martin holland the european union and the third world 2002

Martin Holland

The European Union andthe Third World

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The European Union and the Third World

Martin Holland

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Martin Holland 2002

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Library of Congress Cataloging-in-Publication Data

Holland, Martin, 1954The European Union and the Third World / Martin Holland.

p. cm. (The European Union series)Includes bibliographical references and index.ISBN 0-333-65904-X ISBN 0-333-65905-8 (pbk.)1. European Union countriesForeign economic relationsDeveloping

countries. 2. Developing countriesForeign economic relationsEuropean Union countries. I. Title II. European Union series (Palgrave (Firm))

HF1531.Z4 D445 2002337.401724dc21

10 9 8 7 6 5 4 3 2 111 10 09 08 07 06 05 04 03 02

Printed in Hong Kong

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Contents

List of Tables, Figures and Boxes viii

List of Abbreviations x

Preface xii

Introduction: Setting the Context 1

Where is the Developing World? 3Context 7Objectives and Challenges: The Focus of the Study 11The Chapters 20Conclusion 23

1 Four Decades of African, Caribbean and Pacic Relations 25

The Yaound Conventions 27The Lom Conventions: I and II (197685) 32Lom III and IV 40Institution-building: From Lom to Cotonou 49Conclusion 51

2 Latin America and Asia 52

Latin America 52Asia: Beginning a Dialogue 59The Trade Dimension: ASEM I, II, III 64Future Challenges 74The Aid Dimension 78Conclusion 83

3 Decision-making and Reforming Institutional Structures 85

The Structure of the Santer Commission, 19959 85The 2000 Administrative Reforms 89ECHO: The European Community

Humanitarian Ofce 100Conclusion 111

v

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4 Complementarity and Conditionality: Evaluating Good Governance 113

Complementarity 114Conditionality: Good Governance, Democracy,

Human Rights and Rule of Law 119Economic Conditionality: Liberalization, Structural

Adjustment and Debt 125Implementing Conditionality 132Conclusion 138

5 Regimes, Trade and Trading Relations 140

EU Trade Policy 140Trade 147Financial Resources 151Other Trading Regimes 153Conclusion 164

6 The 19962000 Reform Process 167

The Rationale for Reform 169The Green Paper and the New Agenda 173The Post-Lom Alternatives 174The Commission Guidelines and Policy Transition 177The Council Negotiating Mandate 186Unequal Partners: The Negotiating Process 189Conclusion 194

7 The Cotonou Partnership Agreement 196

Objectives, Principles and Institutional Structure 199Political Dialogue and Conditionality 201Financing and the EDF 205Innovations 208Towards Differentiation under the ACP Umbrella 212Conclusion 219

8 Future Challenges: Implementing Cotonou and Everything but Arms 220

Implementing Cotonou 220Everything but Arms 225Conclusion 232

vi Contents

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9 Conclusion: Development and Integration 234

Development and Integration Theory 235Conclusion 243

Bibliography 245

Index 253

Contents vii

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List of Tables, Figures and Boxes

Tables

1.1 Distribution of CFSP Joint Actions and CommonPositions adopted, 199799 8

1.1 EC imports and exports to the developing world,195867 30

1.2 STABEX transfers by product category, Lom I and II 37

1.3 STABEX transfers by country, Lom I and II 381.4 Financing of development cooperation, 19582000 432.1 EU imports from ASEM, 199599 (m.) 662.2 EU exports to ASEM, 199599 (m.) 662.3 EUASEM balance of trade, 199599 (m.) 662.4 EU aid to Asian countries, 198695 (m.) 802.5 EU aid to Latin American countries, 198695

(m.) 802.6 EU aid to ALA countries, 198695 (m.) 822.7 EU ALA aid for uprooted people, 199799 (m.) 823.1 ECHO organizational structure, 2000 1033.2 ECHO expenditure by source of funding, 1998,

1999 1104.1 EU sanctions based on violations of democracy,

human rights, the rule of law or good governance,199098 134

5.1 EUdeveloping country trade, 197694 1485.2 EU imports from ACP states, 1985, 199193

(bn ecus) 1495.3 Percentage EU external trade with selected third

world regional groupings, 197094 1545.4 Comparison of EU/USA Trade with MERCOSUR,

199698 1555.5 Value of trade by major product group, 199597

(bn ecus) 1605.6 Value of member state imports/exports with

Asia, 199597 161

viii

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5.7 EU imports, exports and trade balance with East Asia, 198394 (US$m.) 162

5.8 Percentage of EU external trade by regional groupings, 197597 163

7.1 Partnership agreement nancial resources, 20007 (bn) 206

7.2 ACP countries Human Development Index:i) LDCs (39) dened under Cotonou 216ii) Other ACP African countries (15) 217iii) ACP Caribbean countries (15) 217iv) ACP Pacic Island countries (14) 218

8.1 List of Least Developed Countries 2268.2 Tariff quotas for rice and raw sugar from LDCs 230

Figures and Boxes

3.1 ECHOs 20 main partners in 2000 1063.2 Financial decisions for EC humanitarian aid,

19952000 (amounts in ) 1073.3 Trends in main beneciaries of ECHO aid,

199698 1083.4 ECHOs main types of expenditure, 1998 1085.1 Lom IV nancial protocol, 19952000 1525.2 Value of EU trade (exports/imports) with Asia,

199597 (bn ecus) 1586.1 Summary Commission guidelines 1796.2 Summary June 1998 Council negotiating mandate 188

List of Tables, Figures and Boxes ix

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List of Abbreviations

ACP African, Caribbean and Pacic countriesALA AsiaLatin American (Committee)APEC AsiaPacic Economic CooperationASEAN Association of South East Asian NationsASEM AsiaEurope MeetingCAP Common Agricultural PolicyCEEC Central and Eastern European CountriesCFSP Common Foreign and Security PolicyCIS Confederation of Independent StatesCOREPER Committee of Permanent RepresentativesDAC Development Assistance Committee (of the

OECD)DGI Directorate General for External Economic

RelationsDGVIII Directorate General for DevelopmentEAMA Associated African States and MadagascarEBA Everything but ArmsEC European CommunityECHO European Community Humanitarian OfceEDF European Development FundEEC European Economic CommunityEIB European Investment BankEMU Economic and Monetary UnionESAF Enhanced Structural Adjustment FacilityEU European UnionEUA European Units of AccountEurodad European Network on Debt and DevelopmentFDI Foreign Direct InvestmentFIC Forum Island CountriesFRY Former Republic of YugoslaviaFTA Free Trade AreasFTAA Free Trade Area of the AmericasGATT General Agreement on Tariffs and TradeGDP Gross Domestic ProductGNP Gross National ProductGSP Generalized System of Preferences

x

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G7 Group of SevenHDI Human Development IndexHIC High-Income CountryHIPC Highly Indebted Poor CountriesIGC Inter-Governmental ConferenceIMF International Monetary FundLDC Least Developed CountryLIC Low-Income CountryLMIC Lower Middle-Income CountryMaghreb Countries of Algeria, Morocco and TouisiaMashrek Countries of Egypt, Jordan, Lebanon and SyriaMERCOSUR Mercado Comn del SurMFA Multi-bre AgreementMFN Most Favoured NationNAFTA North American Free Trade AgreementNGO Non-Governmental OrganizationNICs Newly Industrialized CountriesNIS Newly Independent States (of the former USSR)OCT French Overseas Collectivities and TerritoriesODA Ofcial Development AssistanceOECD Organization for Economic Cooperation and

DevelopmentQMV Qualied Majority VotingSADC Southern African Development CommunitySAP Structural Adjustment ProgrammeSCR Service Commun Relex (Joint Service for the

Management of Community Aid to Non-Member Countries)

SEM Single European MarketSTABEX Stabilization of Export Earnings SchemeSYSMIN Stabilization Scheme for Mineral ProductsTEU Treaty on European UnionUK United KingdomUMIC Upper Middle-Income CountryUN United NationsUNDP United Nations Development ProgrammeWTO World Trade OrganizationZANU-PF Zimbabwe African National UnionPatriotic

Front

List of Abbreviations xi

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Preface

This has been without any doubt a difcult book to write. Notonly is the topic vast and complex, the parameters within whichthe EU has operated its policy with the Developing or ThirdWorld have undergone radical and seemingly continual reformin recent years. This text incorporates all these signicantchanges, including a full analysis of the Cotonou PartnershipAgreement of June 2000 and the Everything but Arms initia-tive of March 2001. Hopefully, the analysis will remain bothprovocative and relevant for years to come even if the policydetails continue to change in the future. The analysis poses anumber of simple but related questions. First, can the EUdemonstrate a distinct development policy separate and supe-rior to that of the Member States? Second, how far have tradi-tional development policy assumptions been replaced by aglobal liberalized agenda based on free trade? Third, how suc-cessfully has the EU linked development policy with its foreignpolicy activities under CFSP? And lastly, what is the impact ofexternal relations particularly development policy on theintegration process per se?

