Article 7. Cooperation
Shall support from the grant allocation:
(a) low-income housing to promote long-term development of the housing sec- tor, including secondary mortgage facilities;
(b) micro-finance to promote SMEs and micro-enterprises; and
(c) capacity building to strengthen and facilitate the effective participation of the private sector in social and economic development.
2. The ACP-EC Council of Ministers shall, after the signature of this Agreement and on a proposal by the ACP-EC Development Finance Cooperation Committee, decide on the modalities and the amount of resources allocated from the long- term development envelope to attain these objectives.
Chapter 3. Financing for Short-term Fluctuations In Export Earnings (FLEX)
Article 8.
1. The Parties recognise that losses of export earnings as a result of short-term fluctuations may jeopardise the development financing requirements and the implementation of macroeconomic and sectoral policies. The degree of dependence of an ACP State's economy on the export of goods, and in particular from agricultural and mining products shall, therefore, be a criterion for determining the allocation of long-term development.
2. In order to mitigate the adverse effects of instability of export earnings and safeguard the development programme jeopardised by the drop in revenue, additional financial support may be mobilised from the programmable resources for the country's long-term development on the basis of Articles 9 and 10.
Article 9. Eligibility Criteria
1. Eligibility for additional resources shall be established by:
- 10 % (2 % in the case of least-developed, landlocked, island, post-conflict and post-natural disaster states) loss of export earnings from goods compared with the arithmetic mean of the earnings in the four years preceding the application year, excluding the most extreme value, or
- 10 % (2 % in the case of least-developed, landlocked, island, post-conflict and post-natural disaster states) loss of export earnings from the total of agricultural or mineral products compared with the arithmetic mean of the earnings in the four years preceding the application year, excluding the most extreme value for countries where the agricultural or mineral export earnings represent more than 40 % of total export earnings from goods, or
- 10 % (2 % in the case of least-developed, landlocked, island, post-conflict and post-natural disaster states) loss of export earnings from the total of agricultural or mineral products compared with the arithmetic mean of the earnings in the four years preceding the application year, excluding the most extreme value for countries where the agricultural or mineral export earnings represent between 20% and 40 % of total export earnings from goods, provided that total earnings do not increase more than proportionally with respect to the impact of the loss of export earnings from agricultural or mineral products as a proportion of total exports.
2. The loss of export earnings defined in paragraph 1 must be 0.5 % of gross domestic product (GDP) or more for there to be entitlement to additional support. Entitlement to additional support shall be limited to three successive years.
3. The additional resources shall be reflected in the public accounts of the country concerned, They shall be utilised in accordance with programming rules and methods including the specific provisions in Annex IV "Implementation and management procedures", on the basis of agreements drawn up in advance between the Community and the ACP State concerned in the year following the application. By agreement of both Parties the resources may be used to finance programmes included in national budget. However a part of the additional resources may be set aside for specific sectors, in particular to develop market-based insurance schemes offering protection against the risk of fluctuations in export earnings.
Article 9A.
1. The amount of additional financial support shall be equal to the loss of export earnings multiplied by the arithmetic mean of the "government revenue/ gross domestic product" ratio of the four years preceding the application year, excluding the most extreme value and capping that ratio at 25 %.
2. The Commission shall analyse the data provided by the ACP States for the purpose of establishing eligibility and additional financial support as defined in Article 9 in the local currency corrected for inflation. The Commission will then convert the potential amount of additional financial support into euro in accordance with its procedures.
3. Each year, within the total financial allocation for national indicative pro- grammes, the Commission shall establish an envelope covering all ACP countries to provide support in the event of short-term fluctuations in export earnings. If the amount of financial support calculated on the basis of the criteria defined in Article 9 exceeds the amount of that envelope, each ACP Stateâs share will be established in proportion to the potential amount of its additional financial support expressed in euro.
Article 10. Advances
The system for allocating additional resources shall provide for advances to cover any delays in obtaining consolidated trade statistics and to ensure that the resources in question can be included in the budget of the second year following the application year at the latest. Advances shall be reserved for states where Flex financial support can be implemented by means of general budgetary support. They shall be mobilised on the basis of provisional export statistics drawn up by the government and submitted to the Commission. The maximum advance shall be 100 % of the amount of additional financial support for the application year. The amounts thus mobilised shall be adjusted in the light of the final consolidated export statistics. Those statistics shall be submitted no later than 31 December of the second year following the application year.
