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Cheap cross-border payments: Sharing the benefits of the euro

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Euro payments within the euro area cost close to nothing. People from elsewhere in the EU will now also get to benefit from low-cost payment fees.

On 14 February MEPs will vote on plans to ensure lower charges on euro payments across the EU and increase transparency on currency conversion fees when a payment involves different currencies.

Lower payment charges for countries outside the euro zone

Existing rules already provide for low payment costs between euro zone countries. For example, if you live in Finland and you buy a pair of shoes from Italy, the fee charged for the payment will be the same as for a domestic payment, which in many cases is zero.

However, if you live in Bulgaria, which is not part of the euro area, and you want to order that same pair of shoes, a euro payment to Italy may set you back as much as €24, according to a European Commission study.

The changes to EU legislation would align the fees charged for sending or receiving euro payments by banks and other payment service providers in non-euro area countries with the fees charged for payments in their national currency. That will make euro payments more affordable, boost incentives for consumers to buy from other EU countries, as well as reduce trade costs for businesses.

After striking a provisional agreement with the Council in December, Bulgarian EPP member Eva Maydell, the MEP in charge of steering the plans through Parliament,  said this represented a step forward for the EU’s single market.

“By reducing the unjustified high charges for money transfers, European institutions show that by working together we deliver for our citizens,” she said in a tweet.

Currency conversion charges: informed choice for customers

The legislation also seeks to provide more transparency on the fees charged when one currency is converted into another in a payment transaction.

Imagine a German would like to make a card payment in a restaurant in Poland and is asked whether he prefers to make the payment in euros or in the local currency, the zloty. If he chooses a payment in zloty, the currency conversion will be done by his own bank; if he chooses a payment in euros, the service will be provided by the merchant’s bank.

In the two cases, the charges will be different, but if the client is not given clear and comparable information, he may end up paying more.

The amended rules require that the user is given all currency conversion options, showing the total costs in a clear and neutral manner before the transaction is carried out. Increased transparency should lead to more competition between service providers and lower charges for the service over time.

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Future ACP-EU Partnership

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What is the Cotonou Partnership Agreement between the EU and African, Caribbean and Pacific countries?

The Cotonou Partnership Agreement is the legal framework governing the relations between the EU and 79 countries in Africa, the Caribbean and the Pacific (ACP). It is one of the oldest and most comprehensive frameworks of cooperation between the EU and third countries. Signed in 2000 and due to expire on 29 February 2020, the Agreement unites more than one hundred countries (EU member states + 79 ACP countries) and represents over 1.5 billion people stretched over four continents.

The EU-ACP partnership focuses on the eradication of poverty and inclusive sustainable development for ACP and EU countries. It is divided into three key action areas: development cooperation, political dialogue and trade.

Why does it need to be modernised and why is this important?

The world has changed considerably since the Cotonou Agreement was adopted almost two decades ago in 2000. Global and regional contexts (in Europe, Africa, the Caribbean and the Pacific) have evolved significantly – and so have the common global challenges and opportunities to be grasped. Thus, the core objectives of the partnership have to be reviewed to adapt to the new realities. The EU is therefore seeking a comprehensive political agreement, setting a modern agenda framed by the internationally agreed sustainable development roadmaps (the UN 2030 Agenda, the Sustainable Development Goals (SDGs), the Addis Ababa Action Agenda, as well as the Paris Agreement, the New EU Consensus on Development, the Global Strategy on EU Foreign and Security Policy, etc.). The coming months will be crucial, as the EU is about to enter a new era in its relationship with ACP countries. The negotiations will pave the way for new dynamics and cooperation going beyond the traditional development dimension.

What are the potential benefits? What change will a new era of EU-ACP relations bring for people?

Building on the lessons learned during four decades of cooperation and having assessed the challenges and possibilities in the new context, the future agreement can bring new opportunities. By setting up a powerful political alliance, the EU and its partners will be in a position to develop solutions to the challenges faced in each region. These include growth and job creation, human development and peace, migration and security issues. Many of today’s challenges of a global dimension require a concerted, multilateral approach, in order to achieve tangible results. A good example was the successful coalition we set up in 2015 that ultimately led to the conclusion of the Paris Agreement on climate change. This shows that the ACP-EU partnership has the power to lead responses to global challenges. If we join forces, we can form a majority worldwide, as the EU and ACP countries represent more than half of the seats at the United Nations. Together, we can make a difference and set a global agenda in international forums.

