EPA Update
By Melissa Julian, ECDPM
This is the longer, more detailed version of the TNI EPA Update in the November 2007 issue of Trade Negotiations Insights.
Summary
*EU agrees additional EPA development support and new flexible approach to conclude EPAs by year end deadline, but is it enough?
* Afrique centrale. Le bât blesse à nouveau
*EU reacts negatively to West Africa waiver extension request
*SADC negotiations progressing
*Crucial ESA-EPA meeting on market access and development
*EAC countries agree to put forward common market access proposals
*Indian Ocean Commission also agrees to table market access proposals
*Caribbean high level meeting narrows the gaps on contentious issues
*Pacific-EC agree to go for interim EPA by year's end
*EU agrees additional EPA development support and new flexible approach to conclude EPAs by year end deadline, but is it enough?
European Union (EU) Foreign Ministers at their 15-16 October meeting adopted an EU Aid for Trade Strategy setting development assistance commitments to help developing countries develop the capacity to trade. In total, EUR 2 billion will be potentially available every year from 2010, with a bout half of that specifically targeted for African, Caribbean and Pacific (ACP) countries. ACP countries have been anxiously awaiting the strategy and the European Commission (EC) and the EU Member States see it as delivering on a major ACP demand in the Economic Partnership Agreement (EPA) negotiations for additional financial resources to be provided for the adjustments that will be required from undertaking an EPA to enable the ACP to benefit from EPAs. But is this enough for the ACP? How to link trade liberalisation commitments to development support in the EPA is a key sticking point in negotiations, with the ACP insisting on legally binding support in the EPA to match the legal commitments they will take to liberalise trade (see separate article on Aid for Trade in this issue of Trade Negotiations Insights). There are also now questions about whether the 10 th European Development Fund ( EDF) will be ratified and programmed in time to provide support to the ACP from 1 January 2008 when commitment of funds from the 9th EDF ceases . The 10 th EDF will not be established until the EDF is ratified by the requisite 53 ACP and 27 EU countries. At present only 26 ACP and 15 EU have ratified. Conditions for ratification should be in place by 13 November in order to establish the 10 th EDF by year's end.
The EU Council also endorsed the EC's new approach in the EPA negotiations, also outlined to the 22 September informal EU Development Ministers meeting, to focus on at least signing interim WTO compatible EPA agreements on market access in goods with ACP regions, sub-regions or individual non-Least Developed Countries (LDC) countries to replace the WTO's Cotonou Agreement's preferences waiver which expires on 31 December. Any details of the agreement not yet completed, on product specific liberalisation schedules and development provisions can be negotiated early in 2008. The EC aims for the interim agreements to include commitments and timetables to negotiate trade related issues (TRIs). Not all ACP regions may be willing to sign up to that (the Southern African Development Community (SADC) in particular). Interim agreements should be initialled by the end of October/early November in order to allow sufficient time to pass through EU legislative procedures in time for agreements to be in place by the end of the year. The shift in approach is needed to avoid disruption in trade when the WTO waiver expires at the end of the year and in the face of negotiation delays due to constraints on the ACP side, in particular in relation to tabling market access offers, but also in the face of strong demands from the EU, such as for Most Favoured Nation Treatment clauses to be included in the EPA [i.e. that any future concession in both goods and services granted by ACP regions to a country enjoying more than a 1 percent share of world merchandise exports, such as China, Turkey, India and Brazil, should be automatically conferred to the EU. Acceptance of such an EC proposal would pose severe challenges to the ACP.] seeking to set precedents for its global trade strategy and eventual trade agreements with Brazil, India and China, but which the ACP say are ill fitted to the EPA objective of gradual trade liberalisation as a development tool. The Pacific and SADC regions are going this two phase route. The Eastern and Southern Africa (ESA) region as well, though insisting development aspects must be part of the EPA interim agreement to be signed this year. Central Africa may be considering this option. West Africa has rejected the approach, calling instead for an extension of the current WTO waiver to continue EPA negotiations. The Caribbean continues to negotiate with a view to concluding a comprehensive EPA (including development aspects and TRI) by the end of year deadline. See the separate article in this Trade Negotiations Insights on the pros and cons of this two stage approach.
