis-à-vis the WTO in defending the provisions of the Cotonou Agreement.

It has to be acknowledged that the problem of efficiency arises not only in the implementation of aid under the previous Convention, but that it is also a more general problem concerning European aid as a whole and development aid worldwide. In-depth reform of instruments and implementation of cooperation as embodied in the Cotonou Agreement forms part of a global framework which is geared towards greater efficiency. This involves reform of the Commission's external relations services and a definition of a global Community strategy vis á vis all developing countries. In the Cotonou Agreement, we have made progress with in-depth reform of the instruments and terms and conditions of financial cooperation. The instruments have been rationalised and reunified around two envelopes: an envelope for development in the long term and an investment facility for specifically supporting the private sector. This reform also involves introducing a rolling-pro-gramming system, which will allow greater flexibility in responding to the evolution of requirements and per-formance levels of the different countries. Finally the reform envisages greater selectivity in the granting of resources, simplification of procedures and provi-sions aimed at making decisions more relevant to conditions in the field by decentralisation and dele-gation of tasks.

The Cotonou Agreement is the only one of its kind in the world. I know of no other agreement which is as global as this and which is based on the three pil-lars of politics, trade and development between a group of industrialised countries and a group of developing countries. The conclusion of this Agreement shows that the will within the EU to set up a framework of privileged relations with the ACP Group is indeed genuine. As the largest donor and trade partner of developing countries, the EU could have a greater influence in the international debate if it were better coordinated. Admittedly, large-scale strategies are often taken up by others and the EU often pays the consequences. The Cotonou Agreement offers special features and advantageous added value. Where other donors are concerned, we have the comparative advantage of addressing not only politics but also trade and development aid. Next, the Community will consolidate collective EU experience in regional integration. In the context of globalisation, this approach is a prerequisite to wider integration into the world economy. Thirdly, the Community has a vast network of representatives in the field. Fourthly, EU development policy conveys a certain image of Europe in the world, based on com-mon values of solidarity, social progress and democ-racy. Finally, beyond its competence in trade and despite the weak nature of its human resources, the EU has developed acknowledged expertise in key fields such as support for economic reforms, the social sector and transportation. To conclude, no one person is now capable of managing the myriad issues, which make up a development policy. There is no alternative to working within the context of a gen-eral consensus based on the objective of poverty eradication, alongside other donors and our own Member States. Complementarity means division of labour. Depending on the comparative advantages of each party, dialogue with the country in question will be led by whoever has the greatest expertise or human and financial resources. Our actions will in future be implemented in this context.

Interview by Kenneth Karl

From Georgetown to Cotonou:

The ACP Group faces up to new challenges

by Kenneth Karl

The African, Caribbean and Pacific Group of States, better known as the 'ACP Group', was created by the Georgetown Agreement of 6 June 1975 and by the first Lomé Convention, signed in the same year. This was an entity made up of countries which were in man respects very different, but which nonetheless had a great many interests in common - most importantly the socio-economic development of their peoples. Founded on the principles of solidarity and unity, this group of countries has, in spite of its diversity, managed for many years to maintain a highly admirable level of cohesion. Now, having just celebrated its twenty-fifth anniversary, the ACP Group needs to update itself in order to respond appropriately to the different developments of the new Millennium and the challenges it brings.

A long way covered together!

Although the ACP Group only came into being officially in 1975, many of the countries which belong to it today already enjoyed a special rela-tionship with the European Community (now Union) stretching back much further in time. Historical connections had long been forged with several European nations, anxious for the most part to preserve their privileged relations with their former colonies. The articles of Association of the Overseas Countries and Territories, instituted with the Treaty of Rome in 1957, and the two Yaoundé Conventions (1963 and 1969) linking the Community with the African and Madagascan States, arose largely out of just such a vision. A new hand was dealt when the United Kingdom joined the EEC in 1973, creating new imperatives for this group of countries from the South deter-mined to work hand-in-hand towards their own economic development. The legitimate aspirations of numerous Commonwealth countries - spread over several continents - and their desire also to belong to this privileged circle, inevitably led to widening of the latter in terms of its geographical, cultural and linguistic space.

In signing the Georgetown Agreement on 6 June 1975, the 46 African, Caribbean and Pacific States affirmed their common identity based on solidarity, but more importantly, they gave their Group the proper legal status which r had previously lacked. Twenty-five years of coop-eration with the European Community have now gone by, with the Group being progressive'-, enriched by the arrival of new members. A numbe-r of developing countries have joined the big ACP--family, bringing its total from 46 to 58 under Lomc-11, then from 65 under Lomé III to 70 under Lome IV, revised in 1995. Meanwhile, South Africa has joined the Group under a special charter, and E new small Pacific States have added their signa-ture to the Cotonou Agreement, thus confirming the attraction this group continues to hold for other -developing countries. In all, there are now 77 countries striving together to push back the frontiers of poverty and to create the conditions for real economic development by actuating the various levers of international cooperation, particularly those of the European Union.

In a quarter of a century of cooperation with the EU, the ACPs have succeeded, through the inter--play of negotiation and compromise, and despite obviously divergent interests, to establish the foundations for consensus so essential to the unity of their Group. These foundations, although -more than ever in need of reinforcement, bear wit-ness to all those years of united endeavour and solidarity. It is, of course, more difficult for 7-countries to arrive at balanced, unanimous decisions than it is for 15 countries on the same continent to reach agreement. Despite the more mitigated, official nature of 'Lomé-style' cooperation, a number of ACP countries have managed to reap the benefits of this unique relationship in terms of economic and social infra-structures, technical and finan-cial aid programmes in various sectors, access to the European market for some of their pro-duce, assistance with imple-menting effective macroeconomic policies, backing structural adjustments, and so on. Others, however, have been unable to take full advantage of this cooperation for various rea-sons. Approximately 40 coun-tries belonging to the ACP Group are still labelled LDC (Less Developed Country), indi-cating a low per capita income about 300 dollars) and severe infrastructure problems. These figures clearly reveal that there s still a very long way to go on the road to development, a road paved with innumerable chal-lenges for the Group's member countries.

On the political level, although the democratic process appears to have taken firm root in sever-al ACP countries, in others it is still very much in its infancy. Intra- and inter-State conflicts - real obstacles to development - are, alas, still very much a fact of life, as illustrated by the distressing examples of Ethiopia and Eritrea, the Democratic Republic of the Congo or Sierra Leone, to name but a few. Reinforcement of the political dimension in the new partner-ship agreement, one of the main aims of which is to anticipate and better manage these crisis situations, would at first sight appear to offer interesting per-spectives which the ACP Group could use to stem this infernal tide of wars, leaving them free to concentrate on a different battle - the battle to eradicate poverty in the interests of development.

"Positive differentiation" under the ACP umbrella

Before the publication in 1996 of the Commission's Green Paper which looked at the future of ACP relations, the question of the existence of the ACP Group as a homogeneous whole had never really been an issue. Everyone knew that it was made up of a number of different countries and regions whose inter-ests did not necessarily coin-cide, since needs and levels of socio-economic development varied according to the particu-lar national or local framework, as did the benefits and advan-tages derived from the different Lomé Conventions. Neverthe-less, from the very inception of their Group, the ACP countries managed - in spite of their num-ber - to consistently maintain the level of cohesion necessary to defend their interests collective-ly in relation to their European partners. However, new trends outlined by the EU in the context of a prospective 'post-Lomé' debate aimed to encourage a better targeted partnership capable of responding more effectively to the specificities of regional groups. This, along with the increasing necessity for inte-gration and regional cooperation, has provided new food for thought concern-ing the geographical scope of the future Agreement. Whilst accepting the principle of pos-itive differentiation - a policy which also guides EU relations with other parts of the world - the States of the ACP Group have nevertheless expressed their desire to remain united as a group, to main-tain their ACP political identity and above all to preserve the achievements of 25 years of coop-eration with the EU. This position was reaffirmed and defended at the highest political level by the ACP Heads of State and Government at their summit meeting in Libreville on 6 and 7 November 1997.

As a consequence, the new ACP-EU partner-ship agreement will be implemented in the con-text of regionalised structures within the ACP nucleus maintained as a whole, in whatever form this entity emerges from the delicate compromise devised by the two groups of partner countries. The fact that the ACP countries were so keen to preserve the structural framework of their Group can be explained by the not inconsiderable advantages of this in purely political terms. A number of experts believe that the very size of a Group consisting of 71 countries - to which we must now add the 6 new Pacific States - conveys credibility. This size makes it easier (in principle, at least) to carry political weight in multilateral negotiations, in this case negotiations with EU. This solidarity also enables them to fend off competition from other parts of the world which also have long-standing relations with the EU. In fact, the EU has said that it is concerned more than ever with rationalising its foreign policy, especially its budgetary spending. Speaking with one voice also gives the small (Caribbean and Pacific) States a greater chance to benefit from the advantages offered to the whole Group.

Although fears concerning the political weaken-ing of the ACP Group now seem to have abated somewhat, work on unification is still needed. Its members must endeavour to reduce the recurring obstacles that stand in the way of a stronger union. Intra-ACP cooperation is itself still limited. both economically and politically, and the chal-lenges of regionalisation remain huge, in spite of the substantial progress already made. The biggest challenge for the ACPs will be to reconcile the imperatives of unity and solidarity – principles fundamental to their very existence - with the new demands of global cooperation, which all serve to reinforce the regional dynamics.

Towards a wider existential legitimacy?

It could be said that the ACP Group's sole raison d'être is derived from its special relationship with the EU, fostered for more than 20 years Although certain provisions of the Georgetown Agreement might uphold this view, other provisions with a much broader content, actually indi-cate the opposite. The three primary objectives of the Group mentioned in the first chapter (Article of the Georgetown Agreement explicitly refer the Lomé Convention and to the EEC. They V vide for implementation of the aims of the Lo-o Convention, coordination of the activities of 14 ACP States in this context, and definition of common ground vis-6-vis the EEC under the terms this same Convention. The other aims of Group focus, moreover, on strengthening solidarity between the ACPs, contributing to advancement of economic, social and cultural relations between developing countries in many different spheres, finding common ground on issues being dealt with on the international stage and which relate to the Convention, and promoting regional, inter-regional and intra-ACP cooperat-ion. All in the hope of one day arriving at a fairer and more equitable world order.

Aside from any analysis of the legal terms of the -ext of the Georgetown Agreement, however, we must look at the real situation. It is true that, over the years, the ACP Group has to a large degree concentrated on its relations with the EU. Even if, individually, each Member State has its own bilateral or regional cooperation relationship with other partners, this entity of 71 countries (77 today) still remains under-represented in other multilateral issues under discussion, where it would certainly benefit from speaking with a single voice. The shifting power play on the world's geopolitical chessboard, coupled with the demands of galloping globalisation and its perverse effects, means that the ACPs now necessarily have new prioritises. Their ability to defend and safeguard their interests in other international arenas, as the WTO example shows, is still minimal and very weak. The Group itself has clearly become aware of this situations in recent years, displaying its desire to cast its net a little wider by forming other associa-tions on the international stage. In the Libreville Declaration, the ACP States made a commitment to “consolidate the political identity of the Group, to enable it to speak with one voice in all the inter-national arenas." The Santo Domingo declaration, adopted two years later, "reaffirms the growing political and economic importance of other players on the world stage and the need to forge appro-priate relations with them." In the lucid and prag-matic words of Jean-Robert Goulongana, taking office as the new Secretary General of the ACP Group: "We need to join forces with other partners who can help us defend our interests without, however, jeopardising our special relationship with the Union." This neo-realism will have to find a more effective expression in practice, however, because the desire to be a player on the world stage presupposes the mobilisation of strategic and political forces along with additional human and material resources. On a positive note, the EU appears to be in favour of this new trend, now con-sidered essential. It will even support ACP repre-sentation in other international arenas such as the WTO, where the economic and commercial future of these countries is also being played out (Article 39 of the Cotonou Agreement). This new opening--up to the international stage will also facilitate cohesion, coordination and complementarity on the part of the various financial backers when it comes to approaches and development strate-gies.

Aware of the magnitude of the challenges facing them, because of the necessity of adapting their Group to a changing world, the ACP States have undertaken a series of radical reforms, including the restructuring of their main executive body - the general Secretariat of the ACP Group - the head-quarters of which are in Brussels. It will also be necessary to adapt the Georgetown Agreement once again, with the aid of amendments, to re-inforce its substance, and to avoid it becoming anachronic. In the light of these major changes and this reshaping of EU cooperation, there are grounds for optimism regarding improvement of the conditions for development in ACP countries. But it is important to keep in mind that develop-ment results from two dynamics. One is an inter-nal dynamic, determined by the efforts of the country itself and its people, and isn't this the most important? The other is an external dynamic, which comes from the indispensable advantages which are drawn from international cooperation, in terms of technical and financial support. With this new ACP-EU Agreement, which falls into the sec-ond dynamic, and the opening up to other actors, the Group hopes that the next twenty years will see it write a more glorious chapter in its history. We'll have to wait and see. Good luck!

An opportunity for the new Pacific ACP members

by David MacRae

Eight Pacific island countries currently belong to the ACP Group but this number is set to grow with the inclu-sion of six new members. This article examines what this means for the Pacific ACP Group, and the implications for the ACP Group as a whole in its relations with the EU.

The Pacific region

The Pacific region consists of the islands and territories that lie within the Pacific Ocean, inhabited by Pacific peoples (Melanesians, Micronesians and Polynesians). In the broadest sense this would therefore include New Zealand (Aotearoa) with its Maori population and Hawaii which, though part of the USA, has a native population of Polynesians. A narrower definition, closer to present day political realities, is to regard the Pacific Region as consisting of the 22 countries and territories which today belong to the Pacific Community. This includes the eight countries already members of the ACP Group, and the six new Pacific ACP members.

These 14 countries - the eight existing plus six new members of the Pacific ACP Group also all belong to the Pacific Forum, a grouping of independent Forum Island Countries (FICs) together with Australia and New Zealand. The Forum has its own permanent secretariat and meets on a regular basis at ministerial level to deal with issues of common interest. An idea that has been around for some time, and is now under serious consideration, is the formation of a free trade area between the FICs. Under the new ACP-EU Partnership Agreement this could form the basis for a Pacific Regional Economic Partnership Agreement.

The Pacific ACP Group has existed on the exist within the regional institutions, thus red basis of historic relations with certain EU members states, but it is not a coherent entity. After WWII the Pacific was divided into zones of influence. The countries and territories of the central Pacific had a close relationship with the USA while those of the South Pacific had links the colonial powers, France and the UK. The accession of the six new members to the Pacific ACP Group may help to promote regional integration, bringing these countries into contact with the EU and the former EU colonies of the South Pacific.

The Pacific Community has been an important vehicle for regional cooperation by involving the countries and territories of the region in a range of technical and social programmes. The Forum Island Countries, all of whic-h now be members of the ACP Group, have taken this further in the sphere of trade and -: cooperation. Thus, becoming members of ACP Group may help promote regional integration between the independent island states.

The EU-funded Pacific Regional Indicative -Programme is programmed and implemented through the region's network of regional and institutions. For programming and project identification purposes the Regional Authorising Oft (RAO) is the Secretary General of the Forum Secretariat. The accession to the ACP Group of the six new members means that it is now possible (from EDF9 onwards) to prepare projects for all Forum Island Countries rather than for only a part of the group.

Similarly, at the implementation stage, the Pacific Community and other regional institutions are involved, it is now possible to device projects for an existing group of countries for which implementation arrangements already exist within the regional institutions, thus reducing the requirements for separate EU-Pacific ACP arrangements.

The Pacific region includes eight territories, four of which are with the EU: New Caledonia, Wallis and Futuna and French Polynesia are French territories, while tiny Pitcairn - popula-tion less than 50 - is the last remaining UK ter-ritory in the Pacific. These, together with four other Overseas Countries and Territories (OCTs): American Samoa, Guam, Northern Marianas (all US) and Tokelau (NZ), belong to the Pacific Community. By matching funds from the ACP and OCT programmes it is now possi-ble to extend the coverage of EU-funded regional programmes to cover 18 of the Pacific Community's 22 countries and territories.

The six new ACPs

The six newcomers to the ACP Group include three Central Pacific Micronesian Countries - Palau, the Federated States of Micronesia (FSM) and the Republic of the Marshall Islands (RMI). These were once Spanish possessions that were later sold to Germany. They then passed to Japan after WWI and became American territories after WWII. Unlike the Northern Marianas and Guam which remained US territories, Palau, FSM and RMI opted for independence and have been involved with the USA in a Compact arrangement. The other three newcomers have also had links in the past with EU member states. Nauru, which is also a central Pacific Micronesian country, was a German colony before WWI. It was then administered by the UK, Australia and New Zealand during which time the country's extensive phosphate deposits were mined.

For a short period, the Cook Islands and Niue, South Pacific Polynesian countries, were administered as a British colony. They were then transferred to New Zealand in a voluntary association arrangement. This has allowed internal self-government, with progressive autonomy in international relations leading towards eventual independence.

As small island countries, the six new ACP members face similar development constraints to other small Pacific ACP states. Typically they have small subsistence-based economies, are remote from world markets and, with the exception of the single islands of Nauru and Niue, are composed of a large number of islands scattered over a vast area of ocean.

Land resources are limited but marine resources, at present poorly developed, are considerable. The Exclusive Economic Zone (EEZ) of the Pacific Region as a whole extends over 30 million km² of which 11.7 million km² belongs to the original eight ACP members. The six new members will raise this to almost 20 million km².

In common with other Pacific island coun-tries, the six new ACP members are highly vul-nerable to natural disasters and heavily dependent on a limited number of exports. While none is classified as a least developed country, their private sectors are underdevel-oped and there is a shortage of trained person-nel. The share of the public sector in national output is high.

Each of the new countries has its own indi-vidual characteristics, the three former US ter-ritories are heavily dependent on the transfer of financial resources as laid down in the Compact Agreements with the US. Palau has gone furthest to develop other sources of income, from the tourism sector in particular. However, FSM and RMI remain heavily dependent on transfers from the USA.

Nauru became one of the wealthiest coun-tries in the world during the 1980s due to its rich phosphate deposits. Much of this wealth has now been lost, and phosphate mining has caused serious environmental damage.

The Cook Islands and Niue have enjoyed particularly close relations with New Zealand. Niue, with a resident population of just over 2,000, is particularly small (though Niuans living overseas are a multiple of this figure) and will be the smallest ACP member state. Both countries are part of the New Zealand monetary system and in the past have relied heavily on budgetary transfers.

The Cook Islands, FSM and RMI have adopted structural reform programmes since the mid 1990s. These are designed to reduce the public sector and to strengthen the private sector, particularly in fisheries, agriculture and tourism.

The USA and Japan are important trading partners for the former US trust territories, while trade with Australia and New Zealand is important for the other three countries. Except for occasional transac-tions, for all six countries trade with the EU is practically negli-gible. Intra-regional trade between the six and other Pacific countries is also limited and underdeveloped. Region. The cre-ation of a FTA between the FIC's is seen as a possible remedy.

The six new ACP members and the EU

The Pacific region only con-tains some 7 million people, of whom more than 6 million are in the original 8 Pacific ACP states. At 225,000, the total population of the six new members is less than that of the Solomon Islands. In terms of population, and of land mass, the six new members add little, therefore, to the size of the ACP Group. Their trade with the EU is also minimal and their total financial impact is very modest.

In terms of marine resources, with a combined EEZ over 8 million kM2, the resource endowment of the six new members can be consid-ered as significant, particularly when judged against the small size of their populations. The sustainable management of the region's marine resources, clearly a development priority, is receiving attention within the Pacific Regional Indicative Programme.

Perhaps the best way of viewing the accession of the six new members to the Pacific ACP Group is the effect it has on the nature and scope of the relationships, which the EU is able to develop with the Pacific Region. The Pacific is the smallest of the three regions of the ACP Group. By raising the number of Pacific countries, from eight to 14 - just one behind the current size of the Caribbean region - it reduces the natural imbalance in favour of Africa within the Group as a whole. The six new members, like the existing members of the Pacific ACP Group, are all small island states, which suggests that the special problems which these countries face - vulnerabilitv and economic viability - coul-d be raised on the agenda at ACP-EU meetings. The extra Pacific faces at the ACP-EU gatherings may also bring an -extra dimension during the deliberations of the two groups given the Pacific tendency to strive for consensus.

The inclusion of the six new Pacific ACPs closes a gap in the EU's economic and political cooperation with the Pacific Region. Historically, the Pacific island peoples have seen their region divided by the metropoli-tan powers. The inclusion of the six countries in the ACP Group helps to bring the region togeth-er again. Their inclusion within any future Pacific Regional Partnership Agreement broad-ens the scope and renders more credible the EU's regional cooperation endeavour.

Yolette Azor-Charles

Ambassador of the Republic of Haiti to Brussels

"The partnership must be founded on mutual respect"

As Haiti's ambassador to Brussels for several years, Yolette Azor-Charles is fully au fait with ACP-EU cooperation, where she has taken an active role. She was closely involved in the long negotiations with the EU which ended in February 2000. Following this she took over the rotating presidency of the ACP Committee of Ambassadors for a period of six months. During this delicate transitional period it was necessary to prepare the ground for the new Agreement, setting up transitional measures, preparing reforms and defining strategic guidelines, to give the new partnership arrangement a good start. She found time to give her views on a num-ber of important issues underlining the Cotonou Agreement.

That's a very difficult question to answer. It's not simply a matter -of a direct comparison between the new Agreement and Lomé, because the Lomé Convention was reasonably complete, although we did experience a lot of disappointment. But we have to reflect on what the situation might have been without such an agreement. I can't say whether the Cotonou Agreement in itself stands a better chance of achieving that objective, but it has at least come into being at a defining moment when the general impression is that governments, international organisations, the international com-munity and all those involved in development pol-icy feel more concerned and are more aware of the disturbingly wide extent of poverty throughout the world, including countries in the northern hemisphere.

The direct reference to civil society in this Agreement marks a new beginning. Certain actors in civil society had of course already been target-ed in previous Conventions and were able to ben-efit from certain types of funding. But by its explic-it mention of civil society, the new Agreement appears revolutionary, turning a static environ-ment totally upside-down. It is important to involve civil society, giving it more responsibilities, but there are still problems. In certain countries civil society is not yet well-defined, hence the need to agree on a specific definition. In other countries, most non-State actors are not consulted or even informed about this cooperation. There is also a fear that such players would want to take over something of the role of the State. If everyone's role can be defined and respected, it will be pos-sible to turn the situation to advantage. At the time that my country acceded to the Lomé Convention, I was already promoting the advantages of broad--based participation in cooperation, by stressing the importance of the role of each of the players concerned. Now that these non-govern mental actors have been expressly associated with the new Agreement, it is imperative to give them financial and institutional support, and adequate training so that they can fulfil their role.

The political dimension in our cooperation has become increasingly important insofar as we have had to adopt measures which, on a number of occasions, touch on the political sphere. Greater importance is being given to political dialogue, and that makes it necessary that such dialogue is organised and based on mutual respect. All the parties involved need to be given a fair hearing if we are all to benefit from the new partnership.

You're quite right, this issue has given rise to a great deal of emotional discussion, passion and even increased sensitivity. That was inevitable because there was a problem of lack of confi-dence, with certain parties concentrating on the issue of corruption. Those who coined the term '.good governance" used it for specific purposes. If one conceives good governance as proper man-agement of public affairs, with sound and suitable management, we are obliged to note certain short-comings. Unfortunately, many meanings have been given to this concept, and that's why the ACP countries were reluctant to agree to good governance becoming an essential clause in the Cotonou Agreement, to prevent ambiguous situa-tions. A clear-cut definition has never been offered and accepted at international level, so everyone interprets it in their own way. I would also add that good governance must be respected on all sides. For example, when an international institution allo-cates aid to a country, its duties must include respect for the partnership and it must send qual-ified people, have precise and transparent rules, and not create obstacles to the smooth running of cooperation. This partnership must be based on mutual respect.

Why should this Agreement be given such a heavy responsibility? Shouldn't we emphasise those elements which impose the need for democ-ratisation in the ACIP countries? The Cotonou Agreement must be perceived as an appeal of sorts, an opportunity to encourage, even to sanc-tion. Through it, it is possible to implement actions which will motivate people to consolidate democ-ratisation. As the European Commissioner said, populations have to be shown that democratisa-tion pays. To achieve that, citizens' rights and the rights of States have to be respected. That is why mechanisms and facilities aimed at removing obstacles to this process have to be devised. Financial, institutional or administrative shortcom-ings in certain countries can give the impression of a lack of democratisation. In other countries, the lack of respect for certain democratic principles is very real and the Agreement makes provision for dealing with such situations. It would also be desirable for physical support to be provided, to increase awareness, either through books or through audiovisual aids, so that citizens can be reminded of their rights and duties and encour-aged to promote democracy. However, the fact that an individual is not given the right to educa-tion, food, health or employment, for example, is also a violation of human rights, which can slow the process down, don't you think?

