Cotonou Agreement 1) OBJECTIVE 2) ACT 3) SUMMARY.

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1 Cotonou Agreement 1) OBJECTIVE To set up a new framework for cooperation between the members of the African, Caribbean and Pacific Group of States (ACP) and the European Community and its Member States. This framework constitutes a joint ACP-EC response to globalisation. It is designed to promote and expedite the economic, social and cultural development of the ACP States, contribute to peace and security and promote a stable and democratic political environment. 2) ACT 2000/483/EC : Partnership Agreement between the members of the African, Caribbean and Pacific Group of States (ACP) of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000 [Official Journal L 317 of ]. 3) SUMMARY GENERAL FRAMEWORK Background The new partnership Agreement represents a new stage in cooperation between the ACP States and the European Union, which began with the signing of the first cooperation convention (Yaoundé Convention) in 1964 and continued with the four Lomé Conventions, the last one expiring on 29 February Given the limited success of the main approach of non-reciprocal trade preferences in the previous conventions and the need to adapt to international developments such as globalisation and technological advances, plus the far-reaching social changes in ACP States, the Agreement establishes a new approach to cooperation in this field. Main objectives of the Agreement The Agreement's main objectives are the reduction and eventual eradication of poverty and the gradual integration of ACP States into the global economy, whilst adhering to the aims of sustainable development. Comprehensive approach The new approach of the Agreement aims to strengthen the political dimension, provide more flexibility and entrust the ACP States with greater responsibilities. It has three main dimensions, namely politics, trade and development, and represents an approach that is both integrated and sectoral. Operations should focus on a specific sector (health, transport, etc.) and combine many aspects of cooperation (economic, environmental, social, etc.) in order to ensure that aid is better targeted. The Agreement has been concluded for 20 years, with a revision clause every five years.

2 Pillars of the partnership The partnership is based on five interdependent pillars: a comprehensive political dimension; promotion of participatory approaches; development strategies and priority for the objective of poverty reduction; the establishment of a new framework for economic and trade cooperation; Reform of financial cooperation. PILLAR I: A POLITICAL DIMENSION The Agreement puts greater emphasis on the political dimension which concerns all of the Agreement's objectives and operations and represents global commitments on the part of the ACP States. The key elements of this pillar are as follows: political dialogue; peace-building policies, conflict prevention and resolution In this field, the partnership will concentrate in particular on regional initiatives and on building local capacities. It also includes provisions to ensure that financial resources are not diverted from development objectives; respect for human rights, democratic principles based on the rule of law and transparent and accountable governance These three elements are vital for the partnership and sustainable development. A new procedure has been developed for cases of violation of these elements, stressing the responsibility of the country in question; good governance A new specific procedure has been drawn up. It will be applied in serious cases of corruption, not only corruption involving funds from the European Development Fund (EDF) but also, more generally, in any country where the EC has a financial interest and where the corruption is an obstacle to development. PILLAR II: PROMOTION OF PARTICIPATORY APPROACHES The Agreement envisages a substantial role for non-state actors in the design and implementation of development strategies and programmes, for example the private sector and economic and social partnerships. The role of civil society is particularly important whilst non-governmental organisations (NGOs) should also be strengthened in order to guarantee a significant contribution to the development process. Furthermore, the participation of these actors depends on certain criteria relating to management and their form of organisation. PILLAR III: DEVELOPMENT STRATEGIES AND PRIORITY FOR POVERTY REDUCTION The integrated approach of the partnership stresses three key areas for cooperation, always taking into account the major objective of poverty reduction: Economic development This field focuses on: investment and private sector development (for example, enhancing export activities); macroeconomic and structural reforms and policies (for example, liberalizing trade regimes); sectoral policies (for example, developing the industrial, trade and tourism sectors).

3 Social and human development The key elements in this field are the following: social sectoral policies (for example, improving education, health and nutrition systems, and integrating population issues into strategies); youth issues (for example, protecting the rights of children and youth, particularly girls); cultural development (for example, recognising, preserving and promoting the value of cultural traditions and heritage). Regional cooperation and integration Regional cooperation and integration aims to facilitate development in all sectors, including the management of natural resources and economic and social problems. They aim in particular to: accelerate diversification of the economies of ACP States; promote and expand inter and intra-acp trade and with third countries, which equally benefits the least developed countries (LDC) among the ACP States; Implement sectoral reform policies at regional level. Provision is also made for cooperation in areas such as fisheries and food security. The priorities for intervention will be drawn up for each country and the principle of differentiation has now become a key element of the partnership. Thematic and cross-cutting issues The comprehensive framework for development strategies also provides for systematic consideration of three cross-cutting issues in all fields of cooperation: gender equality; sustainable management of the environment; institutional development and capacity building. The question of integrating sustainable management of the environment covers several subjects, for example tropical forests, water resources, desertification, the use of renewable energy sources, and so on. PILLAR IV: THE ESTABLISHMENT OF A NEW FRAMEWORK FOR ECONOMIC AND TRADE COOPERATION The new framework makes significant amendments to the existing system in order to bring it into line with World Trade Organisation (WTO) rules and to enable the ACP States to play a full part in international trade. New trade Agreements The Agreement provides for the negotiation of new trading arrangements with a view to liberalising trade between the two parties, putting an end to the system of non-reciprocal trade preferences from

