IV. Main Developments in Regional Arrangements

International Monetary Fund. External Relations Dept.
Published Date:
September 1983
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During the period under review, developments in regional economic cooperation involved mainly efforts to strengthen and expand existing regional arrangements. Negotiations continued on the accession of Portugal and Spain to the EC. At the sixth ministerial meeting to negotiate for Portugal’s accession in February, basic agreements were reached on capital movements, economic and financial affairs, regional policy, transport, and its participation in the European Atomic Energy Community (Euratom). In subsequent ministerial meetings in June and September, basic agreements were also reached on the transitional period for the establishment of the customs union, the introduction of the value-added tax, and direct investment in Portugal by other member states. As regards the negotiations between Spain and the EC, at the tenth ministerial meeting on March 22, agreement was reached on the first six chapters of the accession negotiations covering capital movements, economic and financial questions, right of establishment and freedom to provide services, transport, regional policy, and harmonization of laws. At the twelfth ministerial meeting, progress was made in the negotiations on customs union and the European Coal and Steel Community (ECSC).

New financial protocols to the cooperation agreements between the EC and Morocco, Jordan, the Syrian Arab Republic, Lebanon, Egypt, Algeria, and Tunisia were signed in May, June, and October. The protocols provide for Community aid retroactively from November 1, 1981 to October 30, 1986. During the year, the special trade arrangements applied by the EC to Cyprus and Malta were both extended until June 30, 1983, pending new negotiations.

The Council of Ministers of the ACP (African, Caribbean, and Pacific States)27 and EC held their seventh meeting in Libreville, Gabon, in May, to discuss the operations of the second Lomé Convention. Discussions continued on Stabex (the EC’s export shortfall compensatory financing scheme), in particular the shortfall in resources for 1981, the sugar protocol, and financial and technical cooperation. There were also talks on trade, and industrial and agricultural cooperation. During 1982, Antigua and Barbuda, Belize, and Zimbabwe acceded to the Lomé Convention.

The annual (or in some instances six-monthly) meetings of the joint committees responsible for the management of the free trade agreements between the EEC and EFTA countries28 were held in June and December. The committees noted that, in all countries, the agreements were in general operating satisfactorily. Individual areas of improvement were also discussed.

The EC-Romania joint committee met on December 2–3 to review the operations of the 1980 trade agreement. The two parties decided to start discussions at expert level of a more comprehensive agreement on economic cooperation. Simultaneously, discussions would be held on expanding the number of items included under the present trade agreement.

A framework agreement for cooperation between the EC and Brazil entered into effect on October 1. The agreement, which had a five-year initial duration, replaced the 1974 trade agreement and aims at providing a more stable institutional context to the relationship between the two parties. It was designed to encourage the expansion of commercial cooperation in general between the two parties and to develop economic cooperation through a joint committee established for this purpose.

Representatives of the EC and the Association of South East Asian Nations (ASEAN)29 met on various occasions during the year to discuss progress made in cooperation projects undertaken under the aegis of their cooperation agreement signed in 1980. At the meeting of the EC-China joint committee on November 11–12, the two parties noted consensus on renewing the current agreement that was to expire on May 31, 1983. A widening of the scope of the agreement for 1982 by the inclusion of some ten new products in the liberalization list and increases in a number of quotas was also announced at the meeting.

The annual summit conference of the Economic Community of West African States (Ecowas)30 was held in Cotonou, Benin, during May 28–29, 1982. At the center of the discussion were trade issues, in particular the question whether Article 20 of the Treaty of Lagos, which concerns the according of most-favored-nation treatment within Ecowas, should be suspended for the members of the West African Economic Community (WAEC)31 and the Mano River Union. A special ministerial committee was convened to make recommendations to be discussed during the next summit meeting. Also discussed was the protocol on the definition of community enterprises, which had been agreed earlier in the year. For technical reasons, this was not approved, thus further postponing the lifting of all tariffs on intracommunity trade in goods from community enterprises, which was to have taken effect on May 28, 1981. The heads of state approved the creation of an Energy Resources Development Fund within the Ecowas Fund, to which member states would contribute voluntarily.

The heads of state of the WAEC met in Yamoussoukro, Ivory Coast, in late December. The discussions centered on efforts to satisfy the needs of the populations of member countries for water resources, mass transport systems, and health and education. On the same occasion, the heads of state of the West African Monetary Union (WAMU)32 met to discuss issues of common interest. The final communiqué indicated that work progressed on a regional strategy toward the improvement of financial and economic conditions of the member countries. A decision on the admission of Mali into the WAMU was postponed until a later date.