The ACIP Group is often presented as a mosaic, or as a heterogeneous whole. Yet, as a large group with several small, well-founded blocs, it is easier to lend a hand and link up shared interests and common causes to be defended. Whenever there is a problem in an ACP country, all the oth-ers feel involved and work together to seek a solu-tion - we have often felt such solidarity within our Group. Regionalisation is important in that it enables different countries to enter into a closer relationship and to get to know each other better, thereby constituting a force within the bloc. Admittedly, problems are not the same from one region to another, but there is also intra-ACIP cooperation which, on account of this solidarity imperative, should be enhanced. It is already developing informally through exchanges of expe-rience which should be encouraged, to consoli-date solidarity at regional and even Group level. Our feeling is that we are progressing towards greater solidarity within our Group.

I have to confess that I've found this aspect of the Agreement a little disappointing, although some people would say that a decision to promote development benefits women and also young people, who mustn't be forgotten. However, women have an advantage: when they are not given a specific role, they carve one out for them-selves and make themselves heard in that way. They primarily occupy the informal sector, which means that their role is not very clearly understood in statistical terms. I very much hope that States will see fit to allocate a percentage of funds to enhancing women's skills; such a policy has already shown its importance in the development of our nations. Women need to have access to education, health and credit, and need men's sup-port. I agree with that famous lady who said that the third millennium will be the millennium of women, or nothing. As regards young people, I genuinely believe that they have a place in the programmes we envisage, whether in terms of improving skills or in the involvement of new actors. We have to explain to them how this Agreement operates and, ultimately, allocate them a share of the funding. Then they will be able to become fully-fledged members of civil society.

Interview by Kenneth Karl

Regional dynamics in the new ACP-EU partnership

by Walter Kennes

The vast majority of ACP States are small or very small economies. Most of them are also small in terms of population and "m y are landlocked or island states. These characteristics imply a serious challenge in the current globalisation trend. At the same time glob-alisation leads to new opportunities. Regional integration and cooperation can help ACP count-ries to be in a better position to cope with these challenges and to take advantage of the new opportunities.

The new Agreement underscores the impor-tance of regional cooperation in several ways. Regional cooperation is put forward as a development cooperation strategy. In addition, it is an important aspect of economic and trade coopera-tion. Regional integration is considered to be the foundation for the new ACP-EU trade regime. Article 35 states that "economic and trade coop-eration shall build on regional integration initiatives of ACP States, bearing in mind that regional integration is a key instrument for the integration ACP countries into the work economy." Regional cooperation is further encouraged under the heading of macroeconomic policies. This fol-lows the approach advocated for a long time by re EU of taking into account the regional dimen-sion in macroeconomic reform programmes. This approach has gradually been endorsed also by the Bretton Woods Institutions.

As regards regional cooperation as a development strategy, two aspects are distinguished in the Agreement. First there is regional economic integration in the strict sense (see Article 29). This aims to help ACP countries move towards larger and more unified markets in the form of free trade areas, customs unions of single mar-kets. It involves the gradual elimination of con-straints on cross-border trade, payments and investment. Support in this area could cover for example strengthening the capacity of regional integration institutions and facilitating trade liber-alisation, including help with the budgetary effects. The second aspect describes what is usu-ally referred to as functional regional cooperation (Article 30). This typically covers support to deal with common or cross-border problems that arise in areas such as infrastructure, environment, health, education and research. This builds on a long and successful tradition of EU-ACP collabo-ration. Functional cooperation can take place without a formal economic integration process, but in most practical situations both aspects go together and are mutually reinforcing.

Positive advantages, once pre-conditions are fulfilled

Regional integration can help to reduce pover-ty. This can come from the positive effect of inte-gration on economic growth and the fact that growth is necessary for reducing poverty. Successful regional integration will lead to larger markets, more efficient allocation of resources, increased competition and a better investment climate. It also offers a framework for the consol-idation of sound economic policies through regional surveillance and peer pressure. Regional integration includes scope for solidarity between more-favoured and less-favoured parts of the region, for example coastal states in relation to landlocked countries. This can be done, by set-ting up joint compensation or redistribution mech-anisms. Another important aspect is the increased prominence and bargaining power when countries in a region act jointly, rather than on their own. Regional integration can only be successful when a number of political and eco-nomic pre-conditions are fulfilled. The political pre-conditions include peace and security, respect for human rights, democracy and good governance. They largely correspond to the essential elements that figure prominently in the Agreement, but it is important to highlight their role in relation to regional integration. The eco-nomic pre-conditions include sound macroeco-nomic management particularly in respect to monetary, budgetary and fiscal policy. It is easy to understand that countries with very different inflation rates and fiscal policies will find it difficult to increase trade and investment flows. An inter-esting point to add, from European experience, is that once basic pre-conditions are fulfilled the success of regional integration will consolidate and lock in these pre-conditions. In other words regional integration will help to prevent future con-flicts and avoid macroeconomic policy slippages.

Regional cooperation as a development strate-gy and foundation for a new trade regime is com-plementary to other aspects. Regional integration leads to a reduction in tariff revenue. Presently, government revenue in many ACP countries is still highly dependent on tariffs and this puts a brake on implementation of regional integration arrangements. It should be stressed that tariffs are neither an efficient nor an equitable way to collect government revenue. But replacing tariffs by other methods of revenue collection must be examined carefully in the overall macroeconomic and fiscal context. Achieving a good fiscal struc-ture is an important aspect of macroeconomic cooperation.

The benefits of regional integration must be obtained through the operation of the private sec-tor: less efficient industries and firms should be replaced by more promising ones. This adjust-ment process is not easy, because losses will often occur before new investments bear fruit. The Agreement gives a key role to the private sector, and the new instruments to support private sector development should be seen as a way to facilitate the repositioning of the private sector in the regional and global market. This will make the adjustment more gradual and socially sustain-able.

The new trade regime envisaged by the Agreement leads to a radically different perspec-tive for the ACP countries. To achieve a stable trade arrangement that is fully compatible with the global trading system under the World Trade Organisation, the Agreement foresees the grad-ual introduction of reciprocity in ACP-EU trade. This would take the form of WTO-compatible eco-nomic partnership agreements that would com-prise free trade areas, but would also pay atten-tion to increasingly important themes such as services trade, intellectual property, standardisa-tion, sanitary and phytosanitary measures, labour standards and environment. Implementation would start not later than the year 2008. The EU would seek maximum flexibility in terms of the transition period and product coverage. The new regime will be such that it cannot be challenged by other WTO members and would thus be fully secure for traders and investors. In this way, it would constitute a strong stimulus for EU invest-ment in ACP states. As mentioned above, these partnerships should build upon the regional inte-gration initiatives of ACP countries. In other words they should become Regional Economic Partnership Agreements (REPAs). There are important benefits anticipated from REPAs, but there are also transitional costs. There is an important need to enhance the readiness of ACP countries to move in the direction of REPAs. The transitional problems that arise with the imple-mentation of regional integration, such as fiscal reform and private sector restructuring, will also arise with the move towards REPAs.

The EU is ready to help ACP countries with the gradual move towards a new trade regime. One aspect will be to develop negotiation capacity at the level of promising regional integration organi-sations within the ACID group. Special attention will be given to assisting least developed coun-tries to adjust to the new trade regime.

The ACP states and the countries of the European Union

Taken together, the 77 countries of the ACP Group and the 15 Member States of the European Union represent almost one billion inhabitants, out of the total six billion population of the planet, and more than half of the Member States of the United Nations. By signing the Cotonou Agreement on 23 June 2000, they confirmed the sin-gularity of their development cooperation relation-ship, based as it is on a partnership that is unique in *17e world, dealing at the same time with political, economic and commercial aspects, as well as devel-opment aid. The clear objective of this vast group of partner countries is to fight for the eradication of poverty while encouraging the progressive insertion of the ACP States into the world economy.

The following tables provide basic information on the 92 partner countries which are linked by the Cotonou Agreement signed on 23 June 2000.

The classification according to the index of human development comes from the UNDP's 2000 Human Development Report. The HDI (Human Development Index) indicated for each country is calculated by combining three major elements.

It will be noted that the IDH is unfortunately not avail-able for certain countries.

The maps are not necessarily on the same scale. Their publication involves the recognition of no bor-der and prejudges the statute of no country or territory. Well after the signature of Lomé IV, revised at Mauritius, South Africa joined the ACP family, with a rather individual status, and six new Pacific states have just entered the group by adhering to the Cotonou Agreement.

Overseas Countries and Territories

Denmark

Country having special relations with Denmark

- Greenland

France

Territorial collectivities

- Mayotte

- St Pierre and Miquelon

Overseas Territories

- New Caledonia and dependencies

- French Polynesia

- French Southern and Antarctic territories

- Wallis and Futuna United Kingdom

Overseas countries and territories

- Anguilla

- British Antarctic Territory

- British Indian Ocean Territory

- British Virgin Islands

- Cayman Islands

- Falkland Islands

- Southern Sandwich Islands and dependencies

- Montserrat

- Pitcairn Island

- Saint Helena and dependencies

- Turks and Caicos Islands Netherlands

Overseas countries

- Aruba

- Netherlands Antilles (Bonaire, Curaçao, Saba, Sint Eustatius, Sint Maarten)

PART ONE

GENERAL PROVISIONS

TITLE I

Objectives, principles and actors

CHAPTER 1

Objectives and principles

ARTICLE 1

Objectives of the partnership

The Community and its Member States, of the one part, and the ACP States, of the other part, here-inafter referred to as the "Parties" hereby conclude this Agreement in order to promote and expedite the economic, cultural and social development of the ACP States, with a view to contributing to peace and security and to promoting a stable and democratic political environment.

The partnership shall be centred on the objective of reducing and eventually eradicating poverty consis-tent with the objectives of sustainable development and the gradual integration of the ACP countries into the world economy.

These objectives and the Parties' international com-mitments shall inform all development strategies and shall be tackled through an integrated approach tak-ing account at the same time of the political, eco-nomic, social, cultural and environmental aspects of development. The partnership shall provide a coher-ent support framework for the development strate-gies adopted by each ACP State.

Sustained economic growth, developing the private sector, increasing employment and improving access to productive resources shall all be part of this frame-work. Support shall be given to the respect of the rights of the individual and meeting basic needs, the promotion of social development and the conditions for an equitable distribution of the fruits of growth. Regional and sub-regional integration processes which foster the integration of the ACP countries into the world economy in terms of trade and private investment shall be encouraged and supported. Building the capacity of the actors in development and improving the institutional framework necessary for social cohesion, for the functioning of a democrat-ic society and market economy, and for the emer-gence of an active and organised civil society shall be integral to the approach. Systematic account shall be taken of the situation of women and gender issues in 6 the Courier - September 2000 - Special Issue - Cotonou Agreemen all areas - political, economic and social. The princi-ples of sustainable management of natural resources and the environment shall be applied and integrated at every level of the partnership.

ARTICLE 2

Fundamental principles

ACP-EC cooperation, underpinned by a legally bind-ing system and the existence of joint institutions, shall be exercised on the basis of the following fundamen-tal principles:

- Equality of the partners and ownership of the development strategies: for the purposes of implementing the objectives of the partnership, the ACP States shall determine the development strategies for their economies and societies in all sovereignty and with due regard for the essential elements described in Article 9; the partnership shall encourage ownership of the development strategies by the countries and populations concerned;

- Participation: apart from central government as the main partner, the partnership shall be open to different kinds of other actors in order to encourage the integration of all sections of society, including the private sector and civil society organisations, into the mainstream of political, economic and social life;

- The pivotal role of dialogue and the fulfilment of mutual obligations: the obligations assumed by the Parties in the framework of their dialogue shall be central to their partnership and coop-eration relations;

- Differentiation and regionalisation: cooperation arrangements and priorities shall vary accord-ing to a partner's level of development, its needs, its performance and its long-term development strategy. Particular emphasis shall be placed on the regional dimension. Special treatment shall be given to the least-developed countries. The vulnerability of landlocked and island countries shall be taken into account.

ARTICLE 3

Achievement of this Agreement's objectives

The Parties shall, each as far as it is concerned in the framework of this Agreement, take all appropriate measures, whether general or particular, to ensure the fulfilment of the obligations arising from this Agreement and to facilitate the attainment of the objectives thereof. They shall refrain from any measures liable to jeopardize these objectives.

CHAPTER 2

The actors of the partnership

ARTICLE 4

General approach

The ACP States shall determine the development z-inciples, strategies and models of their economies and societies in all sovereignty. They shall establish, with the Community, the cooperation programmes provided for under this Agreement. However, the parties recognise the complementary role of and potential. for contributions by non-State actors to the devel-opment process. To this end, under the conditions aid down in this Agreement, non-State actors shall, where appropriate:

- be informed and involved in consultation on cooperation policies and strategies, on priori-ties for cooperation especially in areas that concern or directly affect them, and on the political dialogue;

- be provided with financial resources, under the conditions laid down in this Agreement in order to support local development processes;

- be involved in the implementation of coopera-tion project and programmes in areas that concern them or where these actors have a comparative advantage;

- be provided with capacity-building support in critical areas in order to reinforce the capabili-ties of these actors, particularly as regards organisation and representation, and the esta-blishment of consultation mechanisms inclu-ding channels of communication and dialogue, and to promote strategic alliances.

ARTICLE 5

Information

Cooperation will support operation to provide more information and create greater awareness of the basic features of ACP-EU Partnership. Cooperation will also:

- encourage partnership and build links between ACP and EU actors;

- strengthen networking and exchange of exper-tise and experience among the actors.

ARTICLE 6

Definition

1. The actors of cooperation will include:

(a) State (local, national and regional);

(b) Non-State:

- Private sector;

- Economic and social partners, including trade union organisations;

- Civil Society in all its forms according to natio-nal characteristics.

2. Recognition by the parties of non -governmental actors shall depend on the extent to which they address the needs of the population, on their spe-cific competencies and whether they are organised and managed democratically and transpa-rently.

ARTICLE 7

Capacity building

The contribution of civil society to development can be enhanced by strengthening community organisa-tions and non-profit non-governmental organisations in all spheres of cooperation. This will require:

- encouraging and supporting the creation and development of such organisations;

- establishing arrangements for involving such organisations in the design, implementation and evaluation of development strategies and programmes.

TITLE II

THE POLITICAL DIMENSION

ARTICLE 8

Political dialogue

- The Parties shall regularly engage in a compre-hensive, balanced and deep political dialogue lea-ding to commitments on both sides.

- The objective of this dialogue shall be to exchange information, to foster mutual understanding, and to facilitate the establishment of agreed priorities and shared agendas, in particular by recognising existing links between the different aspects of the relations between the Parties and the various areas of cooperation as laid down in this Agreement. The dialogue shall facilitate consulta-tions between the Parties within international fora. The objectives of the dialogue shall also include preventing situations arising in which one Party might deem it necessary to have recourse to the non-execution clause.

- The dialogue shall cover all the aims and objec-tives laid down in this Agreement as well as all questions of common, general, regional or sub-regional interest. Through dialogue, the Parties shall contribute to peace, security and sta-bility and promote a stable and democratic politi-cal environment. It shall encompass cooperation strategies as well as global and sectoral policies, including environment, gender, migration and questions related to the cultural heritage.

- The dialogue shall focus, inter alia, on specific political issues of mutual concern or of general sig-nificance for the attainment of the objectives of this Agreement, such as the arms trade, excessive military expenditure, drugs and organised crime, or ethnic, religious or racial discrimination. The dialogue shall also encompass a regular assess-ment of the developments concerning the respect for human rights, democratic principles, the rule of law and good governance.

- Broadly based policies to promote peace and to prevent, manage and resolve violent conflicts shall play a prominent role in this dialogue, as shall the need to take full account of the objective of peace and democratic stability in the definition of priority areas of cooperation.

- The dialogue shall be conducted in a flexible man-ner. Dialogue shall be formal or informal according to the need, and conducted within and outside the institutional framework, in the appropriate format, and at the appropriate level including regional, sub-regional or national level.

- Regional and sub-regional organisations as well as representatives of civil society organisations shall be associated with this dialogue.

ARTICLE 9

Essential elements and fundamental element

1 Cooperation shall be directed towards sustainable development centred on the human person, who is the main protagonist and beneficiary of deve-lopment; this entails respect for and promotion of all human rights.

Respect for all human rights and fundamental freedoms, including respect for fundamental social rights, democracy based on the rule of law and transparent and accountable governance are an integral part of sustainable development.

2. The Parties refer to their international obligations and commitments concerning respect for human rights. They reiterate their deep attachment to human dignity and human rights, which are legiti-mate aspirations of individuals and peoples. Human rights are universal, indivisible and inter-related. The Parties undertake to promote and protect all fundamental freedoms and human rights, be they civil and political, or economic, social and cultural. In this context, the Parties reaf-firm the equality of men and women.

The Parties reaffirm that clemocratisation, deve-lopment and the protection of fundamental free-doms and human rights are interrelated and mutually reinforcing. Democratic principles are uni-versally recognised principles underpinning the organisation of the State to ensure the legitimacy of its authority, the legality of its actions reflected in its constitutional, legislative and regulatory system, and the existence of participatory mechanisms. On the basis of universally recognised principles, each country develops its democratic culture.

The structure of government and the prerogatives of the different powers shall be founded on rule of law, which shall entail in particular effective and accessible means of legal redress, an indepen-dent legal system guaranteeing equality before the law and an executive that is fully subject to the law.

Respect for human rights, democratic principles and the rule of law, which underpin the ACP-EU Partnership, shall underpin the domestic and international policies of the Parties and constitute the essential elements of this Agreement.

3. In the context of a political and institutional envi-ronment that upholds human rights, democratic principles and the rule of law, good governance is the transparent and accountable management of human, natural, economic and financial resources for the purposes of equitable and sustainable development. It entails clear decision-making pro-cedures at the level of public authorities, transpa-rent and accountable institutions, the primacy of law in the management and distribution of resources and capacity building for elaborating and implementing measures aiming in particular at preventing and combating corruption.

Good governance, which underpins the ACP-EU Partnership, shall underpin the domestic and international policies of the P , arties and constitute a fundamental element of this Agreement. The Parties agree that only serious cases of corrup-tion, including acts of bribery leading to such corr-uption, as defined in Article 97 constitute a viola-tion of that element.

4. The Partnership shall actively support the promo-tion of human rights, processes of democratisation, consolidation of the rule of law, and good governance.

These areas will be an important subject for the political dialogue. In the context of this dialogue, the Parties shall attach particular importance to the changes underway and to the continuity of the progress achieved. This regular assessment shall take into account each country's economic, social, cultural and historical context.

These areas will also be a focus of support for development strategies. The Community shall provide support for political, institutional and legal reforms and for building the capacity of public and private actors and civil society in the framework of strategies agreed jointly between the State concerned and the Community.

ARTICLE 10

Other elements of the political environment

1. The Parties consider the following elements as contributing to the maintenance and consolidation of a stable and democratic political environment:

- sustainable and equitable development involv-ing, inter alia, access to productive resources, essential services and justice;

- greater involvement of an active and organised civil society and the private sector.

2. The Parties recognise that the principles of the market economy, supported by transparent com-petition rules and sound economic and social policies, contribute to achieving the objectives of the partnership.

ARTICLE 11

Peace-building policies, conflict prevention and resolution

1. The Parties shall pursue an active, comprehensive and integrated policy of peace-building and conflict prevention and resolution within the frame-work of the Partnership. This policy shall be based on the principle of ownership. It shall in particular focus on building regional, sub-regional and natio-nal capacities, and on preventing violent conflicts at an early stage by addressing their root-causes in a targeted manner, and with an adequate com-bination of all available instruments.

2. The activities in the field of peace-building, conflict prevention and resolution shall in particular include support for balancing political, economic, social and cultural opportunities among all segments of society, for strengthening the democratic legitimacy and effectiveness of governance, for establi-shing effective mechanisms for the peaceful conciliation of group interests, for bridging dividing lines among different segments of society as well as support for an active and organised civil society,

3. Relevant activities shall also include, inter alia, support for mediation, negotiation and reconcilia-tion efforts, for effective regional management of shared, scarce natural resources, for demobilisation and reintegration of former combatants into the society, for addressing the problem of child soldiers, as well as for suitable action to set resp-onsible limits to military expenditure and the arms trade, including through support for the promotion and application of agreed standards and codes of conduct. In this context, particular emphasis shall be given to the fight against anti-personnel land-mines as well as to addressing an excessive and uncontrolled spread, illegal trafficking and accumulation of small arms and light weapons.

4. In situations of violent conflict the Parties shall take all suitable action to prevent an intensification of violence, to limit its territorial spread, and to facili-tate a peaceful settlement of the existing disputes. Particular attention shall be paid to ensuring that financial resources for cooperation are used in accordance with the principles and objectives of the Partnership, and to preventing a diversion of funds for belligerent purposes.

5. In post-conflict situations, the Parties shall take all suitable action to facilitate the return to a non-vio-lent, stable and self-sustainable situation, The Parties shall ensure the creation of the necessary links between emergency measures, rehabilitation and development cooperation.

ARTICLE 12

Coherence of Community policies and

their impact on the implementation of

this Agreement

Without prejudice to Article 96, where the Community intends, in the exercise of its powers, to take a measure, which might affect the interests of the ACP States, as far as this Agreement's objectives are con-cerned, it shall inform in good time the said States of its intentions. Towards this end, the Commission shall communicate simultaneously to the Secretariat of the ACP States its proposal for such measures. Where necessary, a request for information may also take place on the initiative of the ACP States.

At their request, consultations shall be held promptly so that account may be taken of their concerns as to the impact of those measures before any final deci-sion is made.

After such consultations have taken place, the ACP States may, in addition, transmit their concerns in writing to the Community as soon as possible and submit suggestions for amendments indicating the way their concerns should be met.

If the Community does not accede to the ACP States' submissions, it shall advise them as soon as possible giving its reasons.

The ACP States shall also be provided with adequate information on the entry into force of such decisions, in advance whenever possible.

ARTICLE 13

Migration

1. The issue of migration shall be the subject of in-depth dialogue in the framework of the ACP-EU Partnership.

The Parties reaffirm their existing obligations and commitments in international law to ensure res-pect for human rights and to eliminate all forms of discrimination based particularly on origin, sex, race, language and religion.

2. The Parties agree to consider that a partnership implies, with relation to migration, fair treatment of third country nationals who reside legally on their territories, integration policy aiming at granting them rights and obligations comparable to those of their citizens, enhancing non-discrimination in economic, social and cultural life and developing measures against racism and xenophobia.

3. The treatment accorded by each Member State to workers of ACP countries legally employed in its territory, shall be free from any discrimination based on nationality, as regards working condi-tions, remuneration and dismissal, relative to its own nationals. Further in this regard, each ACP State shall accord comparable non-discriminatory treatment to workers who are nationals of a Member State.

4. The Parties consider that strategies aiming at reducing poverty, improving living and working conditions, creating employment and developing training contribute in the long term to normalising migratory flows.

The Parties will take account, in the framework of development strategies and national and regional programming, of structural constraints associated with migratory flows with the purpose of suppor-ting the economic and social development of the regions from which migrants originate and of redu-cing poverty.

The Community shall support, through national and regional Cooperation programmes, the trai-ning of ACP nationals in their country of origin, in another ACP country or in a Member State of the European Union. As regards training in a Member State, the Pates shall ensure that such action is geared towards the vocational integration of ACP nationals in their countries of origin.

The Parties shall develop cooperation programmes to facilitate the access of students from ACP States to education, in particular through the use of new communication technologies.

5. (a) In the framework of the political dialogue the Council of Ministers shall examine issues arising from illegal immigration with a view to establi-shing, where appropriate, the means for a pre-vention policy.

(b) In this context the Parties agree in particular to ensure that the rights and dignity of individuals are respected in any procedure initiated to return illegal immigrants to their countries of ori-gin. In this connection the authorities concerned shall extend to them the administrative facilities necessary for their return.

(c) The Parties further agree that:

(i) each Member State of the European Union shall accept the return of and readmission of any of its nationals who are illegally present on the territory of an ACP State, at that State's request and without further formalities;

each of the ACP States shall accept the return of and readmission of any of its nationals who are illegally present on the territory of a Member State of the European Union, at that Member State's request and without further formalities.

The Member States and the ACP States will provide their nationals with appropriate identity documents for such purposes.

In respect of the Member States of the European Union, the obligations in this paragraph apply only in respect of those persons who are to be considered their nationals for the Community purposes in accor-dance with Declaration No 2 to the Treaty establish-ing the European Community. In respect of ACIP States, the obligations in this paragraph apply only in respect of those persons who are considered as their nationals in accordance with their respective legal system.

(ii) at the request of a Party, negotiations shall be initiated with ACP States aiming at concluding in good faith and with due regard for the rele-vant rules of international law, bilateral agree-ments governing specific obligations for the readmission and return of their nationals. These agreements shall also cover, if deemed necessary by any of the Parties, arrange-ments for the readmission of third country nationals and stateless persons. Such agree-ments will lay down the details about the cate-gories of persons covered by these arrange-ments as well as the modalities of their read-mission and return.

