UNITED NATIONS
E»C O N O M I C a
Distr.
GENERAL
SOCIAL COUNCIL
e/cn.14/207
2o January 1963 Original: ENGLISH
ECONOMIC COMMISSION FOR AFRICA Fifth session
Leopoldville, Februarys-March 1963
Provisional agenda item 10
INTCiRMATION PAPER ON RECENT IEVELOPMENTS IN WESTERN EUROPEAN ECONOMIC GROUPINGS
63-235
e/cn. 14/207
INFORMATION PAPER ON RECENT IEVELOFMENTS IN WESTERN EUROPEAN ECONOMIC GROUPINGS
1. Under Resolution 3i(lll) the Economic Commission for Afrioa at its
third session requested the Executive Secretary to "keep under constant review arid inform members and associate members of the Commission of the continuous and changing impact of the European economic groupings on African economies." To the fourth session was submitted a report on"Recent developments in Western European economic groupings as far as
they concern African countries," (e/cn.14/139 and Add.1). This report
was primarily aimed at keeping the members and associate members up-to- date of the institutional changes in the European Economic Community.
The first session of the Standing Committee on Trade, which met in
September 1962, had before it a paper on "European integration and African trade" (E/CN.14/STC/4), which gave an account of events in
1962 and an analysis as far as it was possible at a time when the main
issues - negotiation on a new convention of association and between the United Kingdom and the Community - were still not solved,2, The negotiations on a new Convention of Association have now been
concluded. The present paper, whioh is purely descriptive and is not intended to be an analysis of the impact of this Convention, will only bring up to date this most recent institutional development. The nego tiations with the United Kingdom are still going on and little can be added to what was written in the paper presented to the Standing Committee on Trade as far as implications for African countries are concerned,3« The old Implementing Convention, whioh came into force at the
beginning of 1958, expired at the end of 1962. It is still too early to get an unambiguous picture of the effect which this Convention may have had on the trade of the associated African countries as well as on theoountries not associated with the Community.-^ Imports into the European
1/ ^or a short appraisal see European Integration on African Trade
(E/CN.14/STC/4) particularly paragraphs 57-63.
Page 2/
■ +«^ ea+--r-. and territories (including
Eoonomic Community from associated St^c ~nd tern
Algeria) increased from S1546 millionin 1958 to S1766 aillxon in 1961 and has grown further in the first half of 1962. The share of the
imports from associated countries of total imports into the Six from outside has nevertheless fallen fractionally during this perio.d.
4. Pive products - coffee, cocoa, tropical woods, vegetable seeds and oils and Wnas - account for .round half of the imports fro* associated
countries into the European Common Market. The value of imports of
cocoa from associated countries fell fro. 1959 to 1961, primarily because of the fall in prices. The decrease was, however, stronger than the
fall in the total value of import of cocoa, " There has also ,een a fall ,oth absolutely and relatively in imports from the associated countrie
^ oi vegetate seeds and oil*, wheraas imports of coffeo remained approzi- ' mately at the same level. Of those five products only imports of
■ tropical woods show an increaee in eharo as wall as in absolute value.
Imports of bananas, which increased in value, Call relatively to total
imports of hananas into the Six during thia period.
5 AS far as the financial assistance is concerned the European Fund had net completely exhausted tie resources at its
the end of ,9«. Of the S581 ,illion earmarked for fxnanc.a
; the five-yea^perica 19^1962, net more than; W0T ;.illi» ^
teen used up till the end oS Novoraber 19«-
6.' The new Conv^ntio,. of isso^lon, which el .oh- a duration of fiv*
years, was initialled ,y «pr..^a,iW,. of ,he Si, -™^
■European Eoanomio Communi--jr- -^ ™* ^S^- ■ ■ .,
, ... .^.,o- rTthor hf-3--io negotiations December 1962 after lor.- anu e.-, «i^e. latnor n.- -
■ - T+^n-tr T.^-pTn^oiiT-a* and Netherlands Belgium, France, Germany, Italy; ^emaoug ana
Burundi,. C^eroun, C.tralJ^o« Kep^lio Chad -ngo ^
Sif^6 -^n3om,Wi To^ «,, ^ -Ita.
E/ON. 14/207
3
The xnitialling of the Convention is only a first step in the ratification
procedure. C^e date and place of the official signature have still to be arranged through diplomatic channels. It has teen proposed that this
ceremony should take place in one of the capitals of the associated States.
After the official signature comes the ratification by the national
assemblies of the meters and associate members. It is expected that the Convention will ePter into force in July 1963. To close the gap between the expiration of the old and the entering into force of the new convention
certain transitional measures have been agreed upon.
7. The Convention concerns in principle only independent States. Measures
concerning dependent countries and territories and the French overseas
departments have yet to be decided by the EEC Council of Ministers on the fcasxs. of Article 136 of the Home Treaty.-!/ ^ main outline hasslready teen agreed-upon as far ao the financial part is concerned. As far as the trade tem,s are concerned the French oversea, departments, which include ton, should pose no problem, fte rules of the Rome treaty in regard of
free circulation of goods should apply to them directly. For the dependent counties and territories, which include the French Somaliland, the terms will no doubt be 4uite similar to those provided for trade between the Community and the independent associated States.
