SELECT COMMITTEE ON FOREIGN AFFAIRS díospóireacht -
Tuesday, 19 Mar 2002

Vol. 5 No. 1

ACP-EC (Cotonou) Agreement.

Chairman

I propose to deal first with the ACP-EC - Cotonou - Agreement. I will provide an outline of the agreement while we are waiting for the Minister.

From the outset, the Lomé conventions were a unique model of contractual trade and co-operation between the developed North and the developing South. Lomé combined a system of trade preferences together with development co-operation. Co-operation was generous, with billions of euro being granted to the African, Caribbean and Pacific countries in the form of direct assistance for development projects and supports at times when there occurred price fluctuations on the export of agricultural produce and ore. Trade preferences were also beneficial to the ACP countries as they introduced a measure of stability and the protocols on rice, beef and sugar are vital to some ACP countries' economies. However, while the agreements have been positive, overall they have not been as beneficial as was intended and certain valid criticisms have been levelled against Lomé.

With some notable exceptions, such as Uganda and Mozambique, the development co-operation between the EU and the ACP countries does not appear to have achieved the hoped for results, with the populations of some of these countries, particularly in sub-Saharan Africa, continuing to be stuck in the same abject poverty traps as heretofore. Poverty in these countries, the least developed in the world, does not just mean lack of jobs, it frequently means no food for their populations in addition to life threatening diseases such as malaria, TB and HIV-AIDS. Women and children are frequently the ones who pay the ultimate price.

What has happened is that one event or a combination of events have occurred that undermine programmes which have the potential to lift these countries out of poverty and give them the necessary impetus to find their own way forward. Among the reasons for the lack of success are internal and external conflicts, the fact that some development programmes were not sustainable, inefficiencies in the implementation of those programmes and corruption in a number of the countries receiving aid.

Under Lomé agreements, ACP countries have preferential access to EU markets for certain products. In addition, there are agreed protocols giving special terms for ACP commodity imports to the EU. However, under World Trade Organisation rules, these preferences and protocols have to be removed. The least developed countries are, however, exempt from the rules. This has been reinforced after the EU sponsored "everything but arms" duty free access was agreed by the WTO. While some of the non-least developed ACPs are apprehensive about losing preferences and protocols - one can understand their concern - we in Ireland discovered that preferences can be a golden cage. Although they offer protection of sorts, one cannot depend on them and growth is restricted. While the Lomé preferences and protocols were generous, they failed to generate the type of growth and trade that was expected when they were introduced. Free trade on the other hand forces industry in countries to produce products efficiently at competitive prices, which in turn leads on to better competitiveness and growth. What is needed in these countries is change with some necessary framework and capacity building which would gradually allow the ACPs to integrate their economies into the world market.

Cotonou attempts to learn lessons from Lomé and combines this with much of the new strategic thinking on development co-operation shared by international organisations, the EU and the member states. With the objectives of poverty eradication, sustainable development and gradual integration of the ACP countries into the world economy, the new agreement emphasises the importance of partnership where, unlike in the past, the developing country itself takes the lead role in developing strategies for its own future. The EU helps with budgetary support, regular political dialogue with the country concerned and the introduction of an innovative and trade framework which will involve the private sector. The focus of the new structures will be directed at conflict prevention, good governance, particularly the fight against corruption, the inclusion of other players in the economy besides government, and greatly improved economic and trade performances.

The new agreement uses political dialogue to prevent or at least mitigate conflict, increases respect for the three essential elements of democracy, the rule of law and human rights, and fosters good governance with particular emphasis on combating corruption. Development co-operation will be carried out by working with the country involved to develop strategies and programmes which will provide sustainable development. A new trade regime is proposed to replace the preference system under Lomé. Negotiations to introduce this system of free trade agreements between individual regions of the ACP with the EU are scheduled to commence next September and to enter into force in 2008.

The internal agreement covers the arrangements for funding the first five years of the Cotonou Agreement, under which the member states will agree to fund €13.5 billion. Added to this will be €1.7 billion from the European Investment Bank and a further €9.9 billion from the past unspent Lomé funding. The overwhelming amount of this fund will be provided in non-repayable development co-operation grants. However, €2.2 billion will be spent on the investment fund to provide loans for private enterprise in ACP countries.