There is still much work to be done to reach agreement on a minimum EPA interim agreement. And confidence in the EC has been strained by the EU's unilateral denunciation of the 30 year old ACP Sugar Protocol's preferential access to the EU market in the middle of the EPA negotiations, but without providing any assurances of how its benefits will be transposed into future EPA agreements.
The EC will present a report on EPAs progress to EU Member States the week of 22 October. Progress will also be assessed at joint ministerial meetings in November. If there is no progress and the threat of reinstating tariffs remains, EPAs may become a major agenda item at the EU-Africa summit in December.
The new two phase approach does not answer the question of what happens if a region is not able to table a market access in goods offer. The EC maintains that there is no other legal option as good as an EPA to the year end deadline expiry of WTO Cotonou trade preferences waiver. In an open letter to anti-poverty campaigners on the 27 September “Global Day of Action Against EPAs”, EC Trade and Development Commissioners Mandelson and Michel urged them to support EPAs and argued that the WTO's end-of-year deadline cannot be missed if Europe and the ACP are to ensure that ACP countries retain the best possible access to the EU market, without fear of legal challenge from non-ACP developing countries. They also issued a paper outlining why the Generalised System of Preferences Plus (GSP+) is not an alternative.
The West African EPA group and the African Union Chairman (at the United Nations General Assembly) have asked the EU to relax the time lines set for the agreement. World Bank officials also say the EC should not be threatening disruption of trade and have said more time and flexibility is needed in the EPA negotiations.
Trade experts argue that if, in January 2008, the EC becomes the first Commission in 50 years to impose a wide-ranging increase of EU tariffs on many of the poorest countries in the world, it will be by choice, not legal compulsion, and that this would cast serious doubt on the EU's development credentials. They argue that it is impossible to complete EPA negotiations by the end of the year without jeopardising the ACP 's development prospects and undermining regional integration. The EC could seek an extension of the WTO waiver or fine tune its GSP to avoid raising tariffs in the middle of EPA negotiations.
*Afrique centrale. Le bât blesse à nouveau
[for a shorter version in English, click here]
Selon Peter Thompson, négociateur en chef de la partie européenne, les négociations de l'APE avec l'Afrique centrale auraient connu des avancées depuis notre dernière mise à jour, notamment dans les domaines des services, des investissements et du renforcement des capacités. Il a toutefois déploré un manque de progrès sur l'accès aux marchés, concernant surtout les tarifs douaniers à l'importation.
Sur les questions d'accès aux marchés, la liste régionale des produits sensibles reste à déterminer. Afin de ne pas retarder les travaux, certains pays d'Afrique centrale ont fourni des listes à titre provisoire. Des travaux d'harmonisation ont eu lieu à la mi-octobre à Bruxelles en vue des réunions techniques conjointes programmées à partir du 22 octobre. Cette série de réunions devrait aboutir à la ministérielle conjointe du 29 octobre, à l'occasion de laquelle les parties pourraient signer l'APE.
Toutefois, de nombreuses sources en Afrique centrale ont indiqué que les réunions de Kinshasa se sont soldées par un échec. Pour la région, l'APE doit être un accord de développement dont l'accès au marchés n'est qu'un des piliers, l'autre étant le renforcement des capacités. Or, suite aux réunions de Kinshasa, du 19 au 29 septembre, il semblerait que, sur ce dernier, le bât blesse à nouveau.
Lors des réunions de Kinshasa, la partie Afrique centrale a en effet déploré l'absence de la partie consacrée au renforcement des capacités et la mise à niveau dans le nouveau projet de structure du texte soumis par la partie européenne.
Cette question est d'importance fondamentale pour la CEMAC. Il est estimé que sur cette question, le fonds du problème réside dans le double langage et l'incapacité de la DG Commerce à discuter des questions de développement et à endosser les avancées réalisées au niveau de la DG Développement, faute de mandat. De plus, pour la CE, la question du financement ne sera réglée qu'après signature. Cette dernière ne semblerait par ailleurs plus disposée à inclure dans le texte de l'Accord, mais en annexe, la création du Fonds régional APE (FORAPE) destiné à soutenir les efforts de renforcement des capacités.
