Title

Economic Co-operation Instruments Between Europe and Latin America (Prepared for CARIFORUM)

II. Co-operation Instruments

Co-operation between the European Union and the different regions of Latin America is structured according to the Budget allocations approved by the Commission and the European Parliament for each year; therefore, the instruments which support agreed co-operation programmes are grouped on the basis of these budget allotments.

The organisation of Community programmes is the same for the different regions of Latin America: CENTRAL AMERICA, MERCOSUR, THE ANDEAN COMMUNITY, CHILE and MEXICO. This responds no doubt to the organisation and programming of the control mechanisms and facilitation of operational issues, as can be seen below:

In Central America and the Andean Community, two integration sub-systems, co-operation agreements have been negotiated with the European Union with common bases, although the stress on Co-operation and the instruments used vary from one group to the other because of the difference in the development levels achieved. For example, in Central America, the basic instrument is: technical and financial assistance to support sector development, mainly agriculture, industry, agro-industry, telecommunications, rural and urban development and institutional strengthening, using integration as the unifying instrument of regional political will.

On the other hand, in the Cartagena Agreement, singed in April 1993 in Copenhagen, the basic instrument is the Generalised System of Preferences, granted as a special and transitory regime of the EC, based on the social reality of the Andean countries which are plagued by drug problems with the concomitant economic and political repercussions.

The preceding achievements notwithstanding, the Cartagena Agreement emphasises the institutional strengthening of integration as the mechanism par excellence for supporting Co-operation between the two customs unions, the EU and the GRAN (Andean Community).

Unlike these two Latin American integration groupings, the basic instrument included in the framework agreement for MERCOSUR is total liberalisation of trade among: the European Union and the four countries of the Southern Section of South America, as a preamble to an association among them. Although this opening up implies removing all tariff and non-tariff barriers which impede trade among the two subregions, economic co-operation and social assistance will continue to play their respective roles in slowly eliminating the differences that might impede the strengthening of the MERCOSUR integration process. However, most of the instruments that the EU has been using to make their co-operation agreements effective, are the same as those used in Central America and the Andean Community.

On the other hand, the structure of the Lomé Agreements or Conventions negotiated with the EU is different because it is a political association with an extraordinary historical background to explain its existence. Lomé IV was signed for the long-term -10 years- with a provision that it be reviewed at the end of the first five-year period.

The long-term objectives and the economic and social environment are changing in Europe as well as in Africa, the Caribbean and Pacific (ACP). In fact, the EU is on the verge of introducing a series of changes in its institutional organisation and also expanding the objectives of the Union, in conformity with the Maastricht Agreements. In Africa, on the other hand, the political climate is changing. Another factor that will have to be considered is the socio-economic situation in Africa, the Caribbean and Pacific.

The structure of Lomé IV is based on a community contribution of ECUs 15 billion for the 1995-2000 period, an amount that constitutes the basic instrument for achieving goals in the countries of Africa the Caribbean and the Pacific.

Ninety percent (90%) of these resources comes from the European Development Fund (EDF) with total financial autonomy because they are direct contributions made by member countries and do not have to be approved by the European Parliament. These are funds which are to be used to finance specific products and studies and the decision regarding them is made by a representative from the European Commission and by representatives of the member countries, presided over by the Committee. The EDF contributions are distributed as part of Scheduled Aid which includes: risk capital, subsidies, etc., and Non-scheduled Aid which is distributed through instruments such as: STABEX, SISMIN and Emergency Aid. Financial and technical assistance is also an instrument that is very important because it is used to help find short-and medium-term solutions to financial problems derived from structural adjustments to the economies of those ACP countries which are experiencing difficulties with international financial organisations.

A. Instruments for Co-operation with Central America

Ninety percent (90%) of Community contributions to the region are made through the caption known as "Financial and Technical Co-operation" for regional and subregional projects either underway or committed to, which at the end of April 1996, amounted to a total of ECUs 248,756,261.

1. Technical Assistance: ECUs 96,872,000

Technical assistance is the instrument essentially used to carry out projects and programs to reinforce research that is applied to the agricultural-food sector, development of urban and rural areas, health, education, improvement programs for youth and telecommunications.

Of major importance are the following:

• Reinforcing agricultural research on basic grains in the region;

• Support program for agriculture and livestock health;

• Development of urban slum areas and following-up on projects in rural areas;

• Maternal-child health program; and Latin America against cancer;

• Treatment program for hospital waste;

• Development of indigenous peoples;

• Program for adolescents and single young mothers;

• Development of telecommunications;

• Radar control of air traffic;

• Institutional support for the Central American Parliament.

2. Financial Assistance Instruments: ECUs 151,884,426

These fiduciary funds resources donated via the main financial instrument of the region, the Central American Bank for Economic Integration, are earmarked for strengthening production and updating exports from the Central American Isthmus and from the industrial and agro-industrial production centres. These funds are the following:

• The Special Fund for Small and Medium-Size Enterprises, SMEs;

• Strengthening of Central American Exports, FOEXCA;

• Special Fund for Promoting Honduran and Nicaraguan Exports, FEPEX;

• Promotion of Production Co-operatives in Central America, PROCOOPCA;

• Pilot Project for Agro-industrial Development along the Border: El Salvador, Guatemala and Honduras, TRIFINIO;

• Development of Fishing in Central America: PRADEPESCA;

3. Instruments for Economic Co-operation: ECUs 6,399,600

This budget allocation is to support and strengthen the private business sector in the region by implementing projects and programs with a regional scope, stimulating the participation of business enterprises, promoting encounters between European and Central American businessmen and improving the administrative and organisational structures of different enterprises. With these objectives in mind, similar instruments created a number of years ago are being used, such as: AL-INVEST, EUROCENTERS (see Annex 1), as may be seen below:

• Contributions to the establishment of EUROCENTERS in Nicaragua, Honduras, Costa Rica, Guatemala and Panama, with different private counterpart organisations, depending on the characteristics of each country, as for example: the Nicaraguan Institute for Development; the Foundation for Investment and Development of Exports FIDE in Honduras; the Export Chamber of Commerce of Costa Rica; the Foundation for the Development of Guatemala, FUNDESA; Inter-American Council of Trade and Production in Panama;

• AL-INVEST -Sector level business encounters, in tourism, to be held in Honduras and organised by EUROCENTER;

• Regional programme of visits by European importers, with FECAEXCA, the Federation of Export Chambers of Commerce of Central America in charge;

• Redesign and updating of export statistics in Costa Rica, El Salvador and Honduras. These actions cover three important aspects of co-operation: training, improvement of international trade and institutional support for the Foreign Trade Ministries through the European Centre for Training in Economic Statistics; EUROTRACE.

