HC Deb 20 December 1989 vol 164 cc262-3W
Mr. Stern

To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the outcome of the negotiations on a fourth Lomé convention.

Mrs. Chalker

The main outstanding issues in the negotiation were settled at the fifth ACP/EC ministerial negotiating meeting in Brussels on 25–27 November. After further discussions, both sides subsequently confirmed their acceptance of the final outcome. The way was thus clear for signature in Lomé on 15 December. As soon as the finalised text of the new convention has been received a copy will be laid before Parliament.

The general framework of ACP/EC co-operation is largely unchanged under Lomé IV. The main features of the new convention are as follows:

  1. (a) Duration: Lomé IV is of 10 years duration (ie it expires 29 February 2000) with provision for review after 5 years. Financial resources will continue to be provided on a 5 yearly basis so Lomé IV will be covered by two five-year European Development funds (EDF).
  2. (b) New ACP members: The applications by Haiti and the Dominican Republic to join Lomé IV were accepted. Namibia will also be welcome to join Lomé when it becomes independent and if it wishes to do so.
  3. (c) Financial package: Lomé IV contains a financial package of up to 12 billion ecu (around £8.5 billion). This comprises 10.8 billion ecu (around £7.7 billion) under the seventh European Development Fund (EDF VII), an increase of 46 per cent. over the previous EDF, and up to 1.2 billion ecu from the European Investment Bank's (EIB) own resources. This financial package will cover the first five years of the new convention. The Community will also provide up to 165 million ecu over the next five years to member states' dependencies under an associated Council decision. This comprises 140 million ecu from EDF VII plus up to 25 million ecu from EIB own resources.

The EDF is financed by direct contributions from the member states and not from the EC budget. The UK contribution to EDF VII will be 1.79 billion ecu (around £1.3 billion); this is 16.37 per cent. of the overall sum. EIB own resources are raised on the capital markets of the world as part of its overall financial operation.

  1. (d) Use of EDF:
    1. (i) Aid projects and programmes: the bulk of EDF resources will continue to be channelled through national indicative programmes for each ACP state. Aid will be programmed in the same way as under LoméIII, with a series of mutual commitments and obligations 263 designed to maximise the effectiveness of the aid provided. Rural development is likely to continue to be the focal sector of assistance for many countries. However, LomÉ IV places increased emphasis on industrial development and encouragement of private sector activity. Assistance will also be available in the form of finance for import programmes both from within national indicative programmes and from a separate earmarking which will be allocated on a selective basis throughout the next five years.
    2. (ii) Investment support: specific support for investment and industrial development will continue to be available in the form of risk capital, managed by the EIB. This has been increased from 600 million ecu to 825 million ecu.
    3. (iii) Stabex: (the arrangement for assisting ACP states facing shortfalls in their export earnings from a specified list of agricultural products). The Stabex provision within EDF VII is 1.5 billion ecu, representing a slightly increased share of the EDF. The system remains broadly the same as under LomÉ III, although a number of technical changes have been agreed.
    4. (iv) Sysmin: (an arrangement which provides assistance to ACP states facing shortfalls in production or earnings from a specified list of minerals): Sysmin also remains largely unchanged though the funds will now be provided to the ACP on grant terms. Its financial provision, at 480 million ecu, represents a slightly lower proportion of EDF VII than under EDF VI, reflecting the rate of take-up of available Sysmin funds in recent years.
  2. (e) Use of EIB Own Resources: the EIB will continue to provide loans, subsidised from the EDF, for investment activities in creditworthy ACP countries.
  3. (f) Trade Provisions: LomÉ IV contains further improvements to the already favourable LomÉ trade regime. These include improved access for a range of agricultural products arid various improvements to the rules of origin designed to assist the ACP to develop processing and manufacturing industry. Substantial progress was made on the liberalisation of ACP rum access (rum is the only ACP industrial product still subject to quota restrictions). The EC agreed that the Council should take a decision by 1995 on how the quota should be abolished.
  4. (g) Bananas: the Banana Protocol has been retained coupled with a joint EC/ACP declaration that the interests of traditional ACP suppliers will be safeguarded should any modifications be made to the internal Community arrangements for bananas in the context of the completion of the single market.
  5. (h) Sugar: the sugar protocol is of indefinite duration and continues unchanged in LomÉ IV.
  6. (i) Toxic Waste: the EC has agreed to ban the export of all hazardous and radioactive waste to the ACP countries provided they ban imports from all countries.

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