Memorandum from Dr Chris Stevens and Mr
Keith Bezanson, Institute of Development Studies
THE FUTURE OF THE LOMÉ CONVENTION
THE EFFECTIVENESS
OF LOMÉ
Trade
When it was signed, Lomé I was hailed
as an innovative form of co-operation that would herald a New
International Economic Order, yet the subsequent economic performance
of the ACP has been dismal. Has it failed? This is an impossible
question to answer, since the ACP's economic performance without
Lomé might have been even worse. But it is important to
identify what has gone wrong.
The marginalisation of the ACP
The trend in EU-ACP trade illustrates starkly
both the extent of the decline and its implications for a relationship
billed when it was negotiated as a "partnership" of
mutual interest. The reasons for this marginalisation are such
that there is unlikely to be an early return to the status
quo ante.
A reflection of this changed economic interest
is to be found in data on EU import shares (Figure 2). In 1976,
the ACP were the second most important source of EU imports from
the five developing country regions covered in Figure 2, with
over six per cent of the total. They were second only to the Mediterranean
and well above Latin America, East and South-East Asia and South
Asia. In 1995, by contrast, the ACP were the second least
important source of EU imports from these country groups, and
the only one to witness a declining share.
Not only had imports from East and South-East
Asia soared ahead (as might be expected), but the ACP had also
lost position to Latin America, seen their share decline relative
to the Mediterranean, and found South Asia emerging as a much
closer competitor.
A similar picture is painted by the share of
EU exports to these five regions (Figure 3). Once again, the ACP
have slipped over the period 1976-95 from the second most important
to the second least important destination of EU exports. But their
share has fallen more sharply so that by 1995 it was less than
half what it had been only a quarter of a century before.
Interestingly, one piece of conventional wisdom
that is not supported by these data is that there has been
an inverse relationship between preferences and trade performance.
It is argued that because the ACP, with their substantial preferences,
have lost market share whilst the East Asian and ASEAN states,
with modest preferences, have an increased share, the preferences
may have had a malign influence. There may be something to such
an argument; the data in Figures 2 and 3 are too limited to undermine
it. But it requires a broader perspective if it is to be supported.
The ACP are not the only preferred group, and East Asia/ASEAN
are not the only less preferred group. If the comparison is between
the Mediterranean (high preferences) and South Asia/Latin America
(low preferences) it is not so clear that there is any inverse
relationship. The methodological problem with an analysis concentrating
on the ACP and East Asia/ASEAN is in disentangling market access
from the domestic supply position, for which the two groups are
almost polar opposites.
The poor performance of the ACP is emphasised
in Figures 4 and 5, which provide information on the current value
of EU imports and exports from all developing countries and from
the ACP over the period 1976 to 1995. Whereas there has been a
strong growth in the current value of EU trade with developing
countries as a whole, in the case of the ACP the value of EU imports
and, especially, exports has barely increased even in current
terms. In real terms, there has been a substantial fall.
ACP economic decline
Part of the reason for these dramatic changes
is economic mismanagement on the part of some ACP governments,
but it is not this aspect of the problem that is the focus here.
If the problems were just the result of errors in economic policy
then improved economic management might alter fundamentally the
direction of change.
The deep-seated element is that the nature of
the European economy has changed (and will continue to change)
in ways that affect its relative demand for the types of goods
that the ACP are currently able to produce. Such changes are manifest
in other OECD countries as well with the result that the foreign
exchange earnings of ACP states are falling and, hence, so is
their capacity to import.
The relative importance of merchandise trade
in European growth is falling (as, for example, trade in services
increases its share) and, within merchandised trade, there has
been a decline in the relative importance of primary products
and an increase in the share of manufacturers. The decline in
the value of primary trade reflects and, in turn, influences the
drastic fall in world prices for most of the ACP's primary exports
over the last decade and a half.
The declining relative importance of primary
products versus manufacturers in EU imports is illustrated in
Figure 6, which shows for five years during the period 1976-95
the relative share in EU non-oil imports of primary products and
manufactures. Whereas there was a roughly 50:50 split between
the two at the time Lomé I was signed, by 1995 manufactures
accounted for two-thirds, and primaries for only one-third of
the total.