4. Co-operation Instruments for the Environment and Ecosystems: ECUs 12,046,370

This significant amount of resources is destined for one of the region's most sensitive areas in view of the extensive deforestation that has taken place in recent years. This programme, generally referred to as "Tropical Forests", encompasses two projects for the linkage of the agricultural frontiers between countries of the region and the conservation of the humid forest, mainly in the zone between Nicaragua and Costa Rica, which has been seriously impaired by deforestation as will be detailed below:

• Sustainable Development Programme in the Agricultural Cross-border Zones. The execution of this programme has been entrusted to the Central American Environment and Development Commission (CCAD). Duration: 4 years. Area: border zones of Talamanca and Peten, between Guatemala and Mexico, the Sierra of Agalta in Honduras, the Gulf of Darien in Panama;

• Conservation project for the humid tropical forest and eco-tourism activities. Currently being executed in the area of Rio San Juan, between Costa Rica and Nicaragua. These activities will be carried out over a three-year period in the forestry sector. Task entrusted to the non-governmental organisation known as "Amigos de la Tierra" (Friends of the Earth), which specialises in environmental matters; and

• Research project to find an alternative to carry out cultivation changes in Honduras and Costa Rica. Being executed at Cambridge University, UK.

5. Co-operation Instruments in the Area of Science and Technology for Development: ECUs 1,400,000

Scientific research applied to agro-industry and health with the participation of different specialised centres in Europe and Central America, that are actors in the execution and application of science and technology as detailed below:

• Evaluation and selection of germplasm for resistance to prevailing nematodes in Central America, whose execution is in the hands of Centre de Co-operation International en Recherché Agronomique, of France, together with the following two counterparts, Centro Agronómico de Investigación (CATIE) of Costa Rica and Organización de Productores de Café C.A. (PROMECAFE), with headquarters in Guatemala. Forty-eight months of applied research for coffee growing is expected to yield substantial improvements in it;

• Improved practices for the handling of productive rehabilitation of sloped deforested lands. Project between two countries: Guatemala and Costa Rica. Duration: 36 months. Execution entrusted to Universidad Nacional de Heredia and Instituto de Tecnología Agraria of Guatemala;

• Work towards the establishment of a research network on Leishmaniasis in Central America. Project approved that will soon be implemented under the responsibility of the University of Guatemala, the National Centre for Hygiene and Epidemiology of Nicaragua, University Network Service in Panama, the Ministries of Health of El Salvador and Honduras, and the Science Research Council of Spain, as well as the University of Keele in the United Kingdom. This project should yield benefits for the entire Central American region.

6. Support for Refugees, Displaced and Demobilised Individuals Through NGOs: ECUs 690,000

7. Democratisation and Human Rights: ECUs 3,202,000

8. Humanitarian Aid ECHO: ECUs 606,291

This Community support aims to assist in preventing disasters and to strengthen the capacity to deal with natural disasters of various kinds, taking account of the high seismic risk that is present in the Central American Isthmus and the ongoing exposure to hurricanes and tropical storms every year due to geographic location. Specialist groups from different inter-American organisations participate in this effort. Sphere of action: includes Belize.

The projects are the following:

• Strengthening of institutional capacity in dealing with natural disasters as well as to prevent disasters in Latin America. Intermediate Technology Development Group is executing this project;

• Project for Reduction of Vulnerability in the face of Natural Disasters: Implemented by the Organisation of American States (OAS). Sphere of implementation: Central America and Belize;

• Reduction of the Impact of Road Network of Central American and Andean Countries. Project of inter-American scope. OAS is responsible for its execution.

B. Co-operation Synthesis between the European Union and Central America

In the analysis of the European co-operation with Central America, we have highlighted the concrete projects being implemented at the subregion level with funding from the Community and as can be seen from the document, the greater part of the resources are applied to technical and financial assistance, with economic co-operation taking second place in importance and efforts in the field of trade and export promotion, taking third priority. This is so because the San Salvador Agreement emphasises consolidation for peace and of the democratic regimes in the Central American Isthmus, allowing at the same time, the solution of economic problems as well as dealing with the more significant trade matters.

There is nothing better to explain this point of view than the concepts expressed in the Joint Communiqué of the Ministerial Conference of San Jose (XIII), held at The Hague, Holland on 26 February 1997 which reads:

..."The Ministers congratulated each other for the additional improvement during the last months, with a view to the consolidation of the process for peace and democracy in Central America, efforts which deserve continuous support. In this regard, they congratulated each other particularly for the signing of the Agreement for firm and lasting peace in Guatemala".

..."The Ministers likewise outlined the importance of the recent general elections in Nicaragua, which allowed support for democratic institutions and culture in that country."

..."They also acknowledged the positive role of Community Co-operation in the process for consolidation of democracy and of human rights in El Salvador.

The parties acknowledged the progress made and agreed that it was reasonable to continue and deepen their co-operation in the strengthening of the State and of Law and support of social policies."

Even when the greater interest of both parties is political, it is noteworthy to acknowledge that at the same time significant efforts have been made in the field of economic co-operation, allowing them to put in place a series of instruments centred on the Central American Bank of Economic Integration, with the firm participation of the subregion's private sector, which includes more than 80 commercial banks which act as financial agents in each country, administering the Community Funds placed as trust funds. These resources are for strengthening the small and medium-sized enterprises, PYMEs.

Also in the economic field, during the last two years a Regional Network of EUROCENTRES has been established which under the AL-INVEST mechanism seeks to optimize the role of private partners in the area of joint investments, mainly with the ECIP instrument, and whose action in the forthcoming years will be more decisive.

On the issue of strengthening the economy, in San Jose XIII, the Ministers were aware of the mandate granted to the European Investment Bank, EIB, so that it could continue its financial actions in Central America, particularly in large projects of infrastructure and industrial development, with the BCIE as counterpart.

In the field of commerce, the decision adopted by the European Union in San Jose XIII, to extend the GSP concessions to Central America for agricultural products as of January 1997, is known. Central Americans, for their part, insisted on the need to obtain the GSP granted to the Andean Countries for industrial products, with a view to accessing the European market under the same conditions as that applied to industrial products coming from other parts of the world which receive concessions.

Perhaps the more serious problem for Latin America in the field of trade is the quotas applied by the European Union to banana, the subregion's main exporting item.