The conceptualization as well as writing of this book hasspanned several years and locations. My gratitude and appreci-ation go to Heribert Weiland and other colleagues at the ArnoldBergstraesser Institut, University of Freiburg, Germany, and tothe Alexander von Humboldt Foundation for their continu-ing fellowship support; to Apirat Petchsiri and the graduate students of the European Union Studies Programme at Chulalongkorn University, Bangkok, Thailand; and to my col-leagues at the Centre for Research on Europe at the Universityof Canterbury, New Zealand. Special thanks goes to the Rockefeller Foundation for the award of a Bellagio residencyfellowship which enabled me to complete the rst draft of this manuscript while at the indescribably wonderful Villa Serbelloni on Lake Como Italy in the summer of 2000. Lastly,I hope this book goes some way to repay the debt I owe to my

xii

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wife, Ann Marie: the completion of this manuscript would nothave been possible without her love, support, understandingand patience.

Villa Serbelloni Martin Holland

Authors note

Throughout this book, it can safely be assumed that one Euroequals one Ecu and/or EUA.

Preface xiii

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For

Ann Mariewho makes me complete

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Introduction: Setting the Context

Europes formal relations with the developing world are as oldas the European Community (EC) itself. However, the shape andthe content of those relations have altered signicantly since thesigning of the Treaty of Rome in 1957. Successive enlargements,differential rates of global development, the collapse of com-munist ideology in Central and Eastern Europe and the reorga-nization of international trade under the auspices of the WorldTrade Organization (WTO) have all contributed to redeningthe European Unions (EU) external relations with the ThirdWorld. These changes were nowhere more dramatically por-trayed than in the Lom Convention (19752000). The Con-vention linking the EU with the African, Caribbean and Pacic(ACP) developing countries was considered the hallmark ofthe EUs policy with the Third World, yet it failed to meet the needs and expectations of the new millennium and underwent a comprehensive and critical review from 1997onwards. The new century also witnessed parallel revisionsundertaken in Europes relations with Latin America, Asia andelsewhere. This text examines these changes and identiescommon themes as well as contrasting examples. Most signi-cantly, the argument presents development policy within thewider context of Europes integration process and suggests thattheories of integration are the appropriate tools for under-standing not just Europes internal politics, but its external relations as well.

In order to contextualize development policy, the EUsengagement with the Third World is best described as a policypatchwork. In addition to the ACP states, it incorporates LatinAmerica, China, India, most of Asia and arguably North Africa.Europe has negotiated framework cooperation agreements withsome 15 Asian and Latin American countries; has similar agree-ments with three regional groupings (the Association of South

1

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East Asian Nations (ASEAN), Andean Pact and CentralAmerica); began the AsiaEurope Meeting (ASEM) process;operates cooperation or association agreements with theMaghreb and Mashrek states as well as with four other Mediter-ranean countries; and, lastly, also has special relationships witha multitude of member state overseas departments and ter-ritories. However, by far the most structured and important historical relationship has been the Lom Convention, which inJune 2000 was superseded by the Cotonou Agreement and nowembraces almost all the developing countries of the Caribbean,Pacic and sub-Saharan Africa.

Consequently, Europes traditional view of development hasbeen specic but comparatively limited. The developing worldwas dened as principally those former member state coloniesin Africa, the Caribbean and the Pacic and dealt with underthe Lom framework; only this relationship was historical, insti-tutionalized, comprehensive and based on the principle of non-reciprocity. In contrast, relations with the Indian sub-continent,Asia and Latin America have been comparatively new, adhoc, fragmented and generally more limited in scope. Such adichotomy (based on past practice rather than development criteria) was always difcult to sustain, and has become increas-ingly indefensible. The collapse of communism in Central andEastern Europe further complicated what was already an un-tenable position: throughout the 1990s development aid wasincreasingly shifted in favour of these emerging democraticEuropean states. Clearly, Europes old denitions of develop-ment needs were proving to be hopelessly inadequate, raisingmore issues than they solved.

A more inclusive denition of the developing world wasneeded for the EU that recognized regional disparities andsought a common approach to common problems. Geographyand history were no longer an acceptable or sufcient rationale.Consequently, from 1997 onwards the EU fundamentally re-viewed its network of relations with regions of its traditionalpartners in the developing world (ACP, Asia, Latin America) inan attempt to produce a new policy paradigm that was con-sistent, comprehensive and common in origin, approach and criteria. Formally, and if somewhat belatedly, this motivationwas founded in the treaty obligations agreed to at Maastricht.Article 130u of the Treaty on European Union states:

2 The European Union and the Third World

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Community policy in the sphere of development co-operation, which shall be complementary to the policiespursued by the Member States, shall foster: the sustainable economic and social development of the

developing countries, and more particularly the most dis-advantaged among them;

the smooth and gradual integration of the developingcountries into the world economy;

the campaign against poverty in the developing countries.

Thus the trinity of coordination, coherence and complementar-ity governing the EUs external policies was extended to devel-opment. Europes relations with the developing world cameunder greater scrutiny and past practice was challenged bothexternally and internally. It has become increasingly unfashion-able for states and other international actors to follow tradi-tional development strategies because of their modest successesover the past half century. More immediately, priority has beengiven to the transitional economies of the states of Central andEastern Europe at the expense of the non-European developingworld. For the European Union, charity has increasingly ap-peared to begin closer to home.

Where is the developing world?

From the EUs perspective, determining what constitutes theThird World has been complicated rather than simplied by itspast reliance on the Lom Convention as the principal line ofdemarcation. But the Lom framework, whilst extensive, neverprovided a comprehensive approach towards the developingworld and one of its greatest weaknesses was its somewhat idiosyncratic and incremental nature. For example, consider the following comparison of two countries at the end of the1990s. Both share a European colonial legacy; they have comparably poor per capita GDPs (Gross Domestic Product);display similar low literacy and life expectancy levels; and theexternal trade patterns for both are based on a limited range of primary products. Both, clearly, are developing countries,arguably amongst the least developed. In this example, however,only one, Angola, was a member of the Lom Convention, the

Introduction 3

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EUs then preferred framework for relations with the develop-ing world. The other, Cambodia, remained outside. Similar parallels can be made between Nigeria (a comparatively afu-ent Lom state) and India, a developing country outside theConvention, or between Dominica and Vietnam. Out of the 48least developed countries in the world as listed by the UnitedNations, 9 were excluded from the fourth Lom Conventionthat only expired in 2000.

These illustrations symbolize a central problem the patch-work nature of the EUs development policy. A consistent andcomprehensive approach has been absent: incrementalism andadhocery spiced with pragmatism and post-colonial Angst hasresulted in Europes fragmented and increasing complexity ofrelations with the countries of Africa, Asia, the Caribbean, LatinAmerica and the Pacic Island states. More vociferous criticsargue that such a status quo is indefensible. The question iswhether this geographical diversity requires policy pluralism, oris a simple coherent global approach more appropriate and ulti-mately more effective in realizing development goals?