The Cotonou Agreement between the EU and the 77 countries from Africa, the Caribbean and Pacific islands offers a positive way forward for development co-operation and trade partnership. Many of these countries are well known to Ireland and have shown their friendship over the years. They were central to the massive support we received in securing a seat on the UN Security Council in 2000. The EU is the biggest provider of aid to developing countries and this agreement reinforces that commitment. This is a message that will again be borne in mind as part of the EU approach to the Monterey convention on financing for development, which is currently taking place.

However, the EU's past implementation record is not good and it is not certain that the promised reforms have healed that problem. We must also ensure that funding is only provided to those countries which carry out the programmes which they agreed with us and that this money is not diverted to corrupt uses or used to allow government funding to be diverted for military purposes. The essential and fundamental elements must strictly be complied with and sanctions under Article 96 of Cotonou must be rigorously applied against countries like Zimbabwe.

It is to be hoped that the new trade regime can be negotiated within the time limits agreed with the WTO. There has been some slippage in the timetable. It is noted that despite our greatly increased development aid budget, Ireland's commitments have not increased in this agreement over the percentage agreed in Lomé. There are, however, ways of becoming more deeply involved with some of the countries in question and the investment facility offers a means by which both Ireland Aid and the Irish private sector could become involved in assisting economic growth in them.

Cotonou is a landmark agreement in relation to partnership co-operation between North and South, and I recommend that the committee agrees to its ratification and the acceptance of the internal agreement which accompanies it.

Mrs. Owen

I am disappointed that there is such a small number of people here to deal with the replacement of Lomé. In the 1980s and 1990s, the debate on the Lomé conventions for ratification and tranches of financing was conducted in the Houses of the Oireachtas with more Members making contributions as the years went by. Such issues are now dealt with in committee and we will simply rubberstamp this even though Ireland is committing a significant amount of money in a major new agreement to assist the poorer, least developed countries.

I would like more information on the new trading arrangements, which do not come into force until 2008. The non-reciprocal preferential tariffs to EU markets are being done away with. Under Lomé, countries with material surpluses or in need of foreign input got quotas to sell their products in EU countries. This system is being done away with because it is, according to our note, against World Trade Organisation rules, but I am worried about the new trading arrangements which aim to help these countries help themselves. This ought to be the aim of any such agreement as aid cannot continue as a charity and we should help them to develop their own economies, infrastructures, health and education systems as well as being able to feed their own people. However, it says euphemistically in the notes that the agreement provides for new trading arrangements which should - not will - enter into force by 2008 and will gradually evolve into free trade between the EU and ACP regional trade areas. That is very aspirational and I would like some reassurance it is more than that. Why is "should" being used, unless it means that we will do our best but it might not happen? Are all our EU partners willing to allow this kind of trade with the ACP countries?

I see no reference to another major area of discussion under Lomé, namely stopping aid to countries where leaders are abusing it and filtering it off for their own uses. I do not know whether there are any built-in criteria which have to be achieved by various receiving countries to ensure the money is adding value rather than just satisfying us in the developed world that we are doing our bit to help the ACP countries. I did not see any mention of this issue in the briefing note.

The note states that Ireland will contribute €85.56 million to the EDF over the period 2000-07 which will count against our UN target. Are the Lomé commitments calculated as part of the 0.7%? I seem to recall that they were not calculated in that way. Is this something new? The note also states that Ireland's share is 0.62% of the total which is the same percentage as under previous Lomé Conventions. There have been job losses and a downturn in growth figures in recent months, but would there not have been an onus on us to increase our percentage contribution, even by a small amount, given our superior placing among the wealthy nations? It seems a little mean that we are continuing with the contribution made under previous Lomé Conventions.

Mr. J. O’Keeffe

I apologise for being late, but we were launching Fine Gael's Just Economics document which is recommended reading for the Minister.

Minister for Foreign Affairs (Mr. Cowen)

I understand the document outlines the principles as distinct from the policies.

