Steffen Smidt, Danish-born Director General for Development at the EU's executive European Commission, says the EU faces two key challenges: redefining relations with the ACP states and drawing up a 'collective' development policy which reflects the common interests of all 15 EU member states.

Smidt, who took over as head of the Commission's Development Directorate in January 1995, also wants to upgrade the EU's 'policy dialogue' with the ACP states, so that discussions with the group can cover areas like the environment, health and education.

"In political terms, defining our future relations with the ACP states is our biggest challenge," says Smidt. The EU-ACP agreement, known as the Lome Convention, won't expire until 2000.

But, Smidt is convinced that the debate on the future of Lome must start as early as possible, so that all interested parties -- the 70 ACP states, EU governments, non-governmental organisations, academics, business leaders and trade unionists -- can give their views on revitalising EU-ACP relations.

"We want to get everyone involved so that we can discuss what should be developed after 2000," Smidt explains. "We want an early start to the discussions."

The Commission has promised to prepare a green paper on the future of the Lome Convention in September this year. A year of debate will follow, after which Smidt and his development experts will draw up specific proposals for redefining Europe's strategy for the ACP states.

It won't be easy. The ACP countries are determined to hang on to the Convention, worried about losing its valuable trade and aid benefits. But, as negotiations for the last accord showed so clearly, EU countries' interest in the Lome agreement is flagging.

The final aid package of 13.3 billion ECUs (16.75 billion dollars) is about 20 percent higher than EU spending in the 70 ACP states under the previous Lome Convention. But, during the 15 month-long negotiations that preceded the aid deal, several EU states made it clear that they wanted to cut aid spending in the ACP states.

Although some countries did reduce their Lome pledges, this was made up by increased contributions from other nations, including France. But, Smidt refutes allegations that new priorities are forcing the EU to look away from the ACP group.

"New priorities have been added on to our old responsibilities," he insists, referring to increased EU aid spending in eastern Europe and the Middle East. "There's been a cumulative effect."

EU governments, however, continue to make demands for a reassessment of EU-ACP relations to take account of economic and political changes in both blocs. "The question facing us is whether we should continue with our privileged treatment of ACP countries in a collective manner, through an agreement that covers all countries," says Smidt.

The Lome Convention has its share of critics outside the group. The EU has secured a World Trade Organisation (WTO) waiver for the Lome Convention, essentially in order to escape repeated U.S. criticism of the agreement's preferential trade regime, which critics believe discriminates against non-ACP developing countries.

"Nobody knows what will happen when the WTO waiver runs out in 2000," says Smidt. "But, I'm convinced that it will be possible to find a WTO acceptable regime to give the ACP states some preferences in the trade field. But, we'll have to work on this."

Even if some special arrangement for the ACP states is accepted by WTO members, the pressure for reforming the Lome Convention will persist.

The question the Commission and others will have to ask themselves is whether the agreement should remain a collective enterprise or whether it would be more efficient to forge 'tailor-made' deals for the Convention's individual members.

"We need to know what the ACP need," Smidt stresses. The challenge will be to come up with new ideas which are acceptable to the ACP states -- but do not contradict the WTO's rules on non- discriminatory trade.

Various options will be considered, including the negotiation of separate or regional agreements with the ACP states within a Lome 'umbrella'.

EU plans to negotiate a free trade area agreement with South Africa cannot be replicated with other ACP states, Smidt argues. "Free trade area agreements can only work with countries which have a high level of development, which can compete with the EU," he says.

Smidt is also working on another equally ambitious task: over the next few months, he plans to develop a series of "strategy papers" focusing on the development potential and constraints in the 70 ACP states.

"These papers will help us to identify the major policy areas where we can step in to help," he explains. "We will coordinate policies with EU member states."

The aim of the exercise is twofold: to give the Commission the information it needs to start a wide-ranging policy dialogue with the ACP countries. At the same time, to encourage EU governments to draw up a 'collective philosophy' on key development issues.

"Take the issue of democracy and good governance," says Smidt. "We have a lot of work to do to define exactly what these terms mean."

Specific historical factors will always influence countries's thinking and this will have to be reflected in our policy," he admits. "But, without this collective European development policy the EU will have no impact" in the developing world, Smidt warns.