Toutefois, certains ont indiqué qu'en l'absence d'engagement ferme et de garanties sur l'additionnalité des ressources et les mécanismes de financements, les PMA de la région pourraient opter pour le régime Tout Sauf les Armes. Des réserves auraient également été émises quant à la signature de l'APE par certains membres du Comité national de négociation des APE (CONAPE) du Gabon, estimant que le pays ne serait pas plus mal loti en cas d'acceptation du système SPG « le système de partenariat généralisé ». Les parties ne sont par ailleurs pas parvenues à s'accorder sur une méthodologie d'évaluation des pertes de recettes. L'UE aurait proposé une méthodologie mais la CEMAC n'a, à l'heure actuelle pas fait de contre-proposition. La volonté de la CE d'inclure des conditionnalités politiques (bonne gouvernance) au déboursement des fonds et de voir les Etats membres de la région contribuer au fonds a également été déplorée.
Plusieurs questions restent par ailleurs en suspens au niveau technique. Les parties ne sont pas parvenues à avancer sur la question des règles d'origine. Tandis que la CEMAC souhaite retenir les règles de Cotonou , CE propose de définir les règles d'origine sur le principe de valeur ajoutée, a hauteur de 70%.
Sur le commerce des services et les investissements, les deux parties ont échangé leurs offres. Certains estiment toutefois que l'offre de l'UE sur les service est une « coquille vide » dans la mesure ou certains pays, notamment les partenaires commerciaux de la région ont fermé les secteurs jadis ouverts à l'OMC.
Au vu des retards pris, certains estiment que les négociations ne pourront être conclues dans les délais, faute de temps. L'option d'un accord cadre ou partiel fait son chemin dans les discussions et la question est posée de savoir s'il serait raisonnable de signer un accord le 29 octobre au vu du retard pris. Toutefois, certains se montrent inquiets par rapport à cette proposition car il s'agirait alors de signer un accord partiel portant uniquement sur le commerce des marchandises, laissant de cote ou pour plus tard le volet développement ou renforcement des capacités, pourtant crucial pour la région. Certaines sources ont déploré l'inadéquation entre le politique et le technique, amplifié par la CE dans la mesure où elle s'engage dans des discussions au niveau politique au lieu d'aplanir les divergences techniques. Cette division est une source de préoccupation de la région et certains estiment qu'elle est à la base des avancées fulgurantes des négociations relevées récemment.
Certains membres de la société civile d'Afrique centrale, tout en reconnaissant l'importance de poursuivre les négociations, se sont également dit en faveur d'accorder plus de temps aux négociateurs pour parvenir à un APE réellement axé sur le développement. Au niveau national, il a également été fait appel pour l'organisation d'une concertation nationale pour la ratification des APE. Par ailleurs, une centaine d'industriels africains, dont de nombreux en Afrique de l'ouest et centrale, ont signé une pétition contre la conclusion des APE.
*EU reacts negatively to West Africa waiver extension request
As we go to press, there is a joint meeting of the West Africa-EC Senior EPA officials taking place in Brussels to discuss how to move forward in the EPA negotiations deadlocked following the West African's request for the EU to submit a request to extend the 2001 Cotonou trade preferences waiver to the WTO to allow more time to complete West Africa's EPA negotiations. EU Ministers at the Economic Community of West African States (ECOWAS)-EU Ministerial Troika meeting on 11 October reacted negatively to the West African's waiver request. Press reports indicate that EC officials were more straightforward saying "We cannot and will not ask the WTO for a waiver …. The only possibility is a two-stage approach" i.e. both parties could seek a WTO-compatible interim agreement covering their trade in goods, leaving other issues to be solved next year.
West African Ministers, however, rejected, after heated debate between Member States and ECOWAS and West African Economic and Monetary Union (WAEMU) Commissions, the EC's two stage approach at their 5 October EPA Ministerial Follow-Up Committee in Abidjan . WAEMU and Cote dÍvoire reportedly led a group of Member States who wanted to go for the two stage EPA approach proposed by EC. Nigeria and ECOWAS led a majority of Member States who's position was finally adopted as the regional position that the joint preconditions agreed in February for signing an EPA had not been met (joint definition of accompanying measures for the EPA and their financing; market access liberalisation schedules; and drafting of legal text) and that more time is needed to conclude an agreement which takes West Africa's concerns into account. Not even a market access in goods only agreement is possible since West Arica 's market access offers, lists of sensitive products, rules of origin and studies on fiscal impact are not yet completed and institutions for development support not yet agreed. Ministers, therefore, requested the EC request an extension of the WTO waiver to allow more time to complete EPA negotiations. Ablasse Ouedraogo, special adviser for trade negotiations to the ECOWAS President says it "should take less than two years" for the West African bloc to prepare to sign the deal.