8. The new Convention comprises 62 articles divided into 5 chapters, 7
protocols, 1 annex and 9 statements. For this paper the Convention can be characterised by three attributes, which will be reviewed more in detail
Delow:
(i) The old trade protection accorded to the associated States by
certain metropolitan powers, particularly France, will be gradually repla
ced by a system allowing for competitive pricing.
(ii) The financial assistance accorded to associated States has been
substantially increased and its scope extended.
(iii) There have ben created Euro-African institutions.
1/ Which concerns renewal of the Convention.
E/CN.14/2^7
Page 4
Trade relations :'
9. The future trade relations "between the Six and the Eighteen may basically be said to "be built on a gradual and mutual elimination of all tariff and quantitative barriers on trade between them. The members of the EEC will apply the same tariff-and-quota-*disarmament measures on imports from associated states as they carry out between
themselves. This means that products originating in the associated states will enter the Community without any restriction from the time when the European Common Market is established* Certain tropical commo dities,, which represent an important part of the exports of the associated States, will be admitted free of duty into the six Common Market countries from the time when the new convention enters into force. These commodities
are pineapple, coco-nut, coffee, cocoa, tea, pepper, vanilla, cloves and nutmeg. The pommon external tariff on these products will be applied on imports from third countries from the same time with some reductions.
These reductions are, however, not part of the Convention, The common external tariff on coffee will be reduced by 25 per cent and suspended by 15 per cent which in practice means a reduction of 40 per cent. The same reduction and suspension apply to cocoa. The common tariff on tea will be
reduced by 40 per cent.-^ This implies reductions from 16, 9 and 18 per
cent to 9.6, 5.4 and 10*8 per cent respectively. The tariffs on pineapple, coco-nut, pepper, -vanilla, clovos and nutmeg will be reduced by between 25 and 4^ >©r cent. The associated States will on the other hand reduce
£r$du*ily (by 15 per cent annually) the duties on imports originating in
the Six. This elimination will start,at the latest,six months after the Convention enters into force.10. The tariff quotas provided for in the Rome Treaty for imports of
unroasted coffee into Italy and Benelux and of bananas into Germany will be continued. It has nevertheless been agreed that the common external tariff
J/ It has been agreed in principle in the negotiations between the United
Kingdom and the Community to abolish completely the common tariff on tea.
E/Cfl. 14/207
5■for imports of coffee from third countries should be gradually appli9d.
The dutywillbe one per cent until the end of 1965, thereafter five per cent up to .1970 and after that year the full common tariff.
11. The associated States will suppress at the latest four years after the entering into force of the Convention all quantitative restrictions on imports from the Six. The quotas will be gradually increased starting from a basic quota (the quota of 1959 increased by 75 per cent) by 20 per cent during the first year, 20 per cent second year, 30 per cent third
year and 40 per oent fourth year.
12. Safeguard clauses permit the associated States to impose, maintain or strengthen tariffs, or quantitative restrictions if it is found necessary for economic development, industrialization or fiscal reasons. They may also impose quantitative restrictions, if it is required by membership in regional organisations. It should be noted that the members of the Community also have the right to impose tariffs or quotas on imports from associated States in- the case of serious economic difficulties in a particular sector
of the economy, or balance of payments problems.
13. Ho discrimination is allowed between imports from the members of the European Economic Community into the associated States In this connexion one important point should be mentioned as it may be relevant for future trade relations between African countries. The associated state, will be
permitted to maintain or establish Customs unions or free trade areas between themselves. ^ey win also be permitted to form Customs unions or free trade areas with third countries if this is not "incompatible with the
principles or provisions of the Convention."
14. A timetable has been agreed upon concerning the gradual transition of marketing of tropical products to prices prevailing in the world markets.^/
These measures are timed with an increase in aid to compensate for the
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abolition of the price supports. Marketing at world market prices starts from the 1963-64 season for coco-nuts, pepper, palm oil, cotton and gum arable. For oilseeds and oils (ground-nuts) the transition takes place from the coming into force of a common agricultural policy for these
products, but in any case not later than from the start of the 1964-65
season. The transition to competitive pricing for rice and sugar is;also made dependent upon the coming into force of the common agricultu ral policy. For ooffee the marketing at competitive prices will be
carried out gradually from the season which starts during the second half of 1963. It should be completely accomplished at the latest from
the beginning of the season which opens during the second half of 19^7•
The annual and gradual alignment to the world prices will be between 15 per oent and 35 per cent. The Council of Association will decide which rate to apply before the start of each season.
Aid
15. The financial assistance offered by the European Economic Community
under the old convention consisted only of grants from the EuropeanDevelopment Fund. The new provisions for financial assistance open,
possibilities to give part of the aid in the form of long-term, low interest loans from the Development Fund or standard loans from the
European Investment Bank. The main part - in all $680 million to indepen
dent and dependent associated States - of the assistance envisaged for the next five years is, however, still to be given in the form of grants.