Dening the Third World has always been problematic.Even the term itself raises political sensitivities. What criteriashould be applied: ideology; poverty; geography; economic performance; aid; or exclusion from the global economy? Obviously, reliance on just a single criterion is inadequate. How-ever, each, at some time, has been utilized as the demarcationbetween the First and Third World. Analysis as recent as 1990dened the Third World as non-European, non-communist andpoor (ONeill and Vincent, 1990, p. ix). The tumultuous inter-national events of the 1990s overturned not just communism,but also the simplicity of ideology as a denitional developmentcriterion. The former stability of global political geography has dissipated to such an extent that the traditional usage of the term developing country is no longer a clearly delineatedconcept. The variety of nomenclature is revealing: the ThirdWorld, Developing World, the South, under-developed,non-industrialized or even Other World have all been appliedto the same general category of countries, albeit each with spe-cic inclusions and exclusions. To further complicate matters,just after the birth of the European Community in the late 1950sthere were just 83 member countries in the United Nations. By1989 this had risen to 156 members and by 1996 to 185. Faced


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with more than one hundred new nations, old designationshave seemed increasingly redundant.

At one level it is argued that the Third World can be denedmost simply by identifying geographically what constitutes theFirst and Second/transitional Worlds denition by exclusionof the other. If we accept this proposition the Third World iscomposed of all states other than those of Western, Central andEastern Europe, Russia and the Confederation of IndependentStates (CIS), Japan, Australasia and North America, mirroringa broad NorthSouth divide (the antipodes excepted). Such simplicity sits uneasily with the reality of crudely dening theeconomies of Brazil, Singapore, Venezuela, United Arab Emir-ates, Kuwait or even South Africa as simply developing.

An alternative strategy is to work from the bottom up. TheOECD-dened 48 Least Developed Countries (LDCs) obviouslyt the rubric; so too do all the 77 ACP (African, Caribbean andPacic) full member states of the 2000 Cotonou PartnershipAgreement, the successor to the previous Lom Conventions.Once the arithmetic approaches three gures, choices becomeopen to interpretation. What of the states on Europes southernborder? Do, perhaps, the economies in transition of EasternEurope, or those developing countries on the Mediterranean rim qualify? Further aeld, is it valid to classify Latin America,China, India and the vast majority of Asia as an undifferenti-ated Third World category?

What criteria, then, can Europe use to distinguish between thecomplex and differentiated categories of the developed anddeveloping world? Certainly a crude dichotomy is unsatisfac-tory. Perhaps statistics provide a reliable guide to this denitionalproblem? If so, whose statistics should be used: the OECD, theWorld Bank, the European Community or the third countriesthemselves?

The World Banks World Development Report 1997 uses 1995GNP per capita statistics as the main criterion to establish fourbasic categories of development (covering 210 countries). Theseare (note strange gap between US$3020 and US$3036!):

Low-income (US$765 or less) Lower-middle-income (US$7663020) Upper-middle-income (US$30369385) High-income (US$ 9386 and above).

Introduction 5

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The analysis identied 63 low-income economies, 65 lower-middle-income, 30 upper-middle-income and the remaining 52as high-income economies. The Report goes on to state thatlow- and middle-income economies are sometimes referred toas developing economies; but whilst the use of the term is con-venient . . . Classication by income does not necessarily reectdevelopment status(!) (pp. 2645). Dening the Third Worldfrom these World Bank categories is also complicated by geog-raphy. For example, 16 lower-middle-income and 7 low-incomecountries are from Central and Eastern Europe and Russia economies in transition certainly, but not normally seen as partof the Third World.

In the OECD 1996 Development Assistance Committeesreport Development Cooperation a different but relatedmethodology is adopted. Focusing on just those developingcountries that were ODA (Ofcial Development Aid) recipients,ve categories were identied, again using the criterion of percapita GNP (although based on 1992 data):

Least Developed Countries (LDCs) Low-Income Countries (LICs) (less than $675) Lower Middle-Income Countries (LMICs) ($676$2695) Upper Middle-Income Countries (UMICs) ($2696$8355) High-Income Countries (HICs) (greater than $8355).

Forty-eight LDCs, 16 LICs, 65 LMICs, 32 UMICs and 6 HICs(see OECD, p. A101) were identied. Two additional categorieswere used to distinguish between aid to 14 countries and ter-ritories in transition (CEECs: Central and Eastern EuropeanCountries and NICs: Newly Independent States of the FormerSoviet Union) and 6 states designated more advanced develop-ing countries (such as Kuwait, Singapore or the United ArabEmirates). However, nine CEEC/NIS states were still dened aseither LIC or LMIC states traditional Third World categories blurring the usefulness of the index for dening developmentstatus.

The Human Development Index (HDI) offers yet another perspective. This United Nations Development Programme(UNDP) approach supplements indices that focus crudely onGNP bases. It employs indicators based on the criteria oflongevity (life expectancy), educational level and income per


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head: whilst still imperfect, many argue that it gives a betterassessment of development as opposed to poverty. The 1999HDI Report rank-ordered 174 countries and produced somesurprising results. For example, the ACP country of Barbadosranked number 30 above EU candidate countries Malta (32),Slovenia (33), Czech Republic (36) and Poland (44)! In fact, veCaribbean ACP States were ranked in the top 50 places. Lesssurprisingly, every country ranked below 150 was an ACPmember (http://www.undp.org/hdro/HDI.html).

Faced with this ambiguity, in this study a precise GNP percapita denition of the Third World is avoided in favour of anessentially geographically based interpretation that reects thereality and actual practice of the EUs development relations.Marginal countries that are excluded from this study are thosethat fall into either the World Bank higher income bracket orthe OECD more advanced developing countries classication.Most signicantly, none of the CEEC/NIS states are includedhere. This is despite the fact that a number meet the GNP percapita criterion and, as is argued elsewhere in this text, duringthe 1990s these new states took the lions share of aid. Indeed,the priority given to their reconstruction highlighted the prob-lems within the EUs fragmented approach to global develop-ment per se.

Context

It has become commonplace to draw attention to the compli-cations introduced by the pillared approach to post-MaastrichtEU policy-making. The Treaty on European Unions (TEU) inter-governmental compromise, which introduced the idea of policypillars that distinguish between competences and decision-making methods according to policy sector, has undoubtedlyexacerbated rather than reduced the ability for the EU to act as a single actor. The cordoning and sanitization of foreignpolicy as a pillar II intergovernmental competence under theCommon Foreign and Security Policy (CFSP) has excessivelynarrowed the domain for EU foreign policy action. Almost inevery instance, pillar I communautaire competences are requiredto implement CFSP in practice. This consequence is nowheremore clearly evident than in relations with the developing world,

Introduction 7

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which illustrate both the impracticality of this segmentation, as well as the policy contradictions that can result. Of course,this policy apartheid was necessary for reasons related to intra-European debates on integration and the price in terms of adiluted EU external presence was one a majority of memberstates were willing to pay. For third countries the notion thatEuropes relations with the South (particular through Lom) constitute something other than foreign policy is absurd. But itis an absurdity that the EU insists on preserving.

The CFSP particularly joint actions and common positions inevitably contaminates the purity of the TEUs policy pillars.But both the intergovernmental as well as pillar I trade relationsbetween the EU and the developing world remain distinct fromCFSP. The accompanying Table highlights how permeable thepolicy boundaries established under the TEU are. The range ofCFSP joint actions, common positions and decisions with devel-oping countries is high and has become the EUs major foreignpolicy focus outside the Balkans and Eastern Europe. In 1998,for example, Africa accounted for 6 of the 22 common posi-


TABLE I.1 Distribution of CFSP Joint Actions and Common Posi-tions adopted, 199799

Focus of CFSP action Total number of Common Positions/

Joint Actions

Eastern Europe 64 (43 of which Ukraine, Russia, Belarus, Afghanistan, were directed at

Albania, ex-Yugoslavia/Balkans the Balkans/FRY)ACP countries 29Ethiopia, Rwanda/Great Lakes, Africa,

Congo, Sierra Leone, Angola, NigeriaNon-ACP developing countries 14Libya, Indonesia, East Timor, Middle East,

North Korea, Iraq, Cuba, MyanmarThematic issues 22Nuclear non-proliferation, anti-

personnel mines, weapons of dual purpose, biological weapons

Source: European Foreign Affairs Review (1998, 1999, 2000).

