SIGNIFICANCE OF EEC-AFRICAN ASSOCIATION AGREEMENT

Created: 9/13/1963

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SIGNIFICANCE OF EEC-AFRICAN ASSOCIATION AGREEMENT

Aa association convention signed last July and coming up for ratification this fall will govern economic rotations for the next five years beteeen the six members of the European Economic Community and eighteen Associated African and Malagasy states (ACCs). It will bring major economic benefit to the AOCs through increased trade with and aid from the EEC, and will tend to perpetuate Europeanand economic influencearge segment of Africa. On the other hand, its preferential trading arrangements may work against efforts to promote the common interests of the former French, British, and Commonwealth areas io Africa, and will discriminate .Against nonassoclated underdeveloped countries ln Africa and ln such other tropical areas as Latin America. Some of the convention's more radicalcritics are charging that lt lsehicle for continuing European colonial domination.

of the Convention

Tho new convention replaces and is based on the annex to7 SEC treaty which brought within tho community framework the overseas territories then under the administration of France, tbe Netherlands, Belgium, and Italy. From theseassociated" territories,ndependent African countries subsequentlyof them All of these new states chose to maintain this tie with tho EEC on achieving independence, and all agreed lo2 to extend it for one year. Among the original associates, only Guinea has

chosen not to participate ln the new convention.

The original annex,economic in character, provided for EEC developmental aid to the associated countries

0 million and for the gradual institutlonof tariff-free and nondiscriminatory trade between tho associates and all six EEC members. In ths past fivealf years, most of these aid funds have beenand have substantially benefited the Africans. The elimination of tariff barriers has also proceeded as scheduled, but with lesser benefits. Changes in pre-existing trade patterns have been inhibited by language differences, long-standingtrading arrangements, and the great overvaluation of the French-African franc.

Aid to Africa

The new associationprovides an aid program0 million over tbe next five years, of0 million will go to the AOC statesillion to the overseas

THE EUROPEAN COMMON MARKET AND ITS ASSOCIATES

Population

.

' MEMBERS OF THE ASSOCIATION CONVENTION

amcoon

Ctiirjl African Rep. Chad

(Bra ttav file)

Congo (Liopoldvtltel

Daho-iey

Gabon

Iwory Coau

Hologaiy Republic

Mali

M ii 'i Iii-i; ii

Nig*/

Rhonda

Senegal

Somali Republic Togo

0

Upper Volio

iinar

(rounded loiad

Greece Turkey

6 EEC Countries TOTAL

CLASSIFIED MATERIAL ON REVERSE OF PAGE

- SECRET

and dependencies of France and the Netherlands.

illion dollars will be devoted to social and economic development in Africa, and the remainder will be used todiversification andof exportable products. Eighty-five percent of the total aid will be in the form of grants, about six percent in soft loansaximum duration ofearsen-year grace period fornd the rest in bard loans from the EEC's European Investment Bank (EIB).

About two thirds of0 million to be spent by the EEC will be contributed by France and West Germany withillion. Italy will0 million,7 million,illion will come from the EIB itself.

Trade With Africa

Key features of theare the arrangements it specifies affecting trade.

The EEC will abolish all duties and those taxes which have the effect of duties on imports from the AOCs of nine important tropical products including coffee, cacao, and tea. the common external tariff (CXT) on imports of these products from nonassociated countries will be reduced byercent on the above-mentioned products andoercent for other tropical products.

The EEC states, sensitive to the charge that existing trading agreements are stifling AOCare permitting the Africans to impose quantitative restrictions, raise tariff barriers, andor institute customs duties in order to protect their infantThe AOCs are also free to negotiate trade agreements with thirdthe agreements do not conflict with the provisions of the association convention or favor third-country over EEC products.

In keeping with the general liberalization in trade, the Freach price support system for tropical products will eventually be dismantled, but the loss of these supports for the Africans will be ameliorated by the aid they receive for production and diversification. While the aid program is designed to bring about the trading of AOC products at world price levels by the time the convention expireshe EEC is skeptical this goal can be attained. In fact, trade in certain key products will be handled in the framework of the EEC's Common Agricultural policy, which Is presently the object of considerable Franco-German discord.