Without doubt this political matter with deep commercial repercussions will be solved within the framework of GATT/WTO. In the meantime, co-operation relations instead of being hindered have been extended to new fields such as Science and Technology and its application to agricultural development, food security and the conservation, management, reasonable use of natural resources and biological diversity.

In these programmes the efforts on both sides to strengthen the integration process of the subregion, should be highlighted, where the commitment of the member countries is being deepened and diversified with a view to the third millennium. Another network dealing with co-operation is the Non-Governmental Organisations, NGOs, which through direct co-operation with European NGOs, play a significant role in the implementation of social projects in the rural areas and in the urban inner cities, with vulnerable groups such as children, unmarried mothers and separated families.

Obviously in order to strengthen these actions, what is required is the creation of mechanisms of co-ordination and control in order to ensure the use of the resources, avoiding the duplication of activities and seeking better use of available human resources. In summary, co-operation and the use of various instruments of implementation between the European Union and Central America have intensified.

C. Co-operation Instruments with Mexico

Co-operation between the European Union and Mexico is carried out under the Framework Co-operation Agreement signed in April 1991, and opens the possibility of developing actions in all the production sectors and also in agreed areas of mutual interest, such as: regional co-operation and training, information, communications and culture, public administration and development planning, the environment and protection of natural resources, drug trafficking and substance dependency, information technology, telecommunications and informatics, intellectual property, quality standards and certification, among the most important.

In accordance with the Framework Agreement, the budget allocations were as follows:

Source: 1995 Annual Report. Co-operation with Mexico.

The drop in allocations in 1995 was due to two factors:

• A large number of NGOs withdrew from Mexico after that signing of the NAFTA; and

• The restructuring of the Mechanisms for Scientific and Technological Co-operation, after which the budgets were excluded.

Many of the projects under way during 1994 were managed by European and Mexican NGOs, benefiting rural areas, agriculture, the environment, etc., actions which were being carried out mainly in the Chiapas region, emergency aid via the ECHO projects, at a ratio of 83% with Community funds and 17% national funds.

1. Economic Co-operation Instruments

The actions carried out in Mexico in the field of economic co-operation have been aimed at strengthening businesses as is also being done in Chile, MERCOSUR, the Andean Community and Central America, to a less intense degree, promoting the private sector in industry, agro-industry, tourism, energy, transport, electronics-telecommunications, biotechnology and the environment.

The mechanism used is the placing of credit lines in the regional banking institutions or the national private banking system, as practised in Central America. Mexico is possibly the country which has obtained the most from the economic Co-operation mechanism through the following instruments: ECIP, Economic Investment Partner; AL-INVEST, EUROCAM, for commercial promotion, the EUROCENTERS in joint venture with the Mexican Business Council, and the Standard and Certification Programme; Trust Funds which have been opened to the private sector, especially the SMEs, in the following banks: Nacional Financiera, NAFIN; National Bank of Mexico, BANAMEX; Servicios Financieros, SERFIN; Banco del Comercio, BANCOMER; and the Banco del Atlantico.

Using only the ECIP instrument, Mexico obtained the approval for 153 co-investment projects with the European Community, resulting from investment interests in: Spain, France, Denmark, Great Britain, Germany and Holland, with the financing contributed up to May 1996 amounting to ECUs 15,656,483 which represents 10% of the resources mobilised by ECIP at a world level.

The co-financing granted by ECIP to the Mexican private sector since the beginning of its operations in the Great Aztec Country amounts to ECUs 173.0 million, distributed among a total of 1,542 companies, the majority in the manufacturing sector.

Reaching to the new millennium, the ECIP operations through the economic co-operation mechanism amount to ECUs 250.0 million for the 1996-1999 four-year period. The most significant aspects of the achievements obtained in the area of Co-operation have been to date and will be in the immediate future: the stimulus of European direct investments, the transfer of technology and know-how, and facilitating Mexican companies' access to the European markets.

Seeking new horizons by means of the use of the National Financial Development Bank, a semi-private company, as a joint instrument with ECIPs, the EU is sponsoring a mutual Co-operation agreement, by means of granting non-reimbursable funds of ECUs 100,000 to the Industrial Processes Exchange of Queretaro State, a mechanism to identify companies with shared or subcontracted production potential, in order to promote Euro-Mexican investments in the metalworking and auto parts sectors, to be exported to the European markets in the immediate future.

The Community contribution represents 43% of the project's total cost and the exchange will contribute the remaining 57%.

As an attempt is being made in the functioning of this scheme to exploit all the existing mechanisms and instruments on both sides of the Atlantic, 12 business meetings in 12 different cities in the country are being organised with the Italian Chamber of Commerce for Italian and Mexican businesses, including mainly the small and medium-sized enterprises, SMEs.

2. The Trade Promotion Mechanism and Instruments

The actions being developed in the area of promoting trade between the EU and Mexico reflect some of the most important objectives of the Framework Agreement signed between both parties, to strengthen, increase and improve the quality of the trade between these two important regions of the world. Activities are carried out by businessmen and their organisations in both regions, Europe and Mexico, by holding meetings of businessmen in different branches of economic activity, exchanging information, eliminating obstacles to trade, improving production and management systems, raising the quality of the products in accordance with international norms, making co-investments, transferring technology and seeking the removal of customs, tariff and non-tariff barriers.

One of the most important objectives of this series of actions is to benefit and transform the sub-sector of small and medium-sized enterprises, SMEs, linking and tightening the relations between those in Europe and Mexico. Another very important aim is to exploit the existence of different instruments and the accumulation of experiences available.

The most important instruments used are:

• The Generalised System of Preferences, GSP, created by the European Communities in joint agreement with the GATT, to benefit the relatively less developed countries, (LDP);

• The Investment Development Programme in which the support project for Mexico's Agro-industrial Sector must be mentioned;

• AL-INVEST, that is, the use of networks of agents on both sides of the Atlantic;

• Standards and certification, an instrument which permits the use of European Co-operation for the design of projects for penetrating the international markets, with particular focus on the fulfilment of the international regulations on quality, metrology and standards.

Taking into account the successes obtained with the business meetings, the European Commission and the Bank of Foreign Trade of Mexico, have approved a 1995-1998 Pluriannual Programme of Business Meetings, to promote five specific sectors, as follows:

• Auto parts;

• Plastics;

• Pharmaceuticals:

• Agro-industries; and

• Real Estate.

The costs of this co-investment will amount to ECUs 14.0 million with a contribution of 50% from each party.