* SADC negotiations progressing
As we go to press, SADC and EC EPA negotiators are meeting in Maputo the week of 15 October to continue on from their end September EPA negotiations. The pace of negotiations, capacity constraints and political sensitivities result in little information being available on the details of the negotiations. The two sides are reportedly working towards a 15 November deadline to initial an EPA market access in goods only agreement to be put in place at the end of the year when the Cotonou waiver expires. The focus of negotiations has, therefore, been on market access in goods, where officials indicate good progress is being made in discussions on the Southern African Customs Union (SACU) offer. Mozambique is expected to make its market access offer at the Maputo meeting. Officials indicate that Angola will not likely make an offer until the end of the year, if at all (it may choose to keep “Everything but Arms” market access). Tanzania has not yet made an offer and observers still suspect Tanzania may leave SADC to go to the ESA and/or East African Community (EAC) region to conclude an EPA.
Agricultural products remain the most difficult tariff area in negotiations and unexpected divergences were encountered on fisheries, sources indicate.
The EC proposal on rules of origin was well received and will be studied by SADC. Cumulation with at least ESA also remains to be studied.
On services, SADC proposed a South Africa-drafted text excluding any commitments. On other trade related issues, the two sides remain far apart (the region would discuss cooperation with the EU could assist in the development of institutional policy and legislative infrastructures, but made no binding commitments). But with the new two step agreement approach the EC is now not insisting to include these issues in the interim agreement at the end of the year. SADC is concerned, however, with suggested EC wording in the interim EPA text “with a view to take commitments” by a certain date on TRIs.
South Africa 's deputy minister of trade and industry, Dr Rob Davies, says another obstacle to the conclusion of the EPA talks is the issue of a contractual assurance of development support from the EU. The EU's current position on Aid for Trade needs to be changed to have a meaningful impact in terms of training, infrastructure development and other capacities, he said.
SADC presented a draft proposal for EPA support to be included in the 10 th EDF Regional Indicative Programme. The proposal is articulated over six areas and is based on the assumption that the eventual SADC EPA will have an ambitious content. Provisional cost estimates (77 M €, excluding infrastructure investment) are compatible with the indicative amounts communicated by the EC in 2006, plus the 25 % increase anticipated for all regions. The proposal will be refined with a view to hopefully restarting soon the regional programming process.
The 10 October South Africa-EU Strategic Partnership meeting issued a joint communique where Ministers reaffirmed the urgent need for the EU and SADC to conclude by the end of the year a mutually beneficial agreement which also addresses developmental needs in SADC EPA states and supports regional integration.
*Crucial ESA-EPA meeting on market access and development
As we go to press a crucial ESA-EC technical negotiating meeting is being held on 19-20 October in Madagascar . ESA is expected to put forward its market access offer at the meeting. Indications are that they will offer the EU market access after 10 years but with a list of excluded products, like goods whose production is subsidised in Europe or those important to weak African economies. This will be followed by text based negotiations on the ESA proposal from 6 November and culminating in a 12 November ESA-EC Ministerial EPA negotiating round where they hope to agree an EPA on goods market access and development.
At the previous round of negotiations in Kigali from 17-24 September, ESA informed that it was still struggling to come up with a WTO compatible market access offer and to finalise their list of sensitive products due to the diversity of development status within the region - 12 of 16 Member States are LDCs with duty-free-quota-free market access while developing countries, Kenya, Zimbabwe, Seychelles and Mauritius are working so as not to lose market access when the WTO waiver expires this year. The offer needs to be synchronised also with the implementation of the Common Market of Eastern and Southern Africa (COMESA) Common External Tariff which is still being worked out. The EU's interpretation of WTO compatibility is 90-95% coverage as constituting substantially all trade. But ESA says the development status of the region must be given special consideration and an EPA is not a typical FTA so ESA's target for substantially all trade will be between 80-90% and around 30% sensitive items (in September is was at 55%) exclusion at regional level, but with a target of between 10-20% exclusion for each ESA member state.
The EC also says the 25 years transition period proposed by ESA is not acceptable and that the maximum the EC can offer is 12 years with 25 years in some exceptional cases for very sensitive products.
