Let us begin with CE AO. In a fundamental sense, a development strategy finds its embodiment in the structure and level of a commun ity’s external tariff and in its member states’ harmonised investment incentives. In that sense there is as yet no determined development strategy in CEAO - any more than there is in the other groups. But this deficiency, which may yet be overcome, is less damaging for CEAO than it is for ECOWAS because the CEAO system is a coher ent one at any stage. It leaves each member state substantial discre tion with respect to its degree of market integration with its partners. Each country remains free at present to evaluate economic develop ment issues according to its own criteria and to arrange the modalities of integration accordingly. Integration of product markets and trade liberalisation are underpinned by a scheme that provides compensa tion for losses from trade diversion arising from trade liberalisation, with a small measure of redistribution through overcompensation. Compensation is not provided for any losses that might arise from trade creation, but this is immaterial since each country can effec tively avert the loss of any high-cost industries and also retains policy flexibility with respect to the establishment of new ones. Conse quently, even before industrial harmonisation is attained, a country’s interests should not be damaged. This is a workable basis for limited cooperation, and it minimises distributional difficulties and harmon isation problems. But a corollary is that the opportunities it affords
for generating economic gains are likely to be modest. This is partly bound up with the third issue - namely, policy towards direct foreign investment - where little or no progress is discernible, fundamentally because there is no agreed development strategy, or regional indus trial policy or system of investment incentives. At the industrial level, these deficiencies are reflected in the replication of identical plants, which underlines the benefits forgone by failing to promote an opti mal pattern of regional industrial specialisation. Industrial harmon isation is urgently needed to maximise integration gains.