Adequate assistance to implement these agreements will be provided to the ACP States.

(iii) for the purposes of this point (c), the term "Parties" shall refer to the Community, any of its Member States and any ACP State.

PART TWO

INSTITUTIONAL PROVISIONS

ARTICLE 14

The joint institutions

The institutions of this Agreement are the Council of Ministers, the Committee of Ambassadors and the Joint Parliamentary Assembly.

ARTICLE 15

The Council of Ministers

1. The Council of Ministers shall comprise, on the one hand, the members of the Council of the European Union and members of the Commission of the European Communities and, on the other, a member of the government of each ACP State.

The office of the President of the Council of Ministers shall be held alternately by a member of the Council of the European Union and a member of the govern-ment of an ACP State.

The Council shall meet as a rule once a year on the initiative of the President and whenever it seems nec-essary, in a form and a geographical composition appropriate to the issues to be addressed.

2. The functions of the Council of Ministers shall be to:

(a) conduct the political dialogue;

(b) adopt the policy guidelines and take the decisions necessary for the implementation of the provisions of this Agreement, in particular as regards deve-lopment strategies in the specific areas provided for by this Agreement or any other area that 2. should prove relevant, and as regards procedures;

(c) examine and resolve any issue liable to impede the effective and efficient implementation of this Agreement or present an obstacle to achieving its objectives;

(d) ensure the smooth functioning of the consultation mechanisms.

3. The Council of Ministers shall take its decisions by common agreement of the Parties. The proceed-ings of the Council of Ministers shall be valid only if half the members of the Council of the European Union, one member of the Commission and two-thirds of the members representing the governments of the ACP States are present. Any member of the Council of Ministers unable to attend may be represented. The representative shall exercise all the rights of that member.

It may take decisions that are binding on the Parties and frame resolutions, recommendations and opinions. It shall examine and take into consideration resolutions and recommendations adopted by the Joint Parliamentary Assembly.

The Council of Ministers shall conduct an ongoing dialogue with the representatives of the social and economic partners and other actors of civil society in the ACP and the EU. To that end, consultations may be held alongside its meetings.

4. The Council of Ministers may delegate powers to the Committee of Ambassadors.

5. The Council of Ministers shall adopt its rules of procedure within six months of the entry into force of this Agreement.

ARTICLE 16

The Committee of Ambassadors

1. The Committee of Ambassadors shall comprise, on the one hand, the permanent representative of each Member State to the European Union and a representative of the Commission and, on the other, the head of mission of each ACP State to the European Union.

The office of Chairman of the Committee of Ambassadors shall be held alternately by a Permanent Representative of a Member State designated by the Community, and a head of mis-sion representing an ACP State, designated by the ACP States.

2. The Committee shall assist the Council of Ministers in the fuffilment of its tasks and carry out any mandate entrusted to it by the Council, In this context, it shall monitor implementation of this Agreement and progress towards achieving the objectives set therein.

The Committee of Ambassadors shall meet regu-larly, in particular -Lo prepare the Council sessions and whenever it proves necessary.

3. The Committee shall adopt its rules of procedure within six months of the entry into force of this Agreement.

ARTICLE 17

The Joint Parliamentary Assembly

1. The Joint Parliamentary Assembly shall be composed of equal numbers of EU and ACP representatives. The members of the Joint Parliamentary Assembly shall be, on the one hand, members of the European Parliament and, on the other, members of parliament or, failing this, representatives designated by the parliament of each. ACP State. In the absence of a parliament, the attendance of a representative from the ACP State concerned shall be subject to the prior approval of the Joint Parliamentary Assembly.

2. The role of the Joint Parliamentary Assembly, as a consultative body, shall be to:

- promote democratic processes through dialogue and consultation;

- facilitate greater understanding between the peoples of the European Union and those of the ACP States and raise public awareness of development issues;

- discuss issues pertaining to development and the ACP-EU Partnership;

- adopt resolutions and make recommendations to the Council of Ministers with a view to achieving the objectives of this Agreement.

3. The Joint Parliamentary Assembly shall meet twice a year in plenary session, alternately in the European Union and in an ACP State. With a view to strengthening regional integration and fostering cooperation between national parliaments, mee-tings between EU and ACP members of parlia-ment may be arranged at regional or subregional level.

The Joint Parliamentary Assembly shall organise regular contacts with representatives of the ACP-EU economic and social partners and the other actors of civil society in order to obtain their views on the attainment of the objectives of this Agreement.

4. The Joint Parliamentary Assembly shall adopt its rules of procedure within six months of the entry into force of this Agreement.

PART THREE

COOPERATION STRATEGIES

ARTICLE 18

The cooperation strategies shall be based on development strategies and economic and trade cooperation which are interlinked and complementary. The Parties shall ensure that the efforts undertaken in both aforementioned areas are mutually reinforcing.

TITLE I

Development strategies

CHAPTER 1

General framework

ARTICLE 19

Principles and objectives

1. The central objective of ACP-EC cooperation is poverty reduction and ultimately its eradication; sustainable development; and progressive integ-ration of the ACP countries into the world econ-omy. In this context, cooperation framework and orientations shall be tailored to the individual cir-cumstances of each ACP country, shall promote local ownership of economic and social reforms and the integration of the private sector and civil society actors into the development process.

2. Cooperation shall refer to the conclusions of United Nations Conferences and to the objectives, targets and action programmes agreed at interna-tional level and to their follow up as a basis for development principles. Cooperation shall also refer to the international development cooperation targets and shall pay particular attention to putting in place qualitative and quantitative indicators of progress.

3. Governments and non-State actors in each ACP country shall initiate consultations on country development strategies and community support thereto.

ARTICLE 20

The Approach

1. The objectives of ACP-EC development coopera-tion shall be pursued through integrated strategies that incorporate economic, social, cultural, envi-ronmental and institutional elements that must be locally owned. Cooperation shall thus provide a coherent enabling framework of support to the ACP's own development strategies, ensuring complementarity and interaction between the various elements. In this context and within the framework of development policies and reforms pursued by the ACP States, ACP-EC cooperation strategies shall aim at:

(a) achieving rapid and sustained job-creating econo-mic growth, developing the private sector, increas-ing employment, improving access to productive economic activities and resource, and fostering regional cooperation and integration;

(b) promoting human and social development helping to ensure that the fruits of growth are widely and equitably shared and promoting gender equality;

(c) promoting cultural values of communities and specific interactions with economic, political and social elements;

(d) promoting institutional reforms and development, strengthening the institutions necessary for the consolidation of democracy, good governance and for efficient and competitive market econo-mies; and building capacity for development and partnership; and

(e) promoting environmental sustainability, regenera- 2tion and best practices, and the preservation of natural resource base.

2. Systematic account shall be taken in mainstrea-ming into all areas of cooperation the following thematic or cross-cutting themes: gender issues, environmental issues and institutional develop-ment and capacity building. These areas shall also be eligible for Community support.

3. The detailed texts as regards development cooperation objectives and strategies, in particular sectoral policies and strategies shall be incorporated in a compendium providing operational guidelines in specific areas or sectors of cooperation. These texts may be revised, reviewed and/or amended by the Council of Ministers on the basis of a recommendation from the ACP-EC Development Finance Cooperation Committee.

CHAPTER 2

Areas of support

SECTION 1

Economic development

ARTICLE 21

Investment and private sector development

1. Cooperation shall support the necessary econo-mic and institutional reforms and policies at natio-nal and/or regional level, aiming at creating a favourable environment for private investment, and the development of a dynamic, viable and competitive private sector. Cooperation shall further support:

(a) the promotion of public-private sector dialogue and cooperation;

(b) the development of entrepreneurial skills and business culture;

(c) privatisation and enterprise reform; and

(d) development and modernisation of mediation and arbitration systems.

2. Cooperation shall also support improving the qua-lity, availability and accessibility of financial and non-financial services to private enterprises, both formal and informal; by:

(a) catalysing and leveraging flows of private savings, both domestic and foreign, into the financing of private enterprises by supporting policies for developing a modern financial sector including a capital market, financial institutions and sustai-nable micro finance operations;

(b) the development and strengthening of business institutions and intermediary organisations, asso-ciations, chambers of commerce and local provi-ders from the private sector supporting and provi-ding non-financial services to enterprises such as professional, technical, management, training and commercial support services; and

(c) supporting institutions, programmes, activities and initiatives that contribute to the development and transfer of technologies and know-how and best practices on all aspects of business management.

3. Cooperation shall promote business development through the provision of finance, guarantee facili-ties and technical support aimed at encouraging and supporting the creation, establishment, expansion, diversification, rehabilitation, restructu-ring, modernisation or privatisation of dynamic, viable and competitive enterprises in all economic sectors as well as financial intermediaries such as development finance and venture capital institu-tions, and leasing companies by:

(a) creating and/or strengthening financial instruments in the form of investment capital;

(b) improving access to essential inputs such as busi-ness information and advisory, consultancy or technical assistance services;

(c) enhancement of export activities, in particular through capacity building in all trade-related areas; and

(d) encouraging inter-firm linkages, networks and cooperation including those involving the transfer of technology and know-how at national, regional and ACP-EU levels, and partnerships with private foreign investors which are consistent with the objectives and guidelines of ACP-EC Development cooperation.

4. Cooperation shall support microenterprise deve-lopment through better access to financial and non-financial services; an appropriate policy and regulatory framework for their development; and provide training and information services on best practices in microfinance.

5. Support for investment and private sector deve-lopment shall integrate actions and initiatives at macro, meso and micro economic levels.

ARTICLE 22

Macroeconomc and structural reforms and policies

1. Cooperation shall support ACP efforts to implement:

(a) acroeconomic growth and stabilisation through disciplined fiscal and monetary policies that result in the reduction of inflation, and improve external and fiscal balances, by strengthening fiscal disci-pline, enhancing budgetary transparency and effi-ciency, improving the quality, the equity and com-position of fiscal policy; and

(b) structural policies designed to reinforce the role of the different actors, especially the private sector and improve the environment for increases in business, investment and employment, as well as:

(i) liberalise trade and foreign exchange regimes and current account convertibility, having regard to the particular circumstances of each country;

(ii) strengthen labour and product-market reforms;

(iii) encourage financial systems reforms which help to develop viable banking and non-ban-king systems, capital markets and financial services, including micro-finance;

(iv) improve the quality of private and public services; and

(v) encourage regional cooperation and progressi-ve integration of macroeconomic and monetary policies.

2. The design of macroeconomic policies and struc-tural adjustment programmes shall reflect the socio-political background and institutional capa-city of the countries concerned, ensure a positive impact on poverty reduction and social services access and shall be based on the following principles:

(a) the ACP States shall bear primary responsibility for the analysis of the problems to be solved, the design and the implementation of the reforms;

(b) support programmes shall be adapted to the different situation in each ACP State and be sensitive to the social conditions. culture and environ-ment of these States;

(c) the right of the ACP States to determine the direction and the sequencing of their development strategies and priorities shall be recognised and respected;

(d) the pace of reforms shall be realistic and compatible with each ACP State's capacities and

(e) strengthening the communication and the infor-mation of populations on economic and social reforms and policies.

ARTICLE 23

Economic sector development

Cooperation shall support sustainable policy and institutional reforms and the investments necessary for equitable access to economic activities and pro-ductive resources, particularly:

(a) the development of training systems that help increase productivity in both the formal and the informal sectors,

(b) capital, credit. land. especially as regards property rights and use,

(c) development of rural strategies aimed at establi-shing a framework for participatory decentralised planning, resource allocation and management;

(d) agricultural production strategies, national and regional food security policies. sustainable development of water resources and fisheries as well as marine resources within the economic exclusi-ve zones of the ACP States. Any fishery agree-ment that may be negotiated between the Community and the ACP States shall pay due consideration to consistency with the develop-ment strategies in this area:

(e) economic and technological infrastructure and services, including transport, telecommunication systems, communication services and the deve-lopment of information society;

(f) development of competitive industrial, mining and energy sectors, while encouraging private sector involvement and development;

(g) trade development, including the promotion of fair trade;

(h) development of business, finance and banking; and other service sectors;

(i) tourism development; and

(j) development of scientific, technological and research infrastructure and services; including the enhancement, transfer and absorption of new technologies;

(k) the strengthening of capacities in productive areas, especially in public and private sectors.

ARTICLE 24

Tourism

Cooperation will aim at the sustainable development of the tourism industry in ACP countries and sub-regions, recognising its increasing importance to the growth of the services sector in ACP countries and to the expansion of their global trade, its ability to stimulate other sectors of economic activity, and the role it can play in poverty eradication.

Cooperation programmes and projects will support the efforts of ACP countries to establish and improve the countries legal and institutional framework and -esources for the development and implementation of sustainable tourism policies and programmes, as well as inter alia, improving the competitive position of the sector, especially small and medium-sized enterpris-es (SMEs), investment support and promotion, product development including the development of indige-nous cultures in ACP countries, and strengthening linkages between tourism and other sectors of eco-nomic activity.

SECTION 2

Social and human development

ARTICLE 25

Social sector development

1. Cooperation shall support ACP States' efforts at developing general and sectoral policies and reforms which improve the coverage, quality of and access to basic social infrastructure and ser-vices and take account of local needs and speci-fic demands of the most vulnerable and disadvan-taged, thus reducing the inequalities of access to these services. Special attention shall be paid to ensuring adequate levels of public spending in the social sectors. In this context, cooperation shall aim at:

(a) improving education and training, and building technical capacity and skills;

(b) improving health systems and nutrition, eliminating hunger and malnutrition, ensuring adequate food supply and security;

(c) integrating population issues into development strategies in order to improve reproductive health, primary health care, family planning; and preven-tion of female genital mutilation;

(d) promoting the fight against HIVADS;

(e) increasing the security of household water and improving access to safe water and adequate sanitation;

(f) improving the availability of affordable and ade-quate shelter for all through supporting low-cost and low-income housing programs and improving urban development; and

(g) encouraging the promotion of participatory methods of social dialogue as well as respect for basic social rights.

2. Cooperation shall also support capacity-building in social areas such as programmes for training in the design of social policies and modern methods for managing social projects and programmes; policies conducive to technological innovation and research; building local expertise and promoting partnerships; and round-table discussions at national and/or regional level.

3. Cooperation shall promote and support the deve-lopment and implementation of policies and of systems of social protection and security in order to enhance social cohesion and to promote self-help and community solidarity. The focus of the support shall, inter-alia, be on developing ini-tiatives based on economic solidarity, particularly by setting-up social development funds adapted to local needs and actors.

ARTICLE 26

Youth issues

Cooperation shall also support the establishment of a coherent and comprehensive policy for realising the potential of youth so that they are better integrated into society to achieve their full potential. In this context, cooperation shall support policies, measures and operations aimed at:

(a) protecting the rights of children and youth, especially those of girl children;

(b) promoting the skills, energy, innovation and poten-tial of youth in order to enhance their economic, social and cultural opportunities and enlarge their employment opportunities in the productive sec-tor;

(c) helping community-based institutions to give chil-dren the opportunity to develop their physical, psychological, social and economic potential; and

(d) reintegrating into society children in post-conflict situations through rehabilitation programmes.

ARTICLE 27

Cultural development

Cooperation in the area of culture shall aim at:

(a) integrating the cultural dimension at all levels of development cooperation;

(b) recognising, Preserving and promoting cultural values and identities to enable inter-cultural dialogue;

(c) recognising, preserving and promoting the value of cultural heritage; supporting the development of capacity in this sector; and

(d) developing cultural industries and enhancing market access opportunities for cultural goods and services.

SECTION 3

Regional cooperation and

Integration

ARTICLE 28

General approach

Cooperation shall provide effective assistance to achieve the objectives and priorities which the ACP States have set themselves in the context of regional and sub-regional cooperation and integration, including inter-regional and intra-ACP cooperation. Regional Cooperation can also involve Overseas Countries and Territories (OCTs) and outermost regions. In this context, cooperation support shall aim to:

(a) foster the gradual integration of the ACP States into the world economy;

(b) accelerate economic cooperation and develop-ment both *~,in and between the regions of the ACIP States-,

(c) promote the 4ee movement of persons, goods services, capital labour and technology among ACP coutries.

(d) accelerate Diversification of the economies of the ACP States: and coordination and harmonisatior of regional and sub-regional cooperation policies and

(e) promote and expand inter and intra-ACP trade and with third countries.

ARTICLE 29

Regional economic integration

Cooperation shall, in the area of regional economic integration support:

(a) developing and strengthening the capacities of:

(i) regional integration institutions and organization set up by the ACP States to promote regional and integration, and

(ii) national governments and parliaments in matters of integration;

(b) fostering participation of Least Developed Countries (LDC) ACP States in the establishment of regional market and sharing the benefits there from:

(c) implementation of sectoral reform policies at regional level.

(d) liberalisation and payments;

(e) promoting cross border investments both foreign and domestic,. and other regional or sub-regional economic integration initiatives; and

(f) taking account of the effects of net transitional costs of regional integration on budget revenue and balance of payments .

ARTICLE 30

Regional Cooperation

1. Cooperation shall, in the area of regional coopera-tion, support a wide variety of functional and the-matic fields, which specifically address common problems and take advantage of scale of econo-mies, including:

(a) infrastructure particularly transport and communi-cations and safety thereof and services, including the development of regional opportunities in the area of Information and Communication Technologies (IC-T);

(b) the environment; water resource management and energy;

(c) health, education and training;

(d) research and technological development;

(e) regional initiatives for disaster preparedness and mitigation; and

(d) other areas, including arms control, action against drugs, organised crimes, money laundering, bribery and corruption.

2. Cooperation shall also support inter and intra-ACP cooperation schemes and initiatives.

3. Cooperation shall help promote and develop a regional political dialogue in areas of conflict pre-vention and resolution; human rights and demo-cratisation; exchange, networking, and promotion of mobility between the different actors of deve-lopment, in particular in civil society.

SECTION 4

Thematic and cross-cutting issues

ARTICLE 31

Gender issues

Cooperation shall help strengthen policies and programmes that improve, ensure and broaden the equal participation of men and women in all spheres of political, economic, social and cultural life. Cooperation shall help improve the access of women to all resources required for the full exercise of their fundamental rights. More specifically, cooperation shall create the appropriate framework to:

(a) integrate a gend er- sensitive approach and concerns at every level of development coopera tion including macroeconomic policies, strategies and operations; and

(b) encourage the adoption of specific positive measures in favour of women such as:

(i) participation in national and local politics;

(ii) support for women's organisations;

(iii) access to basic social services, especially to education and training, health care and family planning;

(iv) access to productive resources, especially to land and credit and to labour market; and

(v) taking specific account of women in emergency aid and rehabilitation operations.

ARTICLE 32

Environment and natural resources

1. Cooperation on environmental protection and sus-tainable utilisation and management of natural resources shall aim at:

(a) mainstrearning environmental sustainability into all aspects of development cooperation and support programmes and projects implemented by the various actors;

(b) building and/or strengthening the scientific and technical human and institutional capacity for envi-ronmental management for all environmental sta-keholders;

(c) supporting specific measures and schemes aimed at addressing critical sustainable management issues and also relating to current and future regional and international commitments concer-ning mineral and natural resources such as:

(i) tropical forests, water resources, coastal, mari-ne and fisheries resources, wildlife, soils, biodi-versity;

(ii) protection of fragile ecosystems (e.g. coral reef);

(iii) renewable energy sources notably solar energy and energy efficiency;

(iv) sustainable rural and urban development;

(v) desertification, drought and deforestation;

(vi) developing innovative solutions to urban environmental problems; and

(vii) promotion of sustainable tourism.

(d) Taking into account issues relating to the transport (c) improven-ve- af-,:: of public finance and disposal of hazardous waste.

2. Cooperation shall also take account of:

(a) the vulnerability of small island ACP countries, especially to the threat posed by climate change;

(b) the worsening drought and desertification problems especially of least developed and land-locked countries; and

(c) institutional development and capacity building.

ARTICLE 33

Institutional development and capacity building

1. Cooperation shall pay systematic attention to institutional aspects and in this context, shall support the efforts of the ACP States to develop and strengthen structures, institutions and procedures (b) lor- -n, formulate and that help to:

(a) promote and sustain democracy, human dignity, social justice and pluralism, with full respect for diversity within and among societies;

(b) promote and sustain universal and full respect for and observance and protection of all human rights and fundamental freedoms;

(c) develop and strengthen the rule of law; and impro-ve access to justice, while guaranteeing the pro-fessionalism and independence of the judicial systems; and

(d) ensure transparent and accountable governance and administration in all public institutions.

2. The Parties shall work together in the fight against bribery and corruption in all their societies.

3. Cooperation shall support ACP States' efforts to develop their public institutions into a positive force for growth and development and to achieve major improvements in the efficiency of govern-ment services as they affect the lives of ordinary people. In this context, cooperation shall assist the reform, rationalsation and the modernisation of the public sector cooperation support shall focus on:

(a) the reform and modernization of the civil service;

(b) legal and judicial reforms and modernisation of justice system.

(c) improvement and strengthening of public finance management;

(d) accelerating reforms of the banking and financial sector;

(e) improvement of the management of public assets and reform of publics procurement procedures and;

(f) political, administrative, economic and financial decentralization.

4. Cooperation shall also assist to restore and/or enhance critical public sector capacity and to support institutions needed to underpin a market economy, especially support for:

(a) developing legal and regulatory capabilities needed to cope with operation of a market economy, including competition policy and consumer policiy;

(b) improving capacity to analyse, plan, formulate and implement, policies, in particular in the economic, social, environmental, research, science and technology and innovation fields;

(c) modernizing, strengthening and reforming financial and monetary institutions and improving procedures;

(d) building the capacity at the local and municipal levels which is required to implement decentralization policy and to increase the participation of the population in the development process; and

(e) developing capacity in other critical areas such as:

(i) international negociations; and

(ii) management and coordination of external aid.

5. Cooperation shall span all areas and sectors of cooperation to foster the emergence of non-State actors and the development of their capacities; and to strengthen structures for information, dialogue and consultation between them and the national authorities, including at regional level.

TITLE II

Economic and trade cooperation

CHAPTER 1

Objectives and principles

ARTICLE 34

Objectives

1. Economic and trade cooperation shall aim at fos-tering the smooth and gradual integration of the ACP States into the world economy, with due regard for their political choices and development priorities, thereby promoting their sustainable development and contributing to poverty eradica-tion in the ACP countries.

2. The ultimate objective of economic and trade cooperation is to enable the ACP States to play a full part in international trade. In this context, par-ticular regard shall be had to the need for the ACP States to participate actively in multilateral trade negotiations. Given the current level of deve-lopment of the ACP countries, economic and trade cooperation shall be directed at enabling the ACP States to manage the challenges of globalisation and to adapt progressively to new condi-tions of international trade thereby facilitating their transition to the liberalised global economy.

3. To this end economic and trade cooperation shall aim at enhancing the production, supply and tra-ding capacity of the ACP countries as well as their capacity to attract investment. It shall further aim at creating a new trading dynamic between the Parties, at strengthening the ACP countries trade and investment policies and at improving the ACP countries' capacity to handle all issues related to trade.

4. Economic and trade cooperation shall be imple-mented in full conformity with the provisions of the WTO, including special and differential treatment, taking account of the Parties' mutual interests and their respective levels of development.

ARTICLE 35

Principles

I. Economic and trade cooperation shall be based on a true, strengthened and strategic partnership. It shall further be based on a comprehensive approach, which builds on the strengths and achievements of the previous ACP-EC Conventions, using all means available to achieve the objectives set out above by addressing supply and demand side constraints. In this context, par-ticular regard shall be had to trade development measures as a means of enhancing ACP States' competitiveness. Appropriate weight shall therefo-re be given to trade development within the ACP States' development strategies, which the Community shall support.

2. Economic and trade cooperation shall build on regional integration initiatives of ACP States, bearing in mind that regional integration is a key instrument for the integration of ACP countries into the world economy.

3. Economic and trade cooperation shall take account of the different needs and levels of deve-lopment of the ACP countries and regions. In this context, the Parties reaffirm their attachment to ensuring special and differential treatment for all ACP countries and to maintaining special treat-ment for ACP LIDCs and to taking due account of the vulnerability of small, landlocked and island countries.

CHAPTER 2

New trading arrangements

ARTICLE 36

Modalities

1. In view of the objectives and principles set out above, the Parties agree to conclude new World Trade Organisation (WTO) compatible trading arrangements, removing progressively barriers to trade between them and enhancing cooperation in all areas relevant to trade.

2. The Parties agree that the new trading arrange-ments shall be introduced gradually and recognise the need, therefore, for a preparatory period.

3. In order to facilitate the transition to the new tra-ding arrangements, the non-reciprocal trade pref-erences applied under the Fourth ACP-EC Convention shall be maintained during the prepa-ratory period for all ACP countries, under the conditions defined in Annex V to this Agreement.

4. In this context, the Parties reaffirm the importance of the commodity protocols, attached to Annex V of this Agreement. They agree on the need to review them in the context of the new trading arrangements, in particular as regards their com-patibility with WTO rules, with a view to safeguard-ing the benefits derived therefrom, bearing in mind the special legal status of the Sugar Protocol.