Article 11.
The provisions in this Chapter shall be subject to review at the latest after two years of operation and subsequently at the request of either Party.
Chapter 4. Other Provisions
Article 12. Current Payments and Capital Movements
1. Without prejudice to paragraph 3 hereafter, the Parties undertake to impose no restrictions on any payments, in freely convertible currency, on the current account of balance of payments between residents of the Community and of the ACP States.
2. With regard to transactions on the capital account of balance of payments, the Parties undertake to impose no restrictions on the free movement of capital relating to direct investments made in companies formed in accordance with the law of the host country and investments made in accordance with this Agree- ment, and the liquidation or repatriation of these investments and of any profit stemming therefrom.
3. Where one or more ACP State or one or more Member State of the Community is in serious balance of payments difficulties, or under threat thereof, the ACP State, the Member State or the Community may, in accordance with the conditions established under the GATT, GATS and Article VIII and XIV of the Articles of Agreement of the International Monetary Fund, adopt restrictions on current transactions which shall be of limited duration and may not go beyond what is necessary to remedy the balance of payments situation. The Party taking the measures shall inform the other Parties forthwith and shall submit to them as soon as possible a timetable for the elimination of the measures concerned.
Article 13. Qualification and Treatment of Business Entities
As regards arrangements that may be applied in matters of establishment and provision of services, the ACP States, on the one hand, and the Member States, on the other, shall treat nationals and companies or firms of the ACP States and nationals and companies or firms of the Member States respectively on a non-discriminatory basis. However, if, for a given activity, an ACP State or a Member State is unable to provide such treatment, the ACP State or the Member State, as the case may be, shall not be bound to accord such treatment for that activity to the nationals and companies or firms of the state concerned.
Article 14. Definition of "companies and Firms"
1. For the purpose of this Agreement, "companies or firms of a Member State or an ACP State" mean companies or firms constituted under civil or commercial law, including corporations, whether public or otherwise, cooperative societies and other legal persons and partnerships governed by public or private law, save for those which are non-profit-making, formed in accordance with the law of a Member State or an ACP State and whose statutory office, central administration or principal place of business is a Member State or an ACP State.
2. However, a company or firm having only its statutory office in a Member State or an ACP State must be engaged in an activity which has an effective and continuous link with the economy of that Member State or ACP State.
Chapter 5. Investment Protection Agreements
Article 15.
1. When implementing the provisions of Article 78 of this Agreement, the Parties shall take into account the following principles:
(a) a contracting state may request where appropriate, the negotiation of an investment promotion and protection agreement with another contracting state;
(b) the states party to such agreements shall practise no discrimination between contracting states party to this Agreement or against each other in relation to third countries when opening negotiations for concluding, applying and interpreting bilateral or multilateral investment promotion and protection agreements;
(c) the contracting states shall have the right to request a modification or adaptation of the non-discriminatory treatment referred to above when international obligations or changed circumstances so necessitate;
(d) the application of the principles referred to above does not purport to and cannot in practice infringe the sovereignty of any Contracting Party to the Agreement; and
(e) the relation between the date of entry into force of any agreement negotiated, provisions for the settlement of disputes and the date of the investments concerned will be set out in the said agreement, account being taken of the provisions set out above. The Contracting Parties confirm that retroactivity shall not apply as a general principle unless contracting states stipulate otherwise.
2. With a view to facilitating the negotiation of bilateral agreements on investment promotion and protection, the Contracting Parties agree to study the main clauses of a model protection agreement. The study, drawing on the provisions of the existing bilateral agreements between the states' parties, will give particular attention to the following issues:
(a) legal guarantees to ensure fair and equitable treatment and protection of foreign investors;
(b) the most-favoured-investor clause;
(c) protection in the event of expropriation and nationalisation;
(d) the transfer of capital and profits, and
(e) international arbitration in the event of disputes between investor and host state.