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tions taken by the EU, and Asia a further 5: three of the EUs20 joint actions related to Africa (Allen and Smith, 1999, p. 89).But it is only these joint actions and common positions that are dealt with as foreign policy under pillar II procedures. Theproblems of coordination between CFSP objectives and thoseconducted by the EU under pillar I are dealt with elsewhere inthis volume. Sufce it to say at this stage that the existence ofthe CFSP both complements and complicates EU developmentpolicy.

The collapse of the Berlin Wall (intriguingly exactly on the101st anniversary of the birth of Jean Monnet) has done moreto redene the context of the EUs development policy than any other contemporary single event. The East, not the South,became the principal focus of EU development assistancethroughout the 1990s. This new geopolitical context has alsocast a shadow that extends signicantly into the future in theform of enlargement. Arguably, by 2010 at the latest, the EUmay have expanded to include perhaps as many as ten newmembers the majority if not all of which will be comparativelypoor by current EU standards despite the development assist-ance of the 1990s. Under these circumstances, the willingnessor ability of the EU to continue with traditional developmentsupport has been questioned. Consequently, whilst at one levelthe negotiations for enlarging the EU appear to be a strictlyintra-EU issue, the implications do set the context within whichexisting and future relations with the developing world aredetermined. Arguably, part of the explanation behind the EUsdetermination to redene the basis of the Lom Convention issuggested by the context of enlargement.

Similarly, Agenda 2000 and the related Inter-GovernmentalConference (IGC) issues relating to institutional reform alsoimpact upon the EUs development policy albeit in an indirectway. The need to move beyond the constraints of consensustowards majority voting has implications for all external rela-tions. In particular, the new emphasis on enhanced cooperationas a decision-making style could see the EU adopting differ-entiated layers of relationships with the developing world. Nolonger may it be necessary for the fteen to nd a consensus toformulate policy: an inner core group of states may prefer toextend their joint activity to introduce a more extensive collec-tive European policy. Of course, no such policy can contradict

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the existing acquis but undoubtedly this exibility can beregarded as a potential policy vanguard and as such it canimplicitly set the future policy direction of the EU as a whole.Potentially, enhanced cooperation can create path-dependencyby creating a new level of collective policy for the core groupof states that can ultimately lead to a new collective futurepolicy status quo for all member states. This tendency can beapplied at least in theory to initiatives in development policy.As past enlargements have already shown, northern and south-ern EU states have different development policy perspectivesand it seems quite possible that a Nordic dimension could useenhanced cooperation to advance collective development policyfor a smaller number of states. This possibility at least does in-uence the context of EU decision-making. The former use ofconsensus as a policy brake, if not redundant as a threat, is nolonger an absolute veto.

Turning from the internal European contexts that help toshape development perspectives, there are two important external arenas that constrain EU policy: the WTO and globaldebt-reduction initiatives. The failed 1999 Seattle WTO meetingillustrated both the inter-related nature of the EU and WTOagendas and the importance of incorporating development concerns as a central feature of global liberalization. Simply,whatever independent initiatives the EU may wish to make in development policy, these need to be both compatible withWTO rules and consistent with developing country aspirations.As the banana saga of the late 1990s illustrated, the globalcontext of WTO institutions is a clear and legitimate constraintof EU policy formation. Similarly, the G7 initiative of 1998/9on global debt reduction for categories of developing countrieshelped to shape the emergence of a common EU stance on theissue. Thus institutional frameworks outside those of the EUhave had and will continue to have an impact of the direc-tion and application of specically EU development policy.

Other examples could be added to this list of external andinternal agents the global consensus on poverty, the environ-ment and womens development in particular. However, the im-portant point at least from the perspective of this text is thatclearly context does matter. Despite being the worlds largesttrader and having experienced some 50 years of collective actionthe EU cannot act in a fully autonomous manner but is, like all


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international actors, constrained by a multiple series of con-texts, both intra-European and global.

In summary, context matters. Europes development policydoes not operate in a vacuum whether theoretical or empiri-cal. Policy choices are constrained by the varied contexts (inter-nal, external and global) within which the EU operates. Thisgeneral conclusion has signicant policy implications and thissection has outlined a number of particular contexts that haveinuenced the EUs relationship with the developing world (suchas CFSP, enlargement, Agenda 2000, the WTO and global debtinitiatives).

Objectives and challenges: the focus of the study

The task of this text is to explore this mosaic of relations his-torically, institutionally and in terms of contemporary policies and to provide a comprehensive overview that both respectsthe uniqueness of each policy sector and demonstrates, whereapplicable, the commonalities of the EUs global relations withthe developing world. This tension has been the hallmark ofEUThird World relations to date and recent reforms were inpart designed to address the issue of differentiation.

An aspect of integration?

The primary focus is on the EU policy-making process. In par-ticular, the link between internal EU integration and externalrelations is emphasized. The debates pertaining to a deeperUnion and the integration process are not conned purely toEuropes own Single Market and Monetary Union programmes;they inuence and direct the policies adopted towards the exter-nal world. At a simplistic theoretical level, this analysis suggeststhat there is a simple spillover from the level of political andeconomic integration within the EU into the area of develop-ment policy. Collective external action is dependent on the po-litical will of the EUs elite; without their agreement policyreformulation is impossible given its intergovernmental charac-ter. The purpose of this book is not to provide a detailed descrip-tion of each EUdeveloping country bilateral relationship, or even to provide an exhaustive account of the various treaties and

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agreements. Rather, it provides a thematic analysis and over-view that locates development policy in the wider integrationdebate. (See Chapter 9 for a fuller discussion of this theoreticalapplication.) Where specic examples and cases are discussed in various chapters, these are by way of illustration of moregeneral issues.

A case for subsidiarity?

A fundamental question posed in this analysis is to what extentshould there be an EU development policy? What can the EUdo better in terms of development than the member states?Can a more effective development policy be conducted bilater-ally between member states and third countries directly than can be achieved collectively at the EU level? Simply, but pro-vocatively, is development policy a case for subsidiarity? Theconcept of subsidiarity introduced in the Maastricht Treaty hastraditionally (and legally) been regarded as conned to discus-sions of intra-EU policy competences. Subsidiarity is interpretedlegally as a requirement that EU policy only be implementedwhere there is a clear advantage over the bilateral implementa-tion of that policy by individual member states. Brussels has todemonstrate that things can be done better collectively than bythe individual governments acting separately. Within the EUsinternal policies this concept has been problematic enough: inexternal relations, both intergovernmental and communautaire,the difculties are magnied.

However, the principle (at least in a general if not precise legalsense) is relevant to the current external relations debate. Theonus is on the EU to demonstrate that the EU is better in con-ducting and delivering development policy to the Third Worldthan are the member states. If this cannot be demonstrated a re-nationalization of development policy could emerge, a tendencyconsistent with the general intergovernmental interpretation ofsubsidiarity. The challenge, then, is to what extent can the EUdemonstrate both a distinct development role for itself as wellas a superior one to that of the member states? Whilst devel-opment policy will continue to be an area of mixed competencesand commitments between the member states and the EU, therecent trend has been towards increasing the role of the Union.


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And yet to avoid duplication the EU needs to establish a dis-tinct role in development policy separate from that already conducted by the member states. As one senior Commissionofcial has suggested, there seems little point in Europe runninga sixteenth programme for the sake of it. Member states canchoose whether to commit their resources bilaterally or throughthe EU system: what clear advantages can the Community routeoffer? Historically, what has been lacking is any coherent andaccepted yardstick that can determine what aspects of develop-ment cooperation are best done bilaterally by member states,and what are better done collectively at the Community level.

In some respects the EU makes a unique contribution todevelopment aid. First, through the Lom Convention the EUattempted to introduce a greater degree of equality into thedevelopment relationship than traditional bilateral arrange-ments. Second, largely thanks to pressure from the EuropeanParliament, Europe initiated policy and debate on a number ofdevelopment issues, such as women and development, repro-ductive healthcare, AIDS, the environment and development,and refugees. Third, a bottom-up philosophy tends to empha-size cooperation with NGOs as the appropriate deliverer ofdevelopment assistance. Overall, it can be argued that collectiveEU development policy adds value if only by virtue of its scaleof assistance, particularly in areas such as emergency food aidand through Lom funds. However, in general in the past therehas been a deafening silence in answer to the questions ofEuropes distinctive development role and what policy elementsare best coordinated at the EU level. Only in 2000 did the Commission nally begin to address this fundamental concern.