As co-operation relations between Mexico and the EU develop, other implementation instruments have been incorporated with the participation of banking, business and promotion organisations, including some international ones, which exist in Europe and Mexico and others which have emerged in keeping with the characteristics of the country itself, adjusted to the specific requirements to be met, as follows:

Mexican-European Union Business Council

Created to propose, advise and inform Mexican businessmen in their relations with possible European partners, through seminars and advisory meetings.

EUROCAM

Consultation and information instrument with headquarters in Europe to facilitate the access of individual opportunities in any of the Community countries. Publications-guides are prepared.

EUROCENTRE

It is the most common instrument in Latin America, where it assumes the most adequate form and organisation most appropriate for each country. In Mexico, by means of an agreement, the Nacional Financiera and the EU set up a EUROCENTER to promote and facilitate on behalf of Mexican companies the development of Strategic Alliances with European companies and to make the necessary co-investments.

A central objective of the EUROCENTERS' actions is to strengthen, modernise and internationalise the SMEs, to facilitate their insertion in the international markets. The instruments used by the EUROCENTER in Mexico are the following: ECIP, the COPECO Network which groups together specialised operators in investment promotion; Information Networks: BC-NET, BRE, TIPS, RIOST and ALABSUD.

The TIPS Network: Information System for Technological Promotion, established by the European Commission, liases with the United Nations Development Programme, UNDP, to offer the Mexicans information on trade, technology, economic analysis and business opportunities. On the other hand, ALABSUD specialises in subcontracting after the EUROCENTER or the company receives a response to its initiative.

3. Generalised System of Preferences, GSP

The results obtained by Mexico in its co-operation relations with the EU make it one of the Latin American countries which has achieved the greatest advantages and progress not only because of the diversity of the local and European instruments which have been implemented but also because of the drive and aggressiveness of its initiatives as regards making a reality of its insertion and that of its products in European markets.

But undoubtedly the most important instrument from the point of view of a trade co-operation mechanism is and has been the exploitation of the Generalised System of Preferences, GSP, created by the European Union in 1971, in a joint agreement with the GATT, to benefit the less developed countries and compensate their disadvantages when selling to the big markets, mainly to the Community.

Mexico has managed to obtain the 11th place on the list of 166 beneficiary countries because of the volumes placed in the European markets, and 3rd as far as Latin America is concerned.

During the 1988-1992 five-year period, Mexico's total benefits under the GSP grew at an annual rate of 10.42 per cent. Industrial products exported amounted to 74% of total goods, 9% were textile products and 17% were agricultural products.

However, it must be noted that the application of the GSP also has its limitations, since it includes determined ceilings which when reached, preferences are no longer applied to more imports. These limitations have produced uncertainty among the exporters. In addition, the GSP is giving examples of the need to review some lists of agricultural products whose margins should be extended.

4. Co-operation in Other Sectors and Important Activities

While the last Framework Co-operation Agreement between Mexico and the EU, being a Third Generation one, emphasises trade relations and also the important economic relations which are fundamental for extending the free trade zone between these two areas in the world, it also continues to maintain other fields of support and actions aimed at strengthening and improving the environment and the ecosystem, aid for population displacements, the maintenance of conditions for democratisation and the continuous improvement of human rights, as well as important humanitarian aid in emergency situations.

D. Co-operation Instruments with the Andean Pact

The co-operation instruments which are being used to carry out different activities are set out in the Framework Agreement signed in Copenhagen in April 1993, which has a duration of five years. The structure emphasises economic co-operation and financial and technical co-operation, with special mention of the strengthening of the Andean integration process.

The significance of the trade co-operation which emphasises the diversification of the between both parties and the elimination of the obstacles to trade merit attention, as do the GSPs granted since 1990 to the member countries of the Andean Pact.

1. The Economic Co-operation Instruments

Aimed at improving the development of the economies as much as possible, raising production in the sectors of economic activity, and promoting investment flows; this has been carried out in the following ways:

• Project to improve the productivity of the small and medium-sized enterprises, the transfer of technology and to increase trade; cost of the project ECUs 7 M;

• Three-year projects aimed at rural technology (4 projects), food technology (5), wood technology (4), industry (3), and energy with new technology (2);

• To promote the creation of the Andean Confederation of small and medium-sized enterprises;

• To begin the outsourcing programme with the participation of the private sector;

• To strengthen the subregional system of standards, quality control and metrology to promote regional and international trade;

• Through the Simon Bolivar Andean University, to implement a programme of ECUs 3.7 M, for the formation of high level professionals;

• Through joint projects during this period, the following activities were carried out: a) the establishment of an informatics system in the food sector; b) an instrument of information networks on food surpluses, marketing circuits, joint purchases, metal-working, petrochemical and automobile industry development programmes.

2. Financial and Technical Co-operation

These are resources for attending to basic problems which hinder development. The Cartagena Agreement Council adopted a subregional strategy that programmed to supply food to the population in general, programmes for eliminating pests, with the following priority areas: the production of basic grains and short-cycle oleaginous products. These programmes were financed with a Community donation of ECUs 55 M, and 19.5 million contributed by the Cartagena Agreement Council.

3. Trade Co-operation

The trade relations between the Andean Pact and the EU are the most important part of the co-operation programme being carried out, individually or as a whole. Their aim is to promote, develop and diversify the trade to the highest levels, through the granting of high levels of facilitation, and seeking to eliminate or reduce all the obstacles to developing trade, without having reached a total liberalisation of trade or the creation of a free trade zone between the two regions.

Although some of the Andean countries' exportable agricultural products have experienced a series of problems, such as sugar, cocoa and its by-products, flowers, bananas and some other tropical products, it is true that the trade between the two subregions has expanded considerably, such as: Colombian coffee and its by-products, mineral products and their derivatives: such as tin in Bolivia, iron in Venezuela and Peru, Venezuelan aluminium and oil, with this country being the second largest supplier to Europe, after Mexico. The differences in the Andean countries are: Bolivia exports 40% of agro-forestry products; 91% of Colombia's exports are food products; in Ecuador, 77% are food products; Peru sends to the European market: non-ferrous metals (55%), food products (24%), and textiles and clothing (18%); on the other hand Venezuela exports 58% of the oil and its by-products, 6% non-ferrous metals, 6% steel products, 4% chemical products and only 2% are food products.

4. The GSP, Principal Trade Instrument

It is an autonomous instrument of trade policy, aimed at creating an important stimulus for development, production, productivity, selection in the allocation of financial resources, and for the establishment of development priorities. The instrument is simple, because by modulating tariff levels it produces different effects on the economies and the trade relations between the countries. The new revised GSP approved on 19 December 1994 by the EU Council of Minister will be in force for 4 years: 1995-1998.