Under the negotiating directives, the EU’s strategic priorities include:

– Speeding up progress towards meeting the goals of UN 2030 Agenda for Sustainable Development and eradicating poverty in all its dimensions;

– Moving inclusive, sustainable and economic development forward;

– Building stronger states and societies (through peace, security, justice and fighting against terrorism);

– Supporting private sector development and enhancing regional integration;

– Promoting and upholding human rights, fundamental freedoms, democracy, the rule of law and good governance;

– Managing mobility and migration issues;

– Supporting the transition to low greenhouse gas emissions and developing climate resilient economies;

– Ensuring environmental sustainability and sustainable management of natural resources.

How do EU and ACP countries intend to achieve these objectives?

Through a new structure better adapted to each region’s needs.

The proposed new structure consists of a combination of:

– A common foundation agreement (containing values & principles common to the EU and Africa, the Caribbean, and the Pacific, and the overarching objectives) at EU-ACP level;

– Three strengthened regional partnerships (EU-Africa, EU-Caribbean, EU-Pacific), in the form of specific protocols. These three strong, action-oriented pillars will enable the relevant actors to participate in the negotiation, governance and implementation of the future partnership while respecting the subsidiarity principle.

These three “regions” will manage the flexible regional partnerships themselves, providing for a greater role for the relevant regional organisations in the establishment and management of the future regional partnerships.

Our new partnership can act as a powerful tool to strengthen our relations with the countries as a group, as well as with each “region” (namely Africa, the Caribbean and the Pacific), and to focus on key tailored priorities. This will also allow for the further development of our “continent-to-continent” relationship with Africa.

What are the specific priorities proposed towards the African region?

The priorities proposed by the European Union for the EU Africa partnership are to focus on achieving peace and stability, managing migration and mobility, consolidating democracy and good governance, unleashing economic opportunities, reaching human development standards, and addressing climate change. The proposal is fully in line with the outcome of the African Union-European Union Summit held in November 2017 in Abidjan.

What is the link between the future ACP-EU Partnership and the new Africa-Europe Alliance for Sustainable Investment and Jobs announced by President Juncker?

The new Africa-Europe Alliance for Sustainable Investment and Jobs aims to bring our continents closer together by promoting a substantial increase in private investment from both Europeans and Africans, helping improve the business environment, boosting trade and job creation, while supporting education and skills that will benefit European and African people alike.

It will therefore contribute to the economic agenda of the African regional pillar of the future ACP-EU Partnership.

Increasing investment in Africa, especially in strategic sectors where the European Union has a value added, is among the EU’s key priorities. The new Africa-Europe Alliance for Sustainable Investment and Jobs is not a stand-alone initiative. It is part of the wider set of strategic frameworks and a crucial element to deliver on the AU-EU Abidjan Summit Declaration.

What are the specific priorities proposed for the Caribbean region?

The key areas of cooperation for the regional partnership with the Caribbean include addressing climate change, vulnerability, citizen security, good governance, human rights, human development and social cohesion. In the same way, fostering inclusive growth, deepening regional integration and ocean governance as well as reducing natural disasters effects are also high on the agenda.

What are the specific priorities proposed for the Pacific region?

The large number of island nations and their huge maritime territories make the Pacific countries an important player for the EU in tackling global challenges, particularly with respect to their vulnerability to natural disasters and climate change. Other priorities should focus on maritime security, sustainable management of natural resources, good governance, human rights, especially gender equality, and inclusive sustainable growth.

Will regional organisations have a role in the post-Cotonou partnership?

The growth of regional bodies has been a significant trend since the 1990s. Across the ACP countries, numerous regional organisations have emerged. Some have become key actors in international relations. The African Union, the Pacific Islands Forum and Cariforum especially have strengthened their respective roles, as have sub-regional organisations in Africa, including ECOWAS and SADC. The EU and the ACP countries will continue to rely on a multi-level system of governance that allows taking action at the most appropriate level (national, regional, continental or ACP), in line with the principles of subsidiarity and complementarity.

