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TRADE-EU/ACP: EU Proposes Duty-Free Access for LDC Exports

Brian Kenety

PRAGUE, Sep 22 2000 (IPS) - The European Union (EU) this week took a major step towards fulfilling a pledge to grant unhindered access to its markets for all non-military products from the world’s least-developed countries (LDCs).

The EU’s executive arm, the European Commission, announced the new “Everything but Arms” (EBA) initiative today in Brussels, following meetings on Wednesday. The initiative would grant duty-free, quota-free access for the 48 poorest countries on earth, as defined by the United Nations.

EU Trade Commissioner Pascal Lamy welcomed the Commission’s adoption of the proposal, saying: “There has been plenty of talk about how market access for poor countries is critical if we are to tackle their growing marginalisation in the globalising economy. Everyone seems ready to make the commitment at the political level. But talk is cheap. We now need to move beyond opt-out clauses.”

The ‘Quad Group’ of countries – the EU, the United States, Canada and Japan – had announced at a meeting of the World Trade Organisation’s (WTO) ruling body in May that they were ready to dismantle duties and quotas on 99 percent of imports from the LDCs.

The idea for such a ‘confidence-building’ package, as the Quad Group termed it, was proposed by the EU last year and designed to entice poor countries into accepting a new round of global trade talks.

However, the package was met with sharp criticism by LDCs, who said it didn’t go far enough in granting them market access, as the one percent of total imports that would have still been subject to trade barriers included “sensitive” products such as sugar and bananas in the case of the EU, and textiles in the case of the United States and Canada.

The EBA initiative, pioneered by the EU in the run-up to the WTO ministerial meeting in Seattle last year, would go beyond all previous Community commitments.

The proposal reflects the Commission’s belief that all WTO members “can and should benefit from trade liberalisation” it said in a statement.

The announcement of the “Everything but Arms” proposal comes at the start of the annual meetings of the World Bank and the International Monetary Fund (IMF) here in Prague, which have been dominated by discussions on the trade liberalisation and globalisation on the developing world.

Reminiscent of the “Battle in Seattle” at the WTO ministerial meeting, upwards of 20,000 protesters are expected to convene here in the Czech capital later this week in an attempt to “shut down” the meetings of these international financial institutions.

They are demanding that the wealthy governments which dominate the institutions’ governing bodies forgive what they call the unsustainable debts accrued by LDCs and that institutions which they see as harmful to the developing world (the IMF, the World Bank and the WTO) be dismantled.

There can be little doubt that the timing of the Commission’s proposal aims to show that protesters demands are being taken seriously, but that the EU is equally determined to push for another WTO round.

“It’s time to put access to our markets where our mouth is. That means opening up across the board, and for all the poorest countries,” said Lamy.

In 1998, the EU was already the major destination for LDC exports (56 percent of the total, to a value of 8,714 million euros). However, the existing regime still excludes about 10 percent of the 10,500 tariff lines in the EU’s tariff schedule, and one percent of total trade flows.

On Jun. 23, the EU signed a new Partnership Agreement with the African, Caribbean and Pacific (ACP) group of countries, which now number 77, triggering a process that promised to ensure free access for “essentially all” products from all LDCs by 2005 at the latest. Of the 48 LDCs on the UN list, 39 of them are ACP countries.

The new proposal, which would extend duty and quota free access for over 900 lines (specific categories of goods), would come into effect as soon as it is agreed by the EU member states.

For three products (bananas, sugar and rice) implementation will take effect in three progressive stages to be completed within three years. The proposed new list leaves out just 25 tariff lines all relating to the arms trade.

“This obviously covers many products which are not currently imported into the EU at present because of the high level of protection,” said the Commission.

Lamy added: “We have been through this line by line, product by product, and have concluded that we should now take this important further step. Of course, some of the products are relatively sensitive, but there is no point in offering trade concessions on products which LDCs cannot export”.

He acknowledged that duty-free access alone is not enough to enable the poorest countries to benefit from liberalised trade. “We need to help them build their capacity to supply goods of export quality, and we reaffirm the Commission’s commitment to continued technical and financial assistance to this end,” he said.

The EU is by far the biggest importer of LDC products in the world. In 1998, LDCs exported goods worth a total of 15,488 million euros, and the EU imported 56 percent of these.

As for the other Quad Group members, US imports accounted for 36 percent, Japan six percent, and Canada two percent.

The Commission also said it hopes that the proposal will strengthen the will of LDCs to adopt policies across the board that will put their countries on the road to recovery and development and that other developed countries will quickly follow suit.

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