ECONOMY-AFRICA: Be Careful What You Wish For

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Bayano Valy*

MAPUTO, Jun 26 2004 (IPS) - The 79-member grouping of African, Caribbean and Pacific countries known as the ACP bloc wrapped up its latest summit in the Mozambican capital, Maputo, this week, with delegates expressing a willingness to kick start stalled global trade talks.

The Doha round of talks, named after Qatari capital where they got underway, collapsed during a meeting of the World Trade Organisation (WTO) in the Mexican resort of Cancun last September.

However, the ACP warned that the thorny issue of agricultural subsidies would have to be at the top of the talks agenda.

Developing countries have long argued that the financial assistance wealthy countries give to their farmers distorts prices for commodities, effectively making Third World farmers uncompetitive. In Cancun, industrialised states gave considerable attention to issues such as transparency in the issuing of government contracts, and competition policy.

Mozambican Industry and Trade Minister Carlos Morgado told IPS that there was room for flexibility on the agenda, as long as "the issues that we feel disrupt development be addressed."

For his part, the European Union’s (EU) Commissioner for Development, Poul Nielson, said his fellow commissioners "have indicated that (they’re) willing to look at a number of issues that are of interest to the developing countries." The ACP was established in 1975 to promote development in the bloc, with the assistance of the EU.

Ironically, talk of liberalising the sugar industry in Europe was greeted with some concern by delegates to the Maputo summit. A reduction of subsidies would be to the benefit of farmers in the ACP – but opening the European market to more efficient producers in Australia and Brazil could cause this advantage to be short-lived.

"We can’t reduce subsidies in Europe without this also having a consequence for somebody else," said Nielson, in an interview with IPS on the fringes of the summit.

The ACP fears that liberalisation could substantially reduce the prices paid to its sugar cane producers, no small matter in countries where – as Mozambican President Joaquim Chissano told journalists – sugar was a leading export.

As a result, the ACP has requested guarantees from the EU that in the event of any price reduction, member countries would be compensated for their losses.

Mozambique’s ambassador to Brussels, Manuela Lucas, told IPS that the ACP hoped to take advantage of the European Agricultural Guidance and Guarantee Fund, which compensates EU farmers when commodity prices fall, (Brussels is the seat of the European Commission).

A resolution passed at the end of the summit read, in part, ".any discrimination in the level of prices and earnings will be contrary to the letter and spirit of ACP-EU cooperation."

To further mitigate the effects of liberalisation, the ACP called for an annual increase of sugar quotas given to member states, up to 2019.

The liberalisation should also be gradual, "not abrupt so as to cause a great disruption in our sugar industries," observed Morgado, emphasising that ACP states needed to prepare for any eventual price reduction. This required an increase in sugar quotas for these countries while they adjusted their industries.

In the long term, however, these preferential trading arrangements will have to be phased out, as they are incompatible with WTO regulations. Certain states will be required to phase out these arrangements by 2007.

The Maputo summit came in the wake of the EU’s expansion to include ten new member states.

This development has also been a source of concern to the ACP, which fears that aid previously given to its countries could be redirected to the EU’s newer, poorer, nations. There are also concerns that ACP exports might face competition from products originating in the latest additions to the EU.

While Morgado and Nielson did their best to discourage these fears, there was an acknowledgement that ACP states would ultimately have to diversify and improve their exports if they wanted to compete in Europe.

The ACP heads of state and government met in Maputo from June 23 to 24. The block includes 48 sub-Saharan countries, including Angola, Botswana, Namibia, Tanzania and Zimbabwe.

While economic issues were at the foreground of discussions, Zimbabwean President Robert Mugabe took advantage of the gathering to take aim at those who have accused his administration of human rights abuses and poor governance.

Mugabe said that Zimbabwe’s parliamentary elections, scheduled for next year, would not be monitored by former "imperialists". EU observers were prevented from monitoring the 2002 presidential poll in Zimbabwe, whose legitimacy was queried by the Commonwealth.

* Bayano Valy is a reporter and researcher with the Southern African Research and Documentaion Centre