The African and Mauritian Common Organization (AMCO)33 also convened a summit meeting in Yamoussoukro in late December. The heads of state decided to continue their support of AMCO and to discuss its structure and objectives at the following meeting.

The Senegambia Confederation, uniting Senegal with The Gambia, took effect on February 1. Both countries retain their sovereignty under the terms of the union, but will develop joint policies for defense, foreign affairs, finance, and customs. On July 2, the two Governments signed three protocols covering confederate institutions, financial regulations, and external relations policies. Work continues on the other aspects of the union.

The Niger Basin Authority34 met in Niamey during May 10–13 to continue elaborating the general nature of its activities to realize the objectives of the Authority, which are to harmonize and coordinate national development policies; formulate a general development policy for the Basin; to elaborate and implement an integrated development plan for the Basin; to initiate and monitor an orderly and rational regional policy for the utilization of the waters of the Niger River; and to carry out studies and to elaborate projects.

A summit of the Central African Customs and Economic Union (UDEAC)35 took place during December 17–18 in Yaoundé, Cameroon. The heads of state decided in principle to include Equatorial Guinea as a member of the UDEAC. At a previous meeting of the UDEAC in December 1981, the President of Gabon had invited other states in the region to join the four existing members to set up a “major economic community.” The first meeting of an ad hoc committee,36 charged with elaborating the institutional framework and the legal texts for setting up a possible Economic Community of Central African States (ECCAS) was held in Libreville, Gabon, on May 24.

At the annual meeting of the African Development Bank (AfDB), the decision to allow non-African countries to subscribe to the capital of the institution was ratified. This would allow a substantial increase in its capital.

Since March 1980, the Governments of Australia and New Zealand had been working toward a new agreement to supersede the 1966 New Zealand/ Australia Free Trade Agreement (NAFTA). Proposals outlining the basis for the new arrangement were made public by the two Governments in June 1982 and on December 14 an agreement was signed. The Closer Economic Relations (CER) trade agreement went into effect on January 1, 1983. With the exception of a limited number of products for which the liberalization formulas will be temporarily deferred or otherwise modified, all tariffs between the two countries would be eliminated within a 1–5 year period, depending on the initial tariff level in each case. All import restrictions and tariff quotas for most goods in Trans-Tasman trade, with the same exception, would be eliminated. For each product grouping, the access limit would be increased by 15 percent in real terms, annually, until the access limit reaches $NZ 1 million, and by 10 percent thereafter; access will be completely liberalized by 1995. The agreement also contains provisions pertaining to, inter alia, export incentives, agricultural support and stabilization measures, safeguards, and government purchases. Both countries, under the agreement, retain the freedom to conduct their own trade policies with third countries.

The South Pacific Forum37 held its thirteenth meeting in Rotorua, New Zealand, in August. On economic matters, the Forum affirmed the commitment to develop the fisheries resources of member states for the benefit of their people. At the meeting, the Federated States of Micronesia were made full members of the Forum Fisheries Agency. The question of establishing a Pacific Islands Fund for loans to island nations was postponed pending further study.

During 1982, two countries, Vanuatu and Nauru, became signatories to the South Pacific Regional Trade and Economic Cooperation Agreement (Sparteca). Sparteca, which entered into force on January 1, 1981, provides for nonreciprocal duty-free, unrestricted or concessional access to the markets of New Zealand and Australia for a wide range of products imported from signatory countries.

Member countries of the ASEAN continued to expand the scope of their Preferential Trading Arrangement during 1982. In January, the number of items subject to the arrangement was increased to 8,529, with the addition of 1,948 new items. Moreover, the ceiling on annual import values of items which are subject to a 20–25 percent tariff cut was raised in steps from US$500,000 at the beginning of the year to US$10 million at the November meeting of the Ministers of Finance. At the November meeting, the Ministers of Finance also signed an agreement on ASEAN Industrial Joint Ventures. Such joint ventures should involve private sector cooperation between at least two ASEAN countries and require a minimum ASEAN ownership of 51 percent. Products of industrial joint ventures are assured access to all ASEAN countries, and would be given substantial margins of tariff preference. The ministers also agreed to deepen the tariff cuts on nonfood items already under the preferential trading agreement, and on future exchanges, to a maximum of 50 percent. The ASEAN swap arrangement, which allows credit to be obtained by a member country facing temporary liquidity problems, was extended for another five years from February 1982.