Because of commitments assumed during the Tokyo Round, the EU, created a special system for the less developed countries, who would benefit from the total or partial elimination of customs duties for industrial products and for an extended or reduced list of agricultural products, according to the case.

The Lomé Convention includes a broader system of preferences than the one approved by the least developed countries, LDCs. Likewise, the Andean GSP grants a very favourable system as compensation for the fight against drug trafficking, which includes the industrial, agricultural and fishery sectors.

Support Instruments for Trade Co-operation

A mechanism of capital importance for making the co-operation instruments fully operative is the role played by businessmen and the private sector in particular.

Business Encounters: a series of meetings between businessmen from Europe and the Andean Community has made it possible to promote the export potential of the Andean region, creating new opportunities for investment in both parties which signed the Framework Agreement.

The Cartagena Agreement Council has proposed a new strategy for penetrating the European market, with two aims: (a) to accelerate the process of consolidating the extended market as soon as possible; and (b) to deepen the Andean competitive insertion in the international markets, not only in the European one.

In this respect, four actions are relevant:

1. The leading role of the businessmen and the economic operators like ECIP, etc., which help the companies to get together;

2. Establishing joint companies;

3. Technical assistance to overcome production deficiencies and/or to make the legal or administrative adjustments necessary; and

4. Strengthening the telecommunications systems and the use of existing or future information networks.

Within the mobilisation of other existing instruments to contribute to the achievement of the objectives of the co-operation between the EU and the member countries of the Andean Pact, the participation of the commercial banks as a private entity could play at least two important roles:

1. Guarantors of the trust funds and at the same time administrators and recovers of the portfolio of loans made to the businessmen who need working and risk capital; and

2. Bank-to-bank relations with the European banking institutions which have been distanced for a long time from Latin American transactions, to accelerate the promotion of exports.

With sufficient encouragement, these economic agents can become direct actors in promoting Andean integration and strengthening the free trade relations between both regions.

Actions planned in the Framework Agreement

In accordance with the Framework Agreement signed in Copenhagen, a series of instruments is planned, aimed at implementing the objectives proposed in each area of Co-operation, with the active participation of private enterprise:

a. Economic Co-operation

Multiplication of contacts between businessmen from both areas: conferences, trade mission, joint participation of companies in fairs and exhibitions, technical assistance by means of sending experts, scientific research projects including exchange, creation of joint enterprises, exchange of information and the creation of networks of economic agents, mainly in industry (AL-INVEST).

b. Trade Co-operation

Promotion of exchange meetings and contacts between company directors; facilitating co-operation between their respective customs services; promoting and supporting trade promotion seminars, etc. to facilitate access to the raw material markets, stabilisation of the raw materials markets and eliminating obstacles to trade.

To broaden the industrial productive base: design specific products to consolidate and extend the existing networks and establish new ones; extend the use of ECIP; creation of joint enterprises, outsourcing, etc.; creation of an EU/Andean Pact business council, and

c. Financing and Technical Assistance

Through the projects to be developed: co-operation between financial institutions; high level scientific and technological research' projects for the protection and improvement of the environment; development of biotechnology; joint research projects; exchange and dissemination of scientific information.

Development of information and telecommunications technologies through programmes and projects, such as:

• Land and space telecommunications; electronics and microelectronics, high definition television, promotion of investments in these fields; by means of expertise and studies, formation of scientific personnel and the promotion of common projects, among others.

• Co-operation in the Agricultural, forestry and rural sectors; the environment, health, social development, the fight against drugs and co-operation in the area of Economic Integration and the Strengthening of the Andean Customs Union.

E. MERCOSUR's Co-operation Instruments

The Advanced Third Generation Agreement, signed in Madrid on 25 December 1995, is one of the most complex agreements which have been negotiated between two parties for the establishment of a Customs Union and a Free Trade Area, namely, between the European Union and the Common Market of the South (MERCOSUR). This agreement differs from others signed by the EU and other Latin American subregions because it seeks, in the first stage, to create a free trade area, by means of the liberalisation of trade, working its way up to a political and economic Association within a reasonable timeframe. This endeavour would forge efforts in favour of the development and well being of more than 540 million people with a high average income.

To this end, the Framework Agreement for Co-operation signed between both parties seeks to identify the existing relationships in trade and economic areas, as well as financial and technical co-operation, including other aspects of mutual interest. To reach the proposed objectives in each field of action, a number of mechanisms and instruments already in place should be linked while others, which may prove essential, need to be created, as indicated below.

Trade Co-operation: In its first stage, trade co-operation seeks to increase and diversify trade in order to prepare the progressive and reciprocal market liberalisation to create the necessary conditions for establishing an Inter-regional Association. The main objective of a Framework Agreement is to intensify trade.

Economic Co-operation: Economic expansion, strengthened international competition, technological and scientific development, and the enhancement of the standard of living for the population living on both sides of the Atlantic Ocean is equally important. The actions in the economic field, which will be implemented in compliance with the provisions of the Agreement, involve the economic agents of the private sector, assigning an important leading role in all productive sectors, without exclusions.

Financial and Technical Co-operation: mainly aimed at strengthening the regional integration process, as the vehicle which will make it possible to create a free trade area and, in consequence, the Association between these two big regions. Of special importance will be those actions geared at bringing closer inter-institutional relationships, training and education, information and culture, and the fight against drug trafficking.

Main Elements of Co-operation Projects and the Most Important Proposed Actions

According to the above-indicated three large co-operation areas, the Framework Agreement provides the guidelines to implement the proposed actions, as can be seen from the following classification:

1. Trade Co-operation

• Market access and liberalisation of all types of barriers;

• The Parties' relationships with third countries;

• Harmonisation of trade liberalisation with GATT/WTO rules;

• Identification of sensitive products that make them priorities for the Parties;

• Exchange of information on services;

• Rapprochement regarding quality control policies for food and industrial products;

• Acknowledgement of agreement, as well as of the possibility of beginning negotiations for mutual recognition agreements;

• Promotion of quality control for products and enterprises;

• Establishment of a protocol for mutual assistance in customs matters;

• Guarantee the effective and adequate protection of intellectual property rights, in accordance with the TRIPS Agreement.