Whilst Treaty Article 130 lists distinctive features of EUdevelopment policy, currently these are not exclusive domains:however, it might provide a guide to the EUmember state division for future policy sectors. Many proposals to dene andspecify a distinct EU role have been tabled. For example, the EUcould focus primarily on poverty alleviation (as required by theTEU). This radical approach would see EU assistance focus onthe least developed countries, leaving bilateral member-staterelations to cover the other developing countries. Such a divi-sion runs counter to the past twenty-ve years of Lom rela-tions that have grouped all types of developing country together

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under a single convention. Any dismantling of the ACP frame-work would require signicant member-state cooperation andgoodwill in order to plug the resultant gaps. Obviously thistouches on the central issue of the role of the Council. Inter-governmental agendas suggest that neither the extension of EUpolicy competences nor a redistribution of competences betweenthe Union and its member states will be easily achieved. Othershave called for the EU to act as the wholesaler of develop-ment assistance (supporting the structure of development) withmember states acting as retailers in the local markets (actuallyimplementing specic programmes on the ground). Anotherproposal emphasizes conditionality concerning democracy andthe rule of law . . . human rights and fundamental freedoms asa distinctive competence of EU policy. Thus whatever bilateralrelations might exist would be governed by EU-level denitionsof human rights and democratic conditionality. The operation of the European Community Humanitarian Ofce (ECHO) addscredence to Europes civilian humanitarian identity. However,the current consensus is for parallel organizations to exist rather than to create an exclusive EU role. Rationalization rather than duplication may be to the greater benet of devel-oping countries in the post-Lom world. These and other themesare explored in greater detail in the following chapters.

Optional or fundamental?

Confronting this fundamental question does the EU need adevelopment policy is essential. Is any such policy merely anoptional extension of the process of integration, like social orregional policy, or is it a core function, even perhaps a democra-tic obligation? We cannot take as given the necessity of a devel-opment policy beyond the technical framework established bythe Common Commercial Policy. However, there are a numberof altruistic as well as self-interested reasons that suggest that a development policy is not optional, but fundamental to theprocess of European integration and the EUs global role.

Included among these motivations based on self-interest is thedesire to avoid destabilization caused by increased immigrationand refugee crises. Whilst a Europe just for Europeans is not the policy of the EU, improving the living standards of the ThirdWorld may reduce the economic attraction of migration (both


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legal and illegal) to Western Europe. The maintenance ofresource supplies remains a factor, although one that has dimini-shed since the collapse of the Soviet Union. With the opening upof markets and resources in the former Soviet sphere of inuence,the EU is no longer exclusively dependent on the developingcountries for certain products and raw materials. A further motivation can be found in the EUs support for the exploitationof export markets and the general promotion of global freetrade. As is discussed elsewhere in this book the EU is commit-ted to integrating the Third World into the global trading system,but preferably on the basis of free trade despite the developingworlds scepticism. Lastly, the EU has long held a desire toemerge as a global actor both economic as well as political. The development agenda allows it to play such a political rolethrough its economic power as the worlds largest trader.

More altruistically, the EUs development policy expresses itsbelief in democracy. The pervasive application of conditionalityconcerning human rights, good governance and democracyshould not be misinterpreted as the imposition of Europeanvalues on reluctant developing states. Typically, developingcountries welcome this conditionality as it can help them safe-guard and extend democratic practices domestically. Similarly,EU policy encourages and supports regional integration in thedeveloping world. Even under the past Lom umbrella therewere provisions for the promotion of regional integration projects, such as the Southern African Development Community(SADC) for example. Obviously, as the worlds most advancedform of regional cooperation, the EU has a philosophical commitment to integration; however, it would be somewhatchurlish to regard this as a selsh motivation. The rationale isprimarily altruistic. Finally, there is the assumption (alreadytouched on) that Europes internal integration cannot be treatedin splendid isolation but is inextricably linked with its externalrelations. What happens within the EU integration process hasfundamental repercussions for the developing world economi-cally, socially and environmentally. The consequences of a failed Single Market, or Monetary Union would not be connedto Europe: they would impact directly on the fragile economiesof the developing world. The development of the Third World is, therefore, inextricably linked to the internal success of European integration.

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Of course, some argue that development policy is not a coreEuropean policy in the sense that the Common AgriculturalPolicy (CAP) or the Single Market are. Whilst not advocatingthe re-nationalization of development policy (in line with a strictinterpretation of subsidiarity) it would become an EU policysector to which the concept of enhanced cooperation might beappropriately applied. This has been conceived as a method toenable those states that are willing and able to do so to pressahead towards fuller European integration more quickly thanothers. Thus the pace of integration is no longer determined by the slowest member state, and importantly, such exibilitywould enable closer forms of cooperation, that could otherwisetake place only outside the Treaty framework, to be kept underthe Treaty umbrella. For example, the Nordic countries havetraditionally placed a greater emphasis on the developmentagenda than other EU states. In a post-Lom context either that saw the member states fundamentally divided over policyoptions or where a decision was adopted that reduced thecontent of development policy, the Nordic states and others maywish to promote (or enhance) development policy through themechanism of exibility. A number of states, therefore, wouldextend European policy whilst operating under the treaty frame-work (within the obligatory rider that any such activity was con-sistent with the acquis communautaire and existing EC policies).Whilst the content of any such enhanced cooperation as wellas the number of participating countries are unknown, theoret-ically development policy may in future become an unexpectedcandidate for the use of enhanced cooperation a case of conceptual and empirical spillover perhaps?

By necessity this text provides an empirical account of thehistorical development of the EUs Third World policy; however,it offers more than a repetitive, descriptive and statistical recitalof information easily found elsewhere (see Lister 1997a; Grilli,1993). The text presents thematic and theoretical argumentsthat provide the context for analysing EU policy. Obviously, thereform of the Lom Convention is a signicant theme, but asalready argued above, the EUs policy towards developing coun-tries reaches far beyond this treaty-based agreement with theACP states. Both the strengths and the weaknesses of EU policy(in content and scope) are the focus of this analysis.


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Change, reform and differentiation

There is no ideal time to write about the EU: it is constantlyevolving and susceptible to the vagaries of electoral change inthe member states. The same is true for Europes policy with theThird World. The last decade of the twentieth century witnessedmonumental global change: ideological, economic and strate-gic. These changes directly impacted on our perceptions andexpectations about the developing world. From the mid-1990sEuropes development policy has been in a state of ux and itwill continue to evolve into the new millennium. Consequently,this text presents the debates that have shaped the new policyoptions and offers broad parameters within which futurechanges can be located and interpreted. Why did the EU under-take such a complete re-evaluation of its development frame-work at the end of the twentieth century? The rationale forreform was initiated by a growing dissatisfaction with the Lomstructures. The motivations were diverse, but cumulatively compelling, at least from a European perspective.

First, there was the record of European assistance to date. Few,if any, of the Lom countries had seen a radical transformation intheir economic well-being: dependency continued to dene theirrelationship with Europe. Second, as noted earlier, the prefer-ences and resources given to Central and Eastern Europe hadlargely been at the expense of the ACP states: the cake had notsufciently increased to cope with both these developmentdemands. Third, the WTO began to cast a critical eye in generalover preferential agreements, and specically with respect to theexisting Lom preferences (which had an interim WTO waiver),arguing that these were inconsistent with the trend towards openmarkets. In response, the Commission of the EU was active inpromoting a global free trade philosophy. Fourth, and perhapsparadoxically, trade gures suggested that the privileged posi-tion of Lom countries and the value of their preferential treat-ment had been signicantly eroded since 1989. The Lom stateswere no longer at the apex of the pyramid of privilege. Further,many of the states in Asia had substantially out-performed thoseof the ACP despite receiving no concessionary privileges.