Mr. J. O’Keeffe

The Minister would want to read the document. However, we will go back to the other agreement. I wish to raise one issue regarding the Cotonou Agreement. I remember spending a wet week in Fiji on work relating to the Lomé Convention. The Minister has shifted countries for the signing.

I am not sure if this meeting has discussed the fact that we are talking about a fund of €25 billion. A sum of €15 billion will arise under the ninth European development fund, but there is a carry over of €10 billion. I have always been concerned about the way in which the EU handles its financial resources. At one stage this amounted to an international scandal as the figure was up to about €20 billion. It may be coming down a little now. I generally approve of the agreement which is a welcome advance on earlier Lomé agreements, but is there any way we can maintain pressure to ensure that funding which is made available is spent? It is a great scandal to find funds locked up year after year so they are not released. We have heard all sorts of excuses, including that there were not enough staff, logistical arrangements and so on. However, what is the point of First World countries making substantial funding available nominally which is not disbursed to where it is needed? There are people on the ground who need this money. There is great poverty in many of these countries and there is no use locking moneys up in bank vaults in Brussels or in the exchequers of member states. That is my main concern having read the excellent briefing note on the agreement.

In other respects the agreement is a considerable advance. We are one of the small member states, but over the years we have consistently taken a lead in development co-operation matters. It is the one area in which we should make progress at European level.

Mr. Deasy

I wonder about the effectiveness of these programmes given that they are long-term and are spread over so many vastly populated countries. I do not have any suggestions as to how the problem will be solved. This matter is political as well as economic. The onus will be increasingly focused on the EU. The problems which will arise from the difficulties in these countries will create massive problems for us in years to come. There are billions of people in these countries in central and eastern Europe, north Africa, the Middle East and, in particular, the Far East. India, Pakistan and Indonesia have vast populations. If a fraction of these people move in the direction of the EU it will create enormous difficulties. I do not know if people give any thought to this issue. However, it is relevant in the context of 1,000 people arriving on the Sicilian coast yesterday in a ramshackle cargo ship. This creates problems for the Italians who received 25,000 people in the past number of months.

One can see the enormity of the problem. If there is an outflow of people from Afghanistan, Zimbabwe and other trouble spots, not to mention the areas which enjoy a certain amount of stability but which are very poor, there will be a real political difficulty as well as an economic problem. Are we competent to address the scale of the problem?

Will the Minister express his views on the potential difficulties which lie ahead? The movement of people from impoverished countries into what are regarded as opulent countries is increasing by the day. Therefore, the problems are increasing and multiplying by the day. The US is somewhat insulated, but has its own problems with Central and South America and Mexico. However, we are vulnerable to a vast movement from people who are virtually starving. It behoves us to give as much aid as we can to try to stem this movement of people and to give political support. However, that is very difficult. One would need to wisdom of Solomon to solve the problem. We are only tinkering with the problem. If one looks far enough ahead the thought is quite frightening.

Mr. Cowen

I thank you, Chairman, and members of the committee for arranging to consider these important international agreements. I take it that we are taking the Cotonou Agreement first.

The ACP-EC partnership agreement will give a new momentum to the long-standing relationship between the ACP states and the EU. This agreement represents a milestone in the international effort to promote sustainable development and to reduce poverty. Cotonou builds on over two decades of successful co-operation between Europe and the developing world through the Lomé Conventions. Ireland played an important role in the negotiation of those first two conventions which took place during our presidencies in 1975 and 1979.

The central objective of the Cotonou agreement is to reduce and eventually eradicate poverty while contributing to sustainable development and to the gradual integration of the ACP countries into the world economy. The agreement adopts an integrated approach towards achieving this aim consisting of political dialogue, economic development and substantial development aid. I wish to focus on these three key aspects of the agreement, beginning with the political dimension.

At the outset Lomé was primarily an economic partnership agreement. Over time, political co-operation assumed a more important role in the partnership. The emphasis on the political aspect reflected, especially in the post Cold War period, world-wide trends towards democratisation and increased political accountability. This development reaches a new stage in the Cotonou Agreement where political co-operation is at the very core of the EU-ACP relationship.