The two sides also discussed rules of origin with ESA calling for cumulation with all ACP countries and that value tolerance should be reviewed upwards to 30%. ESA also expressed its concern that single transformation is conditional upon request.
There were also negotiations on the development matrix. The matrix lists concrete development programmes with indicative time frames and costs which ESA members want to undertake and which could act as the basis for demanding additional resources from donors. There was also a discussion on ESA's development benchmarks proposal which links trade liberalisation to EU development support. Discussions on both issues focussed on how these could be included in or linked to the EPA, with ESA requesting reference in the development chapter and throughout the agreement and to annex the matrix to the EPA. The EC is considering possibilities. The EC also welcomed the ESA proposal for the preparation of a Development Strategy that would form the basis of negotiations for adjustment costs to accompany the development matrix, but expressed the need to align the same with monitoring and evaluation. ESA will continue work on prioritising the matrix and reiterated they are looking for additional resources to move forward the process of development and require an instrument for resources mobilisation. ESA reinstated its call for additional EPA related development support. The EU restated available support, including Aid for Trade, but that there cannot be a financial protocol that includes commitment on specific amounts of funds to EPA.
On agriculture, negotiations are complex because of the different elements including market access, food aid and food security, development and safeguards among others. ESA called on EC to reconsider its double zero approach to export subsidies and domestic support, operationalise PMDT (processing, marketing, distribution and transport) and work out ways of operationalising the application of countervailing duties when affected by subsidies. EC emphasised that issues of export refunds and domestic support could not be discussed bilaterally.
*EAC countries agree to put forward common market access proposals
East African Community (EAC) countries ( Rwanda , Tanzania , Burundi , Uganda and Kenya ) will adopt a common market access proposal that will be tabled in both ESA and SADC EPA configurations it was agreed by the EAC Ministers of Trade meeting in Nairobi on 11 th October. This because of the impending deadline and to ensure that trade between the EAC countries and the EU is not disrupted after January 2008. EAC has indicated that it aims to retain its common taxation regime to protect domestic industry.
*Indian Ocean Commission also agrees to table market access proposals
Indian Ocean Commission (Comores, Madagascar , Mauritius , Seychelles ) Ministers agreed to constitute a subgroup to accelerate negotiations and conclusion of EPAs on time at an extraordinary Foreign Ministers meeting on 10 October. To assure that the specificities and needs of the IOC are taken into account, they will prepare a collective market access offer and common position on development aspects of EPAs. IOC Ministers will meet again at the end of October to discuss progress in ESA negotiations and take measures to avoid rupturing trade relations between IOC and EC at year's end.
*Caribbean high level meeting narrows the gaps on contentious issues
As we go to press, a Cariforum (Caribbean Forum of African, Caribbean and Pacific States ) Council of Ministers meeting is being held in Haiti on 18 October to consider the results of EC-Caribbean technical and principal EPA negotiators meetings from 10-15 October.
These meetings followed on from the 1 October special meeting of EC Trade and Development Commissioners with Caribbean Heads of Government to discuss areas of continuing divergence in the EPA negotiations. The high level meeting was preceded by a series of negotiating sessions culminating in a principal negotiators meeting at the end of September.
The Caribbean informed that it is still working to reduce the products exclusion list in its market access offer, but is also waiting until there is agreement with the EC on the percent of substantially all trade and transition periods that will be used for the EPA.
The EC maintains its demand for an MFN clause to be included in the EPA which Cariforum rejects, though there are reportedly discussions on how an appropriate form of wording on this may be found.
The EC also continues to demand that an EPA includes binding provisions on good governance in taxation, judicial and financial issues, despite Cariforum's mandate not to negotiate these issues. Cariforum remains unconvinced that provisions on good governance on taxation properly reside in the realm of a trade agreement and are concerned they may impact the offshore financial services industry.
The two sides are seeking improvements to each's services offers. Substantive texts on tourism and cultural services are reportedly being negotiated to be included as an essential component of an EPA.