2. Economic Co-operation

• Try to expand economies, strengthen international competition, foster technological and scientific development, and enhance their standards of living;

• Promote regional treatment of co-operation to optimise its results;

• Create economic and social links and networks;

• Intensify organised contacts among operators' networks, through all kinds of business meetings;

• Initiatives to support SMEs;

• Establishment and promotion of networks to support research;

• Investment promotion by the exchange of information, and Bilateral Agreements between the Parties to protect investments;

• Foster encounters among small and medium size enterprises of both Parties;

• Co-operate in the sectors of energy, transport, science and technology, telecommunications, and integrated service networks;

• Taking into account the objectives of sustainable development, promote environmental protection, with institutional and technical assistance to implement joint projects;

• Strengthen MERCOSUR's Economic Integration, as a key objective of the Framework Agreement.

3. Financial and Technical Co-operation

• Foster a closer relationship among the relevant institutions, on the widest basis, exchange of experiences, consulting and information;

• Define the tools needed to upgrade and strengthen education and teaching at the training, university, and inter-business levels;

• Creation of links between their respective specialised entities to improve the use made of technical resources and the exchange of experiences;

• Strengthen cultural links, promotion of events among information media;

• Foster the co-ordination and intensification of efforts aimed at drug-trafficking and its repercussions; and

• Development of joint policies on trade, macroeconomic matters and concerning social cohesion and economic cohesion.

4. Operational Instruments

The MERCOSUR member states have a long history relating to economic, political and trade relations with Europe, and more specifically with the countries that currently make up the European Union. It should be noted that many years before the European Union- MERCOSUR Agreement was signed, a number of co-operation instruments already existed that helped to make trade possible and facilitated co-operation.

The co-operation instruments currently in force within MERCOSUR to reach the objectives indicated in the basic elements of the programmes and projects are:

EUROPEAN

• Third Generation Bilateral Agreements;

• Generalised System of Preferences (GSP);

• Economic Community International Investment Partner, EC-IIP;

• Business Corporation Network, BC-NET;

• Business Council EU-MERCOSUR; and

• AL-INVEST Liaison Programme

MIXED

• EUROCENTERS, European Union-MERCOSUR

Latin American of MERCOSUR

• Amazonic Co-operation Programme;

• ALABSUB, Latin American Association of Outsourcing Exchanges;

• TIPS, Technological Information Promotion System;

• Association of Chambers of Commerce of MERCOSUR;

• Business Association of MERCOSUR; and

• Banking Associations and Financial Organisations of MERCOSUR.

Brief Account of the Functioning of the Instruments

a. Third Generation Bilateral Agreements

The signing of bilateral agreements between the European Union member states and MERCOSUR and vice-versa is provided for in article 12 Promotion of Investment, numeral 2b.

This instrument makes it possible to undertake specific projects among business or institutional groups for the joint development of specific economic activity sectors, or for the development of certain region or zones relating to the environment, industry, and agriculture, production, and social and economic development.

This is the case for the Treaty for Amazonic Co-operation which encompasses, in addition to Brazil, five countries of the Andean Pact, namely, Ecuador, Venezuela, Colombia, Peru, and Bolivia, plus Suriname, and Guyana. Finance is being provided through ECIP and several European countries stand out: Spain and Italy, 14 projects in Amazon territory, on the contamination of mercury, the ecosystems of the Valley of Tapajos, plant coal chemistry, forest cartography, and another one on energy development.

b. Generalised System of Preferences (GSP)

The member states of MERCOSUR have been taking advantage of the tariff rebate system since 1971, when the European Union established the programme. In practical terms, it is perhaps the instrument that is most applied and the most valuable for the countries of the South Cone, which, at the beginning of the 90s channelled their trade as follows:

• Argentina 65% of the total exports allowed under GSP

• Brazil 90% of the total exports allowed under GSP

• Uruguay 70% of the total exports allowed under GSP

• Paraguay 40% of the total exports allowed under GSP

With the facilities provided through GSP, MERCOSUR members have been able to export approximately 400 agricultural products, the most important being: coffee, cocoa, cotton, seafood, cereals, citrus fruits, and a variety of industrialised products.

Brazil ranks second, after China, in terms of being a beneficiary of GSP.

c. ECIP

Instrument designed by the European Community to promote joint investments in different regions of the world. It operates in developing countries in Asia, Latin America, the Mediterranean, and South Africa.

ECIP resources are for the identification and preparation of projects, loans for human resource training, and loans for investments, and even for the purchase stock. A requirement is that there be counterpart participation of local or State banks is required, as well as that of other institutions of a financial nature.

From the moment of its creation in 1988, the MERCOSUR countries were the first Latin American countries to take advantage of the five facilities provided by this Co-operation instrument. Hence, the MERCOSUR countries have ample experience in this respect. The main productive sectors that take advantage of ECIP are: the development of telecommunications, industrial co-operation, energy development, environmental protection as well as its use, and scientific and technical co-operation.

The creation of European-Latin American SMEs is a central objective for ECIP financing aimed at promoting industrial and technological development which in turn makes it possible to concretely identify investment possibilities, establishing the conditions for European businessmen to seek potential partners in MERCOSUR.

ECIP, also known as "Cheysson Facility" provides other opportunities, including, transfers, of capital, technology, capital goods and management services from European enterprises to profitable Latin American enterprises.

MERCOSUR's financial network includes the following banks and institutions: Banco de la Providencia de Buenos Aires, Banco Robert's, Corporación Nacional para el Desarrollo en Montevideo, and by the Instituto Movilizador de Fondos Cooperativos in Buenos Aires. Other affiliated institutions are located in Santiago de Chile, Guayaquil, Caracas, La Paz, and Lima.

d. BC-Net: Business Co-operation Network

Represents a sizeable portion of the European network known as COPECO (Economic Co-operation Network) with 150 business operators, i.e., institutions and organisations that represent affiliated enterprises, such as:

• Chamber of Industry and Trade;

• Professional and employer organisations;

• Financial entities, regional agencies and any other regional development institution;

• Institutions or organisations that act in the realm of inter-company co-operation and information and to foster development; and

• Special advisors for industrial co-operation and investment promotion.

In Brazil, just as in the rest of the MERCOSUR countries, BC-Net networks exist. These networks group business organisations of the main cities of each country. This network is present, for example, in Sao Paulo, Belo Horizonte, and Rio, cities renowned for their intensive industrial transformation and agriculturally related activities.

e. European Union Business Council-MERCOSUR

These instruments serve to prepare technical/economic studies, organise seminars, motivate enterprises and business people, promote rapprochement with the private sector with the European Union acting as promoter and channel, and in some instances, providing financial co-operation.

f. AL-INVEST Liaison Programme

Launched in Madrid in April 1994, AL-INVEST is a Community Programme addressed to 18 Latin American countries for the purpose of ensuring co-operation for transfers and joint activities in the realm of technology, professional expertise and financing. Its area of application covers 30 countries, 18 of which are in Latin America, and 15, European, thus creating a North-South line of co-operation.