The central role of political co-operation in Cotonou is described in the preamble to the agreement. This acknowledges the crucial importance of a favourable political environment for long-term development and the responsibility of the ACP states to establish such an environment. The agreement proceeds to set out certain core principles which must be respected by each of the parties. These include three principles which the agreement calls "essential elements" and whose violation may provide grounds for the suspension of EU aid and trade co-operation with individual ACP countries. The essential elements are respect for human rights and fundamental freedoms, universally recognised democratic principles and respect for the rule of law.

However, suspension is a measure of last resort. This is because the political partnership between the EU and ACP will be underpinned by a reinforced political dialogue, which will include new areas such as peace-building and conflict prevention, the arms trade and migration. The political dialogue to be established with ACP countries under Cotonou is thus unprecedentedly wide in its scope. Ireland's view is that the political dialogue will help developing countries to draw up and achieve their own development strategies, introduce conflict prevention mechanisms and encourage good governance. It is an instrument of assistance and persuasion.

Another new feature of the political dialogue is that it is not limited to exchanges between governments but will also include representatives of civil society. Indeed, an important innovation in Cotonou generally is that it extends the concept of partnership to include new actors for development such as the private sector, the social and economic partners, including trade union organisations and a diverse range of civil society.

Good governance is set down in the agreement as a "fundamental element" of the partnership. A basic principle of the Union's approach during the negotiation of the agreement was that, unless the partner countries are prepared to establish governance structures that respect participation and democratic accountability, EU aid cannot promote development. As the key instrument in managing the relations between the two parties to the agreement, the political dialogue is intended to encourage progress on human rights, democracy and the rule of law.

The second part of the agreement concerns economic development. Economic and trade co-operation is a cornerstone of ACP-EU co-operation. Under the Lomé conventions, trade co-operation largely took the form of preferential tariffs. In future, EU-ACP economic co-operation will be based on a new, WTO-compatible approach which is aimed at the gradual integration of the ACP countries into the global trading system. The new economic partnership agreements provided for in the Cotonou Agreement will gradually evolve into free trade areas between the Union and the ACP states. This new trading regime should help ACP countries to attract international investment and to benefit from the opportunities offered by the global economy. The European Union has committed itself to providing appropriate support measures to ease the transition to the new trade co-operation arrangements.

The third part of the agreement relates to development assistance. The Internal Agreement on Community Aid establishes a ninth European development fund to deliver this assistance. The ninth European development fund, including balances left over from previous funds, will make a total of €25 billion of aid available for the ACPs. Ireland's share of this will be €85.56 million, which will come from the overseas development assistance budget. This aid will make a real difference to the lives of some of the poorest people in the world. Priority areas for support will be economic development, social and human development and regional integration and co-operation. Focal areas for economic development will include the private sector, macro-economic reforms, agriculture, trade promotion and tourism. The development of the social sectors is also a priority. Assistance will be targeted on such areas as education and training, health and the fight against HIV-AIDS, food security and nutrition, housing and access to clean water and adequate sanitation. Gender equality, environment and institutional development will be promoted in all development initiatives.

The Cotonou Agreement reforms the ACP-EU development finance co-operation system to make it more efficient, flexible and responsive. It will help optimise the use of resources and their impact on poverty reduction. The internal reforms under way within the European Commission will also contribute to improving the quality and efficiency of the delivery of financial assistance. Commissioners Patten and Nielson have been making headway in that whole area, decentralising the administration, cutting out a lot of bureaucracy and handing more responsibility to those who are out in the field to ensure the money which traditionally has been poorly absorbed, given the level of political commitment in the past, is properly absorbed. Much needed and long awaited reforms in that whole area are taking place.

The Cotonou agreement is the only one of its kind in the world. No other agreement is as global in its scope and integrates the three interdependent pillars of politics, trade and development. The EU is the largest donor and trade partner of the ACP states. The Cotonou agreement sends a strong signal of the European Union's continuing political, economic and financial commitment that the EU is the largest donor of development assistance in the world. It gives the signal to our partners in the developing world of our determination to help them in their struggle for economic and social development, peace and justice.