Last, the calls for reform reected a growing recognition ofthe diversity within the so-called developing world and the

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obvious inconsistencies in the EUs geographical ambit. Itbecame increasingly difcult to explain what common interestsbound the Lom states together or distinguished them from themajority of non-Lom developing countries. The ACP was anacronym, but it also became increasingly anachronistic. TheACP secretariat argued that the rationale for the grouping is more than post-colonial history and clearly the large size ofthe ACP group does provide certain negotiating advantages (for both the ACP and the EU). However, the existence ofregional provisions within the existing Lom frameworkworked to emphasize the diversity of needs rather than enhancethe coherence of the ACP community. Increasingly differenti-ation became the clarion call for the new development policyagenda.

Future challenges

This text raises many of the future challenges that face the EUspolicy towards the Third World beyond 2000. The rst is thequestion of development funding. To what extent can nancialassistance and trade preferences be redistributed away from thecountries of Central and Eastern Europe and back to the tra-ditional denition of Third World developing states? An overallincrease in support is not an option. Second, the lessons frompast enlargements suggest that the next wave of membershipwill impact on the EUs development policy: the status quo isnot viable. Third, within the changing context some memberstates will strive to maintain and protect their special historicalties with particular countries or developing regions. Balancingthis with more general reform issues may prove contentious,particularly for the French and the British. Fourth, global trendswill inuence the EUs policy options. The WTO provides a newconstraint upon EU policy as any new trading relationship withthe developing world has to be consistent with WTO regula-tions. The 1990s dispute over Lom banana preferences is justone small indication of the new environment in which EU policymust now operate. Fifth, and related, is the move towards globalregionalism that provoked a restructuring of the EUs develop-ment relations. Perhaps the greatest challenge lies in the EU differentiating between levels, or types, of developing country,discriminating between countries that up to the year 2000 had


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largely been treated on an equal footing despite their apparentdifferent levels of development. Sixth, the framework for relations will be problematic. Should the principle of non-reciprocity be retained (albeit for a reduced category of states)or should the philosophy of Free Trade Areas (FTA) be applieduniformly irrespective of the level of development? And last, asset out in both the Maastricht and Amsterdam Treaties, thereduction of poverty is the development policy goal. However,has the EU provided itself with adequate and appropriate instru-ments and policies for such an ambitious task? Simply, is sucha humanitarian policy goal achievable?

As is typically the case in most EU policy areas, developmentand relations with the Third World combine a number of otherwise discrete policy sectors and institutional actors. Forexample, it involves external trade relations in general as wellas Lom relations specically: the role of the European Com-munity Humanitarian Ofce has increased signicantly whereasthe CFSP has been used spasmodically to achieve developmentpolicy goals. Consequently, both communautaire pillar I Euro-pean Community competences are utilized in conjunction withpillar II intergovernmental procedures. The actors include themember states in the Council, the European Parliament and theCommission (which itself divides competence for developmentpolicy between at least ve Directorates General). As is exploredin the following chapters, whilst such policy diversication has both strengths and weaknesses, the problems of coordina-tion and complementarity are undoubtedly exacerbated by this diffusion.

The relationship between the CFSP and development policyis a clear illustration of this problem. The Maastricht Treatydemands a linkage despite the pillared structure that separatesdevelopment policy from intergovernmental CFSP. Article C ofthe Common Provisions is explicit:

The Union shall in particular ensure the consistency of itsexternal activities as a whole in the context of its externalrelations, security, economic and development policies. TheCouncil and Commission shall be responsible for ensuringsuch consistency. They shall ensure the implementation of these policies, each in accordance with its respectivepowers.

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The challenge is to balance Europes array of external objectivesand responsibilities. Development policy, in its broadest sense,is part of the EUs CFSP personality and one of its instruments.Joint actions, for example, can have development implications:the 19935 joint action on South Africa provides a good illus-tration of this relationship. As a global actor the EU requires acomprehensive network of external policies that combine trade,environment, development as well as the more traditionally recognizable foreign policy issues together. Achieving coordina-tion, coherence and complementarity between and across thesesectors within the Union is a mammoth task (and one that hasbeen compounded by the Maastricht reforms). But it is also anessential task and one, as already suggested, unavoidably linkedto the integration debate per se. In such a scenario developmentpolicy cannot be an optional extra, but constitutes a core component of Europes external relations and CFSP.

The chapters

The remainder of this introduction provides a synopsis of theindividual chapters. Whilst each chapter focuses on a specicarea of European development policy, the themes and ideasraised in this introduction permeate the discussion throughout.The EU has set itself the task of fundamental reform of its relations with the Third World. As such it is legitimate and necessary to question whether the reforms are based on a coher-ent philosophy or represent a series of disjointed political com-promises that do little to reconceptualize development policy.Why should there be an EU policy? What should be its content?How is it to be executed? Who are the actors? And, crucially,how is it to be funded? These are all central issues that require analysis.

Chapters 1 and 2 provide an historical and a geographicaloverview of EUThird World relations. Here the dichotomybetween relations with the ACP states and non-ACP countries(in Asia and Latin America) is the organizing principle, with aseparate chapter devoted to each of these two groups. Chapter1 considers the origins, motivations and content of Europesdevelopment policy towards the ACP and contrasts the earliestperiod of relations (the Yaound Convention) with the succes-


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sive Lom Conventions. Chapter 2 explores the comparativelyrudimentary relations with Latin America (particularly withMERCOSUR) and those with Asia (through both ASEAN andthe ASEM process). The framework for relations, trade and aidare all considered, highlighting the contrasts as well as the similarities with EUACP relations.

Chapter 3 draws on some of the arguments suggested in theearlier chapters. It examines the institutional relations thatstructure the EUThird World dialogue as well as the decision-making processes within the EU that shape development policy.The internal reforms of the Prodi Commission are contrastedwith the Santer Commission structure of 199599. The man-agement of the Commissions external assistance programme aswell as the rationale behind the reorganization of DirectorateGenerals is reviewed. The chapter concludes with a discussionof ECHO and the role of humanitarian aid. The main argumentof this chapter is that poor administrative and implementationstructures have hampered the delivery of development policyand structural reform is a necessary precondition for a moreeffective EU development policy in future. Chapter 4 debatesthe merits, effects and consequences of two specic EU con-cerns: complementarity and conditionality. Complementarityhas become a guiding principle for the organization of all EUpolicy sectors. The realization of this goal in development policyis, however, complex and problematic. Political conditionality(in the form of good governance, democracy, the rule of law andHuman Rights) has become a pervasive element of EU externalrelations, and yet its application remains disputed. Economicconditionality (structural adjustment, liberalization and debt) is similarly contentious, but also remains a core element ofEuropean policy. The chapter examines two contemporary cases (Zimbabwe and Fiji) that address some of the issues ofimplementing conditionality.

Chapter 5 explores a number of trade policy regimes used bythe EU from Generalized System of Preferences (GSP) toLom, reciprocity and WTO obligations. Europes promotion of global regional integration is also considered. The EUs trade policy debates which contrast preferential regimes withliberalized free trade areas provide the theoretical context forexamining the trade data. The chapter provides a summary ofthe patterns of trade between the EU and the developing world

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(distinguishing between the ACP, MERCOSUR and ASEAN/ASEM frameworks) The conclusion of the analysis is that trademechanisms are not simply a technical question: their choice isinherently political. Chapter 6 provides a background to thereform processes of the late 1990s that have seen the Lom Convention fundamentally challenged and the basis of EUThird World relations radically altered. Four phases of changeare identied: the 1996/7 Green Paper exercise; the resultantCommission guidelines; the Council negotiating mandate; andthe eventual negotiating process. The chapter sets out the insti-tutional and policy framework options that were effectively toshape EUThird World for the next two decades. It concludeswith an assessment of the implications of the reforms for policycoordination, coherence and complementarity the ofcialmantra governing external relations and development policy.