ARTICLE 37

Procedures

1. Economic partnership agreements shall be nego-tiated during the preparatory period, which shall end by 31 December 2007 at the latest. Formal negotiations of the new trading arrangements shall start in September 2002 and the new trading arrangements shall enter into force by 1 January 2008, unless earlier dates are agreed between the Parties.

2. All the necessary measures shall be taken so as to ensure that the negotiations are successfully concluded within the preparatory period. To this end, the period up to the start of the formal nego-tiations of the new trading arrangements shall be actively used to make initial preparations for these negotiations.

3. The preparatory period shall also be used for capacity-building in the public and private sectors of ACP countries, including measures to enhance competitiveness, for strengthening of regional organisations and for support to regional trade integration initiative, where appropriate with assistance to budgetary adjustment and fiscal reform, as well as for infrastructure upgrading and development, and for investment promotion.

4. The Parties will regularly review the progress of the preparations and negotiations and, will in 2006 carry out a formal and comprehensive review of the arrangements planned for all countries to ensure that no further time is needed for prepara-tions or negotiations.

5. Negotiations of theconomic partnership agreements will be undertaken with ACP countries which consider themselves in a position to do so, at the level they consider appropriate and in accordance with the procedures agreed by the ACP Group taking into account regional integration process within the ACR

6. In 2004. the Community will assess the situation of the non-LDC which, after consultations with the Community decide that they are not in a position to enter into economic partnership agreements and will examine all alternative possibilities, in order to provide these countries with a new framework for trade which is equivalent to their existing and in conformity with WTO rules.

7. Negotiations of the economic partnership agreements shall aim notably at establishing the timetable for the progressive removal of barriers to trade between the Parties, in accordance with the relevant WTO rules. On the Community side trade liberalisation shall build on the acquis and shall aim at improving current market access for the ACP countries through inter alia, a review of the rules of origin. Negotiations shall take account of the level of development and the socio-economic impact of trade measures on ACP countries, and their capacity to adapt and adjust their economies to the liberalisation process. Negotiations will therefore be as flexible as possible in establishing the dura-tion of a sufficient transitional period, the final pro-duct coverage, taking into account sensitive sectors, and the degree of asymmetry in terms of timetable for tariff dismantlement, while remaining in conformity with WTO rules then prevailing.

8. The Parties shall closely cooperate and collab-orate in the WTO with a view to defending the arrangements reached, in particular with regard to the degree of flexibility available. The Community will start by the year 2000, a process which by the end of multilateral trade negotiations and at the latest 2005 will allow duty free access for essentially all products from all LDC building on the level of the existing trade provisions of the Fourth ACP-EC Convention and, which will simplify and review the rules of origin, including cumulation provisions, that apply to their exports.

ARTICLE 38

Joint Ministerial Trade Committee

1. A Joint ACP-EC Ministerial Trade Committee shall be established.

2. The Ministerial Trade Committee shall pay special attention to current multilateral trade negotiations and shall examine the impact of the wider liberalisation initiatives on ACP-EC trade and the deve-lopment of ACP economies. It shall make any necessary recommendations with a view to pre-serving the benefits of the ACP-EC trading arran-gements.

3. The Ministerial Trade Committee shall meet at least once a year. Its rules of procedure shall be laid down by the Council of Ministers. It shall be composed of representatives of the ACP States and of the Community.

CHAPTER 3

Cooperation in the international for a

ARTICLE 39

General provisions

1. The Parties underline the importance of their acti-ve participation in the WTO as well as in other rele-vant international organisations by becoming members of these organisations and closely follo-wing their agenda and activities.

2. They agree to cooperate closely in identifying and furthering their common interests in international economic and trade cooperation in particular in the WTO, including participation in setting and conducting the agenda in future multilateral trade negotiations. In this context, particular attention shall be paid to improve access to the Community and other markets for products and services origi-nating in the ACP countries.

3. They also agree on the importance of flexibility in WTO rules to take account of the ACIPs level of development as well of the difficulties faced in meeting their obligations. They further agree on the need for technical assistance to enable the ACP countries to implement their commitments.

4. The Community agrees to assist the ACP States in their efforts, in accordance with the provisions set out in this Agreement, to become active members of these organisations, by developing the neces-sary capacity to negotiate, participate effectively, monitor and implement these agreements.

ARTICLE 40

Commodities

1. The Parties recognise the need to ensure a better operation of international commodity markets and to increase market transparency.

2. They confirm their willingness to step up consulta-tions between them in the international fora and organisations dealing with commodities.

3. To this end, exchange of views shall take place at the request of either Party:

- regarding the operation of existing international agreements or specialised intergovernmental working parties with the aim of improving them and making them more effective, consistent with market trends;

- when it is proposed to conclude or renew an international agreement or set up a specialised intergovernmental working party.

The aim of such exchanges of views shall be to take account of the respective interest of each party. They may take place, where necessary, in the framework of the Ministerial Trade Committee.

CHAPTER 4

Trade in services

ARTICLE 41

General provisions

1. The Parties underline the growing importance of services in international trade and their major contribution to economic and social development.

2. They reaffirm their respective commitments under the General Agreement on Trade in Services (GATS), and underline the need for special and differential treatment to ACP suppliers of services;

3. In the framework of the negotiations for progres-sive liberalisation in trade and services, as provi-ded for in Article XIX of GATS, the Community undertakes to give sympathetic consideration to the ACP States' priorities for improvement in the EC schedule, with a view to meeting their specific interests.

4. The Parties further agree on the objective of exten-ding under the economic partnership agreements, and after they have acquired some experience in applying the Most Favoured Nation (MFN) treat-ment under GATS, their partnership to encompass the liberalisation of services in accordance with the provisions of GATS and particularly those rela-ting to the participation of developing countries in liberalisation agreements.

5. The Community shall support the ACP States' efforts to strengthen their capacity in the supply of services. Particular attention shall be paid to ser-vices related to labour, business, distribution, finance, tourism, culture and construction and related engineering services with a view to enhan-cing their competitiveness and thereby increasing the value and the volume of their trade in goods and services.

ARTICLE 42

Maritime transport

1. The Parties acknowledge the importance of cost-effective and efficient maritime transport services in a safe and clean marine environment as the main mode of transportation facilitating internatio-nal trade and thereby constituting one of the forces behind economic development and the development of trade.

2. They undertake to promote the liberalisation of maritime transport and to this end apply effective-ly the principle of unrestricted access to the inter-national maritime transport market on a non-dis-criminatory and commercial basis.

3. Each Party shall grant, inter alia. a treatment no less favourable than that accorded to its own ships, for ships operated by nationals or compa-nies of the other Party, and for ships registered in the territory of either party, with respect to access to ports, the use of infrastructure and auxiliary maritime services of those ports, as well as related fees and charges, customs facilities and the assi-gnment of berths and facilities for loading and unloading.

4. The Community shall support the ACP States' efforts to develop and promote cost-effective and efficient maritime transport services in the ACP States with a view to increasing the participation of ACP operators in international shipping services.

ARTICLE 43

Information and Communication technologies,

and information society

I. The Parties recognise the important role of infor-mation and communication technologies, as well as the active participation in the Information Society, as a pre-requisite for the successful integ-ration of the ACP countries into the world econo-my.

2. They therefore reconfirm their respective commit-ments under existing multilateral agreements, in particular the protocol on Basic Telecommunications attached to the GATS, and invite those ACP countries, which are not yet members of these agreements, to accede to them.

3. They furthermore agree to participate fully and actively in any future international negotiation, which might be conducted in this area.

4. The Parties will therefore take measures that will enable inhabitants of ACP countries easy access to information and communication technologies, through, amongst other, the following measures:

- the development and encouragement of the use of affordable renewable energy resources;

- the development and deployment of more extensive low-cost wireless networks.

5. The Parties also agree to step up cooperation between them in the area of information and com-munication technologies, and the Information Society. This cooperation shall, in particular, be directed towards greater complementarity and harmonisation of communication systems, at national, regional and international level and their adaptation to new technologies.

CHAPTER 5

Trade-related areas

ARTICLE 44

General provisions

1. The Parties acknowledge the growing importance of new areas related to trade in facilitating pro-gressive integration of the ACP States into the world economy. They therefore agree to streng-then their cooperation in these areas by establi-shing full and coordinated participation in the rele-vant international fora and agreements.

2. The Community shall support the ACP States' efforts, in accordance with the provisions set out in this Agreement and the development strategies agreed between the Parties to strengthen their capacity to handle all areas related to trade, inclu-ding, where necessary, improving and supporting the Institutional framework.

ARTICLE 45

Competition policy

1. he Parties agree that the introduction and imple-mentation of effective and sound competition poli-cies and rules are of crucial importance in order to improve and secure an investment friendly clima-te, a sustainable inclustrialisation process and transparency in the access to markets.

2. To ensure the elimination of distortions to sound competition and with due consideration to the dif-ferent levels of development and economic needs of each ACP country, they undertake to implement national or regional rules and policies including the control and under certain conditions the prohibi-tion of agreements between undertakings, deci-sions by associations of undertakings and concer-ted practices between undertakings which have as their object or effect the prevention, restriction or distortion of competition. The Pates further agree to prohibit the abuse by one or more under-takings of a dominant position in the common market of the Community or in the territory of ACP States.

3. The Parties also agree to reinforce cooperation in this area with a view to formulating and supporting effective competition policies with the appropriate national competition agencies that progressively ensure the efficient enforcement of the competi-tion rules by both private and state enterprises. Cooperation in this area shall, in particular, include assistance in the drafting of an appropriate legal framework and its administrative enforcement with particular reference to the special situation of the least developed countries.

ARTICLE 46

Protection of intellectual property rights

1. Without prejudice to the positions of the Pates in multilateral negotiations, the Parties recognise the need to ensure an adequate and effective level of protection of intellectual, industrial and commer-cial property rights, and other rights covered by TRIPS including protection of geographical indica-tions, in line with the international standards with a view to reducing distortions and impediments to bilateral trade.

2. They underline the importance, in this context, of adherence to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) to the WTO Agreement and the Convention on Biological Diversity (CBD).

3. They also agree on the need to accede to all rele-vant international conventions on intellectual, industrial and commercial property as referred to in Part I of the TRIPS Agreement, in line with their level of development.

4. The Community, its Member States and the ACP States may consider the conclusion of agree-ments aimed at protecting trademarks and geo-graphical indications for products of particular interest of either Party.

5. For the purpose of this Agreement, intellectual property includes in particular copyright, including the copyright on computer programmes, and neighbouring rights, including artistic designs, and industrial property which includes utility models, patents including patents for bio-technological inventions and plant varieties or other effective suigeneris systems, industrial designs, geographical indications including appellations of origin, trade-marks for goods or services, topographies of inte-grated circuits as well as the legal protection of data bases and the protection against unfair com-petition as referred to in Article 10a of the Paris Convention for the Protection of Industrial Property and protection of undisclosed confiden-tial information on know how.

6. The Parties further agree to strengthen their cooperation in this field. Upon request and on mutually agreed terms and conditions cooperation shall inter alia extend to the following areas: the preparation of laws and regulations for the protec-tion and enforcement of intellectual property rights, the prevention of the abuse of such rights by rightholders and the infringement of such rights by competitors, the establishment and reinforce-ment of domestic and regional offices and other agencies including support for regional intellectual property organisations involved in enforcement and protection, including the training of personnel.

ARTICLE 47

Standardisation and certification

1. The Parties agree to cooperate more closely in the field of standard isation, certification and quality assurance to remove unnecessary technical bar-riers and to reduce differences between them in those areas, so as to facilitate trade.

In this context, they reaffirm their commitment under the Agreement on Technical Barriers to trade, annexed to the WTO Agreement (TBT Agreement).

2. Cooperation in standardisation and certification shall aim at promoting compatible systems bet-ween the Parties and in particular include:

- measures, in accordance with the TBT Agreement, to promote greater use of interna-tional technical regulations, standards and conformity assessment procedures, including sector specific measures, in accordance with the level of economic development of ACP countries,

- cooperation in the area of quality management and assurance in selected sectors of import-ance to the ACP States,

- support for capacity building initiatives in the ACP countries in the fields of conformity assessment, metrology and standardisation,

- developing functioning links between ACP and European standardisation, conformity assess-ment and certification institutions.

3. The Parties undertake to consider, in due course, negotiating mutual recognition agreements in sectors of mutual economic interest.

ARTICLE 48

Sanitary and phytosanitary measures

1. The Parties recognise the right of each Party to adopt or to enforce sanitary and phytosanitary measures necessary to protect human, animal or plant life or health, subject to the requirement that these measures do not constitute a means of arbi-trary discrimination or a disguised restriction to trade, generally. To this end, they reaffirm their commitments under the Agreement on the Application of Sanitary and Phytosanitary Measures, annexed to the WTO Agreement (SPS-Agreement), taking account of their respec-tive level of development.

2. They further undertake to reinforce coordination, consultation and information as regards notifica-tion and application of proposed sanitary and phytosanitary measures, in accordance with the SPS-Agreement whenever these measures might affect the interests of either Party. They also agree on prior consultation and coordination within the CODEX ALIMENTARIUS, the International Office of Epizootics and the International Plant Protection Convention, with a view to furthering their com-mon interests.

3. The Parties agree to strengthen their cooperation with a view to reinforcing the capacity of the public and the private sector of the ACP countries in this field.

ARTICLE 49

Trade and environment

1. The Parties reaffirm their commitment to promo-ting the development of international trade in such a way as to ensure sustainable and sound mana-gement of the environment, in accordance with the international conventions and undertakings in this area and with due regard to their respective level of development. They agree that the special needs and requirements of ACP States should be taken into account in the design and implementa-tion of environment measures.

2. Bearing in mind the Rio Principles and with a view to reinforcing the mutual supportiveness of trade and environment, the Parties agree to enhance their cooperation in this field. Cooperation shall in particular aim at the establishment of coherent national, regional and international policies, rein-forcement of quality controls of goods and ser-vices related to the environment, the improvement of environment-friendly production methods in relevant sectors.

ARTICLE 50

Trade and labour standards

1. The Parties reaffirm their commitment to the inter-nationally recognised core labour standards, as defined by the relevant International Labour Organisation (ILO) Conventions, and in particular the freedom of association and the right to collec-tive bargaining, the abolition of forced labour, the elimination of worst forms of child labour and non-discrimination in respect to employment.

2. They agree to enhance cooperation in this area, in particular in the following fields:

- exchange of information on the respective legislation and work regulation;

- the formulation of national labour legislation and strengthening of existing legislation;

- educational and awareness-raising pro-grammes;

- enforcement of adherence to national legisla-tion and work regulation.

3. The Parties agree that labour standards should not be used for protectionist trade purposes.

ARTICLE 51

Consumer policy and protection of consumer health

1. The Parties agree to step up their cooperation in the area of consumer policy and consumer health protection, having due regard to domestic legisla-tion to avoid barriers to trade.

2. Cooperation shall, in particular, aim at improving the institutional and technical capacity in this area, establishing rapid-alert systems of mutual infor-mation on dangerous products, exchanging infor-mation and experiences on the establishment and operation of post market surveillance of products and product safety, improving information provi-ded to consumers on prices, characteristics of products and services offered, encouraging the development of independent consumer associa-tions and contacts between consumer interest representatives, improving compatibility of consu-mer policies and systems, notifying enforcement of the legislation and promoting cooperation in investigating harmful or unfair business practices and implementing exports prohibitions in the trade between the Parties of goods and services the marketing of which has been prohibited in their country of production.

ARTICLE 52

Tax carve-out clause

1. Without prejudice to the provisions of Article 31 of Annex IV, the Most Favoured Nation treatment granted in accordance with the provisions of this Agreement, or any arrangement adopted under this Agreement, does not apply to tax advantages which the Pates are providing or may provide in the future on the basis of agreements to avoid double taxation or other tax arrangements, or domestic fiscal legislation.

2. Nothing in this Agreement, or in any arrangements adopted under this Agreement, may be construed to prevent the adoption or enforcement of any measure aimed at preventing the avoidance or evasion of taxes pursuant to the tax provisions of agreements to avoid double taxation or other tax arrangements, or domestic fiscal legislation.

3. Nothing in this Agreement, or in any arrangements adopted under this Agreement, shall be construed to prevent the Parties from distinguishing, in the application of the relevant provisions of their fiscal legislation, between taxpayers who are not in the same situation, in particular with regard to their place of residence, or with regard to the place where their is invested.

CHAPTER 6

Cooperation in other areas

ARTICLE 53

Fishery agreements

1. The Parties declare their willingness to negotiate fishery agreements aimed at guaranteeing sustai-nable and mutually satisfactory conditions for fishing activities in ACP States.

2. In the conclusion or implementation of such agreements, the ACP States shall not discrimina-te against the Community or among the Member States, without prejudice to special arrangements between developing States within the same geo-graphical area, including reciprocal fishing arran-gements, nor shall the Community discriminate against ACP States.

ARTICLE 54

Food security

1. With regard to available agricultural products, the Community undertakes to ensure that export refunds can be fixed further in advance for all ACP States in respect of a range of products drawn up in the light of the food requirements expressed by those States.

2. Advance fixing shall be for one year and shall be applied each year throughout the life of this Agreement, it being understood that the level of the refund will be determined in accordance with the methods normally followed by the Commission.

3. Specific agreements may be concluded with those ACP States which so request in the context of their food security policies.

4. The specific agreements referred to in paragraph 3 shall not place in jeopardy production and trade flows in ACP regions.

PART FOUR

DEVELOPMENT FINANCE

COOPERATION

TITLE I

General provisions

CHAPTER 1

Objectives, principles, guidelines and eligibility

ARTICLE 55

Objectives

The objectives of development finance cooperation shall be, through the provision of adequate financial resources and appropriate technical assistance, to support and promote the efforts of ACP States to achieve the objectives set out in this Agreement on the basis of mutual interest and in a spirit of inter-dependence.

ARTICLE 56

Principles

1. Development finance cooperation shall be imple-mented on the basis of and be consistent with the development objectives, strategies and priorities established by the ACP States, at both national and regional levels. Their respective geographical, social and cultural characteristics, as well as their specific potential, shall be taken into account. In addition, cooperation shall:

(a) promote local ownership at all levels of the development process;

(b) reflect a partnership based on mutual rights and obligations;

(c) emphasise the importance of predictability and security in resource flows, granted on highly concessional terms and on a continuous basis;

(d) be flexible and appropriate to the situation in each ACP State as well as adapted to the specific nature of the project or programme concerned; and

(e) ensure efficiency, coordination and consistency

2. Cooperation shall ensure special treatment for LDC ACP countries and duly take into account the vulnerability of landlocked and island ACP countries. In addition the specific needs of post conflict countries shall also be addressed.

ARTICLE 57

Guidelines

1. Operations financed within the framework of this Agreement shall be implemented by the ACP States and the Community in close coopera-tion, the concept of equality between the partners being recognised.

2. The ACP States shall be responsible for:

(a) defining the objectives and priorities on which the indicative programmes are based;

(b) choosing projects and programmes;

(c) preparing and presenting the dossiers of projects and programmes:

(d) preparing, negotiating and concluding contracts;

(e) implementing and managing projects and programmes, and

(f) maintaining projects and programmes.

3. Without prejudice to the provisions above, eligible non-State actors may also be responsible for proposing and implementing programmes and projects in areas concerning them.

4. The ACP States and the Community shall be jointly responsible for:

(a) establishing, within the joint institutions, the guide-lines for development finance cooperation;

(b) adopting the indicative programmes;

(c) appraising projects and programmes;

ARTICLE 58

Eligibility for financing

1. The following entities or bodies shall be eligible for financial support provided under the Agreement:

(a) ACP States;

(b) regional or inter-State bodies to which one or more ACP States belong and which are authori-sed by those States; and

(c) joint bodies set up by the ACP States and the Community to pursue certain specific objectives.

2. Subject to the agreement of the ACP State orACP States concerned, the following shall also be eligible for financial support:

(a) national and/or regional public or semi-public agencies, departments or local authorities of the ACP States and, in particular, their financial institu-tions and development banks;

(b) companies, firms and other private organisations and private operators of ACP States;

(c) enterprises of a Community Member State to enable them, in addition to their own contribution, to undertake productive projects in the territory of an ACP State;

(d) ACP or Community financial intermediaries provid-ing, promoting and financing private investments in ACP States; and

(e) agents of decentralised cooperation and other non-State actors from the ACP States and from the Community.

CHAPTER 2

Scope and nature of financing

ARTICLE 59

Within the framework of the priorities established by the ACP State or States concerned at both national and regional levels, support may be given to projects, programmes and other forms of operations contribut-ing to the objectives set out in this Agreement.

ARTICLE 60

Scope of Financing

The scope of financing may include, inter alia, depending on the needs and the types of operation considered most appropriate, support to:

(a) measures which contribute to attenuate the debt burden and balance of payments problems of the ACP countries;

(b) macroeconomic and structural reforms and policies;

(c) mitigation of adverse effects of instability in export earnings;

(d) sectoral policies and reforms;

(e) institutional development and capacity building;

(f) technical cooperation programmes; and

(g) humanitarian and emergency assistance including assistance to refugees and displaced persons, short-term rehabilitation measures and disaster preparedness.

ARTICLE 61

Nature of Financing

1. The nature of financing shall, inter alia, include:

(a) projects and programmes;

(b) credit lines, guarantee schemes and equity participation

(c) budgetary support, either directly, for the ACP States whose currencies are convertible and freely transferable, or indirectly, from counterparts funds generated by the various Community instruments;

(d) the human and material resources necessary for effective administration and supervision of projects and programmes;

(e) sectoral and general import support programmes which may take the form of:

(i) sectoral import programmes through direct procurement including financing of inputs in the productive system and supplies to improve social services;

(ii) sectoral import programmes in the form of foreign exchange released in instalments for financing sectoral imports; and

(iii) general import programmes in the form of foreign exchange released in instalments for financing general imports covering a wide range of products.

2. Direct budgetary assistance in support of macro-economic or sectoral reforms shall be granted where:

(a) public expenditure management is sufficiently transparent, accountable and effective;

(b) well defined macroeconomic or sectoral policies established by the country itself and agreed to by its main donors are in place; and

(c) public procurement is open and transparent.

3. Similar direct budgetary assistance shall be grant-ed gradually to sectoral policies in substitution for individual projects.

4. The instruments of import programmes or budge-tary support defined above can also be used to support eligible ACP States implementing reforms aimed at intra-regional economic liberalisation which generate net transitional costs.

5. In the framework of the Agreement, the European Development Fund (hereinafter referred to as the Fund) including counterpart funds, unexpencled balance from previous Funds, own resources of the European Investment Bank (hereinafter refer-red to as the Bank) and where appropriate resources drawn from the European Community's budget, shall be used to finance projects, programmes and other forms of operations contribu-ting to the achievement of the objectives of this Agreement.

6. The funds provided under the Agreement may be used to cover the total costs of both the local and foreign expenditure of projects and programmes, including recurrent cost financing.

TITLE II

Financial cooperation

CHAPTER 1

Financial resources

ARTICLE 62

Overall amount

1. For the purposes set out in this Agreement, the overall amount of the Community's financial assis-tance and the detailed terms and conditions of financing are provided for in the Annexes to this Agreement.

2. Should an ACP State fall to ratify this Agreement or denounce it, the Parties shall adjust the amounts of the resources provided for in the Financial Protocol set out in Annex 1. Adjustmentof the financial resources shall also apply upon:

(a) the accession to the Agreement of new ACP States which did not take part in its negotiation; and

(b) the enlargement of the Community.

ARTICLE 63

Methods of financing

The methods of financing for each project or pro-gramme shall be determined jointly by the ACP State or States concerned and the Community by reference to:

(a) the level of development, the geographical situation and economic and financial circumstances of these States;

(b) the nature of the project or programme, its economic and financial return as well as its social and cultural impact; and

(c) in the case of loans, factors guaranteeing their servicing.

ARTICLE 64

On-lending operations

1. Financial assistance may be made available to or through the ACP States concerned or, subject to the provisions of this Agreement through eligible financial institutions or directly to any other eligible beneficiary. Where financial assistance is granted to the final recipient through an intermediary or directly to the final beneficiary in the private sector:

(a) the terms and conditions on which the assistance may be made available by the intermediary to the final recipient or directly to the final beneficiary in the private sector shall be laid down in the finan-cing agreement or loan contract; and

(b) any financial benefit accruing to the intermediary from the on-lending transaction or resulting from direct lending operations to the final beneficiary in the private sector, shall be used for development purposes on the conditions laid down in the finan-cing agreement or the loan contract, after taking into account administrative costs, exchange and financial risks and the cost of technical assistance given to the final recipient.

2. Where the financing is undertaken through an on-lending body based and/or operating in the ACP States, it shall be the responsibility of that body to select and appraise individual projects and to administer the funds placed at its disposal under the conditions provided for in this Agreement and by mutual agreement bet-ween the Parties.