It will comes as no surprise to discover that
the ACP are more heavily dependent on primary products in their
exports to the EU than are other developing countries. Whereas
primaries have fallen from over 60 per cent to under 40 per cent
of EU imports from all developing countries over the period 1976-95
(Figure 7), in the case of the ACP they have declined only marginally
and are still around two-thirds. The most dramatic decline has
been witnessed by ASEAN, but even the Mediterranean has seen a
substantial change in the commodity composition of its exports
to the EU over the Lomé period.
Aid
In short, the world has changed dramatically
since Lomé I was signed, but the ACP have failed to change
with it. In consequence, a relationship that could be described
in 1975, with only a certain degree of hyperbole, as a "partnership
of equals" is now quite clearly very far from such an arrangement.
It is a partnership of increasingly "unequals". Yet,
the institutional framework for Lomé reflects its original
ethos of equality. The loss of any semblance of equality may explain
some of the stresses that are occurring within this framework,
particularly in respect of aid.
There has long been criticism of the quality
of EU-level aid administration, but it has increased in strength
recently less because of a deterioration in EU competence than
because of sharpening squeeze on funds. The irony is that the
criticism tends to focus on Lomé aid even though this is
in general more effectively administered than is aid financed
from the EU budget. This oversight (which stems probably from
a lack of knowledge about budget aid and from a failure to appreciate
its current importance) is unfortunate since the Member States
have more effective influence over the Commission in respect of
the budget than of the EDF. It is important that justified criticisms
of Lomé do not translate into actions that reduce the share
of EU-level aid that is relatively better administered
in favour of the part that is relatively worse administered.
Until now, the Commission has been a relatively
modest channel for European aid spending. Figure 8 illustrates
this, showing that throughout the period 1970-94 Commission spending
was much smaller than total aid spending by the Member States,
and that it tended to follow the same upward or downward trend
as total European aid. The reason for this is that the Member
States are the ultimate source of all European aid and that they
have various possible spending channels open to them.
At the 1995 Cannes Summit the EU took decisions
foreshadowed at the 1992 Edinburgh Council. Their effect is to
alter the proportions of the aid given by the European Member
States that are channelled through Union, multilateral and bilateral
institutions, as well as the share of aid going to Eastern Europe
and the former Soviet Union, the Mediterranean and sub-Saharan
Africa.
The twin stimuli for the decisions were:
— the need to allocate the totals agreed
for external spending under the Delors II financing package in
1992;
— and the requirement to agree the
aid allocation under the flagship of EU Development Co-operation,
the Lomé Convention.
At the December 1992 Edinburgh Council meeting
it was agreed that the EU's external spending could rise annually
by up to six per cent in real terms for the rest of the decade.
The principal candidates for such external expenditure are the
economies in transition and some developing countries, principally
those in Asia, Latin America and North Africa.
Developing countries in sub-Saharan Africa,
the Caribbean and the Pacific (ACP) are excluded as a result of
one of the historical quirks associated with the emergence of
Community-level policies towards developing countries. This is
because, as signatories of the Lomé Convention, their aid
is charged not to the budget but to the extra-budgetary EDF.
Although the bulk of Union-level financial aid
used to be channelled through the Lomé Convention, this
is no longer the case (Figure 9). In the mid-1980s disbursements
of financial aid from the budget were at only half the level of
the EDF; by the early 1990s they were at almost the same level.
As the budgetary aid programme has grown, the extra-budgetary
nature of the EDF has come increasingly to appear an anomaly.
And in Cannes it proved to be a dangerous anomaly for the ACP:
the EU has used the opportunity created by the division to, virtually,
freeze the level of aid to the ACP and, so, offset to a certain
extent the Edinburgh commitment.
The Edinburgh Summit, a compromise on Delors
II acceptable to all, was a time-bomb for the Member States' aid
programmes. As is evident from Figure 8, the European states have
already begun to cut their total aid after several years of increase.
This process is set to continue as budgetary pressures bite. By
agreeing substantial annual increases in the Union budget for
an area of spending that is stagnant at national level, at best,
it determined that there would be a change in the balance between
competing channels for aid disbursement. When the Union institutions
spend aid, the charge is distributed among the Member States according
to their agreed share of the EU budget and, in turn, debited to
their national aid allocations.
An increase in Union spending thus reduces the
amounts available for disbursement through competing channels,
including the national bilateral aid programmes and multilateral
organs such as the World Bank. The severity of the squeeze depends
upon the proportion of a donor's total aid that is absorbed by
the Commission-administered programmes, and this varies widely
between the Member States. Over 1991-4, for example, France's
contribution to EU spending absorbed 11 per cent of its total
aid; for Germany the proportion was 18 per cent; and for UK it
was 23 per cent (see Figure 10). The differences are due to the
differing sizes of the total aid budgets of each of the states.