AL-INVEST links a number of operator's network, harmonising between networks already in place in Europe and others created in Latin America. In this manner, the European networks are interlinked with Latin American networks.

g. EUROCENTRES

The European Union used the AL-INVEST Programme to establish focal points in Latin America, and in this specific case, in MERCOSUR countries. These focal points are aimed at ensuring the existence of inter-network dialogue, for which European intermediaries must have access to analogue networks in the Southern Cone countries and vice-versa.

The objective sought by the EUROCENTRES for Business Co-operation (EBC) is to group the MERCOSUR operators interested in taking advantage of the benefits stemming from the AL-INVEST Programme. Initially, the EUROCENTRES were established within organisational structures already in place in the countries and which promote business development, investments, and exports. These EBCs are counterparts for the European Local Networks with which they have permanent contact for the conduct of their principal activities. These activities include:

• Informing and sensitising the enterprises of MERCOSUR and Europe in the search for business opportunities and entrepreneurial co-operation;

• Provide information in the quest for European partners and vice-versa;

• Identify and analyse business needs;

• Improve the presentation of investment projects; and

• Work towards rapprochement and dialogue on the basis of meetings at individual, group, institutional, sectoral and regional levels.

EUROCENTRES for Business Co-operation (EBC) of MERCOSUR groups the following entities:

• Fundacion de Empresas, Cordoba, Argentina;

• Camara Argentina de Comercio, Buenos Aires, Argentina;

• CITPAR, Centro de Integracion de Tecnologia de Parana, Brazil;

• INDI, Instituto de Desarrollo Industrial de Minas Gerais, Brazil;

• FIERGS-CIERGS, Federacion de Industrias del Estado de Rio Grande do Sul, Brazil:

• FIRJAN in Association with SEBRAE, Rio de Janeiro, Brazil;

• FIESP, Federacion de Industrias de Sao Paolo, Brazil;

• Camara de Industrias del Uruguay en Asociacion con EMPRETEC, Montevideo;

• EMPRETEC, Montevideo, Uruguay; and

• Camara de Comercio e Industrias, CCI, Asuncion, Paraguay.

The number of EUROCENTRES that exist indicate that business Co-operation has intensified in the main centres and cities of MERCOSUR. This suggests as well that co-investment transactions and operations are also on the rise between Europe and South America.

F. Co-operation Instruments with Chile

1. Brief Background

By the end of the 1980s, Chile's economy already showed rapid growth due to the drastic modifications made to its economic policy in the previous years and aimed at increasing the country's productive capacity, enhancing managerial administration of its business sector and, particularly, promoting an increase in exports to other markets, which together with a tax reform, covering tariff and non-tariff aspects, permitted the elimination of barriers to imports, leading to a significant increase in the efficiency of business competition and to the development of competition among the productive activities within the country.

A number of other positive consequences that should be mentioned are: Chilean economy was able to diversify its exports and search for new and more dynamic markets, a structure which was progressively adjusted to face the challenges imposed by competition in international markets and the ever-deepening insertion in the great trade currents and blocs.

In this sense, and in spite of some problems of a political nature, the Third Generation Agreement signed between Chile and the European Union (previously EEC) allowed for significant advances and for taking full advantage of trade co-operation, economic and financial co-operation, and technical assistance.

Regarding international trade, Chile adopted a new, and increasingly aggressive and bold economic policy, establishing innovative mechanisms to achieve wider links with Europe. Tariff and non-tariff barriers were eliminated, domestic and joint investments were promoted by implementing the ECIP instrument, organising and facilitating the operation of economic agents to create joint ventures, to transfer technology, representation and outsourcing, opening the possibilities for new investments and increasing exportable production.

This policy also assigned a leading role to businessmen of the private sector, enabling them to solve the shortage of venture and working capital to finance investments and restore growth. Fresh funds contributed by the European Union, at that time the EEC, through the ECIP mechanism-instrument, provided the necessary capital flows via joint action with Chile's financial agencies, which assumed a wider participating role in favour of national development.

With this new economic policy in place, it was possible to take the greatest advantage of Co-operation with the European Union, solving very relevant problems:

• Promote a wider level of investments;

• Enhance the administrative and technical capacity, as well as the managerial capacity of businessmen, to make them competitive;

• Increase businessmen's motivation to update the productive apparatus, enabling them to face the challenge of development imposed by the coming millennium.

Thus, progressively and through the great efforts made in the previous decade, Chile prepared to take advantage of all opportunities produced by the Co-operation Agreements with the European Union. The conditions to negotiate a more advanced agreement, namely, the Fourth Generation Agreement, were set. It was signed in Florence, Italy on 21 June 1996, and was the most recent agreement by the European Union, aimed at creating a wide free trade area during its first stage and establishing an association of a political and economic nature in the medium term.

Economic Co-operation

• Promote investments, keeping mechanisms of information, identification and dissemination of legislation and investment opportunities;

• Develop mechanisms of co-financing, especially for SMEs;

• Foster initiatives among enterprises aimed at enhancing industrial quality, training and applied research, as well as transfer and development of technologies.

Financial and Technical Co-operation

• Joint projects of scientific research and exchange, and encounters to make common research projects;

• Technical assistance, training, institutional support, analysis and implementation of projects, information exchange in energy matters;

• Programmes and Projects to fight extreme poverty by the creation of employment, social services, health and education, enhancement of the standard and quality of life for the least favoured social sectors; and

• Development of communications, information and culture, particularly taking into account the different levels of education and its expansion capacity.

2. Instruments of Co-operation

The main Chilean instruments of support to business co-operation are the following:

• CORFO, Corporation of Production Promotion;

• Chilean-German Technological Centre in Concepción;

• CEFOPE, Corporation for the Promotion and Development of Small and Medium Size Enterprises;

• ASEXMA - Chile, Association of Manufactures Exports;

• Bi-national Chambers of Trade and Industry with the member countries of the European Union;

• EUROCHILE, European Community-Chile Business Foundation; and

• PRO-CHILE, Organisation of Chile's Producers and Exporters.

The main European instruments of support to business co-operation are the following:

• AL-INVEST, EU Operators' Network with Chileans;

• ECIP, Economic European International Investment Partner;

• COPECO, Economic Co-operation Network; and

• BRE, Business Contact Office, formed by BC-NET, Business Co-operation Network and RIOST, International Network of Outsourcing Organisations.

Among the principal Latin American Support Networks of Business Co-operation are the following:

• ALASUB, Latin American Association for Exchanges on Outsourcing;

• TIPS, Technological Information Promotion System; and

• FORO BOLIVAR, Bolívar Programme.