Chapter 7 is devoted to a critical account of the new CotonouPartnership Agreement of 2000. Key differences from the pre-vious Lom regime are highlighted, as are any similarities withnew agreements being signed with other parts of the develop-ing world in Asia and Latin America. The chapter argues thatthe Cotonou Agreement, if successful, could become the blue-print for the global application of the EUs development pro-gramme. The objectives and institutional structure are outlined,the nature of the political dialogue and conditionalities dis-cussed, and innovations identied. The differentiation withinthe ACP according to development status (separating out theLeast Developed Countries) yet retaining the ACP umbrella forthe purposes of constructing regional free trade agreementsbetween the EU and six ACP groupings is critically reviewed.

Chapter 8 looks towards the future challenges faced by theEU. First the problems associated with actually implementingthe Cotonou provisions are reviewed. Second, the Everythingbut Arms initiative is discussed together with the signicantpolicy developments of early 2001 in which the EU adopted anew trade framework for the worlds 48 LDCs. The chapterdraws some general conclusions about Europes developmentpolicy and suggests topics for further analysis as developmentpolicy evolves. This new approach brings together for the rsttime both ACP and non-ACP countries under one regime.Lastly, Chapter 9 discusses the appropriate conceptual frame-work for analysing EU development policy. It argues that


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integration theory normally used to explain internal EU policiesand processes can also be used to successfully conceptualizedevelopment policy and external relations.

Conclusion

To conclude, the focus of this analysis of development policywith the Third World has consciously chosen to adopt a region-to-region approach. Thus the chapters are concerned with EUrelations with the four principal blocs that describe the devel-oping world the ACP, MERCOSUR, ASEAN and ASEM. Thisapproach is obviously open to the criticism that bilateral rela-tions between the EU and individual developing countries arenot given sufcient recognition. For example, relations withIndia or Pakistan are not included here, nor are the countries ofCentral America. However, this individual level of analysis isthe necessary and unavoidable price to be paid for providing abroader perspective of EU development policy. The text mir-roring the EU itself utilizes economies of scale by looking atregion-to-region relations. Indeed, the very fact that the EUseeks such regional dialogues and agreements underlines thatthis approach is the appropriate perspective.

Writing about development policy as the process evolves is as precarious as it is ambitious. This text seeks to identify the content of the policy debate and to theorize about the rela-tionship between EU development policy and the integrationprocess. As such, the ideas adopted are innovative and hypo-thetical. However, a core theoretical lacuna has been suggestedthat necessitates an answer: does the EU play a distinct role indevelopment policy? Subsidiarity could yet provide the answer,albeit one that is critical of the EUs claim to distinctiveness.Conversely, enhanced cooperation could suggest that develop-ment policy was no longer a core policy within the Union, butone where a variable geometry approach is most appropriate.However, any such reformulation of the EUs role has to recog-nize and accommodate the objective of consistency in externalrelations and development policy as expressly articulated in theMaastricht Treaty.

For much of the developing world the reality of the new mil-lennium started on 29 February 2000, the date the Lom IV

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Convention expired. Traditionally, the EU has been the devel-oping worlds most signicant democratic partner. However, theCommissions 1996 Green Paper on Relations between theEuropean Union and the ACP countries that considered reform-ing the Lom Convention launched a process that many believehas fundamentally altered this relationship. Development policycurrently faces a crossroads and many of the assumptions andcertainties of the past four decades are under scrutiny.

Development policy reform is a continual process, theoutcome of which remains undecided and susceptible to suddenchange. Forging a consensus within the EU member states isalways hard and the European Parliament will certainly beactive and its approval is required for any new treaty-basedagreement. Despite the clear free trade policy tendencies ofEurope, the history of the EU suggests that ambitious propos-als that challenge the status quo more often lead to incremen-tal and pragmatic change than to wholesale reform. However,the response of the Third World is crucial. Collectively they maybe able to shape the debate to their mutual advantage; however,if no consensus emerges on their shared interests the EU mayagain be able to dictate the terms of the dialogue. Whatever the outcome, clearly there will be winners and losers. The19752000 status quo could not be maintained.

Whether the late-1990s reform process was just another manifestation of n de sicle euphoria, or a more sober re-evaluation of the EUs global role and limitations, the new mil-lennium has signied a watershed in development policy.


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Chapter 1

Four Decades of African,Caribbean and PacicRelations

This chapter begins by addressing two basic questions: whatwere the origins of the EUs development policy; and, what werethe motivations? These simple questions need to be examinedin some detail in order to convey the context within whichdevelopment policy has evolved since 1957. Many of the currentdebates concerning the restructuring of relations with the ThirdWorld can only be understood through such an historical perspective.

The 1957 Treaty of Rome establishing the then EEC was adocument that challenged the pre-existing assumptions aboutstate sovereignty. These assumptions were not exclusively inter-nal in their implications but extended to a states external affairsas well. The internal integration of the European market haddirect and serious consequences for third countries and the posi-tion of the developing world was addressed, albeit imperfectly,in the founding Treaty. Of course, bilateral relations have per-sisted and act to complement the European relationship withthe developing world; signicantly, however, the scope and scaleof these bilateral ties have been progressively modied. Whilstthe Treaty was myopic in its largely francophone denition of the Third World this framework represents the origin ofEuropes fragmented and differentiated approach.

The original signatories to the Treaty of Rome all soughtspecial arrangements for those matters that were of particularimportance to them: agricultural, political and colonial. ForFrance, the protection of the relationship with its colonialdependencies was one such priority. Signicantly, throughoutthe discussions that led to the Spaak Report, which set theframework for the original European Community, no mentionwas made of colonial relations, and only as late as May 1956did France table the issue. The other member states were reluc-tant to involve the EC in what was to most a French external

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affair, with the Dutch and the Germans the most critical.However, as expressed by one commentator, Frances move wasshrewdly timed: by making a satisfactory agreement on provi-sions for its dependencies a sine qua non for its signature of theTreaty, French bargaining power was maximized (Ravenhill,1985, p. 48). Consequently, on French insistence, provisions forassociation for all dependencies were included in Part IV of theTreaty: a contractual treaty-based relationship was created thatestablished both the basis and rationale for subsequent arrange-ments such as the Yaound and Lom Conventions.

Associated status was given to specic overseas collectivitiesand territories (OCTs) that had special relations with amember state. Initially this only involved relations between 31OCTs and four member states (France, Belgium, Italy and theNetherlands) but was expanded with the rst enlargement in1973. French colonial ties predominated and incorporated thestates of French West Africa, French Equatorial Africa as wellas island dependencies in the Pacic and elsewhere. Article 131sets out the parameters of these original provisions:

The purpose of association shall be to promote the economicand social development of the countries and territories andto establish close economic relations between them and theCommunity as a whole.

. . . association shall serve primarily to further the interestsand prosperity of the inhabitants . . . in order to lead them tothe economic, social and cultural development to which theyaspire.

In essence, both member states and colonial dependencies wereto be treated similarly with respect to trade access, investmentand the reduction and eventual abolition of customs duties (withthe exception of certain sensitive products). A consequence ofthis was that other third country developing states were dis-criminated against. The contractual nature of the relationshipwas important as a legal obligation was established on memberstates to contribute to the investments required for the pro-gressive development of these countries and territories (Article132.3). The exclusive mechanism chosen for the task of pro-viding aid was the European Development Fund (EDF). The roleof the EDF has grown signicantly (both in the scale and scope


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of funding) and it still remains one of the key instruments ofEuropes policy with the developing world. Despite this assis-tance and the market preferences given to their exports, theassociated states generally failed to improve their economic pro-les over this period.

Not surprisingly, Articles 1316 have subsequently been crit-icized for perpetuating the existing colonial dependency. Whilstwith hindsight this certainly seems the case, two ancillaryfactors are pertinent. First, in the context of the time, these Arti-cles were more signicant for underlining at the very beginningof European integration that an external developmental rela-tionship could not be ignored. Clearly, Europes global role andresponsibility was to be valued and part of the wider notion ofintegration: the then Community was much more ambitiousthan is perhaps commonly acknowledged. As Monnet argued,the Community was not a coal and steel producers associa-tion: it is the beginning of Europe with all that phrase impliesinternally and externally (1978, p. 392). But second, the selec-tivity of the countries included foreshadowed what was tobecome the central problem in Europes relationship with thedeveloping world historical ties rather than need has been thedriving rationale behind preferential treatment. It has takenmore than four decades to begin to unravel this selectivity inEuropes denition of the developing world.