Competition between bilateral and Union-level
aid is already a particularly severe problem for the UK because
it has tried to continue a substantial global bilateral programme
with a total aid budget that has been stagnant in real terms whilst
Union spending has increased. If the Delors ceilings were to be
honoured in full, without any increase in the UK aid budget, Britain's
contribution to Union-level and other multilateral aid could absorb
almost two-thirds of UK aid by the end of the century. This would
result in a substantial change in the character of British bilateral
aid, turning it from a global player to a much more limited donor,
probably concentrating on a small number of recipients.
Similar, but less acute, strains are also being
felt by other Members States. In consequence, an increasing number
(led by Germany and the Netherlands) are questioning both the
effectiveness of Union-level aid and their national share of the
Union budget.
Relative effectiveness of aid administration
The growing realisation, among policy-makers,
administrators and lobbyists, that there is a trade-off between
national—and Union-level aid has resulted in an increased
tempo of criticism of the activities of the European Commission
as an aid donor. In the immediate aftermath of Maastrict, the
Commission had taken the initiative to propose that the objective
of greater co-ordination mentioned in Article 130x could be achieved
by the national administrations ceding powers to the Union level.
Such moves were resisted by the Member States, but they have now
begun to suggest various forms of work sharing in an effort to
protect bilateral programmes.
A common theme of proposals for change is that
there are some types of development co-operation that are more
suited to Union-level action and some that are better done at
a national level. A related theme is that the Union budget could
finance some of the national-level activity.
Typical of the suggested Union-level actions
is aid in support of structural adjustment. The EU Commission
is the only European donor to be directly involved in an open
way in aid for structural adjustment and, given the nature of
the exercise, it is more useful to have a small number of substantial
donors rather than a large number of smaller ones. This is because
aid for balance-of-payments support is typically linked to policy
conditionality, with the recipient agreeing to undertake various
economic and political reforms which the donors claim will help
to alleviate the problems that give rise to the need for structural
adjustment. The nature of these policy conditions is an area of
some considerable controversy, with the World Bank (the most influential
structural adjustment donor) being the target of much criticism
from some quarters for requiring inappropriate policy changes.
Whatever the rights or wrongs of this debate, one clear feature
of the situation is that a recipient state cannot follow two or
more conflicting sets of policy conditions. Hence, a proliferation
of donors, each with their own requirements, is likely to be positively
damaging to the process of reform.
Typical of the areas of activity that are suggested
for national actions are traditional projects in support of the
productive or social sectors of the recipient country. It has
been pointed out that many of the European donors have built up
a substantial body of expertise in areas such as agricultural
development, health sector reform or educational policy and planning.
The European Commission cannot match the combined expertise of
the Member States, it is argued, and so the effectiveness of aid
will be enhanced if it is administered at the national level.
A corollary of this argument is that if the Commission's budget
exceeds its capacity to implement efficiently, while some Member
States have spare administrative capacity, it would make sense
for the Commission to sub-contract the implementation of project
aid to national public agencies (in exactly the same way in which
it currently sub-contracts some aid implementation to private
NGOs).
WTO COMPATIBILITY
One of the catalysts for change to Lomé
is the serious concern that it is incompatible with the WTO. This
section examines the source of this concern, which is closely
linked to a dispute over EU banana trade policy.
To a certain extent the rules administered by
the WTO are more stringent than the old regime under the General
Agreement on Tariffs and Trade (GATT), but this is not the main
source of change. Rather, it is a change of attitudes: exceptions
from MFN treatment are now viewed in a more sceptical light than
in times past. In the opinion of the Union, the preferential access
provided to ACP exports was justified under Article XXIV of the
GATT read in the light of Part IV and, in particular, Article
XXXVI paragraph 8 under which developed countries "do not
expect reciprocity" for preferences given in trade negotiations
to less developed countries.
This view was challenged by a GATT panel established
following a complaint over the new banana regime (see Annex B).
In response the Union sought and obtained in 1994 a waiver for
the Lomé Convention from the MFN rule under Article XXV.