3. The Parties agree to study the capacity of the guarantee systems to give a positive answer to the specific needs of small and medium sized enterprises of insuring their investments in ACP States. The studies referred to above shall be started as soon as possible after the signing of the Agreement. The result of these studies shall be submitted, upon completion to the ACP-EC Development Finance Cooperation Committee for consideration and appropriate action.
ANNEX III. INSTITUTIONAL SUPPORT, CDE AND CTA
Article 1.
Cooperation shall support the institutional mechanisms that provide assistance for businesses and enterprises and promote agriculture and rural development. In this context, cooperation shall help to:
(a) strengthen and enhance the role of the Centre for the Development of Enterprise (CDE) so as to provide the private sector with the necessary support in the promotion of private sector development activities in ACP countries and regions; and
(b) strengthen and reinforce the role of the Technical Centre for Agricultural and Rural Cooperation (CTA) in ACP institutional capacity development, particularly information management, in order to improve access to technologies for increasing agricultural productivity, commercialisation, food security and rural development.
Article 2. CDE
1. The CDE shall promote a business environment which is conducive to private sector development and support the implementation of private-sector development strategies in the ACP countries by providing non-financial services including consultancy services, to ACP companies and businesses and support to joint initiatives set up by economic operators of the Community and of the ACP States. In this regard, due account shall be taken of the needs arising from the implementation of the Economic Partnership Agreements.
2. The CDE shall aim to assist private ACP enterprises to become more competitive in all sectors of the economy. It shall in particular:
(a) facilitate and promote business cooperation and partnerships between ACP and EU enterprises;
(b) assist with the development of business support services through support for capacity building in private sector owned organisations or support for providers of technical, professional, management, commercial and training support services;
(c) provide assistance for investment promotion activities, such as investment promotion organisations, organisation of investment conferences, training programmes, strategy workshops and follow-up investment promotion missions;
(d) support initiatives that contribute to fostering innovation and transfer of technologies and know-how and best practices on all aspects of business management;
(e) inform the ACP private sector about the provisions of the Agreement; and
(f) provide information to European companies and private sector organisations on business opportunities and modalities in ACP countries.
3. The CDE shall also contribute to the improvement of business environment at national and regional levels so as to support enterprises to take advantage of the progress in regional integration processes and trade opening. This shall include:
(a) assisting enterprises in meeting existing and new quality and other standards introduced by progress in regional integration and the implementation of the Economic Partnership Agreements;
(b) diffusing information within the local ACP private sector about the product quality and standards required in external markets;
(c) promoting regional and national business environment reforms, including by facilitating the dialogue between private sector and public institutions; and
(d) enhancing the role and function of national and/or regional service-pro- viding intermediaries.
4. The activities of the CDE shall be based on the concept of coordination, complementarity and added value in respect of any private sector development initiatives taken by public or private entities. In particular, its activities shall be consistent with the national and regional development strategies as defined in Part 3 of this Agreement. The CDE shall exercise selectivity and ensure financial sustainability in undertaking its tasks. It shall ensure an appropriate division of tasks between its Headquarters and regional offices.
5. Periodic evaluations of the activities undertaken by the CDE shall be carried out.
6. The Committee of Ambassadors shall be the supervisory authority of the Centre. It shall, after the signature of this Agreement:
(a) lay down the statutes of the Centre;
(b) appoint the members of the Executive Board;
(c) appoint the management of the Centre on a proposal from the Executive Board; and
(d) monitor the overall strategy of the Centre and supervise the work of the Executive Board.
7. The Executive Board shall, according to the statutes of the Centre:
(a) lay down the financial and staff regulations and the rules of operation;
(b) supervise its work;
(c) adopt the programme and the budget of the Centre;
(d) submit periodic reporting and evaluations to the Supervisory Authority; and
(e) perform any other tasks allocated to it by the statutes of the Centre.
8. The budget of the Centre shall be financed in accordance with the rules laid down in this Agreement in respect of development finance cooperation.