4 which the ACP States currently benefit. Nonetheless, the current system will remain in force for a preparatory period, up to 2008 (the date envisaged for the entry into force of the new arrangements) with a transitional period of at least 12 years. Negotiations on the new regional economic partnership agreements began in October 2003 with CEMAC (Economic and Monetary Community of Central Africa) and ECOWAS (Economic Community of West African States). The Community's policy will take account of these countries' social and economic constraints in two ways: one, through social and human development policies (fight against poverty) and, two through cooperation and enhancing the capacities of ACP States in international bodies. Trade-related areas Trade cooperation is not restricted to traditional trading activities, it also affects other trade-related areas such as the protection of intellectual property rights, trade and labour standards, etc. Trade prospects for the least developed ACP States An improvement in the EC's trade regime for all of the least advanced countries (39 of which are part of the ACP group) is envisaged. This process will be implemented over five years and will ensure that LDC exporters will benefit from duty free access for essentially all of their products on the EC market no later than PILLAR V: REFORM OF FINANCIAL COOPERATION The guiding principles of financial cooperation reflect the comprehensive approach of the partnership: consistency, flexibility and efficiency: ensured by specific rolling programming for each country or region accompanied by regular reviews; change in nature of assistance with move towards budgetary and sectoral support programmes; indicative financial allocations rather than established rights; comprehensive approach: participation of non-state actors; dialogue at local level, timetables and coordination from the bottom up. Rationalisation of cooperation instruments In order to simplify the process and make financing more flexible, provision is made for the rationalisation of cooperation instruments, especially of the European Development Fund (EDF), the main instrument for Community assistance to the ACP States. In contrast to the previous Conventions, the EDF will no longer be divided into several instruments with rigid allocation systems. In addition, resources will no longer be blocked in order to achieve a specific goal. All EDF resources will be channeled through two instruments: grants - grant facility These total EUR 11.3 billion under the ninth EDF, EUR 1.3 billion of which is set aside for regional programmes. They will be administered jointly by the Commission and the ACP States. Each country will receive a lump sum. risk capital and private sector loans - investment facility. This new instrument, allotted EUR 2.2 billion from the ninth EDF, will be administered by the European Investment Bank. The Bank may provide loans, equity and quasi-capital assistance. It will also be able to provide guarantees in support of domestic and foreign private investment.

5 Reform of the programming system. The new system for programming the aid granted by the Community enhances the flexibility of the partnership and entrusts the ACP States with greater responsibility, particularly by establishing a system of rolling programming that eliminates the concept of non-programmable aid, in other words aid programmed unilaterally by the Community. The ACP States now have greater responsibility for determining objectives, strategies and operations and for programme management and selection. The programming process is centred on results. Financial assistance of a set amount is no longer an automatic right. Grants are allocated on the basis of an assessment of requirements and performances in accordance with criteria negotiated between the ACP States and the Community. These criteria reflect the partnership's main objectives, such as progress in institutional reform, poverty reduction, etc. The main instrument used for programming grants is the country support strategy (CSS). An CSS will be drawn up for each ACP State by the Commission and the country in question. The CSS will set out general guidelines for using the aid and will be supplemented by an indicative operational programme containing specific operations and a timetable for their implementation. An annual review is provided for in order to adjust the CSS, the operational programme or the resources allocated. Halfway through and at the end of the period of application of the financial protocol, the annual review will also include an assessment of the cooperation strategy, which would either confirm the thrust of the CSS or suggest appropriate adjustments. The volume of resources allocated to the country concerned may be adjusted as a result. Provision is made for local actors to be involved in the annual review in accordance with the principle of decentralisation. The regional programmes will also be subject to a system of rolling programming based on the same components. However, the regional programmes will be reviewed only halfway through and at the end of the period of application of the financial protocol. The Agreement on additional support in cases of fluctuation of export revenues Additional support in this area is needed because of the ACP States' vulnerability resulting from a high degree of dependence on export revenues in the agricultural or mining sectors in ACP States. Stabex and Sysmin, instruments of the previous Conventions, will not be renewed. The new system of rolling and flexible programming makes it possible to ensure support via the funds allocated within the framework of the CSS and the operational programmes. Financial resources The financial resources are as follows: Ninth European Development Fund (EDF): 13.5 billion unexpended balance from previous EDFs: billion; own resources of the European Investment Bank (EIB): 1.7 billion. The financial protocols are concluded for a period of five years. Implementing procedures and bodies responsible for implementation The Chief Authorizing Officer, the National Authorizing Officer and the Head of Delegation are responsible for implementation.