This removed the immediate questions about the validity of the
Lomé Convention under the GATT. But while the waiver, since
renewed by the WTO, has provided some respite, the problem is
unlikely to go away. Moreover, many other elements of the EU's
pyramid of privilege might be vulnerable were they to be challenged
in the WTO.
The incident has highlighted the less tolerant
attitude of the international community towards trade regimes
that can be portrayed as being discriminatory, and the issue of
"WTO compatibility" was to the fore in the EU's policy
making over an appropriate trade regime with the new South Africa.
It is also behind the EU's proposals for reform to Lomé
and the renegotiation of the Mediterranean accords as free trade
agreements (FTAs).
The task is to transform the EU's accords so
that:
— they are compatible with Article
XXIV;
— or they are compatible with the 1979
Enabling Clause relating to Part IV;
— or, failing that, they command sufficient
support for continuing the waiver under Article XXV.
Justification as an FTA
The formal procedure for obtaining WTO approval
for an FTA is fairly straightforward. Two salient requirements
of Article XXIV are that the FTA must be completed "within
a reasonable length of time" (newly defined in the WTO as
a period that "should exceed ten years only in exceptional
cases") and that "duties and other restrictive regulations
of commerce. . . are eliminated on substantially all the trade
between the constituent territories" [GATT 1947: Part 3,
Article XXIV, paragraphs 5(c) and 8(b); WTO 1995:32]. The parties
to the agreement should notify the WTO following signature.
Under the GATT, notification was generally followed
by the establishment of a working group (membership of which was
open to any country that felt it to be in their interests to belong)
which produced a report that should then be adopted by consensus
by the Council. This practice is set to continue under the WTO.
The majority of these cases notified to the GATT were interim
agreements, some of the provisions of which came into effect before
the relevant working group had completed its deliberations.
It would appear, therefore, that to be accepted
by the WTO an FTA requires universal approval (because of the
practice of achieving consensus). However, during the time of
the GATT this was rarely achieved. As of January 1995, a total
of 98 agreements had been notified under Article XXIV, but only
six (of which only two are still operative) had been explicitly
acknowledged as being in conformity with Article XXIV. In other
words, the formal requirements for legitimisation of an FTA are
high, but in the past a failure to achieve these has not proved
to be a barrier to those countries wishing to create one.
The problem with this approach is that it is
infeasible to expect all of the ACP to enter into a genuine FTA
with the EU. The infeasibility is on both sides. The very limited
approach of the EU towards South Africa illustrates that the Union
does not currently possess the political will to agree substantial
trade liberalisation in key product areas, notably the Common
Agricultural Policy (CAP). On the ACP side, there are some states
that could sustain their part of an FTA, but with the EU offering
little or nothing in terms of improved access as a quid pro
quo it is unlikely that they will find it an attractive proposition.
The Commission itself has cast doubt on the feasibility of a single
FTA linking the EU with all ACP (see below).
Justification as a development policy instrument
The main problem with any EU attempt to justify
any of its preferential accords other than the standard GSP in
relation to the 1979 Enabling Clause is that they do not cover
all developing countries. In this respect, therefore, Lomé
is no different from the bilateral accords that have not yet been
transformed into FTAs and, arguably, the Super GSP, given that
it is not limited to a recognised group of especially poor countries.
It would seem impossible to overcome this limitation, unless either
the liberality of the Lomé preferences were extended to
all countries or they were reduced to the level currently available
under the GSP, or something in between. The first seems very unlikely,
since the EU has given no indication of a political willingness
to extend deep preferences to the more competitive, larger developing
countries. Any generalisation would tend, therefore, to be downward.
This would not only erode the ACP's margin of preference (and
would therefore be opposed by those countries), but would also
effectively increase the EU's absolute level of protection.
Justification through a waiver
The third option is the one adopted by the EU
in 1994 to seek a waiver from the MFN rule under Article XXV.
A majority of the 28 waivers granted since the inception of GATT
have involved preferences granted by developed to developing countries
on a non-reciprocal basis. The Marrakech Agreement has made more
onerous the rules for approving a waiver than was the case under
GATT (when the Lomé waiver was agreed). The level of support
required for approval of a waiver has been increased from a two-third
majority under the GATT to a 75 per cent majority under the WTO.
This is still less onerous than the consensus required for an
Article XXIV approval of an FTA but, as explained above, this
requirement has been honoured mainly in the breach. In other words,
it appears arithmetically more easy to obtain a Lomé-style
waiver than an FTA approval, but the consequences of a failure
to achieve positive support for an FTA appear to be less damaging
to the continued existence of a trade policy than does the failure
to obtain a waiver.