Tho effect of theseis to create an EEC-African free trade area benefiting its members and discriminating against outsiders. Although all exporters of tropical products will have easier access to EEC markets than at present, the associated Africans will definitely have

the inside track. Id return, the SEC countries will haveaccessarket ofillion consumers, and to such African raw materials as tungsten, cobalt, diamonds, copper, and uranium. Theof SEC industries onsources of supply will be-cone even greater than at present, and Euro-African business ties in general will be strengthened. For example, within three years European companies will be on equal footing with Africanln respect of the right to do business and to render services.

Institutions of the Convention

The institutional organs of the association include anCouncil, Committee,Conference, and Court of Arbitration. Africans and Europeans are to participate in these bodies on terms of equality. Tho Council is to be composed of representatives from the EEC Council, EEC Commission, and the AOCs. Meeting at leastear under tbeember of the EEC Councilovernment official from an AOC, the Association Council will issue opinions, make announcements andand make decisions in common accord with the Community and the AOCs. The Committee will in effect be the working group of the association and will aid the Council in carrying out its tasks.

The emphasis on European-African parity is also apparent

in the Parliamentary Conference, ln which members of the European Parliamentary Assombly and African parliamentarians will be represented equally. Each year tbe Council will submit to theeport of its activities. The Court ofwill consider conflicts the Council ls unable to resolve and asks tbe Court to settle.

Convention's Global Significance

The economic and to some extent political effects of the new convention will be felt most strongly ln areas with economies similar to those of the AOCs.

Nonassoclated states in

East and North Africa have in

particular been concerned about tho convention's implications

for their own competitiveand its possibleon their markets abroad. Certain East African countries have evinced ao interest ln the convention provision permitting

the association of economically similar states. However,Commonwealth preferences and Britain's exclusion from the Common Market will make lt very difficult for these formerterritories to find ameans of doing this.irst step, tbeymay wish to establishmissions at the EECin Brussels.

Tho main opposition toof these and other states is likely to come from France, whichigh degree of

1Yrs

over tho economlos of tuny of its former territories in Africa through financial aid and aanlpulatory devices derived from mutual participation in tho franc zono. Paris is therefore likely to be reluctant to welcome any now associate members from countries remaining in thesrea if this would resulteduction in French influonce over the associated states.

Guinea, tho lone holdout among tbe original associates, has avoidod formal renunciation of association, although until fairly recently it had denounced the EEC as "neo-colonialist." In late July, however. President Sekou Toure

estedossible association arrangement with the Common Market, and praised tbatas an ideal arrangement for Europe. Toure Indicated that he regarded Sovietof the EEC as evidence of its effectiveness.

Tbe Maghreb countries arc not covered by the newand in the past havo bad an ambiguous relationship with the EEC. 7 treaty called for the opening of association negotiations with Tunisia and Morocco, but those have never advanced beyond the sounding stage. Algeria has for some purposes been treated as part of metropolitan France by tbe other EEC countries, and West Germany as well as Franceto Algeria the internal EEC tariff reductions of last

July. More recently, the EEC has decided to give Algeriaonths in which to decide what eventual relationship it wishes to seek. Given the extensive economic ties tbe Maghreb still has with France, it soeasto expect that all three countries will eventually seek some kind of formal association.

Tho association convention will also have repercussions ln Latin America. For example, coffee-producing countries such as Brazil and Colombia will find lt increasingly difficult to compete with the AOC products ln tbe West European market. The difficulties ln prospect on this front were foreshadowed in the bitter argument between various AOC and Latin American countries at the recent coffee conference in London over who ahould hold tbe key positions in the World Coffee

France's Common Market partners may have greater success than heretofore in increasing tboir influence ln the associated African areaesult of their large financial contributions and Increased trade While France willromain dominant. West Germany appears to be keenly alert to such opportunities. Bonn seems also to regard tho convention as potentially for political purposes. It has hinted tbat lt mightcontributions to tho EEC's overseas development fund if any AOC were to recognize East Germany.

Since US investment and trade vlth the AOCs is small and European commercial andinfluence so entrenched, the new convention is unlikely toreat impact on US commercial and trading Interests in Africa itself. However, the discriminatory tradeinherent in the convention are counter to US commercial policy of freeing trade onamost-favored-nation basis. There is also likely to be increasing pressure on the industrialoutside the Common Market to absorb the export products and to support the economicof underdeveloped

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