There is nevertheless created a wider scope for financial interventions
in associated States, Such interventions are not as previously limited
to economic and social infrastructure investments, but are in the future
also available for investments in more directly productive investments.
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16. The following table brings out the main features of the financial assistance to be accorded to associated states and territories for the
next five-year period.
Type of aid Allotments Total
To dependent
territories $60 million Grants Long-term loans from European Development Fund
Loans from European Investment Bank
$35 mill. French
territories 35 mill. Dutch
territories $70 mill.
To independent
associated states $620 million Grants
46 mill.Long-term
loans from
European Devel
opment Fund
64 mill.Loans from the European Investment Bank
$500 mill. Economic
and social investments
$ 47 mill. Diversi
fication only $730 mill
$183 mill, diversi fication and production
17. A new concept introduced in the Convention is aid to diversification and production. The aid for diversification is intended to assist in replacing the system of mono-culture with a more diversified agriculture producing at lower coste than at present. The aid for production on the other hand should ease the transition from marketing to higher than world prices of export produce on protected markets to marketing on the world
market at competitive prices. This aid may take the form of direct subsidies.
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18. The following.eleven countries, which will.continue to benefit from a guaranteed price on the French market after the entering into force of
the Convention, will receive aid for both diversification and production.The annual rate of aid for production will be degressive, thus taking into account the "structural reforms realised through the aid for diversi fication, and will disappear completely..at. tfce end. of the five-year period. ," "; ."."''"
Ivory Coast Senegal Madagascar Cameroun
Central African,Republic Niger
Congo (Brazzaville)
Togo
■ Chad Mali
Dahomey
19. The.following four countries already sell their agricultural produce at world market prices. They will therefore get only aid for diversifi
cation.
Congo (Leopoldville) $ 15-0 million
Somalia °-->
Burundi -._. 5-25
Rwanda . - 5.25
$32.0 million
$ 46.
46.
31- 15.
6, 6, 6,
5-
5 5 5
$183 7
■7 .6 ,8 ,8 .5 .4 .7 .7 .6 .5
.0
million
it u ii ii n
M
if*'""
ii it ii
million
e/ch.14/207
Page 9
20. Three countries have pledged themselves to forgo' the guaranteed pricw.son their products from the time the Convention enters into force.
Iheir aid for diversification will be:
Upper" Volta $ 6,0 million
Mauritania 5^0 "
:' Gabon 40n "
0 million .
21, The aid for, diversification and production in all $230 million - falls short of the assistance the associated titctes would have got if the present system of guaranteed prices had been continued. France has therefore promised to make up the difference between the Community aid for these purposes and what the cssocieted ?/c vjos would have received in price, support? i.e. around $100 million for the next five years.
Euro-African
22. The Convention envisages -jhrei institutions,
(i) - A Council of Association, assisted by a Committee of
Association, composed on the one hand of the members of the Council of Ministers of the Eiz ard *k3 members of the Commission and on the other hand of Ministers from each of the associated member States. A repre sentative of the Six and a representative of the Eighteen will alternate as president. The decisions taken by the Council are binding. The Council'institutes the work end tht competence of the Committee ofAssociation, which is composed of one representative of each member and
associate member government and one i-e'presentativa of the Commission.(ii) - A Parliamentary Conference o± Association, which.meets once
a year and which is composed of an e^ual number of members of parliaments of the member ..;-; \; of the Coinnmni-oy and of the associated States,
(iii) - A Court of Association, consisting of five members, to
arbitrate on the interpretation or application of the Convention.
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Establishment rights . * .
23« Within three years of entry into force of the Convention,firms and individuals of EEC - countries should "be given equal rights in setting up and in offering services in the associated States, thus ending the priviliges French nationals are enjoying in many countries at present.
They will, however, not get this right if the member country in question does not accord the same right to firms and individuals of the associated country, A third country may not be offered better treatment than EEC - members, except in the case of regional agreements.
Hew associate members
24* Other States with economies comparable to those of the present associated States are eligible for associate membership, This provision may be used to aocomodate Commonwealth associates. It should be noted
that it is for the Council of Ministers of the Six to deoide whether a country should be admitted as associate member. The Council of Associa tion is only consulted. An increase in the number of associate members will not effect the aid received by the present associates, i.e. new measures additional to the present financial allocation will have to be
found.
Transitional measures
25. Since there is a gap between the expiration of the Implementing Convention and the entering into force of the new Convention, certain transitional measures have been agreed upon until the required number of ratifications - 15 associated States and all member States - has been deposited. The most important ones are:
(i) The elimination of duties between members and associated members will be maintained and executed as under the present agreements.
(ii) The import quotas in both member and associate member States will be maintained at the same level as in 1962, taking into account any modification necessary as a result of decisions which may be taken about the common agricultural policy of the Six,
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(iii) ?he rules about right of establishment in effeot
of 1962 will "be maintained*
(iv) It is anticipated that what was left at the end of 1962 of
the European Development Fund - S5O-6O million ~ will be sufficient to carry the aid programme through the transitional period.