Will the civil society and private sector have a role in the agreement?

The EU values structured dialogue and is in favour of a multi-stakeholder approach that includes the private sector, civil society, and local authorities. These partners should be able to work in an enabling environment and have the opportunity to make a meaningful contribution to national, regional and global decision making.

Observer status

The Agreement should include a provision establishing that third parties that subscribe to the values and principles underpinning the Agreement and have an added value in fostering the specific objectives and priorities of the Partnership may be granted observer status.

What will change in terms of funding?

Discussions on the financial implications will be held at a later stage, given that the EU financial instruments are currently under negotiation as part of the European discussions on the next EU Multiannual Financial Framework (MFF) for 2021-2027. In this context, the EU has proposed a new single instrument for external action, superseding a number of existing external financing instruments. This also includes the European Development Fund (EDF) that currently provides support to African, Caribbean and Pacific countries.

What if the Cotonou Agreement expires before negotiations are concluded?

Parties have agreed on transitional measures to extend, without any change, the application of the Cotonou Agreement until December 2020. These measures will ensure the legal and political continuity of the ACP-EU Partnership. This is in line with the validity of the 11th EDF, which also expires in December 2020.

How long will the new agreement last?

The future EU-ACP partnership would be concluded for an initial period of 20 years. Three years before its expiry, a process should be initiated to re-examine what provisions should govern future relations. Unless a decision on terminating or extending the agreement is taken by the Parties, the agreement will be tacitly renewed for a maximum period of 5 years, until new provisions or adaptations have been agreed upon by all Parties. The agreement should also include a “rendez-vous” clause for a comprehensive revision of the strategic priorities, after the expiration of the UN 2030 Agenda.

Will Brexit affect the post-Cotonou agreement?

The EU will soon open talks over the future relationship with the UK, thus we can’t predict if and how ACP-EU relations would be impacted at this stage.

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New ACP-EU Partnership: Moving forward towards a new partnership fit for the future

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Today, new impetus was given to the post-Cotonou negotiations on a new agreement between the EU and African, Caribbean and Pacific countries (ACP) as the two chief negotiators agreed on the way forward.

Commissioner for International Partnerships and the EU’s new chief negotiator, Jutta Urpilainen, said: “I am personally committed to accelerate our talks to try to reach a final agreement soon. We made real progress in today’s meeting to move forward to a new partnership fit to address today’s realities, meet our mutual needs and champion our common vision of the world, solidarity and progress. I am honoured to take up this function as the chief negotiator for a treaty covering over half of the of the world’s nations”.

Robert Dussey, Minister of Foreign Affairs, African Integration and Togolese Abroad, the ACP’s Chief Negotiator and Chair of the Ministerial Central Negotiating Group, said: “We are very pleased to have concluded the first working session with the new EU chief negotiator, Ms Urpilainen. The atmosphere was cordial, the meeting was productive and the discussions were frank and direct. The parties noted significant progress made both on the common foundation and on regional protocols.” Minister Robert Dussey continued: “Regional protocols that focus on the needs and aspirations of African, Caribbean and Pacific countries will ensure that the new agreement is inclusive and at the same time sensitive to the diversity of the ACP group.

Extending the Cotonou agreement until December 2020

The Cotonou Agreement is a comprehensive association agreement, covering the EU-ACP relations. It is due to expire on 29 February 2020. As negotiations on the future agreement are still under way, parties have agreed on transitional measures to extend, without any change, the application of the current Cotonou Agreement until December 2020. Thus, the legal and political continuity of the ACP-EU Partnership will be ensured.

Progress made and next steps

Meeting with the ACP and EU negotiation teams, the two chief negotiators have made substantial progress in relation to the regional partnerships. Both sides have agreed on key chapters of the regional partnerships within the future ACP-EU agreement. In the weeks to come, EU and ACP teams will carry on the negotiations, merging proposals and fine-tuning the text of the agreement. These include the general provisions, means of cooperation, institutional framework and final provisions.

Background

Negotiations on a new ACP-EU Partnership were launched in September 2018, in New York, in the margins of the United Nations General Assembly.

The initial rounds of talks mainly focused on the “common foundation”, which sets out the values and principles that bring the EU and ACP countries together and indicates the strategic priority areas that both sides intend to work on together.