At the European Council in Barcelona, under the Spanish Presidency, we met for the first time candidate countries separately at ministerial level. This was very productive in respect of the sort of approach we need to take arising out of Doha, Montré and Johannesburg during this year. There is a very strong commitment among candidate countries that while engaging in pretty rapid transition and restructuring their economy to facilitate full membership of the Union, there is a very strong and sincere belief on their part that they will play their role in line with their resources to make sure the enlarged European Union format will be in place soon and that the commitment to this whole area as represented by the Cotonou Agreement will be a continuing and permanent feature of our relationship with these countries.

The point to be underlined is that while development assistance is an important component in trying to integrate these developing economies into a global trading system, the question of market access is crucial. The WTO format provides an opportunity and challenge to the European Union to ensure that apart from financial assistance, the ability to allow these developing countries, if they get good governance systems in place which is part of the development aid programme now in place, will open up EU markets to these countries. This will allow them to develop their economies from a very low base at the moment. That is a more important signal by the developed world to the developing world in terms of the sincerity of our approach than just simply increasing volumes which are out of date. In the past this has not reduced the sense of dependency these people are under because of the way an unjust system has benefited the developed world.

The G8 countries are also taking an initiative in regard to how they will assist developing countries in so far as their agenda allows, which I welcome. What emerged from Barcelona is that development assistance, market access and making sure agreements such as Cotonou are implemented are fundamental to peace and security in the world. We have seen in the past the need for the fight against terrorism and that a military phase must be accompanied by a commitment to deal with the real causes of conflict. Many of these problems are the result of a post-colonisation era which was disastrous. This is now happening in Africa in the post-independence period, which is equally disastrous. There is a need to integrate global trading systems and insist on proper governance procedures and respect for fundamental freedom and human rights so that people will be able to take up the opportunity this represents for them. This agreement is sui generis in the world. It shows the European Union's commitment and continues a tradition with which Irish Presidencies have been very closely associated, for which there is much respect and which has enhanced our own reputation, both within the Union and in wider world fora on these issues.

Mrs. Owen

I agree with the Minister on the issue of helping countries where the level of development is still very low. It is frightening to think how many billions of dollars have gone into these countries following the two Lomé conventions and is difficult to see what progress some of these countries have made, so trade is a crucial element. However, if the existing non-reciprocal preferential tariffs into EU markets are now incompatible and the new trading arrangements do not enter into force until 2008, will there be a phasing out of one system and a phasing in of the other? Controversy arose at one time because Namibia had a quota of beef into the European market and was determined to retain it while the EU constantly chipped away at it. Will one system stop and six or seven years elapse before the other system comes into play? That would certainly be very damaging.

Mr. Cowen

What is involved here is a commitment. The agreement states that new trade arrangements should enter into force by 2008. It has been suggested that this is too vague an aspiration but we do not have an agreement on that. We have a commitment to reach agreement in relation to that matter.

Mrs. Owen

In the meantime do the other agreements die?

Mr. Cowen

No, in the meantime we continue to work under the present regime. When one asks will the ACPs be subjected to free trade areas with the European Union immediately, the answer is no. While the parties have agreed to a new WTO compatible trade regime, it is important to remember that this is a gradual process. It does not mean the poorer countries will suddenly and immediately be exposed to full competition from the European Union. There is no question of coercion. Those states which are not in a position or do not wish to enter a regional economic partnership agreement will not be forced to do so. The Union is committed to studying all possible ways to ensure that any ACP state not entering an economic partnership agreement will continue to enjoy the same access to the EU market as at present. The European Union has also agreed to a lengthy transition period for the negotiation of these new economic partnership agreements which will enter into force on 1 January 2008, at the latest. This period will help the ACP countries to prepare for these agreements by building public and private sector capacities and strengthening regional organisations. Until such time as these agreements are finalised, interim measures will apply. These interim measures require a WTO waiver which the EU and ACPs applied for jointly. The waiver was finalised at the ministerial meeting of the WTO in Doha. In addition, the 39 ACP least developed countries benefit from the EU's everything but arms initiative, which provides quota and tariff-free access to the European Union market for all goods except arms.