ARTICLE 65

Co-financing

1. The financial resources provided for in this Agreement may be applied, at the request of the ACP States, to co-financing undertaken in parti-cular with development agencies and institutions, Community Member States, ACP States, third countries or international or private financial insti-tutions, firms or export credit agencies.

2. Special consideration shall be given to the possi-bility of co-financing in cases where Community participation will encourage the participation of other sources of finance and where such financing may lead to an advantageous financial package for the ACP State concerned.

3. Co-financing may be in the form of joint or parallel financing. Preference shall be given in each case to the solution, which is more suitable from the point of view of cost-effectiveness. In addition, measures shall be taken to coordinate and harmonise operations of the Community and those of other co-financing bodies in order to minimise the number of procedures to be undertaken by the ACP States and to render those procedures more flexible.

4. The process of consultation and coordination with other donors and co-financiers should be streng-thened and developed, where possible, through the establishment of co-financing framework agreements and co-financing policies and proce-dures should be reviewed to ensure effectiveness and the best terms and conditions possible. 4.

CHAPTER 2

Debt and structural

adjustment support

ARTICLE 66

Support for debt relief

1. In order to attenuate the debt burden of the ACP States and their balance-of-payment problems, the Parties agree to use the resources provided for in this Agreement to contribute to debt relief initia-tives approved at international level for the benefit of ACP countries. In addition, on a case by case basis, the use of resources which have not been committed in the framework of past indicative programmes shall be accelerated through the quick-disbursing instruments provided for in this Agreement. The Community furthermore commits itself to examine how in the longer term other resources than the EDF can be mobilised in sup-port of internationally agreed debt relief initiatives.

2. At the request of an ACP State, the Community may grant:

(a) assistance in studying and finding practical solu-tions to indebtedness including domestic debt, debt-servicing difficulties and balance of pay-ments problems;

(b) training in debt management and international financial negotiations as well as support for trai-ning workshops, courses and seminars in these fields; and

(c) assistance to develop flexible techniques and ins-truments of debt management.

3. In order to contribute to the servicing of the debt resulting from loans from the Bank's own resources, special loans and risk capital, the ACP States may, in accordance with arrangements to be made on a case-by-case basis with the Commission, use the available foreign currency referred to in this Agreement for such servicing, as and when debt repayment falls due and up to the amount required for payments in national curren-cy.

4. Given the seriousness of the international debt problem and its impact on economic growth, the Parties declare their readiness to continue to exchange views, within the context of international discussions, on the general problem of debt, and without prejudice to specific discussions taking place in the relevant fora.

ARTICLE 67

Structural adjustment support

1. The Agreement shall provide support for macroe-conomic and sectoral reforms implemented by the ACP States. In this framework, the Parties shall ensure that adjustment is economically viable and socially and politically bearable. Support shall be given in the context of a joint assessment between the Community and the ACP State concerned on the reform measures being undertaken or contemplated either at macroeconomic or secto-ral level, and permit an overall evaluation of the reform efforts. Quick disbursement shall be an important feature of support programmes.

2. The ACP States and the Community recognise the necessity to encourage reform programmes at regional level ensuring that, in the preparation and execution of national programmes, due considera-tion is given to regional activities which have an influence on national development. To this end, support for structural adjustment shall also seek to:

(a) incorporate, from the beginning of the diagnosis, measures to encourage regional integration and take account of the consequences of trans-border adjustment;

(b) support the harmonisation and coordination of macroeconomic and sectoral policies, including fiscal and customs areas, so as to fulfil the dual aim of regional integration and of structural reform at national level; and

(c) take account of the effects of net transitional costs of regional integration on budget revenue and balance of payments, either through general import programmes or budgetary support.

3. ACP States undertaking or contemplating reform at the macroeconomic or sectoral level shall be eli-gible for structural adjustment assistance, giving consideration to the regional context, their effecti-veness and the likely impact on the economic, social and political dimension of development and on economic and social hardships being experien-ced.

4. The ACP States undertaking reform programmes that are acknowledged and supported at least by the principal multilateral donors, or that are agreed with such donors but not necessarily financially supported by them, shall be treated as having automatically satisfied the requirements for adjust-ment assistance.

5. Structural adjustment support shall be mobilised in a flexible manner and in the form of sectoral and general import programmes or budgetary support.

6. The preparation, appraisal and financing decision for structural adjustment programmes shall be carried out according to the provisions on imple-mentation procedures of this Agreement with due regard to the quick disbursing feature of structural adjustment programmes. On a case-by-case basis, retroactive financing of a limited part of imports of ACP-EC origin may be permissible.

7. The implementation of each support programme shall ensure that the eligibility of ACP economic operators for access to the resources of the programme is as wide and transparent as possible and that the procurement procedures accord with the administrative and commercial practices in the State concerned, while ensuring the best possible price/quality ratio on imported goods and the necessary consistency with the progress achieved internationally for harmonising the procedures for supporting structural adjustment.

CHAPTER 3

Support in cases of short-term fluctuations in export earnings

ARTICLE 68

1. The Pates recognise that instability of export earnings, particularly in the agricultural and mining sectors, may adversely affect the development of the ACP States and jeopardise the attainment of their development requirements. A system of additional support in order to mitigate the adverse effects of any instability in export earnings, inclu-ding in the agricultural and mining sectors, is therefore set up within the financial envelope for support to long-term development.

2. The purpose of support in cases of short-term fluctuations in export earnings is to safeguard macroeconomic and sectoral reforms and policies that are at risk as a result of a drop in revenue and remedy the adverse effects of instability of export earnings in particular from agricultural and mining products.

3. The extreme dependence of the ACP States' eco-nomies on exports, in particular from the agricul-tural and mining sectors, shall be taken into account in the allocation of resources in the year of application. In this context, the least developed, landlocked and island ACP States shall receive more favourable treatment.

4. The additional resources shall be provided in accordance with the specific modalities of the support mechanism as set out in Annex 11 on Terms and Conditions of Financing.

5. The Community shall also provide support for market based insurance schemes designed for ACP States seeking to protect themselves against the risk of fluctuations in export earnings.

CHAPTER 4

Support for sectoral policies

ARTICLE 69

1. Cooperation shall support, through the various instruments and modalities provided for in the Agreement:

(a) social and economic sectoral policies and reforms;

(b) measures to enhance productive sector activity and export competitiveness;

(c) measures to expand social sector services; and

(d) thematic and cross cutting issues.

2. This support shall be provided as appropriate through:

(a) sectoral programmes;

(b) budgetary support;

(c) investments;

(d) rehabilitation;

(e) training;

(f) technical assistance; and

(g) institutional support.

CHAPTER 5

Microprojects and decentralised cooperation

ARTICLE 70

In order to respond to the needs of local communities with regard to development, and to encourage all agents of clecentralised cooperation which are in a position to contribute to the autonomous develop-ment of the ACP States to put forward and implement initiatives, cooperation shall support, within the frame-work laid down in the rules and national legislation of the ACP States concerned and the provisions of the indicative programme, such development operations. In this context, cooperation shall support:

(a) micro-projects at local level which have an econo-mic and social impact on the life of the people, meet a demonstrated and observed priority need, and shall be undertaken at the initiative and with the active participation of the local community which shall benefit therefrom; and

(b) clecentralised cooperation, in particular where such operations combine efforts and resources of decentralised agents from the ACP States and their counterparts from the Community. This form of cooperation shall enable the mobilisation of capabilities, innovative operating methods and resources of clecentralised agents for the develop-ment of the ACP State.

ARTICLE 71

1. Microprojects and decentralised cooperation ope-rations may be supported from the financial resources of the Agreement. Projects or programmes under this form of cooperation may or may not be linked to programmes in the sectors of concentration of the indicative programmes, but may be a way of achieving the specific objectives of the indicative programme or the results of initia-tives by local communities or clecentralised agents.

2. Contributions for the financing of micro-projects and clecentralised cooperation shall be made by the Fund, in which case the contribution shall not normally exceed three-quarters of the total cost of each project and may not exceed the limit set in the indicative programme. The remaining balance shall be provided:

(a) by the local community concerned in case of micro-projects (either in kind or in the form of ser-vices or cash and adapted to its capacity to contribute);

(b) by the agents of decentralised cooperation, provi-ded that the financial. technical, material and other resources brought in by such agents shall not nor-mally be less than 25% of the estimated cost of the project/programme, and

(c) exceptionally by the ACP State concerned, either in the form of a financial contribution or through the use of public equipment or the supply of ser-vices.

3. The procedures applicable to projects and pro-grammes financed within the framework of micro-projects or clecentralised cooperation shall be those laid down in the Agreement, in particular those referred to in multi-annual programmes.

CHAPTER 6

Humanitarian and

emergency assistance 4,

ARTICLE 72

1. Humanitarian and emergency assistance shall be accorded to the population in ACP States faced with serious economic and social difficulties of an exceptional nature resulting from natural disasters, man-made crises such as wars and other conflicts or extraordinary circumstances having compa-rable effects. The humanitarian and emergency assistance shall be maintained for as long as necessary to deal with the emergency needs resulting from these situations.

2. Humanitarian and emergency assistance shall be granted exclusively according to the needs and interests of victims of disasters and in line with the principles of international humanitarian law. In par-ticular, there shall be no discrimination between victims on grounds of race, ethnic origin, religion, gender, age, nationality or political affiliation and free access to and protection of victims shall be guaranteed as well as the security of humanitarian personnel and equipment.

3. Humanitarian and emergency assistance shall aim to:

(a) safeguard human lives in crises and immediate post-crisis situations brought about by natural disasters, conflict or war;

(b) contribute to the financing and delivery of humani-tarian aid and to the direct access to it of its inten-ded beneficiaries by all logistical means available;

(c) carry out short-term rehabilitation and reconstruc-tion to enable the parts of the population affected to benefit once more from a minimum of socio-economic integration and, as soon as possible, create the conditions for a resumption of develop-ment on the basis of long-term objectives set by the ACP country concerned;

(d) address the needs arising from the displacement of people (refugees, displaced persons and retur-nees) following natural or man-made disasters so as to meet, for as long as necessary, all the needs of refugees and displaced persons (wherever they may be) and facilitate action for their voluntary repatriation and re-integration in their country of origin; and

(e) assist the ACP State in setting up disaster preven-tion and preparedness mechanisms, including prediction and early-warning systems, with a view to reducing the consequences of disasters.

4. Similar assistance, as set out above, may be gran-ted to ACP States taking in refugees or returnees to meet acute needs not covered by emergency assistance.

5. Underlining the developmental nature of the assis-tance granted in accordance with this Article, assistance may be used exceptionally together with the indicative programme at the request of the State concerned.

6. Humanitarian and emergency assistance opera-tions shall be undertaken either at the request of the ACP country affected by the crisis situation, the Commission, international organisations or local or international non-State organisations. Such assistance shall be administered and imple-mented under procedures permitting operations that are rapid, flexible and effective. The Community shall take adequate steps to facilitate speedy action, which is required to meet the immediate needs for which emergency assistance isneeded.

ARTICLE 73

1. Post-emergency action, aimed at physical and social rehabilitation consequent on the results of natural disasters or extraordinary circumstances having comparable effects, may be undertaken with Community assistance under this Agreement. Such action, using effective and flexible mecha-nisms, must ease the transition from the emer-gency phase to the development phase, promote the socio-economic reintegration of the parts of the population affected, remove as far as possible the causes of the crisis and strengthen institutions and the ownership by local and national actors of their role in formulating a sustainable development policy for the ACP country concerned.

2. Short-term emergency action shall only in excep-tional circumstances be financed under the Fund where such assistance cannot be financed from the Community's budget.

CHAPTER 7

Investment and private

sector development support

ARTICLE 74

Cooperation shall, through financial and technical assistance, support the policies and strategies for investment and private sector development as set out in this Agreement.

ARTICLE 75

Investment promotion

The ACP States, the Community and its Member States, within the scope of their respective compet-encies, recognising the importance of private invest-ment in the promotion of their development coopera-tion and acknowledging the need to take steps to promote such investment, shall:

(a) implement measures to encourage participation in their development efforts by private investors who comply with the objectives and priorities of ACP-EC development cooperation and with the appro-priate laws and regulations of their respective States;

(b) take measures and actions which help to create and maintain a predictable and secure investment climate as well as enter into negotiations on agree-ments which will improve such climate;

(c) encourage the EU private sector to invest and to provide specific assistance to its counterparts in the ACP countries under mutual business coop-eration and partnerships;

(d) facilitate partnerships and joint ventures by en-couraging co-financing;

(e) sponsor sectoral investment fora to promote part-nerships and external investment;

(f) support efforts of the ACP States to attract finan-cing, with particular emphasis on private financing, for infrastructure investments and revenue genera-ting infrastructure critical for the private sector;

(g) support capacity building for domestic investment promotion agencies and institutions involved in promoting and facilitating foreign investment; (c)

(h) disseminate information on investment opportuni-ties and business operating conditions in the ACP States; and

(i) promote national, regional and ACP-EU private sector business dialogue, cooperation and partnerships, in particular through an ACP-EU private sector business forum. Support for operations of an ACP-EU private sector busi-ness forum shall be provided in pursuit of the following objectives:

(ii) to facilitate dialogue within the ACP/EU private sector and between the ACP/EU private sector and the bodies established under the Agreement;

(iii) to analyse and periodically provide the relevant bodies with information on the whole range of issues concerning relations between the ACP and EU private sectors in the context of the Agreement or, more generally, of economic rela-tions between the Community and the ACP countries; and

(iv) to analyse and provide the relevant bodies with information on specific problems of a sectoral nature relating to, inter alia, branches of pro-duction or types of products at regional or sub-regional level.

ARTICLE 76

Investment finance and support

1. Cooperation shall provide long-term financial resources, including risk capital, to assist in pro-moting growth in the private sector and help to mobilise domestic and foreign capital for this pur-pose. To this end, cooperation shall provide, in particular:

(a) grants for financial and technical assistance to support policy reforms, human resource develop-ment, institutional capacity-building or other forms of institutional support related to a specific invest-ment, measures to increase the competitiveness of enterprises and to strengthen the capacities of the private financial and non-financial intermedia-ries, investment facilitation and promotion and competitiveness enhancement activities;

(b) advisory and consultative services to assist in creating a responsive investment climate and information base to guide and encourage the flow of capital;

(c) risk-capital for equity or quasi-equity investments, guarantees in support of domestic and foreign.private investment and loans or lines of credit on the conditions laid down in Annex 11 "Terms and Conditions of Financing" to this Agreement; and

(d) loans from the Bank's own resources.

2. Loans from the Bank's own resources shall be granted in accordance with its statute and with the terms and conditions laid down in Annex 11 to this Agreement.

ARTICLE 77

Investment guarantees

1. Investment guarantees are an increasingly impor-tant tool for development finance as they contri-bute to reducing project risks and inducing priva-te capital flows. Cooperation shall therefore ensu-re the increasing availability and use of risk insu-rance as a risk-mitigating mechanism in order to boost investor confidence in the ACP States.

2. Cooperation shall offer guarantees and assist with guarantees funds covering risks for qualified investment. Specifically, cooperation shall provide support to:

(a) reinsurance schemes to cover foreign direct investment by eligible investors; against legal uncertainties and the major risks of expropriation, currency transfer restriction, war and civil distur-bance, and breach of contract. Investors may insure projects for any combination of the four types of coverage;

(b) guarantee programmes to cover risk in the form of partial guarantees for debt financing. Both partial risk and partial credit guarantee shall be available; and

(c) national and regional guarantee funds, involving, in particular, domestic financial institutions or inves-tors for encouraging the development of the finan-cial sector.

3. Cooperation shall also provide support to capacl-ty-building, institutional support and participation in the core funding of national and/or regional ini-tiatives to reduce the commercial risks for inves-tors (inter alia guarantee funds, regulatory bodies, arbitration mechanisms and judiciary systems to enhance the protection of investments improving the export credit systems).

4. Cooperation shall provide such support on the basis of complementary and added value with res-pect to private and/or public initiatives and, when-ever feasible, in partnership with private and other public organisations. The ACP and the EC will within the framework of the ACP-EC Development Finance Cooperation Committee undertake a joint study on the proposal to set up an ACP-EC Guarantee Agency to provide and manage invest-ment guarantee programmes.

ARTICLE 78

Investment protection

1. The ACP States and the Community and its Member States, within the scope of their respecti-ve competencies, affirm the need to promote and protect either Party's investments on their respec-tive territories, and in this context affirm the impor-tance of concluding, in their mutual interest, investment promotion and protection agreements which could also provide the basis for insurance and guarantee schemes.

2. In order to encourage European investment in development projects of special importance to, and promoted by the ACP States, the Community and the Member States, on the one hand and the ACP States on the other, may also conclude agreements relating to specific projects of mutual interest where the Community and European enterprises contribute towards their financing.

3. The Parties also agree to introduce, within the economic partnership agreements, and while res-pecting the respective competencies of the Community and its Member States, general prin-ciples on protection and promotion of invest-ments, which will endorse the best results agreed in the competent international fora or bilaterally.

TITLE III

Technical cooperation

ARTICLE 79

1. Technical cooperation shall assist the ACP States in the development of national and regional man-power resources, the sustained development of the institutions critical for development success, including inter alia strengthening ACP consulting firms and organisations, as well as exchange arrangements involving consultants from both ACP and EU firms.

2. Furthermore, technical cooperation, shall be cost-effective and relevant to the need for which it is intended, and shall also favour the transfer of know-how and increase national and regional capabilities. Technical cooperation shall contribute to the achievement of project and programme goals, including efforts to strengthen management capacity of the National and Regional Authorising Officers. Technical assistance shall:

(a) be demand-driven and thus made available only at the request of the ACP State or States concerned, and adapted to recipient needs;

(b) complement and support ACP efforts to identify their own requirements;

(c) be monitored and followed up to guarantee effec-tiveness;

(d) encourage the participation of ACP experts, consultancy firms and educational and research institutions in contracts financed from the Fund and identify ways of employing qualified national and regional personnel on Fund projects;

(e) encourage the secondment of ACP national cadres as consultants to an institution in their own country, or a neighbouring country, or to a regional organisation;

(f) aim at developing knowledge of national and regional manpower constraints and potential and establish a register of ACP experts, consultants and consultancy firms suitable for employment on projects and programmes financed from the Fund;

(g) support intra-ACP technical assistance in order to promote the exchange between the ACP States of Technical cooperation may be either of a specific or a general nature. The ACP-EC Development Finance Cooperation Committee shall establish the guidelines for the implementation of technical cooperation. technical assistance, management and professio-nal expertise;

(h) develop action programmes for long-term institu-tion building and staff development as an integral part of project and programme planning, account being taken of the necessary financial require-ments;

(i) support arrangements to enhance the capacity of the ACP States to build up their own expertise; and

(j) give special attention to the development of the ACP States' capacities in project planning, imple-mentation and evaluation, as well budget management.

3. Technical assistance may be provided in all areas of cooperation and within the limits of the manda-te of this Agreement. The activities covered would be diverse in scope and nature, and would be tailored to meet the needs of the ACP States.

4. Technical cooperation may be either of a specific or a general nature.The ACP-EC Development Finance Coorperation Committee shall establish the guidelines for the implementation of technical cooperation.

ARTICLE 80

With a view to reversing the brain drain from the ACP States, the Community shall assist ACP States which so request to facilitate the return of qualified ACP nationals resident in developed countries through appropriate re-installation incentives.

TITLE IV

Procedures and management systems

ARTICLE 81

Procedures

Management procedures shall be transparent, easy to apply and shall enable the decentralisation of tasks and responsibilities to the field, The implementation of ACP-EU development cooperation shall be open to non-State actors in areas that concern them. The detailed procedural provisions for programming, preparation, implementation and th ' e management of financial and technical cooperation are laid down in Annex IV on Implementation and Management Procedures. The Council of Ministers may review, revise and amend these provisions on the basis of a recommendation from the ACP-EC Development Finance Cooperation Committee.

ARTICLE 82

Executing agents

For the implementation of financial and technical cooperation under this Agreement, executing agents are designated. Detailed provisions for the responsi-bilities of the executing agents are laid down in Annex IV on Implementation and Management Procedures.

ARTICLE 83

ACP-EC Development Finance Cooperation Committee

I. The Council of Ministers shall at least once a year examine whether the objectives of development finance cooperation are being attained and shall examine the general and specific problems resul-ting from the implementation of that cooperation. To this end, an ACP-EC Development Finance Cooperation Committee, hereinafter referred to as "the ACP-EC Committee", shall be set up within the Council of Ministers.

2. The ACP-EC Committee shall, inter alia:

(a) ensure the overall achievement of the objectives and principles of development finance cooperation and establish general guidelines for their effective and timely implementation;

(b) examine the problems arising from the implemen-tation of development cooperation activities and propose appropriate measures;

(c) review the annexes to the Agreement to ensure their continued relevance and recommend any appropriate amendments to the Council of Ministers for approval; and

(d) examine the operations deployed within the fra-mework of the Agreement to attain the objectives of promoting private sector development and investment and the operations of the Investment Facility.

3. The ACP-EC Committee, which shall meet every quarter, shall be composed, on a basis of parity, of representatives of the ACP States and of the Community, or their authorised representatives. It shall meet at ministerial level whenever one of the parties so requests and at least once a year.

4. The Council of Ministers shall lay down the ACP-EC Committee's rules of procedure, in parti-cular the conditions for representation and the number of members of the Committee, the detai-led arrangements for their deliberations and the conditions for holding the chair.

5. The ACP-EC Committee may convene meetings of experts to study the cause of any difficulties and bottlenecks, which may impede the efficient implementation of development cooperation. These experts shall make recommendations to the Committee on possible ways of removing such and bottlenecks.

PART FIVE

GENERALPROVISIONS

FOR THE LEAST-DEVELOPOPED,

LANDLOCKED AND ISLAND ACP STATES

(LDLICs)

CHAPTER1

General provisions

ARTICLE 84

1. To enable LDLICs to take full advantage of the opportunities offered by the Agreement so as to step up their respective rates of development, cooperation shall ensure special treatment for the least developed ACP countries and take due account of the vulnerability of landlocked and island ACP countries. It shall also take into consi-deration the needs of countries in post-conflict situations.

2. Independently of the specific measures and provi-sions for the least-developed, landlocked and island countries in the different chapters of the Agreement, special attention shall be paid in res-pect of these groups as well as countries in post-conflict situations to:

(a) the strengthening of regional cooperation;

(b) transport and communications' infrastructure;

(c) the efficient exploitation of marine resources and the marketing of products so produced and, in the case of landlocked countries, inland fisheries;

(d) structural adjustment where account shall be taken of the level of development of these coun-tries and equally, at the implementation stage, of the social dimension of adjustment; and

(e) the implementation of food strategies and integrated development programmes.

CHAPTER 2

Least-developed ACP states

ARTICLE 85

1. The least-developed ACP States shall be accor-ded a special treatment in order to enable them to overcome the serious economic and social diffi-culties hindering their development so as to step up their respective rates of development.

2. The list of least-developed countries is given in Annex VI. It may be amended by a decision of the Council of Ministers where:

(a) a third State in a comparable situation accedes to this Agreement; and

(b) the economic situation of an ACP State changes considerably and durably to the extent that it needs to be included in the least-developed category or its inclusion in that category is no long-er justified.

ARTICLE 86

The provisions adopted in respect of the least -developed ACP States are contained in the following Articles: 2, 29, 32, 35, 37, 56, 68, 84, 85.

CHAPTER 3

Landlocked ACP states

ARTICLE 87

1. Specific provisions and measures shall be establi-shed to support landlocked ACP States in their efforts to overcome the geographical difficulties and other obstacles hampering their development so as to enable them to step up their respective rates of development.

2. The list of landlocked ACP States is given in Annex VI. It may be amended by decision of the Council of Ministers when a third State in a com-parable situation accedes to the Agreement.

ARTICLE 88

The provisions adopted in respect of the landlocked ACP States are contained in the following Articles: 2, 32, 35, 56, 68, 84, 87.

CHAPTER 4

Island ACP states

ARTICLE 89

1. Specific provisions and measures shall be establi-shed to support island ACP States in their efforts to overcome the natural and geographical difficul-ties and other obstacles hampering their develop-ment so as to enable them to step up their res-pective rates of development.

2. The list of island ACP States is. given in Annex VI. It may be amended by decision of the Council of Ministers when a third State in a comparable situation accedes to the Agreement,

ARTICLE 90

The provisions adopted in respect of the island ACP States are contained in the following Articles: 2, 32, 35, 56, 68, 84, 89.

PART SIX

FINAL PROVISIONS

ARTICLE 91

Conflict between this Agreement and

other treaties

No treaty, convention, agreement or arrangement of any kind between one or more Member States of the Community and one or more ACP States may impede the implementation of this Agreement.

ARTICLE 92

Scope of territorial application

Subject to the special provisions regarding the rela-tions between the ACP States and the French over-seas departments provided for therein, this Agreement shall apply, on the one hand, to the terri-tories in which the Treaty establishing the European Community is applied and under the conditions laid down in that Treaty and, on the other hand, to the ter-ritories of the ACP States.