The future agreement is due to include specific, action-oriented regional partnerships focusing on each region’s needs. Consultations on the regional partnerships were concluded in spring 2019.

The future ACP-EU Partnership will serve to further cement the close political ties between the EU and ACP countries on the world stage. Together, the ACP countries and the EU represent over 1.5 billion people and more than half of the seats at the United Nations.

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Trade preferences boost developing countries’ exports to the European Union

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Exports to the European Union from developing countries using special tariff preferences under the EU’s Generalised Scheme of Preferences (GSP) reached a new high of €69 billion in 2018. According to the European Commission’s report published every two years on the GSP, released today, exports to the EU from the 71 GSP beneficiary countries increased to almost €184 billion. Nearly €69 billion of these used GSP special preferences.

High Representative for Foreign Affairs and Security Policy/Vice-President of the European Commission Josep Borrell said:  “Trade is one of the crucial tools the EU has at hand to address, support and improve human rights, labour rights and good governance, which are pillars of sustainable development, around the world. Through the EU’s Generalised Scheme of Preferences, we support developing countries to grow and advance in a sustainable way, not least when it comes to climate action. Our preferential trade tariffs help to take thousands out of poverty, to reduce inequalities, and to bring economic growth.

Commissioner for Trade Phil Hogan said: “Thanks to our trade preferences, the EU imports twice as much from least developed countries as the rest of the world does. This trademark tool of the EU’s trade policy underpins millions of jobs in the world’s poorest countries and acts as an incentive to countries to implement international conventions on human rights, labour rights, good governance and the environment.

The Generalised Scheme of Preferences removes import duties on developing countries’ exports to the EU.  By creating additional export opportunities, it helps the countries to tackle poverty and create jobs while also respecting sustainable development principles. For instance, today’s report shows that, thanks to the GSP, countries like Sri Lanka, Mongolia and Bolivia are more effectively tackling child labour.

The EU’s trade agenda contributes to the United Nations Sustainable Development Goals around the world. The preferences provide beneficiary countries with an incentive to take further steps towards effectively implementing international conventions related to human rights, labour rights, environment and good governance.

Challenges remain in many of the 71 GSP beneficiary countries, including when it comes to restrictions on civil society and freedom of the media, access to justice, minorities’ rights, capital punishment and freedom of association.  Insufficient progress, including in some of the largest beneficiaries, has resulted in the EU increasing its monitoring and enhancing its engagement, in particular regarding human rights and labour rights.  In the case of Cambodia, this has led to the EU initiating the procedure to temporarily withdraw preferences because of the serious and systematic violation of the principles of core United Nations and International Labour Organization conventions. 

The report looks at the extent to which GSP countries make the most  of the scheme.  It also examines a number of overarching issues such as the freedom of civil society to operate, progress on tackling child labour, and environmental and good governance concerns.  The report gives examples of how the EU works with all stakeholders, such as civil society, international organisations – in particular the United Nations and International Labour Organization monitoring bodies – and beneficiary country authorities to make GSP more effective and to make sure that trade and values advance simultaneously.

EU industry is an important partner in making sustainable development a reality by investing and producing in, and sourcing from, GSP countries and by ensuring that international labour and environmental standards are met.

Background

This third biennial report is accompanied by ten Joint Staff Working Documents written by the European Commission and the European External Action Service.   Nine of the documents assess the performance of each of the nine beneficiaries of the GSP+ arrangement; the tenth assesses the three GSP beneficiary countriesBangladesh, Cambodia and Myanmar, with which the EU started enhanced engagement in 2017 – a more intense dialogue on issues related to human rights and labour rights. 

The EU’s GSP has three arrangements:

A General Arrangement for low and lower-middle income countries, providing the partial or full removal of customs duties on two-thirds of tariff lines (15 beneficiaries);

GSP+ is a special incentive arrangement for sustainable development and good governance.  It slashes these same tariffs to 0% for vulnerable low and lower-middle income countries that implement 27 international conventions related to human rights, labour rights, protection of the environment and good governance (8 beneficiaries);

EBA (Everything But Arms) is a special arrangement for least developed countries, giving them duty-free, quota-free access for all products except arms and ammunition (48 beneficiaries).

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