6 In line with the principle of decentralization the Head of Delegation will be given administrative and financial responsibilities. It is proposed, in particular, that the Head of Delegation should be given financial power of decision for projects that do not exceed a given amount. INSTITUTIONAL PROVISIONS The joint institutions for cooperation established by the former Lomé Conventions remain in force, namely: the Council of Ministers, the Committee of Ambassadors, the Joint Parliamentary Assembly. The Council of Ministers The Council of Ministers consists of members of the Council of the European Union, members of the European Commission and a member of the government of each ACP State, and meets once a year on the initiative of the presidency (or more frequently) and in different geographical forms if necessary. The presidency is held in turn by a member of the Council and by a member of the government of an ACP State. The tasks of the Council of Ministers are as follows: initiating political dialogue; adopting political guidelines and taking decisions required for the implementation of the provisions of the Agreement; examining and resolving any issues impeding implementation of the Agreement; ensuring the smooth operation of the consultation mechanisms. Decisions of the Council shall be arrived at on the basis of a consensus of its members. It may take decisions that are binding on the parties and draw up resolutions, recommendations and opinions. It may also delegate responsibilities to the Committee of Ambassadors. The Committee of Ambassadors The Committee of Ambassadors assists the Council of Ministers. It is made up of the permanent representative of each Member State for the European Union, a Commission representative and a head of mission for each ACP State for the European Union. The presidency is held in turn by the permanent representative of a Member State appointed by the Community and by a head of mission representing an ACP State appointed by the ACP States. The Joint Parliamentary Assembly The Assembly is an advisory body made up of an equal number of representatives of Members of the European Parliament and representatives of the ACP States. The latter are members of parliament or, where appropriate, representatives appointed by the national parliament. In the absence of a parliament, the participation of a representative is subject to prior approval of the Assembly.

7 The Assembly may adopt resolutions and submit recommendations to the Council of Ministers. It meets twice a year in plenary session, alternating between the EU and an ACP country. The members of parliament may also meet at regional or subregional level if desired. PROVISIONS CONCERNING THE LEAST ADVANCED, LANDLOCKED OR ISLAND ACP STATES Specific treatment is envisaged for these countries and countries in post-conflict situations. The aim is to increase their rate of development whilst taking account of their vulnerability. In addition to the specific measures and provisions in the various chapters of the Agreement (for example environmental provisions, economic provisions, etc.), special attention is paid to these countries in certain fields, such as the strengthening of regional cooperation, the development of transport and communications infrastructure and the implementation of food strategies. HUMANITARIAN AID AND EMERGENCY AID These are short-term measures aimed at responding to exceptional serious social and economic difficulties resulting from natural disasters or man-made crises, such as war. They involve humanitarian aid measures including aid for refugees, the development of mechanisms for the prevention of natural disasters and disaster preparedness, etc. This aid is financed by the indicative programme of the ACP State concerned and by the Community budget. VIOLATION OF ESSENTIAL ELEMENTS OF THE AGREEMENT Article 96 of the Agreement lays down the possibility of taking appropriate measures in cases of violation by one of the parties of the requirements of essential elements of the Agreement, namely respect for human rights, democratic principles and the rule of law. The Agreement provides for a consultation procedure to resolve the situation by establishing the necessary measures. However, in the absence of an acceptable solution, appropriate measures may be taken, including suspension of the Agreement, although this is the last resort. In the case of Fiji, for example, following the coup d'état on 19 May 2000 and the consultations with Fiji on this subject, the Commission decided to implement measures under Article 96 of the Cotonou Agreement on the violation of essential elements of the Agreement (respect for democratic principles, human rights, etc.). The Commission thus decided to suspend or review certain aspects of aid to Fiji. Following positive developments in the political situation there, the European Union decided in November 2003 to reactivate cooperation with Fiji progressively. ENTRY INTO FORCE Following the deposit with the Secretariat-General of the ACP States of the instrument of ratification by the European Community on 27 February 2003, the Agreement entered into force on 1 April The Agreement applies to the 76 ACP States that had ratified the Agreement when it entered into force. For those ACP States which had not ratified it when it entered into force, the Agreement enters into force on the first day of the second month following the date of deposit of the necessary instruments of ratification (Article 93(3)).

8 Act Date of entry into force Deadline for implementation in the Member States 2000/483/EC : Partnership Agreement between the ACP States and the European Community and its Member States ) IMPLEMENTING MEASURES 5) FOLLOW-UP WORK Decision No 2003/404/EC of the ACP-EC Council of Ministers of 16 May 2003 regarding the accession of the Democratic Republic of Timor Leste to the ACP-EC Partnership Agreement [Official Journal L 141 of ]. This Decision approves the accession of the Democratic Republic of Timor Leste (East Timor) to the ACP-EC Partnership Agreement. Annex VI to the Agreement must be amended to add Timor Leste to the lists of Least-developed ACP States and of Island ACP States. Council Regulation (EC) No 2285/2002 of 10 December 2002 on the safeguard measures provided for in the ACP-EC Partnership Agreement and repealing Regulation (EEC) No 3705/90 [Official Journal L 348 of 21/12/2002]. This Regulation lays down detailed rules for implementing the safeguard clauses as regards the trade measures provided for in Annex V to the ACP-EC Partnership Agreement, known as the Cotonou Agreement.

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