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Friday, 23 June, 2000, 16:03 GMT 17:03 UK
Trading with the poor
Mali, West Africa
After decades of aid, poverty remains widespread
The European Union signed a new trade and aid agreement in Cotonou, Benin, with 71 African, Caribbean and Pacific countries, mostly its former colonies. BBC News Online looks at the history of the biggest multilateral aid programme to the Third World, once known as the Lome Convention..

The Lome Convention was a product of the decolonisation of Africa.

The former colonial powers - mainly Britain, France, and Belgium - wanted to secure their relationship with the newly independent countries.

At the same time they wanted to ensure that trade between those countries and the EU continued in existing patterns.

France had already signed an aid agreement with its African colonies in 1957 in Yaounde, Cameroon.
EU Aid History here
1957: Younde Convention
1975-81 Lome Convention
Lome II: 1981-85
Lome III: 1986-90
Lome IV: 1990-99
Cotonou Agreement: 2000-2007
When Lome was first signed in 1975, the agreement was revolutionary in linking aid with trade concessions.

It was the time of radical developing country initiatives on trade, with talk of a new international economic order and commodity agreements to raise the prices of raw materials.

The EU offered preferential access for most of the raw materials and many manufactured goods from its former colonies, as well as billions of euros in aid.

The aid programme included two stablisation funds, one for agricultural exports and another (set up later) for mineral exports.

Aid has not reached the children
Aid has not reached the children
The agreement between 71 African, Caribbean and Pacific countries, and the EU has been renewed four times since it was first signed in the tiny African state of Togo - but despite increases in aid each time, the economic situation of most of the ACP countries has continued to deteriorate.

A study conducted by the EU concluded that the increase in exports from the ACP countries over the period 1988-1997 was "negligible" and that most countries failed to diversify or develop their manufactured exports.

Other developing countries outside the agreement nearly doubled their exports in the same period.

It seems that the trade preferences had encouraged countries to continue with the same economic patterns, and made them reluctant to reform, seek new markets or find new, more lucrative products to export.

New trade rules

Under the Lome convention, the EU negotiated a number of special agreements giving preferential treatment to particular commodities coming from former colonies.

Britain negotiated a deal to protect sugar imports from its former Caribbean colonies.

And in 1993 the EU introduced a special regime to allow the preferential import of bananas from former French and British colonies in the Carribean, giving them 30% of the market.

That was challenged by the United States in the World Trade Organisation, which ruled the preferences illegal. The EU is still negotiating on how to dismantle the bananas preferences, and has been the subject of US trade sanctions.

But the WTO judgement in the banana dispute has been a writing on the wall for the whole system of preferential trade.

It will now be phased out over 15 years in the new agreement.

Instead, a series of regional free trade agreements will be forged with the EU, which will open up ACP countries to European investment.

"This is definitely not a generous deal," said Phil Bloomer of Oxfam. "It is the minimum necessary for ACP countries to walk away from the table with dignity."

ACP countries will also face increased competition for their clothing exports, as restrictions which limit the import of textiles and clothing from all developing countries are due to be phased out by 2005 under an agreement reached in the Uruguary round of world trade negotiations.

New obligations

The problem for most of the poor countries in the Lome Convention has been that their economic weakness has given them little clout in the world trade negotiations that have reshaped the global economic landscape.

Now the EU wants the ACP countries to cooperate more closely in trade talks, which are increasingly challenging the hegemony of the United States in trade matters.

Brussels also demands more cooperation from the ACP countries on cracking down on illegal immigration.

And the EU wants tough new changes in the government of developing countries, to eliminate corruption and political instability.

Ironcially, the signing of the new accord was to be held in Fiji. Concern about the coup on the island led to moving the signing ceremony to the West African state of Benin.

Thus, the new trade deal will not be known as the Suva, but the Cotonou Agreement.

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See also:

18 May 99 | The Economy
Bananas split trading giants
23 Jun 00 | Africa
New trade deal replaces 'Lome'
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