The Yaound Conventions

Whilst these provisions still apply to a small number of territo-ries today, in the early 1960s the majority of OCTs gained theirindependence and new arrangements were appropriate and necessary. Consequently, by the mid-1960s the vast majority of African states found their relations with the EC structuredthrough a completely new and separate treaty: the rst YaoundConvention. The foundation of the Convention was the recog-nition of the national sovereignty of the participating countries.It established preferential trading arrangements between the Sixand 18, principally francophone, countries. These were knownas the Associated African States and Madagascar (EAMA in itsoriginal French acronym) and were composed of: Burundi,Cameroon, Central African Republic, Chad, Congo, Dahomey,

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Gabon, Ivory Coast, Madagascar, Mali, Mauritania, Niger,Rwanda, Senegal, Somalia, Togo, Upper Volta and Zaire.

There were three distinct and original features to the Con-vention: a) its comprehensive character; b) the multilateralframework; and c) its joint institutions. First, uniquely for thetime, the Convention linked a range of separate developmentpolicies under a single integrated approach. Financial aid, tech-nical assistance and training, trade preferences and investmentand capital movements were all covered. Second, the Conven-tion was the rst example of a common contractual basis forrelations between the industrialized and the developing world.This multilateral framework made it easier to adopt a regionalapproach to issues and promoted regional cooperation amongstthe EAMA group. Third, the three joint institutions of the Asso-ciation were created (the Council, the Parliamentary Conferenceand the Court of Arbitration). The Council contained one rep-resentative from each of the EAMA and Community memberstates, met annually and could issue binding decisions based onjoint agreement. The Parliamentary Conference had only advi-sory status, whereas the Court was the nal arbiter where infor-mal procedures in the Council were unable to resolve disputesarising under the Convention. It was never called upon to doso, however.

The rst Yaound Convention expired in 1969 although itsprovisions were renewed for a further ve-year period endingin 1975. During the lifetime of this second Convention the rstenlargement of the Community took place. UK membership andthe question of Commonwealth relations necessitated a majorreview of external relations. However, this rst decade of treaty-based relations between Europe and the developing world provided the context within which the subsequent Lom Conventions were debated and designed. Community supportfor the EAMA was directed principally through the EDF andthe European Investment Bank (EIB). Under Yaound I a totalof 666 million EUA (European Units of Account) was providedin EDF aid and a further 64 million in the form of EIB loans.Under Yaound II, EDF aid rose to 843 million with a further90 million provided by EIB loans (Commission, 1986, p. 15).During this period the Community provided approximately 20per cent of the total ofcial aid received by the 18 signatorystates. Three times this amount was provided by continued


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bilateral assistance from individual member states (mainlyFrance, Belgium and increasingly Germany). The combinationof Community-level aid and bilateral aid is the hallmark ofEuropes past and present relationship with the developingworld. Whilst the balance may have changed from Conventionto Convention, this essential element has never been challenged.Community-level aid supplements and supports bilateral action:it has never been designed to replace it entirely.

Two serious problems underlay the seeming largesse of theEDF: disbursement of funds and narrow sectoral support. First,typically, from 1957 to 1975 only a third of EDF funds weresuccessfully disbursed during the lifetime of the respective agree-ments. Second, the greatest proportion of EDF aid was given toinfrastructural projects virtually excluding development of theindustrial sector. As such, the EDF mirrored the bilateral prac-tices of former colonial donor states.

The basic principles of the Convention followed those foundin the Communitys own Treaty of Rome and partly foreshad-owed the core elements of the Cotonou Agreement that was tobe signed in the year 2000. Over time it was hoped to establishthe abolition of customs barriers; reciprocal duty-free access;abolition on quantitative quotas on exports; and the extensionof most-favoured-nation status to EC member states. The tradecontent of the Conventions provided for EAMA imports intothe Community free from customs duties and quotas for all agricultural and industrial products except those that were indirect competition with European producers. Whilst the excep-tions were criticized, under Yaound II EAMA producers inthese categories were given limited but preferential access overother third countries. More importantly, the trade preferencesenjoyed by the EAMA were progressively eroded due to the EClowering or abolishing duties on a range of tropical products such as coffee, cocoa, tea, pineapples and nutmeg. In addition,products such as copper, iron ore, cotton, rubber and oil seed,which were the main EAMA exports, were never subject to EC tariffs in general. Consequently, the Convention could not provide them with any preferential access to the Europeanmarket. Overall, the economic benets provided by the Con-vention appeared marginal and were openly criticized by the 18signatories and two member states, Germany and the Nether-lands. The impression was given that the Yaound states were

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just suppliers of the residual market that the Community pro-ducers could not ll and at best provided them with a slightadvantage over third countries (Ravenhill, 1985, p. 56). Tocompound the trading problem, Yaound was based upon theprinciple of reciprocity.

The Yaound Convention only linked Europe to a smallsegment of the developing world and in it the seeds of Europesfuture piecemeal approach to FirstThird World relations canbe traced. Obviously, the 18 Yaound countries share in totalexternal trade was relatively small. Importantly, however, thepattern of trade over the 195867 period declined (see Table1.1). In 1958, 5.6 per cent of Community imports came fromthe Yaound States, this gure falling to 4.2 per cent by 1967.Community exports to the EAMA stood at 4.4 per cent in 1958,but only represented 2.9 per cent a decade later and the resul-tant Community trade decit with the Yaound States rose fromUS$22 million to US$378 million over the period. There was atypical asymmetry in the goods traded: 72 per cent of Yaoundexports to Europe were primary products whereas 85 per centof the Communitys exports were industrial in origin (Commis-sion, 1969, p. 10).

Whilst the rst ten years of the Community saw a generalincrease in the ECs share of world trade (which by 1967 saw theCommunity the leading global importer [18 per cent] andexporter [20 per cent], as shown above the developing worldsshare of this trade declined. Overall, trade with the developingworld like that with the Yaound States declined during theCommunitys rst decade. In 1958 the developing countries sup-


TABLE 1.1 EC imports from and exports to the developing world,195867

1958 1967 1958 1967% imports % imports % exports % exports

Yaound States 5.6 4.2 4.4 2.9Latin America 10.2 8.9 10.1 6.5Africa (non-EAMA) 9.4 10.3 12.3 6.5Middle-East 11.2 9.5 4.4 4.1SE Asia/Oceania 4.8 3.7 6.5 4.9

Source: Commission (1969), Annexe I.

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plied 42 per cent of the ECs imports and took 39 per cent ofEuropes exports. By 1967 these gures had fallen to 38 per centand 27 per cent respectively. During the same period the ECreduced its import of raw materials from 30 per cent to 22 percent. Consequently the Communitys trade decit with the devel-oping world rose from US$700 million in 1958 to $3225 millionin 1967. What is perhaps most surprising is that if these guresare broken down regionally, Latin America, non-EAMA Africaand the Middle East were all more important markets for the EC.Only trade with SE Asia approached the modest levels of theYaound States (see Table 1.1). And yet at this stage Europesrelationship with the wider developing world lacked the formal-ized relationship of the Yaound Convention. No special privi-leges existed that gave concessions to these Third World nations.

This broader trend continued to be reected for the durationof Yaound II. Whereas the EAMA states provided 13.4 per cent of the developing worlds exports to the EC in 1958, thisdeclined to a 7.4 per cent share by 1974. Similarly, the EAMAstates received 11.6 per cent of the ECs exports to the devel-oping world in 1958, falling to 8.4 per cent in 1974 (Ravenhill,1985, p. 61).

What, then, was so special about the Yaound states andwhat were Europes motivations? Were they purely economicand arguably neo-colonial, or more developmental in origin?Certainly, Europes global competitors, especially the USA, mayhave viewed the association as prejudicial and incompatiblewith the framework of the General Agreement on Tariffs andTrade (GATT). The difculties that were to become endemicwithin the economies of the developing world were alreadyapparent by the time the Yaound Convention was signed

martin holland the european union and the third world 2002

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