EUROCHILE

The European Community-Chile Business Foundation is a private autonomous and non-profit corporation, whose founding partners are the Chilean State and the European Commission. It was created in December 1992.

In order to guarantee the dialogue among analogue networks for European and Chilean intermediaries, the AL-INVEST Program, launched by the European Union in April 1994, sponsors the creation of "focal points" in Latin American, the so-called EUROCENTERS FOR BUSINESS CO-OPERATION, to group all Latin American operators concerned, as Trade and Industry Chambers; Professional and Business Organisations; national and regional organisations for economic development; and institutions specialised in industrial information and co-operation, investment promotion and development promotion.

These EUROCENTRES adopt the structure deemed most convenient for each country, but in all cases the European Commission contributes, in the form of a donation, with 50% of realisation and operation costs during two years, the maximum amount being ECUs 200,000.

EUROCHILE Activities

In the case of Chile, the activities for which it was designed are:

• Make contacts and facilitate technological exchange among trade enterprises and joint ventures, especially to form new businesses.

• Search, process and disseminate technical information about trade standards, processes and opportunities.

• Train and educate human resources.

In particular, EUROCHILE is specialised in offering European businesses and organisations information, technical assistance, searching for Chilean partners, preparation of market, trade and financial technical studies, legal counselling for foreign companies, intellectual property protection, registry of trademarks and patents, as well as support for business arrangements and the organisation of business events.

Currently, EUROCHILE has a capital base of ECUs 12.0 million (about US$ 16.0 million).

G. Co-operation Instruments with ACP (Africa, the Caribbean and the Pacific)

To determine which are the instruments for the implementation of co-operation among the European Union and the ACP States, in which are included CARIFORUM countries, it is necessary to make a reflection to situate in perspective the advances achieved by the four Lomé Conventions and which are summarised in the Fourth and last Convention, negotiated in 1989 and amended by an Agreement signed in Mauritius, on 4 November 1995.

In the course of negotiations of the four Lomé Conventions and during the twenty years of implementation and enforcement of the dispositions contained therein, new instruments and mechanisms have been perfected and added to implement Co-operation among the European Community and ACP member States. Even those institutions have been subject to a process of transformation and change during that period. For that reason, to take into account all operative instruments it is necessary to make a brief summary of the progress made in time and space.

1. The IV Lomé Convention

The structure of Lomé IV is similar to the Third Generation Agreements negotiated by the European Union with the Latin American countries at the beginning of 1990, with the difference that Lomé IV is a programme designed for 10 years and can be reviewed half way through that period. It is thus a long-term Convention which emphasises technical and financial co-operation followed by economic co-operation and which is supported by trade co-operation activities. Naturally, the institutional organisation also has the important role that to organise the political and technical dialogue and the mechanisms and instruments of the relations between the European Union and the ACP countries.

Another difference between the structure of the Lomé IV Convention and the Third Generation Agreements in Latin America is that the latter clearly set out the different aspects of co-operation while the Lomé IV is a complete Development Programme that is packaged into its 369 Articles, divided into five parts which contain the Agreement, 16 Titles, 10 Financial Protocols and the 139 Declarations on a number of points in an annex to the Lomé IV Convention.

Co-operation is divided into the four main aspects contained in the text of the Convention, as follows:

• Political framework;

• Economic co-operation;

• Trade co-operation;

• Technical and financial co-operation; and

• Institutional co-operation.

The Lomé IV Agreement continues to maintain as its central objective the implementation of an organised and structured economic space, conceived as an open institution in time and space, where the basic principles should evolve continuously. The object of the opening in space has become more specific insofar as more countries have increased their participation by being members of the ACP and also of the European Community, until it was converted into the European Union of today, with 15 member countries and 73 nations in Africa, the Pacific and the Caribbean to form a political and economic association of 434.2 million inhabitants and 5.5. square kilometres in four continents.

Initially, three aspects were promoted to achieve the objectives of the Lomé Convention:

• The placing of ACP products in the European markets;

• The organised participation of European investors;

• The protection and development of economic activities.

As regards the organised participation of European investors:

• The EDF: the European Development Fund;

• The STABEX;

• The SYSMIN; and

• The European Investment Bank, EIB.

The EDF's are funds provided by the Members States of the European Union, through a programme to finance investments of an economic and social nature to be distributed among the beneficiaries on a national geographic basis.

During the review of the Lomé IV Agreement in Mauritius in November 1995, the following EDF resources were approved, which were distributed as follows:

Source: Le Courier ACP, No. 153, September-October 1995.

As can be appreciated in the above table, 55% of the Budgeted Funds for the 1995-2000 period are allocated to non-reimbursable aid; 9% to finance social compensation programmes to combat the negative effects of the structural adjustment of the economies; 7% is allocated to capital risk investments; 12% will finance the STABEX instruments with MECUs 1,800.0.

It still cannot be affirmed, because of a lack of updated and precise information about annual activities, that the Lomé Conventions (I-IV) have achieved the central objective of creating an open mechanism in which can be adjusted to time and space, to implement an organised and truly structured Association which will adapted to the basic principles that brought it into being, and based on the evolution of the political, economic and social situations in both areas, and in the rest of the world.

One unquestionably positive achievement is the continued increase in the membership of the States which have been joining the international co-operation effort, begun by a group of ACP countries and the first six signatories of the Treaty of Rome, which began with a simple process of solidarity between the nations when natural disasters or conflicts created by men occurred, until arriving at the creation of a co-participative co-operation "model" to achieve development by means of the political will to support the economic, social and political development of the nations.

Adjustment to today's is still a more complex matter because co-operation is becoming a totally flexible system to be adapted to circumstances. That is, that from Lomé I to Lomé IV, there has been a constant review of principles, objectives and aims in accordance with international situations: economic, social and political ones where the accumulation of experiences has been truly notable, going on from problems of the prices of primary and basic products to the alterations of the raw materials in the big markets, as in the case of oil and its by-products, the production in the mineral-producing countries, the structural adjustment processes, which are phenomena that emerge together with crisis of the international financial system.

New co-operation demands have been made by the ACP countries, aimed at increasing the Food Self-sufficiency programmes, to fight drought, desertification and gain access to the capital markets, the promotion of private investments, the allocation of a leading role to the business sector, and the inclusion of European and ACP economic operators.

In this respect, it will be necessary to adopt new measures to meet new demands. Protected trade in low-value commodities and primary products is no longer a valid basis for economic growth.

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