Mr. J. O’Keeffe

Is that without reciprocal entry for the EU into their countries?

Mr. Cowen

Yes. We have given them preferential treatment. The anything but arms initiative has been welcomed by them.

Committee members also asked about tied aid. All aid under the Cotonou programme will be grant aid, that is, untied. With regard to aid going to governments which might abuse it, the aid is granted on the basis of a political dialogue, to which I referred, which emphasises the need for better governance, respect for human rights etcetera. Suspension is available but is seen as a sanction of last resort.

Under the Lomé conventions the money we give counts towards our ODA level so that will not change. Deputy O'Keeffe asked about expenditure on the EU aid programme. We agreed there is a need to improve efficiencies in this area. There has been progress and by January 2001, 51% of the pre-1995 backlog of old commitments had been cleared. There has been much effort by Commissioners Patten and Nielson, working hand in hand to deal with that issue. There is progress and there is more work to be done.

Mr. J. O’Keeffe

That somewhat reassures us, but 51% of pre-1995 is not much to write home about.

Mr. Cowen

I agree. The point is that there are Commissioners who are doing something about it. They require and deserve our support because many of their predecessors did not do much about it.

Mr. J. O’Keeffe

Yes. We must keep up the pressure.

Mr. Deasy

Let us get down to the nuts and bolts of the problem. Fine words are all very well. The EU is self-sufficient in many of the products the ACP countries have to offer. We are self-sufficient in sugar and the market for tropical fruits is limited. What products do they have which can be sold gainfully into the European Union?

Chairman

Beef is one.

Mr. Deasy

Like sugar, we are self-sufficient in beef. The quotas given to South American countries like Argentina and to Namibia are purely nominal. The quantities involved are not realistic. How much of the money given to these countries under the Lomé Conventions was gainfully spent?

Mrs. Owen

White elephants.

Mr. Deasy

How much went into the black holes of corruption and maladministration?

I am not here to be critical but I would like to see a better definition of what has happened and what can happen in the future. It is not realistic to think we can have two-way trade between the European Union and the ACP countries on a par. We will always have the consumer goods and they will always have the goods which are in over-supply and for which there is not much demand.

Mr. Cowen

Deputy Deasy makes a point with which we can all identify and agree. His premise is well taken. The access to and opening up of markets under the WTO process will be a measure of the extent to which we are prepared to subsume our own interests in the interest of bringing a greater sense of opportunity to these countries, which are at a totally different level of economic activity from us. They have a huge way to come.

Because of AIDS, particularly in sub-Saharan Africa, there is a huge security issue. How does one promote investment in an area where the life expectancy of the labour force is tumbling down, there is social dislocation as a result of the number of children left orphaned and millions of people who are part of the productive population are debilitated and suffering from what is often a fatal disease? Very few countries - Uganda being one - have provided AIDS programmes which have succeeded in reducing the number of sufferers rather than allowing a pandemic. In the face of this pessimistic scenario, President Clinton's Dimbleby lecture presented a strategy which might work and which keeps alive my faith in politics to address these serious global problems. He gave an outstanding analysis of what is possible, what resources can be made available and what the challenges are. It would be instructive for anyone who is interested in this question to read a copy of that lecture. He outlined a strong strategic approach which showed what could happen if money spent on rising defence budgets was devoted to more productive purposes. It is not beyond our means to close this widening gap.

The wonders of science and bio-technology are opening areas for us to use scientific knowledge for a more productive and humanitarian purpose. They can change what people fatalistically regard as a status quo that will only get worse. If global governance mechanisms are not capable of mustering the collective political will needed to divert resources and make things happen in these countries then our security is affected. Migration and other issues are a phenomenon of underdevelopment and lack of economic opportunity causing people to seek a better life elsewhere. The phenomenon is not particular to this century.