ARTICLE 93

Ratification and entry into force

1. This Agreement shall be ratified or approved by the signatory Parties in accordance with their res-pective constitutional rules and procedures.

2. The instruments of ratification or approval of this Agreement shall be deposited in the case of the ACP States, with the General Secretariat of the Council of the European Union and in the case of the Community and the Member States, with the General Secretariat of the ACP States. The Secretariats shall promptly notify the signatory States and the Community.

3. This Agreement shall enter into force on the first day of the second month following the date of deposit of the instruments of ratification of the Member States and of at least two-thirds of the ACP States, and of the instrument of approval of this Agreement by the Community,

4. An ACP signatory State that has not completed the procedures set out in paragraphs 1 and 2 by the date on which this Agreement enters into force as provided for in paragraph 3 may do so only within the 12 months following that date, without prejudice to the provisions of paragraph 6.

For such States this Agreement shall become applicable on the first day of the second month following the completion of these procedures. These States shall recognise the validity of any measure taken to implement the Agreement after the date of its entry into force.

5. The rules of procedure of the joint institutions set up under this Agreement shall lay down the condi-tions under which the representatives of signatory States referred to in paragraph 4 may attend those institutions as observers.

6. The Council of Ministers may decide to accord special support to ACP States party to previous ACP-EC Conventions, which, in the absence of normally established government institutions, have not been able to sign or ratify this Agreement. This support may concern institution building and eco-nomic and social development activities, taking particular account of the needs of the most vulne-rable sections of the population. In this context, such countries will be able to draw on the funds provided for in Part 4 of this Agreement for finan-cial and technical cooperation.

By way of derogation from paragraph 4, the coun-tries concerned %%J-ich are signatories to the Agreement may complete the ratification proce-dures within twelve months of the restoration of government institutions.

The countries concerned which have neither signed nor ratified the Agreement may accede to it by means of the accession procedure provided for in Article 94.

ARTICLE 94

Accession

1. Any request for accession to this Agreement made by an independent State whose structural characteristics and economic and social situation are comparable to those of the ACP States shall be presented to the Council of Ministers.

If the request is approved by the Council of Ministers, the State concerned shall accede to this Agreement by clepos"t*ng an act of accession with the General Secretariat of the Council of the European Union. which shall send a certified copy to the ACP Secreianat and notify the Member States. The Council of Ministers may lay down any amending measures t~at might be necessary.

The State concerned shall enjoy the same rights and be subject to the same obligations as the ACP States. Its accession may not infringe on the benefits enjoyed by the ACP States signatory to this Agreement under the provisions on develop-ment cooperation financing. The Council of Ministers may lay do%vn the conditions and specific arrangements for the accession of an individual State in a special protocol that shall form an inte-gral part of the Agreement.

2. The Council of Ministers shall be advised of any request made by a third State to become a mem-ber of an economic grouping of ACP States.

3. The Council of Ministers shall be advised of any request made by a third State to become a mem-ber of the European Union. During the negotiations between the Union and the applicant State, the Community shall provide the ACP States with any relevant information and they in turn shall convey their concerns to the Community so that it can take them fully into account. The ACP Secretariat shall be notified by the Community of any accession to the European Union.

Any new Member State of the European Union shall become a Party to this Agreement from the date of its accession by means of a clause to that effect in the act of accession. If the act of acces-sion to the Union does not provide for such auto-matic accession of the Member State to this Agreement, the Member State concerned shall accede by depositing an act of accession with the General Secretariat of the Council of the European Union, which shall send a certified copy to the ACP Secretariat and notify the Member States.

The Parties shall review the effects of the acces-sion of new Member States on this Agreement. The Council of Ministers may decide on any tran-sitional or amending measures that might be necessary.

ARTICLE 95

Duration of the agreement and revision clause

1. This Agreement is hereby concluded for a period of twenty years, commencing on 1 March 2000.

2. Financial protocols are defined for each five-year period.

3. The Community and the Member States, on the one hand, and the ACP States, on the other, shall notify the other Party not later than 12 months before the expiry of each five-year period of any review of the provisions they desire to make with a view to a possible amendment of the Agreement. This shall not apply, however, to the provisions on economic and trade cooperation, for which a spe-cial review procedure is provided for. Notwith-standing this time limit, if one Party requests the review of any provisions of the Agreement, the other Party shall have a period of two months in which to request the extension of the review to other provisions related to those which were the subject of the initial request.

Ten months before the expiry of this five-year per-iod, the Parties shall enter into negotiations with a view to examining any possible amendments to the provisions that were the subject of the notifi-cation.

Article 93 shall also apply to the amendments made.

The Council of Ministers shall adopt any transitio-nal measures that may be required in respect of the amended provisions until they come into force.

4. Eighteen months before the end of the total period of the Agreement, the Parties shall enter into negotiations in order to examine what provisions shall subsequently govern their relations.

The Council of Ministers shall adopt any transitio-nal measures that may be required until the new Agreement comes into force.

ARTICLE 96

Essential elements: consultation

procedure and appropriate measures

as regards human rights, democratic principles and the rule of law

1. Within the meaning of this Article, the term "Party" refers to the Community and the Member States of the European Union, of the one part, and each ACP State, of the other part.

2.

(a) If, despite the political dialogue conducted regu-larly between the Parties, a Party considers that the other Party has failed to fulfil an obligation stemming from respect for human rights, demo-cratic principles and the rule of law referred to in paragraph 2 of Article 9, it shall, except in cases of special urgency, supply the other Party and the Council of Ministers with the relevant information required for a thorough examination of the situation with a view to seeking a solution acceptable to the Parties. To this end, it shall invite the other Party to hold consultations that focus on the measures taken or to be taken by the party concerned to remedy the situation.

The consultations shall be conducted at the levd and in the form considered most appropriate tor finding a solution.

The consultations shall begin no later than 15 days after the invitation and shall continue for a period established by mutual agreement, depending on the nature and gravity of the violation. In any case, the consultations shall last no longer than 60 days.

If the consultations do not lead to a solution unacceptable to both Parties, if consultation is refused, or in cases of special urgency, appropriate measures may be taken. These measures shall be revoked as soon as the reasons for taking them have disappeared.

(b) The term "cases of special urgency" shall refer to exceptional cases of particularly serious and flagrant violation of one of the essential elements referred to in paragraph 2 of Article 9, that require an immediate reaction.

The Party resorting to the special urgency procedure shall inform the other Party and the Council of Ministers separately of the fact unless it does not have time to do so.

(c) The “appropriate measures” referred to in this Article are measures taken in accordance with international law, arid proportional to the violation. In the selection of these measures, priority must be given to those which least disrupt the application of this agreement. It is understood that suspension would be a measure of last resort.

It measures are taken in cases of special urgency, they shall be immediately notified to the other Party and the Council of Ministers. At the request of the Party concerned, consultations may then be called in order to examine the situation thoroughly and, If possible, find solutions. These consultations shall be conducted according to the arrangements set out in the second -arid third sub paragraphs of paragraph (a).

ARTICLE 97

Consultation procedure and

appropriate measures

as regards corruption

1. The Parties consider that when the Community is a significant partner In terms of financial support to economic and sectoral policies and programmes, serious cases of corruption should give rise to consultations between the Parties.

2. In such cases either Party may invite the other to enter into consultations. Such consultations shall begin tie later than 21 days after the invitation and shall last no longer than 60 days.

3. If the consultations do not lead to a solution acceptable to both Parties or If consultation is refused, the Parties shall take the appropriate measures. In all cases, it is above all incumbent on the Party where the serious cases of corruption have occurred to take the measures necessary to remedy the situation immediately. The measures taken by either Party must be proportional to the seriousness of the situation. In the selection of these measures, priority must be given to those which least disrupt the application of this agreement. It is understood that suspension would be a measure of last resort.

4. Within line meaning of this Article, the term "Party" refers to the Community and the Member States of the European Union, of the one part, and each ACP Slate, of the other part.

ARTICLE 98

Dispute settlement

1. Any dispute arising from the interpretation or application of this Agreement between one or more Member States or the Community, on the one hand, arid one or more ACP Stales on the other, shall be submitted to the Council of Ministers.

Between meetings of the Council of Ministers, such disputes shall be submitted to the Committee of Ambassadors.

2.

(a) if the Council of Ministers does not succeed in settling the dispute, either Party may request settlement of the dispute by arbitration. To this end, each Party shall appoint an arbitrator within thirty days of the request for arbitration. In the event of failure to do so, either Party may ask the Secretary- General of the Permanent Court of Arbitration to appoint the second arbitrator.

(b) The two arbitrators shall in turn appoint a third arbitrator within thirty days. In the event of failure to do so, either Party may ask the Secretary-General of the Permanent Court of Arbitration to appoint the third arbitrator.

(c) Unless the arbitrators decide otherwise, the procedure applied shall be that laid down in the optional arbitration regulation of the Permanent Court of Arbitration for International Organisations and States. The arbitrators' decisions shall be taken by majority vote within three months.

(d) Each Party to the dispute shall be bound to take the measures necessary to carry out the decision of the arbitrators.

For the application this procedure, the Community and the Member States shall be deemed one Party the dispute.

ARTICLE 99

Denunciation clause

This Agreement may be denounced by the Community and its Member States in respect of each ACP State and by each ACP State in respect of the Community and its Member States, upon six months' notice.

ARTICLE 100

Status of the texts

The Protocols and Annexes attached to this Agreement shall form an integral part thereof. Annexes II, III, IV and VI may be revised, reviewed and/or amended by the Council of Ministers on the basis of a recommendation from the ACP-EC Development Finance Cooperation Committee.

This Agreement, drawn up in two copies in the Danish, Dutch, English, Finnish, French, German, Greek, Italian, Portuguese, Spanish and Swedish languages, all text being equally authentic, shall be deposited in the archives of the General Secretariat of the Council of the European Union and the Secretariat of the ACP States, which shall both transmit a certified copy to the government of each Signatory states.

ANNEXES TO THE AGREEMENT

TABLE OF CONTENTS

ANNEX I: FINANCIAL PROTOCOL 4

ANNEX II: TERMS AND CONDITIONS OF FINANCING. 5

Chapter 1 Investment financing 5

Chapter 2 Special operations 7

Chapter 3 Financing for short-term fluctuations in export earnings 7

Chapter 4 Other provisions 8

Chapter 5 Investment protection agreements 9

ANNEX III: INSTITUTIONAL SUPPORT - CDE AND CTA 10

ANNEX IV. IMPLEMENTATION AND MANAGEMENT PROCEDURES 12

Chapter 1 Programming (national) 12

Chapter 2 Programming and preparation (regional) 14

Chapter 3 Project implementation 16

Chapter 4 Competition and preferences 18

Chapter 5 Monitoring and evaluation 23

Chapter 6 Management and executing agents 23

ANNEX V.. TRADE REGIME APPLICABLE DURING THE PREPARATORY PERIOD

REFERRED TO IN ARTICLE 37(1) ....... 27

Chapter 1 General trade arrangements. 27

Chapter 2 Special undertaking on sugar and beet and veal 30

Chapter 3 Final provisions 30

PROTOCOL 1 CONCERNING THE DEFINITION OF THE CONCEPT OF

"ORIGINATING PRODUCTS" AND METHODS OF ADMINISTRATIVE OOPERATION 31

TITLE 1 General provisions 34

TITLE 11 Definition of the concept of CRIGINATING PRODUCTS 35

TITLE 111 Territorial requirements 39

TITLE IV Proof of origin 40

TITLE V Arrangements for administrative cooperation 46

TITLE V1 Ceuta and Melilla 50

TITLE VII Final provisions 50

ANNEX 1 to Protocol 1 Introductory notes to the list in Annex 11 51

ANNEX 11 to Protocol 1 List of working or processing required to be carried out on non-

originating materials in order that the product manufactured can obtain originating status 55

ANNEX III Protocol 1 Overseas countries and territories 98

ANNEX IV to Protocol 1 Form for movement certificate 99

ANNEX V to Protocol 1 Invoice declaration 104

ANNEX VI A to Protocol 1 Supplier declaration for products having preferential origin status 107

ANNEX V1 R to Protocol 1 Supplier declaration for products not having preferential origin

status 108

ANNEX VII to Protocol 1 Information certificate 109

ANNEX VIII to Protocol 1 Form for application for a derogation 111

ANNEX IX to Protocol 1 List of working or processing conferring the character of ACP

origin on a product obtained when working or processing is carried out on textile materials

originating in developing countries referred to in Article 6(11) of this Protocol .... 113

ANNEX X to Protocol 1 Textile products excluded from the accumulation procedure with

certain developing countries referred to in Article 6(11) of this Protocol. 118

ANNEX XI to Protocol 1 Products for which the cumulation provisions with South Africa

referred to in Article 6(3) apply after 3 years from the provisional application of the Agreement

on Trade, Development and Cooperation between the European Community and the Republic

of South Africa 119

ANNEX XII to Protocol 1 Products for Mien the cumulation provisions with South Africa

referred to in Article 6(3) apply after 6 years from the provisional application of the

Agreement on Trade, Development and Cooperation between the European Community

and the Republic of South Africa 132

ANNEX XIII Io Protocol 1 Products to which Article 6(3) shall net be applicable 138

ANNEX XIV to Protocol 1 Fishery products to which Article 6(3) shall temporarily not be

applicable 147

ANNEX XV to Protocol 1 Joint declaration on cumulation 149

PROTOCOL 2 ON THE IMPLEMENTATION OF ARTICLE 9 149

PROTOCOL 3 CONTAINING THE TEXT OF PROTOCOL 3 ON ACP SUGAR. 150

ANNEX to Protocol 3 Declarations on Protocol 3 152

ANNEX Io Protocol 3 Exchanges of letters 152

PROTOCOL 4 ON BEEF AND VEAL 156

PROTOCOL 5 THE SECOND BANANA PROTOCOL 156

ANNEX VI: LIST OF LDLICS 158

PROTOCOLS

PROTOCOL 1 ON THE OPERATING EXPENDITURE OF THE JOINT NSTITUTIONS 159

PROTOCOL 2 ON PRIVILEGES AND IMMUNITIES

Chapter 1 Persons taking part in the work of the Agreement 160

Chapter 2 Property, funds and assets of the Council of ACP Ministers 160

Chapter 3 Official communications 161

Chapter 4 Staff of the Secretariat of the ACP States 161

Chapter 5 Commission Delegations in the ACP States 162

Chapter 6 General provisions 162

PROTOCOL 3 ON SOUTH AFRICA 162

ANNEX 1

FINANCIAL PROTOCOL

1. For the purposes set out in this Agreement and for a period of five years commencing 1 March 2000, the overall amount of the Community's financial assistance to the ACP States shall be EUR 15 200 million.

2. The Community’s financial assistance shall comprise an amount up to EUR 13 500 million from the 9th European Development Fund (EDF).

3. The 9th EDF shall b allocated between the instruments of cooperation as follows:

(a) EUR 10 000 million in the form of grants shall be reserved for an envelope for support for long-term development. This envelope shall be used to finance national indicative programmes in accordance with Articles 1 to 5 of Annex IV “implementation and management procedures" to is Agreement. From the envelope for support for long-term development:

(i) EUR 90 million shall be reserved for the financing of the budget of the Centre for the Development of Enterprise (CDE);

(ii) EUR 70 million shall be reserved for the financing of the budget of the Centre for the Development of Agriculture (CTA); and

(iii) an amount not exceeding EUR 4 million shall be reserved for the purposes referred to in Article 17 of this Agreement (Joint Parliamentary Assembly).

(b) EUR 1 300 million in the form of grants shall be reserved for the financing of support for regional cooperation and integration of the ACP States in accordance with Articles 6 to 14 of Annex IV "Implementation and management procedures" to this Agreement.

(c) EUR 2 200 million shall be allocated to finance the Investment Facility according to the terms and conditions set out in Annex Il "Terms and conditions of financing" to this Agreement without prejudice to the financing of the interest rate subsidies provided for in Articles 2 and 4 of Annex Il to this Agreement funded from the resources mentioned in paragraph 3~a) of this Annex,

4. An amount of up to EURO 1,700 million shall be provided from the European Investment Bank in the form of loans made from its own resources. These resources shall be granted for the purposes set out in Annex Il "Terms and conditions of financing" to this Agreement in accordance with the conditions provided for by its statutes and the relevant provisions of the terms and conditions for investment financing as laid down in the aforementioned Annex. The Bank may, from the resources it manages, contribute to the financing of regional projects and programmes.

5. Any balances remaining from previous EDFs on the date of entry into force of finis Financial Protocol, as well as any amounts that shall be decommitted at a later date from ongoing projects under those Funds, shall be transferred be the 91h ED~ and shall be used in accordance with the conditions laid down in this Agreement. Any resources thus transferred to the 9th EDF that previously had been allocated Io the indicative programme of an ACP State or region shall remain allocated to that State or region. The overall amount of finis Financial Protocol, supplemented by the transferred balances from previous EDFs, will cover the period of 2000 - 200T

6. The Bank shall administer the loans made from its own resources, as well as the operations financed under the Investment Facility. All other financial resources of this Agreement shall be administered by the Commission.

7. Before the expiry of this Financial Protocol, the Parties shall assess the degree of realisation of commitments and disbursements. This assessment shall constitute the basis for re-evaluating the overall amount of resources as \Nell for evaluating the need for new resources to support financial cooperation under this Agreement.

8. In the event of the funds provided for in any of the instruments of the Agreement being exhausted before the expiry of this Financial Protocol, the joint ACP-EC Council of Ministers shall take the appropriate measures.

ANNEX II

TERMS AND CONDITIONS OF FINANCING

CHAPTER 1

Investment financing

ARTICLE 1

The terms and conditions of financing in relation to the operations of the Investment Facility (Facility), the bans from own resources of the European Investment Bank (Bank) and special operations shall be as laid clown in this Chapter. These resources may de channelled to eligible enterprises, either directly or indirectly, through eligible investment funds and/or financial intermediaries.

ARTICLE 2

Resources of the investment facility

1. The resources of the Facility may be used, inter alia, to:

(a) provide risk capital in the form of:

(i) equity participation in ACP enterprises, including financial institutions;

(ii) quasi-capital assistance to ACP enterprises, including financial institutions; and

(iii) guarantees and other credit enhancements which may de used to cover political and other investment-related risks, both for foreign and local investors or lenders.

(b) provide ordinary loans.

2. Equity participation shall normally de for non-controlling minority holdings and shall de remunerated on the oasis of the performance of the project concerned.

3. Quasi-capital assistance may consist of shareholders' advances, convertible bonds, conditional, subordinated and participating loans or any other similar form of assistance. Such assistance may consist in particular of:

(a) conditional loans, the servicing and/or the duration of which, shall on linked to the fulfillment of certain conditions with regard to the performance of the project; in the specific case of conditional loans for pre-investment studies or other project-related technical assistance, servicing may de waived if the investment is not carried out;

(b) participating loans, the servicing and/or the duration of which shall de linked to the financial return of the project; and

(c) subordinated loans, which shall be repaid only after other claims have been settled.

4. The remuneration of each operation shall be specified when the loan is made. However:

(a) in the case of conditional or participating loans, the remuneration shall normally comprise a fixed interest rate of not more than 3% and a variable component related to the performance of the project, and

(b) in the case of subordinated loans, the interest rate shall be market related.

5. Guarantees shall be priced so as to reflect the risks insured and the particular characteristics of the operation.

6. The interest rate of ordinary loans shall comprise a reference rate applied by the Bank for comparable loans with the same terms and conditions as to grade and repayment periods and a mark up determined by the Bank.

7. Ordinary loans may de extended on concessional terms and conditions in the following cases:

(a) for infrastructure projects in the Least Developed Countries or in post-conflict countries that are prerequisites for private sector development. In such cases, the interest rate of the loan will de reduced by 3%, and

(b) for projects which involve restructuring operations in the framework of privatisation or for projects with substantial and clearly demonstrable social or environmental benefits. In such cases, loans may be extended with an interest rate subsidy the amount and form of which will be decided with respect to the particular characteristics of the project. However, the interest rate subsidy shall not be higher than 3%.

The final interest rate shall, in any case, never be less thon 50% of the reference rate.

8. The funds to be provided for these concessional purposes will be made available from the Investment Facility and shall not exceed 5% of the overall amount allocated for investment financing by the Investment Facility and by the Bank from its own resources.

9. Interest subsidies may be capitalised or may be used in the form of grants to support project related technical assistance, particularly for financial institutions in the ACP countries.

ARTICLE 3

Operations of the investment facility

1. The Investment Facility shall operate in all economic sectors and support investments of private and commercially run public sector entities, including revenue generating economic and technological infrastructure critical for the private sector. The Facility shall;

(a) be managed as a revolving fund and aim at being financially sustainable. Its operations shall be on market-related terms and conditions and shall avoid creating distortions on local markets and displacing private sources of finances, and

(b) endeavour to have a catalytic effect by encouraging the mobilisation of long-term local resources and attracting foreign private investors and lenders to projects in the ACP States.

2. On expiry of the Financial Protocol, and in the absence of a specific decision by the Council of Ministers, the cumulative net reflows to the Investment Facility shall be carried over to the next Protocol.

ARTICLE 4

Bank own resource loans

1. The Bank shall:

(a) contribute, through the resources if manages, to the economic and industrial development of the ACP States on a national and regional oasis; and to finis end, finance as a priority productive projects and programmes or other investments aimed at promoting the private sector in ail economic sectors;

(b) establish close cooperation links with national and regional development banks and with banking and financial institutions of the ACP States and of the EU; and

(c) in consultation with the ACP State concerned, adapt the arrangements and procedures for implementing development finance cooperation, as set out in this Agreement, if necessary, to take account of the nature of the projects and programmes and to act in accordance with the objectives of this Agreement, within the framework of the procedures laid down by its statute.

2. Loans from the Banks own resources shall be granted under the following terms and conditions

(a) the reference rate of interest shall be the rate applied by the Bank for a loan with the same conditions as to currency, and repayment period on the day of signature of the contract or on the date of disbursement;

(b) however:

(i) in principle, public sector projects shall be eligible for an interest rate subsidy of 3%,

(ii) private sector projects falling into the categories specified in Article 2 (7)(b) shall be eligible for interest rates subsidies on the same terms as those specified in Article 2(7)(b).

The final interest rate shall, in any case, never be less than 50% of the reference rate.

(c) the amount of the interest rate subsidy calculated in terms of its value at the times of disbursement of the loan shall be charged against the interest subsidy allocation of the Investment Facility as defined in Article 2(8) and 2(g), and paid directly to the Bank; and

(d) the repayment period of cans made by the Bank from its own resources shall be determined on the basis of the economic and financial characteristics of the project, but may not exceed 25 years. These loans shall normally comprise a grace period fixed by reference to the construction period of the project.

3. For investments financed by the Bank from its own resources in public sector companies, specific project related guarantees or undertakings may be required from the ACP Stale concerned.

ARTICLE 5

Conditions for

foreign exchange rate risk

In order to minimise the effects of exchange rate fluctuations, the problems of exchange rate risk shall be dealt with in the following way:

(a) in the case of equity participation designed to strengthen an enterprise's own funds, the exchange rate risk shall, as a general rule, be borne by the Investment Facility;

(b) in the case of risk capital financing for small-and medium-sized enterprises (SMEs), the exchange rate risk shall, as a general rule, be shared by the Community, on the one part, and by the other parties involved, on the other. On average, the foreign exchange rate risk shall be shared equally; and

(c) where feasible and appropriate, particularly in countries characterised by macroeconomic and financial stability, the Facility will endeavour to extend loans in local ACP currencies, thus de facto taking the foreign exchange risk.

ARTICLE 6

Conditions for

foreign exchange transfer

The ACP States concerned shall, in respect of operations under the Agreement, and in respect of which they have given their written approval within the framework of this Agreement:

(a) grant exemption from all national or local duties, fiscal charges on interest, commission and amortisation of loans due in accordance with the law or laws of the ACP State or States concerned;

(b) place at the disposal of the beneficiaries the currency necessary for the payment of interest, commission and the amortisation of loans due in terms of financing contracts granted for the implementation of projects and programmes on their territories; and

(c) make available to the Bank the foreign currency necessary for the transfer of all sums received by it in national currency at the exchange rate applicable between the Euro or other currencies of transfer and the national currency at the date of the transfer. These include all forms of remuneration, such as, inter alia, interest, dividends, commissions and tees, as well as the amortisation of loans and the proceeds from the sale of shares due in terms of financing contracts granted for the implementation of projects and programmes on their territories.

CHAPTER 2

Special operations

ARTICLE 7

1. Cooperation shall support from the grant allocation:

(a) low-income housing to promote long-term development of the housing sector, including secondary mortgage facilities;

(b) micro-finance to promote SMEs and micro enterprises, and

(c) capacity building to strengthen and facilitate the effective participation of the private sector in social and economic development.

2. The ACP-EC Council of Ministers shall, after the signature of this Agreement and on a proposal by the ACP-EC Development Finance Cooperation Committee, decide on the modalities and the amount of resources allocated from the long-term development envelope to attain these objectives.

