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Thursday, May 26, 2022
BRUSSELS, Jan 17 2001 (IPS) - The European Union (EU) has revised its groundbreaking ‘Everything But Arms’ (EBA) proposal – which seeks to eliminate tariffs on essentially all non-military goods entering the EU market from the world’s poorest countries.
The EU has proposed postponing transition periods on three sensitive products: sugar, rice and bananas.
The original proposal, announced in September last year ahead of the annual meetings of the World Bank and the International Monetary Fund (IMF), would grant duty-free, quota-free access for over 900 lines to 48 countries defined by the United Nations as the poorest on earth.
For sugar, rice and bananas, the proposal would have gone into effect in three progressive stages to be completed by Jan 1, 2004. However, the EBA proposal met with strong resistance from parts of the international sugar industry and European farmers and the Commission has now revised its proposal.
The Commission Wednesday gave EU Trade Commissioner Pascal Lamy “a political mandate to discuss a fine-tuning of the proposal”, his spokesman, Anthony Gooch, told a regular press briefing in Brussels.
The Commission has now put forward an informal proposal that would phase out tariffs for bananas from 2002-2006 and on sugar and rice from 2006-2008. Under consideration is the possibility of introducing a “temporary quota” for sugar and rice based on the highest level of exports in recent years, while taking into account other factors.
If no amendments to the revised EBA proposal are put forward, the EU Council of Ministers may pass the initiative by a qualified majority vote at the end of February.
A study released this week for Oxfam, a British-based pressure group that works to address the structural causes of poverty, had warned that the original “radical” EBA proposal had attracted extremely strong resistance from EU Member States, European farmers, and parts of the multinational sugar industry and could be weakened.
“The so-called ‘Everything But Arms’ (EBA) proposal will bring economic benefits to the world’s poorest countries and people. It also represents an important political gesture indicating the EU’s commitment to promote a more equitable distribution of the benefits of international trade,” said Oxfam director David Bryer in the preface to the report.
Oxfam had commissioned the report from the Institute of Development Studies in Sussex (UK) in order “to encourage a more constructive and informed debate about the impact of the EBA proposal” which it says shows that costs to the EU of implementing the EBA are “very small, in comparison to the positive benefits it will bring for the least-developed countries”.
Opposition to the original EBA initiative from the EU farm lobby, in particular the sugar lobby, was such that some officials here have jokingly referred to their position as one of embracing an ‘Everything but farms” initiatives. Within the EU, major sugar producers are based in France, Germany and Britain. Rice is produced by Italian interests and bananas by multinationals based in Spain.
An internal study released by EU Agricultural and Fisheries Commissioner Franz Fischler in December 2000 said that its impact would be greater than originally expected and that the sugar industry might face costs of more than 1 billion euros (approximately 900 million dollars).
Of the 48 poorest countries on the UN list of poorest countries, known as the Least Developed Countries (LLDCs), 39 of them are members of the African, Caribbean and Pacific (ACP) group, with which the EU signed a comprehensive trade and aid Partnership Agreement in June 2000.
The 39 that are part of the ACP group obtain access under the Cotonou Agreement, which succeeded the previous EU-ACP trade and aid agreement, the Lomé Convention; the remaining nine LLDCs have benefited for years from a special tranche of the EU’s Generalised System of Preferences (GSP).
According to the Oxfam report, which draws on figures from the UN Food and Agriculture Organisation (FAO) on LLDC, the professed concern of an adverse impact on European sugar producers, for example, “is fanciful”.
The total raw sugar production of all LLDCs that have significant exports is only 1.8 million tonnes and in the short term the FAO figures indicate a potential maximum increase in LLDC sugar exports to the EU of only 100,000 tonnes. The EU produces 16 million tonnes of sugar each year, consumes 12 million tonnes and exports the rest.
The 18-page report identifies 2,939 items currently imported by the EU from at least one LLDC. Of these, 502 items are exported to a value from the whole LLDC group of 500,000 euros or more, and of these only 11 do not currently have duty- and quota- free access to EU markets. For eight out of the 11 items, non-ACP LLDCs currently receive no preference over the standard tariff payable by industrialised countries, and for two items only one non-ACP LLDC – Bangladesh – obtains a preference.
“If LLDC producers earn more they may be able to afford to increase the volume of their exports. If so, the ultimate impact of EBA could be much greater. If, for example, Bangladesh were able to divert some of its existing exports from lower-priced markets to the EU, or even to increase production so that it could export more in total, the additional export revenue would be a dynamic gain from the EBA change,” says the report.
Nonetheless, Caribbean states within the ACP group fear that the EBA initiative as it now stands could seriously damage every commodity-dependent Caribbean economy.
“So much so that it is no exaggeration to say that it could result in the destruction of much of the Caribbean’s sugar and rice industry, do serious damage to the rum industry’s last remaining chance to compete in the EU market and diminish further the prospects for Caribbean bananas in Europe,” wrote David Jessop, Executive Director of the Caribbean Council for Europe in a recent article examining the issue.
Oxfam’s Bryer, notes that, “Some developing countries that already benefit from preferential access to the EU market have legitimate concerns about the impact of the EBA on their trade with the EU. But these concerns can and should be addressed through positive measures, rather than an EU retreat from the EBA proposal”.
He added that within the context of continuing high levels of northern protectionism against developing country exports, the EBA proposal is “extremely modest”.
Still, the proposal would go beyond all previous EU measures to grant access to the LLDCs, can be seen as part of a “confidence- building” package designed to entice poor countries into accepting a new round of global trade talks.
“Obviously, the idea is to bring these (LLDC) countries into the world trading system. They now account for only 0.4 percent of world trade and 1 per cent of total EU imports” one EU trade official told IPS.
The EBA initiative builds on a promise by the “Quad Group” of countries – the EU, the United States, Canada and Japan – made at a meeting of the World Trade Organisation’s (WTO) ruling body in May 2000 that the group was ready to dismantle duties and quotas on 99 per cent of imports from the LLDCs.
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