Article 3. CTA
1. The mission of the CTA shall be to strengthen policy and institutional capacity development and information and communication management capacities of ACP agricultural and rural development organisations. It shall assist such organisa- tions in formulating and implementing policies and programmes to reduce pov- erty, promote sustainable food security, preserve the natural resource base, and thus contribute to building self-reliance in ACP rural and agricultural development.
2. The CTA shall:
(a) develop and provide information services and ensure better access to research, training and innovations in the spheres of agricultural and rural development and extension, in order to promote agriculture and rural development; and
(b) develop and reinforce ACP capacities in order to:
(i) improve the formulation and management of agricultural and rural development policies and strategies at national and regional levels including improved capacity for data collection, policy research, analysis and formulation;
(ii) improve the information and communication management, in particular within the National Agricultural Strategy;
(iii) promote effective intra-institutional Information and Communication Management (ICM) for performance monitoring, as well as consortia with regional and international partners;
(iv) promote decentralised ICM at local and national levels;
(v) strengthen initiatives via regional cooperation; and
(vi) develop approaches for assessing the impact of policy on agricultural and rural development.
3. The Centre shall support regional initiatives and networks and shall progressively share capacity development programmes with appropriate ACP organisations.
To this end, the Centre shall support decentralised regional information networks, Such networks shall be built up gradually and efficiently.
4. Periodic evaluations of the activities undertaken by the CTA shall be car- ried out.
5. The Committee of Ambassadors shall be the supervisory authority of the Cen- tre. It shall, after the signature of this Agreement:
(a) lay down the statutes of the Centre;
(b) appoint the members of the Executive Board;
(c) appoint the management of the Centre on a proposal from the Executive Board; and
(d) monitor the overall strategy of the Centre and supervise the work of the Executive Board.
6. The Executive Board shall, according to the statutes of the Centre:
(a) lay down the financial and staff regulations and the rules of operation;
(b) supervise its work;
(c) adopt the programme and the budget of the Centre;
(d) submit periodic reporting and evaluations to the Supervisory Authority; and
(e) perform any other tasks allocated to it by the statutes of the Centre.
7. The budget of the Centre shall be financed in accordance with the rules laid down in this Agreement in respect of development finance cooperation.
ANNEX IV. IMPLEMENTATION AND MANAGEMENT PROCEDURES
Chapter 1. Programming (National)
Article 1.
Operations financed by grants within the framework of this Agreement shall be programmed at the beginning of the period covered by the multi-annual financial framework of cooperation.
Programming will be based on the principles of ownership, alignment, donor coordination and harmonisation, managing for development results and mutual accountability.
Programming for this purpose shall mean:
(a) the preparation and development of country, regional or intra-ACP strategy papers (SP) based on their own medium-term development objectives and strategies, and taking into account the principles of joint programming and division of labour among donors, which shall, to the extent possible, be a partner country or region-led process;
(b) a clear indication from the Community of the indicative programmable financial allocation from which the country, region or intra-ACP cooperation may benefit during the period covered by the multi-annual financial framework of cooperation under this Agreement as well as any other relevant information, including a possible reserve for unforeseen needs;
(c) the preparation and adoption of an indicative programme for implementing the SP, taking into account commitments of other donors, and in particular of the EU Member States; and
(d) a review process covering the SP, the indicative programme and the volume of resources allocated to it.
Article 2. Country Strategy Paper
The country strategy paper (CSP) shall be prepared by the ACP State concerned and the EU. It shall draw from prior consultation with a wide range of actors including non-state actors, local authorities and, where relevant, ACP Parliaments, and shall draw on lessons learned and best practices. Each CSP shall be adapted to the needs and respond to the specific circumstances of each ACP State. The CSP shall be an instrument to prioritise activities and to build local ownership of cooperation programmes. Any divergences between the country's own analysis and that of the Community shall be noted. The CSP shall include the following standard elements:
(a) an analysis of the political, economic, social, and environmental country context, constraints, capacities and prospects including an assessment of basic needs, such as income per capita, population size and social indicators, and vulnerability;
(b) a detailed outline of the country's medium-term development strategy, clearly defined priorities and expected financing requirements;
(c) an outline of relevant plans and actions of other donors present in the country, in particular including those of the EU Member States in their capacity as bilateral donors;
(d) response strategies, detailing the specific contribution the EU can provide. These shall, to the extent possible, enable complementarity with operations financed by the ACP State itself and by other donors present in the country; and
(e) an indication of the most appropriate support and implementation mechanisms to be applied in implementing the above strategies.