CHAPTER 3

Financing for short-term

fluctuations in export earnings

ARTICLE 8

1. The Parties recognise that losses of export earnings as a result of short-term fluctuations may jeopardise the development financing requirements and the implementation of macro economic and sectoral policies. The degree of dependence of an ACP States economy on the export of goods, and in particular from agricultural and mining products shall, therefore, be a criterion for determining the allocation of long-term development.

2. In order to mitigate the adverse effects of instability of expert earnings and safeguard the development programme jeopardised by the drop in revenue, additional financial support may be mobilised from the programmable resources for the country’s long-term development on the oasis of Articles 9 and 10.

ARTICLE 9

Eligibility criteria

1. Eligibility for additional resources shall be established by:

(a) - a 10 % (2% in the case of least-developed countries) loss of expert earnings from goods compared with the aril average of the earnings in the first three years of the first four years preceding the application year; or

- a 10 % (2% in the case of least-developed countries ) loss of expert earnings from the total of agricultural or mineral products compared with the arithmetical average of the earnings in the first three years of the first four years preceding the application year for countries where the agricultural or mineral expert revenues represent more than 40 % of total export revenues from goods; and

(b) a 10 % worsening in the programmed public deficit programmed for the year in question or forecast for the following year.

2. Entitlement to additional Support shall be limited to four successive years.

3. The additional resources shall be reflected in the public accounts of the country concerned. They shall be utilised in accordance with programming rules and methods including the specific provisions in Annex IV "Implementation and management procedures", on the basis of agreements drawn up in advance between the Community and the ACP State concerned in the year following the application. By agreement of both Parties the resources may he Used to finance programmes included in national budget. However a part of the additional resources may also be set aside for specific sectors.

ARTICLE 10

Advances

The system for allocating additional resources shall provide for advances to cover any delays in obtaining consolidated trade statistics and to ensure that the resources in question can be included in the budget of the year following the application year. Advances shall be mobilised on the basis of provisional expert statistics drawn up by the government and submitted to the Commission in advance of the official final consolidated statistics. The maximum advance shall be 80 % of the estimated amount of additional resources for the application year. The amounts thus mobilised shall be adjusted by common agreement between the Commission and the government in the light of final consolidated expert statistics and the final figure of the public deficit.

ARTICLE 11

The provisions in this Chapter shall be subject to review ET the latest after two years of operation and subsequently at the request of either Party.

CHAPTER 4

Other provisions

ARTICLE 12

Current payments and capital movements

1. Without prejudice to paragraph 3 here after, the Parties undertake to impose no restrictions on any payments, in freely convertible currency, on the current account of balance of payments between residents of the Community and of the ACP States.

2. With regard to transactions on the capital account of balance of payments, the Parties Undertake to impose no restrictions on the free movement of capital relating to direct investments made in companies formed in accordance with the law of the host country and investments made in accordance with this Agreement, and the liquidation or repatriation of these investments and of any profit stemming therefrom.

3. Where one or more ACP State or one or more Member State of the Community is in serious balance of payments difficulties, or under threat thereof, the ACP State, the Member State or the Community may, in accordance with the conditions established under the GATT, GATS and Article VIII and XIV of the Articles of Agreement of the International Monetary Fund, adopt restrictions on current transactions Which shall be of limited duration and may not go beyond what is necessary to remedy the balance of payments situation. The Party taking the measures shall inform the other Parties forthwith and shall submit to them as soon as possible a timetable for the elimination of the measures concerned.

ARTICLE 13

Qualification and treatment of

business entities

As regards arrangements that may be applied in matters of establishment and provision of services, the ACP States, on the one hand, and the Member States, on the other, shall treat nationals and companies or firms of the ACP States and nationals and companies firms of the Member States respectively on a non-discriminatory basis. However, if, for a given activity, an ACP State or a Member State is unable to provide such treatment, the ACP State or the Member State, as the case may be, shall net be bound to accord such treatment for that activity to the nationals and companies or firms of the State concerned.

ARTICLE 14

Definition of "companies and firms

1. For the purpose of this Agreement, "companies or flans of a Member State or an ACP State" mean companies or firms constituted Linder civil or commercial law, including corporations, whether public or otherwise, cooperative societies and other legal persons and partnerships governed by Public or private law, save for those which are non profit making, formed in accordance with the law of a Member State or an ACP State and whose statutory office, central administration or principal place of business le a Member State or an ACP State.

2. However, a company or firm having only its statutory office in a Member State or an ACP State must be engaged in an activity which has an effective and continuous link with the economy of that Member State or ACP State.

CHAPTER 5

Investment protection

agreements

ARTICLE 15

1. Mon implementing the provisions of Article 78 of fins Agreement, the Parties shall take into account the following principles:

(a) a Contracting State may request where appropriate, the negotiation of an investment promotion and protection agreement with another Contracting State;

(b) the States party to such agreements shall practice no discrimination between Contracting States party to this Agreement or against each other in relation to third countries when opening negotiations for concluding, applying and interpreting bilateral or multilateral investment promotion and protection agreements;

(c) the Contracting States shall have the right to request a modification or adaptation of the nondiscriminatory treatment referred to above when international obligations or changed circumstances se necessitate;

(d) the application of the principles referred to above does not purport to and cannot in practice infringe the sovereignty of any Contracting Party to the Agreement; and

(e) the relation between the date of entry into force of any agreement negotiated, provisions for the settlement of disputes and the date of the investments concerned will be set out in the said agreement, account being taken of the provisions set out above, The Contracting Parties confirm that retroactivity shall net apply as a general principle unless Contracting States stipulate otherwise.

2. With a view to facilitating the negotiation of bilateral agreements on investment promotion and protection, the Contracting Parties agree to study the main clauses of a model protection agreement. The study, drawing on the provisions of the existing bilateral agreements between the States Parties, will give particular attention to the following issues:

(a) legal guarantee to ensure fair and equitable treatment and protection of foreign investors;

(b) the most-favoured-investor clause;

(c) protection in the event of expropriation and nationalisation;

(d) the transfer of capital and profits, and

(e) international arbitration in the event of disputes between investor and host State,

3. The Parties agree to study the capacity of the guarantee systems to give a positive answer to the specific needs of small and medium-sized enterprises of insuring their investments in ACP States. The studios referred to above shall be started as soon as possible after the signing of the Agreement. The result of these studios shall be submitted, upon completion to the ACP-EC Development Finance Cooperation Committee for consideration and appropriate action.

ANNEX III

INSTITUTIONAL SUPPORT, CDE AND CTA

ARTICLE 1

Cooperation shall support the institutional mechanisms that provide assistance for businesses and enterprises and promote agriculture and rural development. In this context, cooperation shall help to:

(a) strengthen and enhance the role of the Centre for the Development of Enterprise (CDE) se as to provide the ACP private sector with the necessary support In the promotion of private sector development activities; and

(b) strengthen and reinforce the role of the Centre for the Development of Agriculture (CTA) in ACP institutional capacity development, particularly information management, in order to improve access to technologies for increasing agricultural productivity commercialisation, food security and rural development.

ARTICLE 2

CDE

1. The CDE shall support the implementation of private-sector development strategies in the ACP countries by providing non-financial services Io ACP comparnies and businesses and support to joint initiatives set up by economic operators of the Community and of the ACP States.

2. The CDE shall aim to assist private ACP enterprises to become more competitive in all sectors of the economy. It shall in particular:

(a) facilitate and promote business cooperation and partnerships between ACIP and EU enterprises,

(a) assist with the development of business support services through support for capacity building in private sector owned organisations or support for providers of technical, professional, management, commercial and training support services,

(c) provide assistance for investment promotion activities, such as investment promotion organisations, organisation of investment conferences, training programmes, strategy workshops and follow-up investment promotion missions; and

(d) support for initiatives that contribute to develop and transfer technologies and know-how and best practices on all aspects of business management.

3. The CIDE shall also:

(a) inform the ACP private sector about the provisions of the Agreement;

(b) diffuse information within the local ACP private sector about the product quality and standards required in external markets; and

(c) provide information to European companies and private sector organisations on business opportunities and modalities in ACP countries.

4. The CIDE shall extend its support for enterprises through qualified and competent national and/or regional service providing intermediaries.

5. The activities of the CDE shall be based on the concept of coordination, complementarity and added value in respect of any private sector development initiatives taken by public or private entities. The CDE shall exercise selectivity in undertaking its tasks.

6. The Committee of Ambassadors shall be the supervisory authority of the Centre. It shall, after the signature of this Agreement:

(a) lay down the statutes and rules of procedure of the Centre, including its supervisory bodies;

(b) lay down the statutes relating to staff, financial and stag regulations;

(c) supervise the work of the bodies of the Centre; and

(d) lay down the rules of operation and the procedures for the adoption of the Centre's budget.

7. The Committee of Ambassadors shall, in accordance with the procedures and criteria determined by it, appoint the members of the bodies of the Centre.

8. The budget of the Centre shall be financed in accordance with the rules laid down in this Agreement in respect of development finance cooperation.

ARTICLE 3

CTA

1. The mission of the CTA shall be to strengthen policy and institutional capacity development and information and communication management capacities of ACIP agricultural and rural development organisations. It shall assist such organisations in formulating and implementing policies and programmes to reduce poverty, promote sustainable food security, preserve the natural resource base, and thus contribute to building self-reliance in ACIP rural and agricultural development.

2. The CTA shall:

(a) develop and provide information services and ensure better access to research, training and innovations in the spheres of agricultural and rural development and extension, in order to promote agriculture and rural development, and

(b) develop and reinforce ACIP capacities in order to;

(i) improve the formulation and management of agricultural and rural development policies and strategies at national and regional levels including improved capacity for data collection, policy research, analysis and formulation,

(ii) improve the information and communication management, in particular within the National Agricultural Strategy;

(iii) promote effective intra-institutional Information and Communication Management (ICM) for performance monitoring, as well as consortia with regional and international canners;

(iv) promote decentralised ICM at local and national levels;

(v) strengthen initiatives via regional cooperation; and

(vi) develop approaches for assessing the impact of policy on agricultural and rural development.

3. The Centre shall support regional initiatives and networks and shall progressively share capacity development programmes with appropriate ACIP organisations. To this end, the Centre shall support decentralised regional information networks. Such networks shall be built up gradually and efficiently.

4. The Committee of Ambassadors shall be the supervisory authority of the Centre. It shall, after the signature of this Agreement:

(a) lay down the statutes and rules of procedures of the Centre, including its supervisory bodies;

(b) lay down the statutes relating to staff, financial and staff regulations;

(c) supervise the work of the bodies of the Centre; and

(d) lay down the rules of operation and the procedures for the adoption of the Centre's budget.

5. The Committee of Ambassadors shall, in accordance with the procedures and criteria determined by it, appoint the members of the bodies of the Centre.

6. The budget of the Centre shall be financed in accordance with the rules laid down in this Agreement in respect of development finance cooperation.

ANNEX IV

IMPLEMENTATION AND

MANAGEMENT PROCEDURES

CHAPTER 1

Programming (national)

ARTICLE 1

Operations financed by grants within the framework of this Agreement shall be programmed at the beginning of the period covered by the Financial Protocol. Programming for this purpose shall mean:

(a) the preparation and development of a Country Support Strategy (CSS) based on the country's own medium-term development objectives and strategies,

(b) a clear indication from the Community of the indicative programmable financial allocation from which the country may benefit during the five-year period as well as any other relevant information;

(c) the preparation and adoption of an indicative programme for implementing the CSS; and

(d) a review process covering the CSS, the indicative programme and the volume of resources allocated to it

ARTICLE 2

Country support strategy

The CSS shall be prepared by the ACP State concerned and the EU following consultations with a wide range of actors in the development process, and shall draw on lessons learned and best practices. Each CSS shall be adapted to the needs and respond to the specific circumstances of each ACP State. The CSS shall be an instrument to prioritise activities and to build local ownership of cooperation programmes. Any divergences between the country's own analysis and that of the Community shall be noted. The CSS shall include the following standard elements:

(a) an analysis of the political, economic and social country context, constraints, capacities and prospects including an assessment of basic needs, such as income per capita, population size and social indicators, and vulnerability;

(b) a detailed outline of the country's medium-term development strategy, clearly defined priorities and expected financing requirements,

(c) an outline of relevant plans and actions of other donors present in the country, in particular including those of the EU Member States in their capacity as bilateral donors:

(d) response strategies, detailing the specific contribution the EU can provide. These shall, to the extent possible, enable complementarity with operations financed by the ACP State itself and by other donors present in the country; and

(e) a definition of the nature arid scope of the most appropriate support mechanisms to be applied in implementing the above strategies.

ARTICLE 3

Resource allocation

1. Resource allocation shall be based on needs and performance, as defined in this Agreement. In this context:

(a) needs shall be assessed on the basis of criteria pertaining to per capita income, population size, social indicators and level of indebtedness, export earning losses and dependence on export earnings, in particular from the sectors of agriculture and mining. Special treatment shall be accorded to the least developed ACP States and the vulnerability of island and landlocked states shall duly be taken into account. In addition, account shall be taken of the particular difficulties of post-conflict countries; and

(b) performance shall be assessed in an objective and transparent manner on the basis of the following parameters: progress in implementing institutional reforms, country performance in the use of resources, effective implementation of current operations, poverty alleviation or reduction, sustainable development measures and macroeconomic and sectoral policy performance.

2. The allocated resources shall comprise two elements:

(a) an allocation to cover macroeconomic support, sectoral policies, programmes and projects in support of the focal or non focal areas of Community assistance; and

(b) an allocation to cover unforeseen needs such as emergency assistance where such support can not be financed from the EU budget, contributions to internationally agreed debt relief initiatives and support to mitigate adverse effects of instability in export earnings.

3. This indicative amount shall facilitate the long-term programming of Community aid for the country concerned. Together with the uncommitted balances of resources allocated to the country under previous EDIF, and wherever possible Community budget resources, these allocations shall be the basis for the preparation of the indicative programme for the country concerned.

4. Provision will be made for those countries which, due to exceptional circumstances, can not access normal programmable resources.

ARTICLE 4

Preparation and adoption of the

indicative programme

1. Upon receipt of the information referred to above, each ACP State shall draw up and submit to the Community a draft indicative programme on the basis of and consistent with its development objectives and priorities as expressed in the CSS. The draft indicative programme shall contain:

(a) the focal sector, sectors or areas on which support should be concentrated;

(b) the most appropriate measures and operations for attaining the objectives and targets in the focal sector, sectors or areas;

(c) the resources reserved for projects and programmes outside the focal sector(s) and/or the broad outlines of such activities, as well as an indication of the resources to be deployed for each of these elements;

(d) identification of eligible non-State actors and the resources allocated for non-Stale actors;

(c) proposals for regional projects and programmes, and a reserve for insurance against possible claims and to cover cost increases and contingencies. The draft indicative programme shall, as appropriate, contain the resources reserved to reinforce human, material and institutional ACP capacity for preparing and implementing national and regional indicative programmes and for improving the management of the ACIP States' public investment projects cycle.

3. The draft indicative programme shall be the subject of an exchange of views between the ACIP State concerned and the Community. The indicative prograrnme shall be adopted by common agreement between the Community and the ACP State concerned. It shall, when adopted, be binding on both the Community and that State. This indicative programme shall be annexed to the CSS and shall in addition contain:

(a) specific and clearly identified operations, especially these that can be committed before the next review;

(b) a timetable for implementation and review of the indicative programme, including commitments and disbursements of resources; and

(c) the parameters and criteria for the reviews.

4. The Community and the ACP State concerned shall take all necessary measures to ensure that the programming process is completed within the shortest possible time and, save in exceptional circumstances, within twelve months of the signing of the Financial Protocol. In this context, the preparation of the CSS and the indicative programme must be part of a continuous process leading to the adoption of a single document.

ARTICLE 5

Review process

1. Financial cooperation between the ACP State and the Community shall be sufficiently flexible to ensure that operations are kept constantly in line with the objectives of this Agreement and to take account of any changes occurring in the economic situation, priorities and objectives of the ACIP State concerned. In this context, the National Authorising Officer and the Head of Delegation shall:

(a) annually undertake an operational review of the indicative programme; and

(b) undertake a mid-term and end-of-term review of the CSS and the indicative programme in the light of current needs and performance.

2. In exceptional circumstances referred to in the provisions on humanitarian and emergency assistance, the review can be carried out on the demand of either Party.

3. The National Authorising Officer and the Head of Delegation shall:

(a) take all necessary measures to ensure adherence to the provisions of the indicative programme, including ensuring that the Timetable of commitments and disbursements agreed at the time of programming is adhered to; and

(b) determine any causes of delay in implementation and propose suitable measures to remedy the situation.

4. The annual operational review of the indicative programme shall consist of a joint assessment of the implementation of the programme and take into account the results of relevant activities of monitoring and evaluation. This review shall be conducted locally and shall be finalised between the National Authorising Officer and the Head of Delegation within a period of 60 days. It shall in particular cover an assessment of:

(a) the results achieved in the focal sectors) measured against the identified targets and impact indicators and sectoral policy commitments;

(b) projects and programmes outside the focal sector(s) and/or in the framework of multi-annual programmes;

(c) the use of resources set aside for non-State actors;

(d) the effecliveness in implementation of current operations and the extent to which the timetable for commitments and payments have been respected; and

(e) an extension of the programming perspective for the following years.

5. The National Authorising Officer and the Head of Delegation shall submit the report on the conclusion of the annual review to the Development Finance Cooperation Committee, within 30 days of the completion of the operational review. The Committee shall examine the report in accordance with its responsibilities and powers under the Agreement,

6. In the light of the annual operational reviews, the National Authorising Officer and the Head of Delegation may at the mid-term and end-of-term reviews, and within the above time frames, review and adapt the CSS:

(a) where operational reviews indicate specific problems; and/or

(b) in the light of changed circumstances of an ACP State.

Such reviews shall be completed within a further period of 30 days of the finalisation of the midterm and end-of-term reviews. The end of Financial Protocol review shall also include adaptation for the new financial Protocol in terms of both resource allocation and preparation for the next programme.

7. Following the completion of mid-term and end-of term reviews, the Community may revise the resource allocation in the light of current needs and performance of the ACP State concerned.

CHAPTER 2

Programming and

preparation (regional)

ARTICLE 6

Participation

1. Regional cooperation shall cover operations benefiting and involving:

(a) two or more or all ACP States; and / or

(b) a regional body of which at least two ACP States are members.

2. Regional cooperation can also involve Overseas Countries and Territories and outermost regions. The funding to enable participation of these territories shall be additional to funds allocated to the ACP States under the Agreement.

ARTICLE 7

Regional programmes

The ACP States concerned shall decide on the definition of geographical regions. To the maximum extent possible, regional integration programmes should correspond to programmes of existing regional organisations with a mandate for economic integration. In principle, in case the membership of several relevant regional organisations overlaps, the regional integration programme should correspond to the combined membership of these organisations. In this context, the Community will provide specific support from regional programmes to group of ACP States who are committed to negotiate economic partnership agreements with the EU.

ARTICLE 8

Regional programming

1. Programming shall take place at the level of each region. The programming shall be a result of an exchange of views between the Commission and the duly mandated regional organisation(s) concerned, and in the absence of such a mandate, the National Authorising Officers of the countries in that region. Where appropriate, programming may include a consultation with eligible non-State actors.

2. Programming for this purpose shall mean:

(a) reparation and development of a Regional Support Strategy (RSS) based on the region's own medium-term development objectives and strategies;

(b) a clear indication from the Community of the indicative resource allocation from which the region may benefit during the five-year period as well as any other relevant information;

(c) preparation and adoption of a Regional Indicative Programme (RIP) for implementing the RSS; and

(d) a review process covering the RSS, the RIP and the volume of resources allocated to each region.

3. The RSS shall be prepared by the Commission and the duly mandated regional organisation(s) in collaboration with the ACP States in the region concerned. The RSS will be an instrument to prioritise activities and to build local ownership of supported Programmes. The RSS shall include the following standard elements:

(a) an analysis of the political, economic and social context of the region;

(b) an assessment of the process and prospects of regional economic integration and integration into the world economy;

(c) an outline of the regional strategies and priorities pursued and the expected financing requirements,

(d) an outline of relevant activities of other external partners in regional cooperation; and

(e) an outline of the specific EU contribution towards achievement of the goals for regional cooperation and integration, complementary insofar as possible to operations financed by the ACP States themselves and by other external partners, particularly the EU Member States.

ARTICLE 9

Resource allocation

At the beginning of the period covered by the Financial Protocol, each region shall receive from the community an indication of the volume of resources from which it may benefit during a five-year period. The indicative resource allocation shall be based on an estimate of need and the progress and prospects in the process of regional cooperation and integration. In order to achieve an adequate scale and to increase efficiency, regional and national funds may be mixed for financing regional operations with a distinct national component.

ARTICLE 10

Regional indicative programme

1. On the basis of the resource allocation indicated above, the duly mandated regional organisation(s), and in the absence of such a mandate, the National Authorising Officers of the countries in the region, shall draw up a draft Regional Indicative Programme. In particular, the draft programme shall specify:

(a) the focal sectors and themes of Community aid;

(b) the most appropriate measures arid operations to achieve the objectives set for those sectors and themes; and

(c) the projects and programmes enabling those objectives to be attained, insofar as they have been clearly identified as well as an indication of the resources to be deployed for each of these elements and a timetable for their implementation.

2. The Regional Indicative Programmes shall be adopted by common agreement between the Community and the ACP States concerned.

ARTICLE 11

Review process

Financial cooperation between each ACP region and the Community shall be sufficiently flexible to ensure that operations are kept constantly in line with the objectives of this Agreement and to take account of any changes occurring in the economic situation, priorities and objectives of the region concerned. A midterm and end-of-term review of the regional indicative programmes shall be undertaken to adapt the indicative programme to evolving circumstances and to ensure that they are correctly implemented. Following the completion of mid-term and end-of-term reviews, the Community may revise the resource allocation in the light of current needs and performance.

ARTICLE 12

Intra-AC12 cooperation

At the beginning of the period covered by the Financial Protocol, the Community shall indicate to the ACP Council of Ministers line part of the funds earmarked for regional operations that shall be set aside for operations that benefit many or all ACP States. Such operations may transcend the concept of geographic location.

ARTICLE 13

Requests for financing

1. Requests for financing of regional programmes shall be submitted by:

(a) a duly mandated regional body or organisation; or

(b) a duly mandated sub-regional body, organization or an ACP State in the region concerned at the programming stage, provided that line operation has been identified in the RIP.

2. Requests for intra-ACP programmes shall be submitted by:

(a) at least 3 mandated regional bodies or organisations belonging to different geographic regions, or the National Authorising Officers of such regions, or

(b) the ACP Council of Ministers, or, by specific delegation, the ACP Committee of Ambassadors; or

(c) international organisations carrying out operations that contribute to the objectives of regional cooperation and integration, subject to prior approval by the ACP Committee of Ambassadors.

ARTICLE 14

Procedures for implementation

1. Regional programmes shall be implemented by the requesting body or any other duly authorised institution or body.

2. lntra-ACP programmes shall be implemented by the requesting body or their duly authorised agent. In the absence of a duly authorised implementing body, and without prejudice to ad hoc: projects and programmes managed by the ACP Secretariat, the Commission shall be responsible for the implementation of intra-ACP operations.

3. Account being taken of the objectives and inherent characteristics of regional cooperation, operations undertaken in this sphere shall be governed by the procedures established for development finance cooperation where applicable.

CHAPTER 3

Project implementation

ARTICLE 15

Project identification, preparation

and appraisal

1. Projects and programmes that have been presented by the AGP State shall be subject to joint appraisal. The ACP-EC Development Finance Cooperation Committee shall develop the general guidelines and criteria for appraisal of projects and programmes.

2. Project or programme dossiers prepared and submitted for financing must contain all information necessary for the appraisal of the projects or programmes or, where such projects and programmes have not been completely defined, provide the broad outlines necessary for their appraisal. Such dossiers shall be officially transmitted to the Community by the ACP States or the other eligible beneficiaries in accordance with this Agreement.

3. Project and programme appraisal shall, take due account of national human resource constraints and ensure a strategy favourable to the promotion of such resources. It shall also take into account the specific characteristics and constraints of each ACP Stale.

ARTICLE 16

Financing proposal and decision

1. The conclusions of the appraisal shall be summansed in a financing proposal drawn up by the Community in close collaboration with the ACP State concerned. This financing proposal shall be submitted for approval by the Commissions decision-making body.

2. The financing proposal shall contain an advance timetable for the technical and financial implementation of the project or programme, including multi-annual programmes and global allocations for operations of a small financial scale, and shall deal with the duration of the different phases of implementation. The financing proposal shall:

(a) take into account the comments of the ACP State or States concerned; and

(b) be forwarded simultaneously to the ACP State or States concerned and the Community.

3. The Commission shall finalise the financing proposal and forward it, with or without amendment, to the Community's decision-making body. The ACP State or States concerned shall be given an opportunity to comment on any amendment of substance, which the Commission intends to make to the document. These comments shall be reflected in the amended financing proposal.