THE GREEN
PAPER OPTIONS
ON TRADE
In its Green Paper [EU, 1996] the Commission
floated four possibilities for change to the trade regime after
Lomé IV, together with a couple of pick-and-mix options,
for each of which it considered quite openly some of the disadvantages
as well as the attractions. The four are:
— maintenance of the status quo;
— integration of Lomé into the
GSP;
— what is called "uniform reciprocity";
— and differential reciprocity.
The four key attractions of the status quo
identified in the Green Paper are that it is a known quantity,
that it maintains contractuality, that it keeps the ACP at the
apex of the pyramid of privilege, and that it provides the best
chance for maintaining preferences on sensitive products falling
under the CAP.
In the Commission's view, there are three problems
with a continuation of the status quo. The first is the
need to obtain WTO waivers on a recurring basis. A second, which
follows from this, is that the security of the Lomé Convention
will be reduced, with implications for both trade decisions and
the attractions of the ACP group for foreign direct investment.
Third, a continuation of the status quo would mean a continuation
of the barriers introduced between geographical neighbours (such
as the Caribbean and Central America) and between ACP states and
other industrialised countries.
In the case of integration into the GSP, the
Commission sees two advantages. One is that it would harmonise
EU policy by bringing the two most extensive of its non-multilateral
accords under the same umbrella. It would also remove discrimination
between developing countries.
Against this, there are three clear disadvantages.
The first is that it would permanently dismantle the Lomé
package approach of aid and trade, and would fundamentally weaken
the "partnership" principle both between the EU and
the ACP, and within the ACP group. Second, it would also, to use
the Commission's own words, "reduce drastically" ACP
preference margins, including those on the CAP products subject
to special access under the Lomé Convention's commodity
Protocols. In effect, it would probably mean the complete abandonment
of significant EU market access on sugar, and a sharp reduction
on beef and to a lesser extent, rice. In consequence, despite
the liberalisation agreed under the Uruguay Round, the EU's important
regime for key CAP products would become markedly less liberal.
Finally, it would remove the security provided by Lomé's
contractuality.
The EU defines the concept of uniform reciprocity
as one in which all ACP states provide the EU with reciprocal
tariff reductions. This proposal would certainly reinforce the
partnership of Lomé and, if it could meet the requirements
of the WTO Article XXIV, would also increase security, with arguable
beneficial effects on both trade and foreign investment. It would
also harmonise the relationship that the EU has with the ACP on
one hand and with its southern and eastern neighbours on the other.
Against this there is one overwhelming problem:
as the Green Paper recognises, the idea is wholly infeasible!
The Paper does not even consider the point of whether each ACP
state would have to liberalise also with respect to all 69 other
states. If they did not do so, there would be horrendous problems
with the rules of origin required to prevent intra-ACP trade being
routed via Europe. Another, less serious, problem is that it would
remove the possibility for differentiation between ACP states
on the basis of geography, level of development, or anything else.
Because of these problems, the Green Paper also
puts forward the concept of differential reciprocity, under which
only some ACP states would reciprocate. Under this proposal, there
would be more variety in the regimes of different ACP states and
groups among them. According to the Green Paper, this approach
would reap "all the benefits" of uniform reciprocity,
allow differentiation according to the conditions, and facilitate
integration between ACP states and their non-ACP neighbours. However,
it is far from clear exactly how this would occur, and how feasible
it would be. Among the disadvantages recognised by the Green Paper
are the loss of ACP integrity, problems for states that are not
members of sub-regions that negotiate special deals with the EU,
a continuation of possible compatibility problems with the WTO
and, significantly, the loss of the commodity Protocols and CAP
preferences.
A BLUEPRINT FOR
THE POST-LOMÉ
WORLD
Retaining the merits of Lomé
Apart from the fact that it is rooted in discrimination
against third parties, and has evidently not prevented the marginalisation
of the ACP in Europe's trade, are there features of the Lomé
Convention that deserve to be preserved? The answer is yes.
There is a serious danger that the net result
of change, justified in relation to coherence with development
priorities and multilateralism, will be simply to make the EU's
overall trade policy a little less liberal and its aid spending
no more poverty-oriented. This is because Lomé has certain
positive features that do not exist in other accords and would
have to be recreated if a successor regime were to represent an
improvement.
