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TRADE-EU: Differences with ACP Countries to Surface Soon

Greta Hopkins

BRUSSELS, Apr 10 2002 (IPS) - The European Union must adopt a flexible and development-oriented approach when it negotiates new trade relations with African, Caribbean and Pacific (ACP) countries, observers here say.

The European Commission, the executive arm of the EU, adopted a proposal to negotiate Economic Partnership Agreements (EPAs) with the 77 ACP countries (78 including associate member Cuba) Tuesday.

The proposed EPAs would be free trade areas to replace preferential trading arrangements currently offered by the EU to its ACP partners. Under the free trade terms advocated by the Commission, both sides would eventually lift all trade barriers.

Under preferential trade terms the ACP countries export quotas of certain products to the EU without paying tariffs. At the same time, they can place tariffs on imports from EU. Preferential trade terms also provide for compensation to ACP countries for shortfalls in export income due to price fluctuations in products such as sugar, beef and bananas.

Glenys Kinnock, Member of the European Parliament, says the European Commission must not underestimate the strength of the ACP case. The ACP are drafting their own negotiating mandate to be approved by leaders in Fiji in July.

“It is inevitable that the Commission has chosen to take a hard-line approach in its negotiating mandate, but it will have to move from that position,” says Kinnock, who is also co-chair of the ACP-EU joint parliamentary assembly, a forum of members of the European Parliament and representatives of ACP countries.

Changes have been proposed by the Commission under an agreement signed in June 2000 between the EU and the ACP in Cotonou in Benin in West Africa. The Cotonou Agreement provides the framework for co-operation between the EU and the ACP until June 2020.

The Cotonou agreement covers political dialogue, financial development, and economic and trade relations. Negotiations on trade relations are due to begin in September and conclude before January 2008.

Sutiawan Gunessee, Mauritian ambassador to the European Union, told IPS that trade talks should be placed in a development context and not be geared only towards trade liberalisation. The objectives of trade relations are the same as the other objectives of Cotonou – sustainable development, the fight against poverty, and the smooth integration of ACP states into the world economy, he says.

One argument the Commission presented for ending trade preferences is that they did not work. Some ACP countries became poorer after these arrangements were brought in, the Commission points out. But Gunessee, an influential member of the ACP sub-committee of ambassadors on trade, says “most of the ACP countries were not able to take advantage of non-reciprocal trade preferences because they did not have the productive and institutional capacities, the necessary human resources and a vibrant private enterprise culture.”

Gunessee says preferential trade can benefit both sides. “Take the example of canned tuna,” he says. “European companies have invested in ACP fishing industries and canneries thanks to these preferences. If the preferences are taken away, these European companies may decide to pull out.”

Gunessee proposes that the European Commission carry out impact studies in ACP countries to identify which sectors need capacity building before trade liberalisation is envisaged. The EU should then provide financial assistance to build capacities and prepare them for the competitive environment that would result from liberalisation, he says.

Gunessee points out that the global situation has changed since the ACP signed up to Cotonou. The ACP did not take into account the launch of a multilateral round of trade negotiations in the World Trade Organisation when they agreed to begin talks in September.

“Even WTO rules are not clear at this time,” he says. “How can we negotiate on new and important trade-related issues such as competition policy and investment when we don’t know what the new WTO rules will be after 2004?” It would be premature to begin talks on trade concessions before 2005, he says.

Eurostep, a network of European NGOs, is also concerned about the Commission’s emphasis on free trade. “The only condition mentioned in Cotonou is WTO compatibility,” says Guggi Laryea, policy advisor at Eurostep. “I think it is jumping the gun a bit to say that this means free trade. There needs to be much more flexibility.”

Eurostep wants open and inclusive negotiations. “These negotiations must not take place behind closed doors, there should be briefings for civil society and discussions with parliament,” Laryea says.

The Commission’s impact assessment studies must be inclusive in their scope, he says. “In the past, when the Commission has carried out these kinds of studies they have been rather academic,” he says. “We hope that the Commission will not only look into the economic impact, but also the potential impact on gender, social development and the disadvantaged.”

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