4. The Community's decision -making body shall communicate its decision within 120 days from the date of communication of the financial proposal referred to above.

5. Where the financing proposal is not adopted by the Community, the ACP State or States concerned shall be informed immediately of the reasons for that decision. In such a case, the representatives of the ACP State or States concerned may, within 60 days thereafter, request either:

(a) that the matter be referred to the ACP-EC Development Finance Cooperation Committee set up under the Agreement; or

(b) that they be given a nearing by the Community's decision-making body.

6. Following such a hearing, a definitive decision to adopt or reject the financing proposal shall be taken by the relevant Community body to which the ACP State or States concerned may forward, before the decision is taken, any facts which may appear necessary to supplement the information available to it.

7. Multi-annual programmes shall, inter alia, finance training, decentralised operations, micro projects, trade promotion and trade development, sets of operations of a limited scale in a specific sector, project/programme management support and technical cooperation.

8. In cases referred to above, the ACP State concerned may submit to the Head of Delegation a multi-annual programme setting out its broad outlines, the types of actions envisaged and the financial commitment proposed:

(a) the financing decision on each multi-annual programme shall be taken by the Chief Authorising Officer. The letter from the Chief Authorising Officer to the National Authorising Officer notifying such decision shall constitute the financing agreement; and

(b) within the framework of multi-annual programmes thus adopted, the National Authorising Officer or, when the case arises, the agent of decentralised cooperation which has been delegated functions for this purpose or, in appropriate cases, other eligible beneficiaries shall implement each individual action in accordance with the relevant provisions of this Agreement and the terms of the financing agreement referred to above. Where implementation is to be carried out by agents of decentralised cooperation or other eligible beneficiaries, the National Authorising Officer and the Head of Delegation shall maintain financial responsibility and monitor the operations regularly with a view to enabling them, inter alia, to carry out their obligations.

9. At the end of each year, the National Authorising Officer in consultation with the Head of Delegation, shall forward a report to the Commission on the implementation of the multi annual programmes.

ARTICLE 17

Cost over-runs

1. Once it appears that cost over-runs beyond the limit set in the financing agreement are likely to be incurred, the National Authorising Officer shall, through the Head of Delegation, notify the Chief Authorising Officer accordingly, as well as of the measures which the National Authorising Officer intends to take in order to cover such cost over-runs over the allocated appropriations, either by reducing the scale of the project or programme or by calling on national or other non-Community resources.

2. If it is decided by agreement with the Community not to scale down the project or programme or if it is not possible to cover them by other resources, then such over-runs may be financed up to 20% of the financial commitment for the project or programme concerned from the indicative programme.

ARTICLE 19

Retroactive financing

1. In order to ensure early project start-up, avoid gaps between sequential projects and prevent delays, the ACP States, in agreement with the Commission, may, on completion of project appraisal and before the financing decision is taken:

(a) issue invitations to tender for all types of contracts, with a suspension clause; and

(b) pre-finance activities linked to the start-up of programmes. Preliminary and seasonal work< orders for equipment with long delivery lead times as well as some on- going operations. Such expenditures must satisfy the procedures provided for in the Agreement.

2. These provisions do not prejudge the powers of the Community’s decision-making body.

3. Expenditure made by the ACP State in pursuance of this provision shall be retroactively financed under the project or programme, once the financing agreement is signed.

CHAPTER 4

Competition and preferences

ARTICLE 20

Eligibility

Save where a derogation is granted in accordance with the General Regulations for contracts or Article 22:

(a) participation in invitations to tender and the award of the contracts financed by the Fund shall be open on equal terms to:

(i) natural persons, companies or firms or public or semi-public agencies of the ACP States and the Member States;

(ii) cooperative societies and other legal persons governed by public or private law, of the Member States and/or the ACP States; and

(iii) joint ventures or groupings of companies or firms of ACP States and/or of a Member State.

(b) supplies must originate in the Community and/or the ACIP States. In this context, the definition of the concept of 'originating products' shall be assessed by reference to the relevant international agreements and supplies originating in the Community shall include supplies originating in the Overseas Countries and Territories.

ARTICLE 21

Participation on equal terms

The ACP States and the Commission shall take the necessary measures to ensure the widest possible participation on equal terms in invitations to tender for works, supplies and services contracts, including, as appropriate, measures to:

(a) ensure publication of invitations to tender in the Official Journal of the European Communities, the Internet, the Official Journals of all the ACP States and any other appropriate information media;

(b) eliminate discriminatory practices or technical specifications which might stand in the way of widespread participation on equal terms;

(c) encourage cooperation between the companies and firms of the Member States and of the ACP States,

(d) ensure that all the awarding criteria are specified in the tender dossier; and

(e) ensure that the tender selected conforms to the requirements of the tender dossier and meets the awarding criteria stated therein.

ARTICLE 22

Derogation

1.In order to ensure the optimum cost-effectiveness of the system, natural or legal persons from non-ACP developing countries may be authorised to participate in contracts financed by the Community at the request of the ACP States concerned. The ACP States concerned shall, on each occasion, provide the Head of Delegation with the information needed for the Community to decide on such derogation, with particular attention being given to:

(a) the geographical location of the ACP State concerned,

(b) the competitiveness of contractors, suppliers and consultants from the Member States and the ACIP States;

(c) the need to avoid excessive increases in the cost of performance of the contract;

(d) transport difficulties or delays due to delivery times or other similar problems; and

(e) technology that is the most appropriate and best suited to local conditions.

2. Participation by third countries in contracts financed by the Community may also be authorised:

(a) where the Community participates in the financing of regional or inter-regional schemes involving such countries;

(b) in the case of co-financing projects and programmes, and

(c) in the case of emergency assistance.

3. In exceptional cases and in agreement with the Commission, consultancy firms with experts who are nationals of third countries may participate in service contracts.

ARTICLE 23

Competition

1. To simplify and streamline the general rules and regulations for competition and preferences for EDIF financed operations, contracts shall be awarded through open and restricted procedures as well as framework contract, direct agreement contracts and direct labour as follows:

(a) open international invitation to tender through or after the publication of a procurement notice in accordance with the provisions of this Agreement;

(b) open local invitation to tender where the procurement notice is published exclusively in the beneficiary ACP States;

(c) restricted international invitation to tender where the Contracting Authority invites a limited number of candidates to take pad in the call for tender after the publication of a pre-information notice;

(d) direct agreement contracts which involve simplified procedure where the publication of the procurement notice is dispensed with and the Contracting Authority invites a limited number of service providers to present their offers, arid

(c) direct labour agreement where contracts are performed through public or semi-public agencies and departments of the beneficiary States concerned.

2. Contracts financed from the Fund shall be concluded in accordance with the following provisions:

(a) works contracts of a value :

(i) higher than FUR 5 000,000 shall be awarded in an open international invitation to tender,

(ii) between FUR 300 000 and EUR 5 000,000 shall be awarded through an open local invitation to tender; and

(iii) lower than EUR 300 000 shall be awarded by direct agreement contract which involves a simplified procedure without publication of a procurement notice.

(b) supply contracts of a value :

(i) higher than FUR 150 000 shall be awarded through an open international invitation to tender;

(ii) between EUR 30 000 and FUR 150 000 shall be awarded through an open local invitation to tender; and

(ill) below FUR 30 000 shall be awarded by direct agreement contract which involves a simplified procedure without publication of a procurement notice.

(c) service contracts of a value :

(i) higher than FUR 200 000 shall be awarded through a restricted international tender after publication of a procurement notice; and

(ii) below FUR 200 000 shall be awarded by direct agreement contract which involves a simplified procedure or a framework contract.

3. For works, supply and service contracts with a value of FUR 5 000 or less, these can be awarded directly without competition.

4. In case of restricted invitation to tender, a short-list of prospective tenderers shall be drawn up by the ACP State or States concerned in agreement with the Head of Delegation following, where applicable, a call for pre-qualification of tenders based on the publication of a procurement notice.

5. In case of direct-agreement contracts, the ACP State shall enter freely into such discussions as it may consider appropriate with the prospective tenderers whom it has short-listed in accordance with the Articles 20 to 22 and award the contract to line tenderers whom it has selected.

6. The ACP States may request the Commission to negotiate, draw up, conclude and implement service contracts directly on their behalf or through its relevant agency.

ARTICLE 24

Direct labour

1. In case of direct labour operations, projects and programmes shall be implemented through public or semi-public agencies or departments of the State or States concerned or by the person responsible for executing the operation.

2. The Community shall contribute to the costs of the department involved by providing the equipment and/or materials that it lacks and/or resources to allow it to acquire additional staff required in the form of experts from within the ACIP States concerned or other ACIP States. The participation of the Community shall cover only costs incurred by supplementary measures and temporary expenditure relating to execution strictly confined to the requirements of the project in question.

ARTICLE 25

Emergency assistance contracts

Contracts under emergency assistance shall be undertaken in such a way as to reflect the urgency of the situation. To this end, for all operations relating to emergency assistance, the ACP State may, in agreement with the Head of Delegation, authorise:

(a) the conclusion of contracts by direct agreement;

(b) line performance of contracts by direct labour;

(c) implementation through specialised agencies, and

(d) direct implementation by the Commission.

ARTICLE 26

Preferences

Measures shall be taken to encourage the widest participation of the natural and legal persons of ACIP States in the performance of contracts financed by the Fund in order to permit the optimisation of the physical and human resources of those States. To this end:

(a) for works contracts of a value of less than FUR 5 000, 000, tenderers of the ACIP States, provided that at least one quarter of the capital stock and management staff originates from one or more ACIP States, shall be accorded a 10% price preference where tenders of an equivalent economic, technical arid administrative quality are compared;

(b) for supply contracts, irrespective of the value of the supplies, tenderers of the ACP States who offer supplies of at least 50% in contract value of ACIP origin, shall be accorded a 15% price preference where tenders of equivalent economic, technical and administrative quality are compared;

(c) in respect of service contracts, given the required competence, preference shall be given to,

(i) experts, institutions or consultancy companies or firms from ACIP States where tenders of equivalent economic and technical qualify are compared,

(ii) offers submitted by an ACIP firm in a consortium with European partners, and

(iii) offers presented by European tenderers with ACIP sub-contractors or experts.

(d) where subcontracting is envisaged, preference shall be given by the successful tenderer to natural persons, companies and firms of ACP States capable of performing the contract required on similar terms; and

(c) the ACIP State may, in the invitation to tender, propose to the prospective tenderers the assistance of other ACIP States' companies or firms or national experts or consultants selected by mutual agreement. This cooperation may take the form either of a joint venture, or of a subcontract or of on-the-job training of trainees.

ARTICLE 27

Award of contracts

1. Without prejudice to Article 24, the ACP State shall award the contract to the tenderer:

(a) whose tender is found to be responsive to the tender dossier;

(b) for a works or supply contract, who has offered the most advantageous tender as assessed, inter alia, on the basis of :

(i) the price, the operating and maintenance costs;

(ii) the qualifications of, and the guarantees offered by the tenderers, as well as the technical qualities of the tender, including the offer of an after-sales service in the ACP State; and

(iii) the nature of, the conditions and the time limit for executing the contracts, and the adaptation to local conditions.

(c) for a service contract who offers the most advantageous lender taking into account, inter alia, the price, the technical value of the tender, the organisation and the methodology proposed for the provision of the services as well as the competence, independence and availability of the personnel proposed.

2. Where two tenders are acknowledged to be equivalent on the basis of the criteria stated above, preference shall be given:

(a) to the tenderer of an ACP State; or

(b) if no such tender is forthcoming, to the tenderer who :

(i) permits the best possible use of the physical and human resources of the ACP States,

(ii) offers the greatest sub-contracting possibilities to ACP companies, firms or natural persons; or

(iii) is a consortium of natural persons, companies and firms from ACIP States and the Community.

ARTICLE 28

General regulations for contracts

1. The award of contracts financed from the resources of the Fund shall be governed by this Annex and the procedures which shall be adopted by decision of the Council of Ministers at the first meeting following the signing of this Agreement, upon the recommendation of the ACP-EC Development Finance Cooperation Committee. These procedures shall respect the provisions of this Annex and the Community's procurement rules for cooperation with third countries.

2. Pending the adoption of these procedures, the current EDF rules as contained in the current general regulations and general conditions of contracts shall apply.

ARTICLE 29

General conditions for contracts

Performance of works, supply and service contracts financed from the resources of line Fund shall be governed by:

(a) the general conditions applicable to contracts financed by the Fund which shall be adopted by decision of the Council of Ministers at the first meeting following the signing of this Agreement, upon the recommendation of the ACP-EC Development Finance Cooperation Committee; or

(b) in the case of co-financed projects and programmes, or where a derogation to third parties has been granted or in accelerated procedures or in other appropriate cases, such other general conditions as may be agreed by the ACP State concerned and the Community, i.e.,:

(i) the general conditions for contracts prescribed by the national legislation of the ACP State concerned or its established practices regarding international contracts; or

(ii) any other international general conditions for contracts.

ARTICLE 30

Settlement of disputes

Any dispute arising between the authorities of an ACP State and a contractor, supplier or provider of services during the performance of a contract financed by the Fund shall:

(a) in the case of a national contract, be settled in accordance with the national legislation of the ACP Slate concerned; and

(b) in the case of a transnational contract be settled either :

(i) if the Parties to the contract so agree, in accordance with the national legislation of the ACP State concerned or its established international practices; or

(ii) by arbitration in accordance with the procedural rules which will be adopted by decision of the Council of Ministers at the first meeting following the signing of this Agreement, upon the recommendation of the ACP-EC Development Finance Cooperation Committee.

ARTICLE 31

Tax and customs arrangements

1. The ACP States shall apply to contracts financed by the Community tax and customs arrangements no less favourable than those applied by them to the most favoured States or international development organisations with which they have relations. For the purpose of determining the most favoured-nation (MFIN) treatment, account shall not be taken of arrangements applied by the ACP State concerned to other ACP States, or to other developing countries.

2. Subject to the above provisions the following shall apply to contracts financed by the Community:

(a) the contract shall not be subject in the beneficiary ACIP State to stamp or registration duties or to fiscal charges having equivalent effect, whether such charges already exist or are to be instituted in the future, however, such contracts shall be registered in accordance with the laws in force in the ACP State and a fee corresponding to the service rendered may be charged for it;

(b) profits and/or income arising from line performance of contracts shall be taxable according to the internal fiscal arrangements of the ACP State concerned, provided that the natural or legal persons who realise such profit and/or income have a permanent place of business in that Stale, or that the performance of the contract takes longer than six months;

(c) enterprises which must import professional equipment in order to carry out works contracts shall, it they so request, benefit from the system of temporary admission as laid down by the rational legislation of the beneficiary ACP State in respect of the said equipment;

(d) professional equipment necessary for carrying out tasks defined in a service contract shall be temporarily admitted into the beneficiary ACP State or States in accordance with its national legislation free of fiscal, import and customs duties and of other charges having equivalent effect where these duties and charges do not constitute remuneration for services rendered;

(e) imports under supply contracts shall be admitted into the beneficiary ACP State without customs duties, import duties, taxes or fiscal charges having equivalent effect. The contract for supplies originating in the ACP State concerned shall be concluded on the basis of the ex-works price of the supplies to which may be added such internal fiscal charges as may be applicable to those supplies in the ACP State;

(1) fuels, lubricants and hydrocarbon binders and, in general, all materials used in the performance of works contracts shall be deemed to have been purchased on the local market and shall be subject to fiscal rules applicable under the national legislation in force in the beneficiary ACIP State; and

(g) personal and household effects imported for use by natural persons, other than those recruited locally, engaged in carrying out tasks defined in a service contract and members of their families, shall be exempt from customs or import duties, taxes and other fiscal charges having equivalent effect, within the limit of the national legislation in force in the beneficiary ACP State.

3. Any matter not covered by the above provisions on tax and customs arrangements shall remain subject to the national legislation of the ACP State concerned.

CHAPTER 5

Monitoring and evaluation

ARTICLE 32

Objectives

The objective of monitoring and evaluation shall consist in the regular assessment of development operations (preparation, implementation and subsequent preparation) with a view to improving the development effectiveness of on-going and future operations.

ARTICLE 33

Modalities

1. Without prejudice to evaluations carried out by the ACP States or the Commission, this work will be done jointly by the ACP State(s) and the Community. The ACP-EC Development finance Cooperation Committee shall ensure the joint character of the joint monitoring and evaluation operations. In order to assist the ACP-EC Development Finance Cooperation Committee, the Commission and the ACP General Secretariat shall prepare and implement the joint monitoring and evaluations and report to the Committee. The Committee shall, at its first meeting after the signature of the Agreement, fix the operational modalities aimed at ensuring the joint character of the operations and shall, on a yearly basis, approve the work programme

2. Monitoring and evaluation activities shall notably

(a) provide regular and independent assessments of the Fund's operations and activities by comparing results with objectives; and thereby

(b) enable the ACP States and the Commission and the Joint Institutions, to feed the lessons of experience back into the design arid execution of future policies and operations,

CHAPTER 6

Management and

executing agents

ARTICLE 34

The Chief Authorising Officer

1. The Commission shall appoint the Chief Authorising Officer of the Fund, who shall be responsible for managing the resources of the Fund. The Chief Authorising Officer shall be responsible for commitment, clearance, authorisation and accounting of expenditure under the Fund.

2. The Chief Authorising Officer shall:

(a) commit, clear and authorise expenditure and keep accounts of commitments and authorisations;

(b) ensure that financing decisions are carried out;

(c) in close cooperation with the National Authorising Officer, make commitment decisions and financial arrangements that prove necessary to ensure proper execution of approved operations from the economic and technical viewpoints;

(d) prepare the tender dossier before the invitations to tender are issued, for:

(i) open international tender, and

(ii) restricted international invitation to tender with prequalification.

(c) approve the proposals for the placing of contracts subject to the powers exercised by the Head of Delegation under Article 36;

(f) ensure publication in reasonable time of international invitations to tender.

3. The Chief Authorising Officer shall, at the end of each year, make available a detailed balance sheet of the Fund showing balances of contributions paid into the Fund by the Member States and global disbursements in respect of each financing heading.

ARTICLE 35

National Authorising Officer

1. The Government of each ACP States shall appoint a National Authorising Officer to represent it in all operations financed from the resources of the Fund managed by the Commission and the Bank. The National Authorising Officer may delegate some of these functions and shall inform the Chief Authorising Officer of any such delegation. The National Authorising Officer shall:

(a) in close cooperation with the Head of Delegation be responsible for the preparation, submission and appraisal of projects and programmes;

(b) in close cooperation with the Head of Delegation, issue invitations for local open tender, receive tenders, both local and international( open and restricted), preside over the examination of tenders, establish the results of this examination, sign contracts and riders thereto and approve expenditure,

(c) submit, before issuing local open invitations to tender, the invitation to tender dossier to the Head of Delegation who shall give his agreement within 30 days;

(d) complete the evaluation of tenders within the tender validity period taking into consideration the period required for the approval of contracts,

(e) transmit the results of the examination of and a proposal for placing the contract to the Head of Delegation for his approval within the time limits set out in Article 36;

(f) clear and authorise expenditure within the limits of the funds assigned to him; and

(g) during the execution operations, make any adaptation arrangements necessary to ensure the proper execution of approved projects or programmes from the economic and technical viewpoint.

2. The National Authorising Officer shall, during the execution of operations and subject to the requirement to inform the Head of Delegation, decide on:

(a) technical adjustments and alterations in matters of detail so long as they do not affect the technical solution adopted and remain within the limits of the reserve for adjustments,

(b) alterations to estimates during execution;

(c) transfers from item to item within estimates,

(d) changes of site for multiple-unit projects or programmes where justified on technical, economic or social grounds;

(e) imposition or remission of penalties for delay;

(1) acts discharging guarantors;

(g) purchase of goods, irrespective of their origin, on the local market;

(h) use of construction equipment and machinery not originating in the Member States or ACP States provided there is no production of comparable equipment and machinery in the Member Slates or ACP Slates,

(i) subcontracting; final acceptance, provided that the Head of Delegation is present at provisional acceptance, endorses the corresponding minutes and, where appropriate, is present at the final acceptance, in particular where the extent of the reservations recorded at the provisional acceptance necessitates major additional work; and hiring of consultants and other technical assistance experts.

ARTICLE 36

Head of Delegation

1. The Commission shall be represented in each ACP State or in each regional grouping, which expressly so requests, by a delegation under the authority of a Head of Delegation, with the approval of the ACIP State or States concerned. Where a Head of Delegation is appointed to a group of ACP States, appropriate stops shall be taken to ensure that the Head of Delegation is represented by a deputy resident in each of the States in which the Head of Delegation is not resident, The Head of Delegation shall represent the Commission in all spheres of its competence and in all its activities.

2. To this end, and in close cooperation with the National Authorising Officer, the Head of Delegation shall:

(a) at the request of the ACP State concerned, participate and give assistance in the preparation of projects and programmes and in negotiating technical assistance contracts;

(b) participate in appraising projects and programmes, preparing tender dossiers and seeking ways to simplify project and programme appraisal and implementation procedures;

(c) prepare financing proposals;

(d) approve, before the National Authorising Officer issues them, the local open invitation to tender and the emergency assistance contract dossiers within 30 days of their submission to him by the National Authorising Officer;

(e) be present at the opening of tenders and receive copies of them and of the results of their examination;

(f) approve, within 30 days, the National Authorising Officer's proposal for the placing of local open tenders, direct agreement contracts, emergency assistance contracts, service contracts and works contracts with a value less than EUR 5 million and supply contracts with a value less than EUR 1 million,

(g) for all other contracts not covered by line above, approve within 30 days the National Authorising Officer's proposal for the placing of the contract wherever the following conditions are fulfilled:

(i) the tender selected is the lowest of those conforming to the requirements of the tender dossier,

(ii) the tender selected meets all the selection criteria stated in the tender dossier; and

(iii) the tender selected does not exceed the sum earmarked for the contract.

(h) where the conditions set out in paragraph (g) are not fulfilled, forward the proposal to the Chief Authorising Officer who shall decide thereon within 60 days of the receipt of the Head of Delegation. Where the price of the selected tender exceeds the sum earmarked for the contract, the Chief Authorising Officer shall, upon giving approval to the award, make the necessary financial commitment

(i) endorse contracts and estimates in the case of direct labour, riders thereto as well as payment authorisations issued by the National Authorising Officer;

(j) ensure that the projects and programmes financed from the resources of the Fund managed by the Commission are properly executed from the financial and technical viewpoints;

(k) cooperate with line national authorities of the ACIP State where he represents the Commission in evaluating operations regularly;

(l) communicate to the ACIP State all information and relevant documents on the procedures for implementing development finance cooperation especially as regards appraisal criteria and tender evaluation criteria; and

(m) on a regular basis, inform the national authorities of Community activities which may directly concern cooperation between the Community and the ACIP States.

3. The Head of Delegation shall have the necessary instructions and delegated powers to facilitate and expedite all operations under the Agreement. Any further delegation of administrative and/or financial powers to the Head of Delegation other than described in this Article shall be notified to the National Authorising Officers and the Council of Ministers.

ARTICLE 37

Payments and paying agents

1. For the purpose of effecting payments in the national currencies of the ACP States, accounts denominated in the currencies of the Members States or in Euro shall be opened in each ACP State in the name of the Commission with a national public or semi-public financial institution chosen by agreement between the ACP State and the Commission. This institution shall exercise the functions of National Paying Agent.

2. The National Paying Agent shall receive no remuneration for its services and no interest shall be payable by it on deposited funds. The local accounts shall be replenished by the Commission in the currency of one of the Member States or in Euro, based on estimates of future cash requirements, which shall be made sufficiently in advance to avoid the need for pre-financing by ACP States and to prevent delayed disbursements.

3. For the purpose of effecting payments in Euro, accounts denominated in Euro shall be opened in the name of the Commission with financing institutions in the Member States. These institutions shall exercise the functions of Paying Agents in Europe,

4. Payments from the European accounts, which will be executed on the instruction of the Commission or by the Head of Delegation acting on its behalf, may be made in respect of expenditure authorised by the National Authorising Officer or by the Chief Authorising Officer with the prior authorisation of the National Authorising Officer.

5. Within the limits of the funds available in the accounts, the Paying Agents shall make disbursements authorised by the National Authorising Officer or, as appropriate, the Chief Authorising Officer, after verifying that the supporting documents provided are substantially correct and in order, and that the discharge given for payment is valid.

6. The procedures for clearance, authorisation and payment of expenditure must be completed within a period of 90 days from the date on which the payment becomes due. The National Authorising Officer shall process and deliver the payment authorisation to the Head of Delegation not later than 45 days before the due date.

7. Claims for delayed payments shall be borne by the ACP State or States concerned, and by the Commission from its own resources, for that part of the delay for which each party is responsible in accordance with the above procedures.

8. The Paying Agents, the National Authorising Officer, the Head of Delegation and trio responsible Commission departments shall remain financially liable until the Commission gives final clearance for the operations for the execution of which they are responsible.