EU

UE : Timor-Leste and European Union have established the diplomatic relations since 20 May 2002. Timor-Leste strengthened the relations with European Union by ratifying the Cotonou Agreement on 19 December 2005. Under this Agreement Timor-Leste is entitled to the European external assistance from European Development Fund.

Cotonou Agreement is Partnership Agreement between European Union and ACP (the African, Caribbean and Pacific Group of States).  Cotonou Agreement is for a 20-year period from 2000 to 2020. It incorporates civil society, the private sector, trade unions and local authorities. It was also designed to establish a comprehensive partnership with three pillars: Development Cooperation – (at national, regional and multi-regional levels) - Political Cooperation - Economic and Trade Cooperation.

ACP was created by the Georgetown Agreement in 1975 and with its main objectives are sustainable development and poverty reduction. The Member states of ACP compose of 79 countries, 48 from Sub-Saharan Africa, 16 from the Caribbean and 15 from the Pacific (including Timor-Leste).

The Description of European Development Fund (EDF) for Timor-Leste is as the following:

1. The 11th EDF National Indicative Program, allocation is EUR 95 million for the period of 2014-2020 (ongoing process) and with focus on two priority areas such as EUR 30 Million for Good Governance (12 million of delegation agreement/institutional twinning with Camoes, this amount of fund will be allocated for the capacity building of the Ministry of Justice, National Parliament, Court of Appeal, Anti-Corruption Commission, General Inspector, Civil society, and another EUR 15 million for budget support for the public financial management sector reform  of the Ministry of Finance) .  EUR 57 Million is allocated for Rural Development including nutrition, (EUR 15 million for budget support for the Ministry of Agriculture, EUR 30   million for delegation agreement with ILO and GIZ. EUR 8 million is foreseen for support measure program. Overall, Good Governance and Rural development programs are in formulation phase). It is noted that Timor-Leste will sign 11th EDF Financing agreement for the budget support under the good governance program by the end of this year or early next year. 11th EDF Pacific Regional Indicative Program, its allocation is EUR 166 million for the period of 2014-2020; this amount is for the 15 Pacific ACP countries including Timor-Leste and with focus on three priority areas as following: Regional Economic Integration, Sustainable Management of Natural Resources and the Management of Waste, Inclusive and Accountable Governance as well as the Respect for Human Rights. From this allocation Timor-Leste may approach to get approximately about EUR 19 0r 20 million, due to Timor-Leste is the second largest population after Papua New Guinea. The recommendation of the Pacific ACP Regional meeting in Dili would be a consideration in formulating the projects.
2. PALOP-Timor-Leste under the 11th EDF Multi Indicative Program, the initial envelop is EUR 30 million for the period of 2014-2020 (ongoing process), with the concentration on three priority areas such as: Employment Generation, Governance Capacity Development, Operating Expenditure-Coordinating and Support Measures. From this allocation Timor-Leste may approach to get approximately about EUR 6 million, however it only depends on our necessities.

Other issues raised by EU during the 6 political dialogue between Timor-Leste and the European Union, such as: Timor-Leste accession to EPA, Good Governance and Human Rights, Timor-Leste’s preparation for ASEAN membership.

• Accession to EU-ACP’s Economic Partnership Agreement (EPA)

1. The EU-ACP Partnership Agreement (known as Cotonou Agreement) was signed in 2000 by members of the African, Caribbean, and Pacific (ACP) Group of States, and the EU and its Member States. The Agreement focuses on three main areas, namely, i) political cooperation; ii) development cooperation, and; iii) economic and trade cooperation. Timor-Leste signed the Cotonou Agreement in 2005.
2. The EU is implementing an Economic Partnership Agreement (EPA) with Pacific States - Papua New Guinea (since 2009), Fiji (since 2014), Samoa (since 2019) and the Solomon Islands (since 2020).
3. The EPA is open to accession of all ACP Pacific States. On 15 October 2020, Timor-Leste notified the European Commission of its intention to accede to the EU – Pacific EPA and sought EU’s assistance to prepare a Market Access Offer (MAO).
4. DG TRADE of EU has confirmed its readiness to offer support, including in preparations of Timor-Leste’s Market Access Offer to the Parties to the Agreement (EU, Fiji, Papua New Guinea, Samoa and Solomon Islands).
5. On 19 November 2020, DG TRADE and Timor-Leste’s trade and customs officials held a preliminary bilateral session to discuss the technical aspects of the preparation of a Market Access Offer.
6. Following the economic and trade cooperation objective of the Cotonou Agreement, the EU granted its preferential trade relationship with the ACP countries by establishing free-trade areas with regional groupings under the Economic Partnership Agreement (EPA) framework by considering the levels of the ACP countries socio-economic development.
7. The Economic Partnership Agreement (EPA)is a development-oriented type of agreement. It aimed at supporting economic development and reforms, trade and investment facilitation, and the gradual integration of ACP countries into the regional and global value-chains. The EU also provides technical assistance to help ACP countries implement the agreements.
8. The Economic Partnership Agreement (EPA) also provides policy options for ACP countries such as the exclusion of sensitive products from liberalization, long liberalization periods, flexible rules of origin, and special safeguards and measures for agriculture, food security, and infant industry protection. The ACP countries will have between 15 years up to 25 years (in exceptional cases) to open their market for EU imports. The EU member states will open their markets immediately upon the signing of the trade agreement.
9. Timor-Leste as a Least Developed Countries (LDC) is currently qualified for full duty-free and quota-free access (non-reciprocal) to the EU market under the unilateral preferential regime established by the EU's 'Everything but Arms' scheme. Accession to the EPA framework will not affect Timor-Leste access to the EU market. As LDCs Timor-Leste will continue to secure the preferential unilateral free access to the EU market.
10. Accession to the Economic Partnership Agreement (EPA)and the provision of EU’s technical assistance pre- and post-accession will greatly contribute to the Timor-Leste technical readiness to implements both WTO and ASEAN agreements. MCAE, MTCI, and MNEC will consolidate, harmonize, and coordinate the implementation of the WTO/ASEAN/EPA accession plan to avoid duplication of efforts, resources, and technical assistance.
11. There are opportunities for Timor-Leste to attract foreign direct investors interested to access the EU market under the EPA provision on rules of origin, including the future potential of Timor-Leste as the main trade-hub connecting ACP and the ASEAN countries.
12. Timor-Leste expresses the interest to be part of the EPA, the EU and Fiji also expressed their full support for Timor-Leste.