Article 3. Resource Allocation
1. The indicative resource allocation among ACP countries shall be based on standard, objective and transparent needs and performance criteria. In this context:
(a) needs shall be assessed on the basis of criteria pertaining to per capita income, population size, social indicators and level of indebtedness and vulnerability to exogenous shocks. Special treatment shall be accorded to the least developed ACP States, and the vulnerability of island and landlocked states shall duly be taken into account. In addition, account shall be taken of the particular difficulties of countries dealing with the aftermath of conflict or natural disaster; and
(b) performance shall be assessed on the basis of criteria pertaining to governance, progress in implementing institutional reforms, country performance in the use of resources, effective implementation of current operations, poverty alleviation or reduction, progress towards achieving the Millennium Development Goals, sustainable development measures and macroeconomic and sectoral policy performance.
2. The allocated resources shall comprise:
(a) a programmable allocation to cover macroeconomic support, sectoral policies, programmes and projects in support of the focal or non-focal areas of Community assistance. The programmable allocation shall facilitate the long-term programming of Community aid for the country concerned. Together with other possible Community resources, these allocations shall be the basis for the preparation of the indicative programme for the country concerned; and
(b) an allocation to cover unforeseen needs such as those defined in Articles 66 and 68 and Articles 72, 72a and 73 of this Agreement, accessible under the conditions set out in those Articles, where such support cannot be financed from the Union's budget.
3. Provision will be made on the basis of the reserve for unforeseen needs for those countries which, due to exceptional circumstances, cannot access normal programmable resources.
4. Without prejudice to Article 5(7) of this Annex concerning reviews, the Community may, in order to take account of new needs or exceptional performance, increase a country's programmable allocation or its allocation for unforeseen needs:
(a) new needs may result from exceptional circumstances such as crisis and post-crisis situations or from unforeseen needs as referred to in paragraph 2(b);
(b) exceptional performance is a situation in which, outside the mid-term and end-of-term reviews, a country's programmable allocation is totally committed and additional funding from the national indicative programme can be absorbed against a background of effective poverty-reduction policies and sound financial management.
Article 4. Preparation and Adoption of the Indicative Programme
1. Upon receipt of the information referred to above, each ACP State shall draw up and submit to the Community a draft indicative programme on the basis of and consistent with its development objectives and priorities as expressed in the CSP. The draft indicative programme shall contain:
(a) general budget support and/or a limited number of focal sectors or areas on which support should be concentrated;
(b) the most appropriate measures and operations for attaining the objectives and targets in the focal sector(s) or area(s);
(c) the resources possibly reserved for a limited number of programmes and projects outside the focal sector(s) or area(s) and/or the broad outlines of such activities, as well as an indication of the resources to be deployed for each of these elements;
(d) the types of non-state actors eligible for funding, in accordance with the criteria laid down by the Council of Ministers, the resources allocated for non-state actors and the type of activities to be supported, which must be not-for-profit;
(e) proposals for a possible participation in regional programmes and projects; and
(f) a possible reserve for insurance against possible claims and to cover cost increases and contingencies.
2. The draft indicative programme shall, as appropriate, contain the resources reserved to reinforce human, material and institutional ACP capacity for preparing and implementing national indicative programmes and possible participations in programmes and projects funded from the regional indicative programmes and for improving the management of the ACP States' public investment projects cycle.
3. The draft indicative programme shall be the subject of an exchange of views between the ACP State concerned and the Community. The indicative programme shall be adopted by common agreement between the Commission on behalf of the Community and the ACP State concerned. It shall, when adopted, be binding on both the Community and that state. This indicative programme shall be annexed to the CSP and shall in addition contain:
(a) an indication of specific and clearly identified operations, especially those that can be committed before the next review;
(b) an indicative timetable for implementation and review of the indicative programme, including commitments and disbursements of resources; and
(c) results-oriented criteria for the reviews.