On development, EC Development Commissioner Michel outlined support available to the Caribbean saying that a total of more than € 2 BILLION over 20 years will be provided, much of it through budget support for more effective delivery. He also said the EC was open to the idea of considering the question of the fiscal impact of the EPA, with a view to neutralising the net fiscal impact, and to include a chapter on the fiscal aspects in the EPA text. Cariforum argues that its EPA commitments are predicated on the timely delivery of EU assistance. The 10 th Regional Strategy Paper has already been crafted and apportions 32% of the €164 million to EPA support. While the full extent of the cost of implementing a CARIFORUM EPA remains unknown, €52.5 million over the period 2007-2013 does not correspond to Caribbean expectations. CARIFORUM also fears that a number for EU Member States are retreating on their commitments.
Both sides said discussions at the high level meeting helped narrow differences on outstanding issues. The Joint Declaration says important issues are still to be finalised and that the overall objective of concluding the negotiations in time for the EPA to take effect on 1 January 2008 remains attainable. There is still a lot to do, but both sides are still aiming at completing the negotiations at the end of October/early November for signature on December 17 in Barbados .
*Pacific-EC agree to go for interim EPA by year's end
As we go to press, Pacific ACP (PACP) leaders are concluding their 15 October meeting. Leaders expressed the need to intensify exchanges with the EU to sort out outstanding issues in the EPA negotiations. They also endorsed a PACP-EC Declaration on Development Cooperation which will be submitted during the dialogue with the EU on 19 October in Nuku'alofa.
The meetings follow on from the 2 October Pacific-EU Commissioners-Ministerial meeting on EPAs which agreed that in view of the short time available until the deadline of 31 December, it was necessary to conclude a WTO-compatible interim agreement as a stepping stone to a comprehensive EPA. A goods agreement is vital to avoid a tariff rise on Pacific fish exports to EU markets on January 1 st 2008 . With the suspension of the sugar protocol, Fiji 's sugar exports could collapse after September 2009 without an EPA. The EU also scrapped the Fiji sugar quota in 2007, and made EDF 10 allocations as well as future sugar quotas conditional on respect to human rights and rule of law, based on Cotonou Article 96. The interim agreement would include a market access in goods liberalisation schedule, rules of origin, safeguards and other necessary elements and, depending on the progress in negotiations, also fisheries, competition, development cooperation provisions and any other text that could already be agreed at this stage. It was agreed that the interim agreement would enter into force on 1 January 2008 and would remain in force until succeeded by a comprehensive EPA. It was also agreed that those PACP States not becoming party to the interim agreement at its inception could join at any future date on comparable terms and conditions. The intention is to complete and approve the interim agreement by 9 November.
Both sides also committed to conclude a comprehensive EPA by 31 December 2008 that would include trade-related rules and services as mutually agreed. The meeting concurred that the market access arrangements in the interim agreement would remain in place until such time as the full EPA as mutually agreed would enter into force.
In the upcoming negotiating round leading up to 9th November deadline for the finalisation of the interim arrangement key issues will need to be addressed. These include the extent of tariff concessions the region will be required to offer the EU in their goods offers. A key outstanding component of an interim agreement are WTO compatible market access offers from the Pacific. In early October, market access offers from five Pacific countries were tabled and others may follow soon. The EC is calling for 90% substantially all trade coverage. The Pacific think they may be able to reach 80%. Discussions are also needed on a dispute settlement mechanism and the nature of customs cooperation. Difficult discussions lie ahead also on the EU's proposed MFT clause.
The Pacific is reportedly happy with the rules of origin for fish which have been improved. Under the new rules, Pacific Island canneries and processors will be allowed to utilise fish from all sources. This should clear a major bottleneck in the development of the regional fisheries sector.
The PACP States and the EC recognise the value of a human resources development scheme which would support and facilitate the temporary movement of Pacific nationals to selected EU Member States. The EC confirmed that human resources development could be an important part of the 10th EDF regional programme in support of EPA related needs and invited the PACP region to finalise its programming as rapidly as possible. The meeting noted the EC's undertaking to assist the PACP States in their ongoing work with the Member States with a view to progressing the proposals contained in the PACP bilateral memorandums of understanding on temporary movement of persons.
At the first Pacific-EC Regional Preparatory Task Force meeting (meant to link development support to EPA implementation), the EU welcomed the PACP adjustment needs analysis as the basis to discuss aid for trade needs and available resources. Given their small size and vulnerability and the extreme strains on their limited resources, substantial assistance will be essential if the necessary adjustments are to be successfully navigated by the Pacific. The purpose of the study is to identify specific projects that are needed as contributions to the adjustment process and for which external assistance is required.