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IB Geography: Resources - Trade Not Aid
IB Geography: Resources - Trade Not Aid
IB Geography: Resources - Trade Not Aid
IB Geography: Resources - Trade Not Aid
IB Geography: Resources - Trade Not Aid
IB Geography: Resources - Trade Not Aid
IB Geography: Resources - Trade Not Aid
IB Geography: Resources - Trade Not Aid
IB Geography: Resources - Trade Not Aid
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IB Geography: Resources - Trade Not Aid

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http://www.geographyalltheway.com/ib_geography/ib_resources/trade_not_aid.htm

http://www.geographyalltheway.com/ib_geography/ib_resources/trade_not_aid.htm

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  • 1. Trade not Aid
  • 2. Lomé Convention • Started in 1975 • Signed in Lomé, the capital of Togo • EU’s comprehensive trade-and-aid agreement with developing countries in Africa, the Caribbean and the Pacific (ACP) • ACP states – 71 members. • 48 in Africa, 15 in the Caribbean and 8 in the Pacific are Europe’s former colonies. • Many of the ACP countries are amongst the poorest countries in the world.
  • 3. Aid • Part of the Lomé Convention • Aid aka Development Assistance • Distinguishing feature: concentrates more on agricultural and rural development projects • Compared to those of the USA and Japan the EU’s aid programme is considered to be less concerned with strategic and commercial relationships and more focused on development
  • 4. Trade • Trade is a key factor influencing prospects for sustainable and equitable growth amongst developing countries • Increased trade if often seen as a means of combating poverty through providing jobs and income-earning opportunities • In order to help stimulate the economies of the of the ACP states, the Lomé Convention guarantees special access to the European market place • 95% of all ACP exports enter the EI market duty free • This, in theory, should give ACP states competitive advantage and stimulate ACP exports to the EU • The ACP countries are still allowed to tax European-made products entering their countries. • It is ‘non-reciprocal’
  • 5. Success? • Evidence from the past 15-20 years suggests that the Lomé Convention’s trade preferences have not acted as a great stimulus to ACP exporters • Trade preferences alone appear to be an insufficient mechanism to stimulate sustainable and equitable growth in developing countries • It appears that rather than being an ‘engine for growth’ the Lomé Convention acted as a ‘life support mechanism’ for many of the ACP states.
  • 6. Why? • There is a lack of industrial culture in many of the ACP states. • The absence of port infrastructure, banking facilities and entrepreneurial activity means that many of the ACP couldn’t take advantage of the opportunities offered • Has Lomé locked ACP counties into unfair trading relationships. • Whilst the developing counties of the ACP exported low value primary products, European counties exported high value manufactured goods. • The impact of Globalization – in 1975 EU trade tariffs stood at 10% - with various free-trade agreements etc and WHO intervention the EU trade tariffs have dropped to under 3%
  • 7. Replacement • In June 2000 a new trade and aid agreement was reached between the EU and 71 ACP countries • The treaty became known as the Cotonou Agreement, after Cotonou in Benin, where the convention for the agreement was held • The Cotonou Agreement is expected to run for 20 years. • The new deal transforms the previous convention into a system of trade and cooperation pacts with individual nations • Some of the poorer ACP states will continue to enjoy virtually free access to European markets and there will be regional free trade agreements between the EU and better-off developing countries

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