The heads of state of the members of the Gulf Cooperation Council (GCC)38 held their second annual meeting in Bahrain on November 9. At the previous meeting in November 1981, a unified economic agreement, calling for unification and coordination of economic policies, had been approved. According to this agreement, customs duties on intra-GCC trade in manufactured goods were to be abolished on December 1, 1982. At the November meeting, however, it was decided to postpone the elimination of customs duties until March 1983. The ministers approved the formation of a Gulf Organization for Investment (GOI), which would have a capital of US$2,100 million, with shares equally divided between the six member states.

In the Latin American Integration Association (LAIA),39 which superseded the Latin American Free Trade Association (LAFTA) in 1980, progress was made in renegotiating the trade preferences originally negotiated under LAFTA. A high level meeting of government representatives in June reaffirmed the intention of the member countries to put the regional preferential arrangements into effect as soon as possible.

At the meeting of the thirty-fourth Andean Pact Commission,40 held in Lima from March 17–19, agreement was reached on new rules for multinational Andean corporations. Such corporations would be required to have at least 80 percent Andean ownership. Corporations that would be set up in Bolivia and Ecuador would be allowed a gradual reduction of maximum foreign ownership from 40 percent to 20 percent.

The heads of government of the Caribbean Common Market (Caricom) met at Ocho Rios, Jamaica, in November, for the first time in seven years. At the same time, the heads of state of the Organization of Eastern Caribbean States (OECS)41 met for their second meeting since the organization was established in 1981. At the OECS meeting, plans were approved for the conversion of the East Caribbean Currency Authority into a fully fledged central bank. It was hoped that the change would take effect from April 1983. The heads of state also agreed to adopt a coordinated stance in negotiations over marine boundaries with neighboring countries and to investigate the possible presence of oil in the region.

The Government of the United States continued work on the Caribbean Basin Initiative (CBI), which is expected to provide duty-free access, on a unilateral basis, for virtually all goods from the Caribbean area, as well as investment incentives and an aid package of some US$350 million. The CBI was not passed by Congress during 1982.

The 63 ACP states, which are associated with the EC, are divided into the following categories by Lomé II: (1) the least developed countries—Benin, Botswana, Burundi, Cape Verde, Central African Republic, Chad, Comoros, Djibouti, Dominica, Ethiopia, The Gambia, Grenada, Guinea, Guinea-Bissau, Kiribati, Lesotho, Malawi, Mali, Mauritania, Niger, Rwanda, St. Lucia, St. Vincent and Grenadines, São Tomé and Principe, Seychelles, Sierra Leone, Solomon Islands, Somalia, Sudan, Swaziland, Tanzania, Togo, Tonga, Tuvalu, Uganda, Upper Volta, Vanuatu, and Western Samoa; (2) the island and land-locked countries—Antigua and Barbuda, Bahamas, Barbados, Equatorial Guinea, Fiji, Jamaica, Madagascar, Mauritius, Papua New Guinea, St. Vincent and Grenadines, Trinidad and Tobago, Vanuatu, Zaïre, Zambia, and Zimbabwe; (3) others—Belize, Cameroon, Congo, Gabon, Ghana, Guyana, Ivory Coast, Kenya, Liberia, Nigeria, Senegal, and Suriname.

Austria, Finland, Iceland, Norway, Sweden, Switzerland, and Spain; Finland is an associate member.

Indonesia, Malaysia, the Philippines, Singapore, and Thailand.

The members of Ecowas are Benin, Cape Verde, The Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, Togo, and Upper Volta.

The members are Ivory Coast, Mali, Mauritania, Niger, Senegal, and Upper Volta.

Benin, Ivory Coast, Niger, Senegal, Togo, and Upper Volta.

Benin, Central African Republic, Mauritius, Niger, Rwanda, Senegal, Togo, and Upper Volta.

Benin, Cameroon, Chad, Guinea, Ivory Coast, Mali, Niger, Nigeria, and Upper Volta.

Cameroon, Central African Republic, the Congo, and Gabon.

Participating in the meeting were representatives from Angola, Cameroon, the Central African Republic, Congo, Equatorial Guinea, São Tomé and Principe, Zaïre, Rwanda, Burundi, Gabon, the Development Bank of Central African States, the Bank of Central African States, UDEAC, and the Economic Community of the Great Lakes Countries.

Composed of Australia, Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Nauru, New Zealand, Niue, Papua New Guinea, Solomon Islands, Tonga, Tuvalu, Vanuatu, and Western Samoa.

Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela.

Members of the Andean Pact are Bolivia, Colombia, Ecuador, Peru, and Venezuela.

Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts-Nevis, St. Lucia, and St. Vincent and Grenadines.

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