African-European Economic Relations under the Lome Convention: Commodities and the Scheme of Stabilization of Export Earnings

Abstract

Ever since Raul Prebisch, UNCTAD's first Secretary General, called attention to it in his famous 1964 report (UNCTAD, 1964), the commodities problem has been a priority item on the international agenda in the various forums where the North-South dialogue has been taking place. When the First Lome Convention was signed on 28 February 1975 between the nine countries of the European Economic Community (EEC) and forty-six African, Caribbean, and Pacific (ACP) states, it was hailed as a major achievement, exemplary of the New International Economic Order (NIEO) then emerging within the wider framework of the North-South dialogue. In particular, much was made of the EEC countries' attempt to come to grips with the commodities problem by agreeing to set up a scheme (known as in Lome parlance) for the stabilization of export earnings from commodities exported by the ACP states to the EEC. This system, generally held as the most innovative feature of the Lome6 Convention, seemed to meet some, if not all, of the demands voiced by the developing countries in the context of the NIEO on the problem of commodities. Yet, this was by no means a gratuitous gesture on the part of the EEC. In the first place, the Community's acute awareness of its dependence on raw materials imports from the ACP states, as well as of the latter's dependence on raw materials exports to the EEC, tended to make it responsive to the ACP states' demands in the area of commodities. Furthermore, Stabex, as a system of compensatory financing, constitutes only one of several ways to deal with the problem, but by no means the most effective. Lastly, a preliminary analysis of the actual functioning of Stabex over the period covered by the First Lome6 Convention (1975 to 1979) and the first three years of implementation of the Second Lome6 Convention (1980 to 1982) shows that the system is fraught with many deficiencies relating to its mechanism, financial resources, distribution of benefits and actual operation by the Community's authorities. It has now become clear that Stabex has fallen far short of the high expectations which it initially raised, and that it has not been able to solve in a satisfactory manner the commodities problem encountered by the African ACP states.1