The global village we live in and the ability of people to move is greater now than before and unless we recognise that we cannot build a fortress Europe, or a fortress developed world against the developing world, and unless we come up with real answers to the problems, things will get worse. Unfortunately people are not yet politically conscious that this is the sort of global perspective they must acquire if they want to deal with the problems. It is our duty, through this committee and otherwise, to inform our electorate that these are issues about which they should be concerned.

The anti-globalisation movement seeks to catch the minds and conscience of young people today. Globalisation can and will bring benefits to the developing world but we must deal with its benign aspects and make sure that technology transfer, resourcing and the opening-up of markets take place. We must also deal with the more malign aspects and ameliorate them for the sake of those who are most vulnerable. The anti-globalisation view is that a freer and less complicated world trading system will not bring benefits to the developing world. Empirical evidence economically is totally against that position.

The idea that globalisation can be stopped is a myth. Globalisation will happen and cannot be stopped. It is part of the nature of our economic development and technology, and impacts on our lives in this 21st century world. All we can do is to manage it and integrate the developing countries. We must try to develop better governance systems and ensure that their primary products get access. We must also explain to our own electorate the political cost involved, such as the reformed Common Agricultural Policy. To what extent are we in a position in an enlarging Europe to allow that to happen?

Irish farmers are hesitant regarding the enlargement of the European Union and how it affects their interests. Unless we facilitate enlargement its biggest beneficiary will be Germany. The German budget was reduced since Berlin from 33% of the total budget to 25% and is still dropping. Only if we facilitate enlargement will we be able to say to Germany that we can continue with further reforms of the policy providing the basic principle of the policy is maintained in an enlarged Europe. That is on the basis of the greater economic opportunities that will open up to Germany if enlargement takes place.

If we vote "No" and prevent enlargement, we will see the absence of the political goodwill of countries like Germany to fund the Common Agricultural Policy. That will impact on us. We must recognise that there is a changing scenario. We must manage that change and shape and influence policy on that particular matter. We want to fit into the wider global trading system where many developing countries are involved with primary products. They need access and to be part of the system so that we can have a more secure and just world.

In the private sector we may promote trade capacity and help attract investment. An important innovation in the Cotonou Agreement which has a specific product sector focus is the investment facility. It replaces the Lomé risk capital and interest rate subsidy facilities. The facility will focus on areas that cannot be financed sufficiently from private capital or by local financial institutions. It is intended to stimulate regional and international investment, strengthen the capacity of local financial institutions, help the development of the ACP private sector by financing projects and/or commercially viable enterprises and companies, and provide risk capital and loans on concessional terms. The investment facility will disburse €2.2 billion in the period 2000-07. In addition the EIB will make €1.7 billion available from its own resources. These are significant sums of money which should help build private sector capacities and support regional integration.

As Deputy Deasy said, we are not talking about a level playing pitch in terms of economic capacity between the European Union and the ACP countries so we may wonder how this can ever work. What has to happen and what is a growing phenomenon is that increasingly we are seeing regional trade organisations being formed by these countries, for example Mercosur in South America or the South Pacific arrangements. While in the UN, I met many people on whose briefs were mentioned all the regional organisations of which they were members. The recognition that within their own regional area they can increase bilateral trade with their neighbours, the direct assistance that we give them, better governance mechanisms and the opening up of markets by the WTO are building blocks towards further integration into the global economy. This is the way we can hopefully give a chance to many of these countries, particularly the least developed countries which are in a terrible state.

There is also the question of the wiping out of debt. There have been positive developments on that issue in recent years and we are continually trying to improve the capacity of these countries to get out from under the heavy burden of indebtedness. Unless governance systems also change we will see a repeat of the failures of the past. That is why it is central in this agreement that we make progress in those areas. Otherwise, despite our best efforts, these countries will not be able to help themselves because of the despots ruling over them.

Chairman

The Cotonou Agreement will not come into force until it is ratified by the 15 member states which will presumably be towards the end of this year but the full provisions do not come into force until 2007 or 2008. Under the existing Lomé agreement, what steps does the EU propose to take in regard to the essential elements of the political dialogue, respect for human rights and fundamental freedoms, universally recognised democratic principles and respect for the rule of law? At present, none of those principles operate in Zimbabwe, which is a beneficiary of Lomé. Fiji is another country where they are not in operation and the same applies to several Pacific islands.