There are two key characteristics of the EU-ACP
relationship that derive from the Lomé framework and are
not found in the GSP. They are partnership and contractuality,
Even if Lomé is no longer a credible partnership of equals,
it does retain a contractual characteristic and its consultative
arrangements have a lasting value in easing the most sensitive
areas of policy dialogue. One long-standing criticism of preferentialism
vis-á-vis multilateralism is that the latter provides
a security absent from the former. Until now, this criticism has
not been valid in relation to Lomé. The negotiated nature
of the Convention marks it out from, for example, the GSP and
the plurilateral framework, which allows the ACP to unite to offset
their inherent weakness vis-á-vis the Union, distinguishes
it from the bilateral accords with Europe's Southern and Eastern
neighbours.
Possibly the most important achievement of the
Lomé Convention has been to erode the artificial divisions
that existed previously between the ACP sub-groups. Even though
relations are not always harmonious, it is easy to forget how
poor were the contacts even between Anglophone and Francophone
Africa prior to the first Convention. This linking of three geographically
disconnected regions in the ACP group may have outlived its usefulness
but it is reasonable to argue that no change should be introduced
that drives a wedge between, say, Anglophone and Francophone Africa,
between West, East and Southern Africa, or between other sub-groups.
The difficulties being created between South Africa and its SACU
and SADC partners in Southern Africa as a result of their different
trade regimes with the EU illustrates the danger.
The EU does not have a trade policy model other
than Lomé that provides any degree of certainty and contractuality
to more than one partner state. Two major attractions of the Lomé
trade regime over the GSP are that it is negotiated and contractual,
and that it allows the ACP to diversify into new exports without
bureaucratic obstacles save in the case of the most sensitive
agricultural items.
The GSP is an autonomous EU instrument which
is not negotiated and which can be altered by the EU of its own
volition. This reduces the benefits of the system to all parties,
both importers and exporters. In the case of new exports, Lomé
provides an agreed mechanism for extending preferences to non-traditional
products as they emerge. In the case of industrial goods this
is straightforward: Lomé offers duty-free access to all
items meeting the rules of origin. The same applies to non-traditional,
non-sensitive agricultural items and to minerals. The only exceptions
are for sensitive agricultural items and, even here, there is
a clear procedure within Lomé for negotiating extensions
of tariff quotas and calendars as the volume of exports increases
and for introducing preferences on entirely new products as the
prospect of exporting emerges. None of this applies to the GSP
which may be amended in its details at the instance of the EU
but not, in any respect, at the request of the developing countries.
A proposal
It is clear that the Lomé Convention
is not perfect but also that it has positive features that might
not be preserved in any of the obvious alternative regimes. One
way of moving forward that might be politically feasible would
be to develop the innovation introduced for South Africa. That
is, to use Lomé as an umbrella relationship with elements
that are selected on an á la carte basis by different
countries.
This would allow the ACP to be joined by other
least developed states, Central America and the Andean Pact (the
Super GSP beneficiaries) and (more contentiously) other areas
as members of a Lomé-style Convention in which they share
certain common arrangements. But the precise details of their
trade and aid relationship with the EU would be subject to individual
and regional negotiation.
On the trade side, this could involve the extension
of a single set of origin rules but with the breadth and depth
of product coverage being determined by sub-regimes which could
range, for example, from the GSP at one end to an FTA at the other.
On aid there could be sub-regimes with different levels of provision
and administrative arrangements depending upon the needs of countries
within each group. It might be feasible, for example, to continue
the EDF for all ACP states and to retain its current administrative
arrangements. However, by bringing budgetary aid within the purview
of Lomé (as has been done with South Africa) it would offer
the opportunity for additional aid to be provided under a different
administrative framework in cases where this was acceptable to
both donor and recipient.
Such suggestions are currently in advance of
official thinking. The power of inertia is considerable in political
and bureaucratic affairs, so it would be imprudent to assume that
there will not be a Lomé V that is similar to its four
predecessors. But, if that is the case, the ACP may still lose
by default. The growing importance of aid from the EU budget is
likely to continue the squeeze on the EDF. And on trade, the evident
concern of the EU in negotiating FTAs with its southern and eastern
neighbours (despite the difficulties over agriculture) is unlikely
to leave much space for extending Lomé to offset the erosion
that will begin to bite in the new century.
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