Many African countries are extraordinarily corrupt but the one flagrantly defying all the fundamental principles and essential elements of the agreements is Zimbabwe. The EU seems to be almost as reluctant as the Commonwealth to deal with the issue. It does not make much difference what the Commonwealth thinks because it does not mean much to anyone but the EU could make a difference. We are talking about large sums of money and access to markets. Does the EU propose to do anything about Zimbabwe now?

Mr. Cowen

The EU approach to this matter cannot be regarded as similar to the shortcomings in the approach taken by the Commonwealth. We have taken steps specifically against the members of the regime in Zimbabwe by freezing their assets and so on. In relation to the wider human rights criteria, article 96 of the Cotonou agreement provides a mechanism for the suspension of development assistance in cases where there is a breach of the obligations to respect human rights, democratic principles and the rule of law. In the case of Zimbabwe, aid was suspended on 18 February 2002 and it is also suspended in the case of Haiti. A suspension of aid under article 96 is a measure of last resort but it is in place in relation to Zimbabwe. The extensive and deep political dialogue provided for under Cotonou is intended to encourage compliance with the human rights and democratic provisions of the agreement. The political dialogue has been successful in achieving this in a number of cases, including, for example, Fiji, where aid has been resumed following improvement in the political situation there.

Ireland is winding down its bilateral aid programmes in Zimbabwe because it is difficult to see how we should proceed under our own particular criteria. The situation in Zimbabwe continues to be monitored very closely. An initiative is taking place at present which is unlikely to succeed because of Tsangarai's refusal to enter any discussions with the Mugabe regime regarding a possible government of national unity. Some African states have been seeking to put this idea forward as a means of recognising rather than resolving the illegitimacy of the outcome of the recent elections in Zimbabwe.

There is a wider issue of whether one disengages with any country where there is no sign of an advanced democracy. A political judgment must be made. Disengagement by the international community as in the case of Somalia means that a country becomes a haven for total criminality and abuse of human rights and a worse situation for the poor and vulnerable people whom we are trying to help. We must make the distinction between governments and people in the question of development aid programmes.

Under the Cotonou Agreement there is a move away from the Lomé Convention restriction of government to government assistance with all the opportunities for corruption which this caused in certain cases. Resources did not find their way to the people for which they were intended. We are now developing mechanisms which are wider than government to government arrangements. We are using the NGO sector based on its track record of credibility and sincerity of purpose. We resource the NGOs and they do the work on the ground such as providing the basic facilities of sanitation, clean water and irrigation. They provide basic survival skills to local communities to help them deal with difficult political and geographical problems. We are learning lessons about the wider issues, and political dialogue on the basis of improvement is the best way to deal with these issues. The EU acted quickly in the light of flagrant abuse and suspended agreements with Zimbabwe under this heading on 18 February.

Mr. Deasy

Will the Minister ask the EU to draw up a league table of countries which have performed well and have used the money provided under the Lomé conventions in a proper manner? This would highlight the countries where the money has been misappropriated. Credit should be given where it is due and those who have not performed well should be named and shamed.

Mr. Cowen

The EU and Commissioners Patten and Neilson monitor how this money is being spent as does Ireland in relation to the bilateral programmes. We monitor the bilateral programmes and we make decisions on how the programmes should be applied. I will ask the departmental division concerned to use whatever data is available from our programmes and from EU Commission documents to provide a detailed analysis on a country by country basis to the committee.

Chairman

That concludes the discussion on the Cotonou Agreement. I propose that the committee inform the Dáil that it has considered it and that there is no objection to its ratification. Is that agreed? Agreed.

Mr. Cowen

Four countries have already ratified the agreement; Ireland will be the fifth.

Chairman

I believe that 39 of the ACP countries have ratified the agreement. Is it necessary that all the countries must ratify it in order to give effect to it?

Mr. Cowen

It must be ratified by 51 countries before it can be brought into effect, that is, two thirds of the total number.