Bridges Weekly Trade News Digest • Volume 8 • Number 6 • 19th February 2004
EC Adopts Commodities Action Plan
The European Commission adopted a commodities action plan on 12 February with the aim of helping developing countries combat agricultural commodity dependency. EC support will target the African cotton sector specifically, and the EC will expand and simplify its ‘FLEX’ instrument, which is used to compensate African, Caribbean and Pacific (ACP) countries for short-term fluctuations in export earnings.
Strategy to target commodity dependent developing countries
Recognising the need to reduce the vulnerability of countries dependent on commodities such as coffee, cotton and cocoa for the majority of their export earnings, the EC has adopted a plan focusing on six major areas: supporting commodity dependent developing countries in elaborating strategies covering critical parts of the commodities chain; supporting regional initiatives for commodity development; increasing access to finance and commodity risk insurance schemes; supporting diversification; helping integrate commodities dependent countries in the international trading system; and enhancing sustainable corporate practices and investments in such countries.
Building on the action plan, the EC has developed a specific programme for African cotton producers. The EC has allocated more than EUR 80 million in trade related technical assistance to help African cotton producers consolidate the competitiveness of their cotton sectors and put in place measures to mitigate the impact of price fluctuations. The EC is currently discussing a reform of the support for its cotton producers by partly decoupling support from production, which would reduce trade-distorting effects. The EC does not apply export subsidies to cotton, and encourages other developed countries to eliminate such subsidies and improve access to their markets.
EC Trade Commissioner Pascal Lamy commented that, "commodity dependent developing countries are particularly disadvantaged in their efforts to reap the benefits of a more open international trading system…trade alone is clearly not a sufficient answer as we have witnessed in the case of African cotton, which already has full market access in the EU. We need to support the development of the supply side. We must also continue our efforts to reduce trade-distorting support. These are key objectives of the on-going WTO negotiations which need to re-start in earnest if development friendly outcomes such as these are to be assured".
Commodities plan discussed at ACP-EU meeting
Officials from the African, Caribbean and Pacific (ACP) countries are meeting with 300 parliamentarians from the EU in the Ethiopian capital Addis Ababa from 16-19 February. The objective of the meeting is to discuss peace and security in developing countries, aid, trade and health-related issues. At the meeting, Lamy outlined the new EC trade commodities action plan, and participants had a chance to comment on it. Although the EC is hoping the new strategies will help Africa meet some of the Millennium Development Goals set by the UN, critics pointed out that the problem of EC farm subsidies are not discussed in the ACP-EC talks. At the launch of the conference, Ethiopian Prime Minister Meles Zenawi stressed, "Without fair trade, nothing we do will create sustained development… In a globalised world, we are and cannot but be each others’ keepers". Sam Barrett of Oxfam International noted that, "Europe should not use the cotton issue as a smokescreen to hide its inaction on sectors where EU subsidies are the real problem, such as sugar and dairy products… Tariffs and subsidies are effectively controlling the way markets work - the way you let some commodities in and keep others out…It is very rich of the EU to say ‘open up your markets’ while they pull up the drawbridge on theirs".
ICTSD reporting; "Ethiopia: ACP-EU trade conference opens in Addis Ababa," IRIN NEWS, 16 February 2004; "Africa: Focus on EU/ACP trade conference in Addis Ababa," IRIN NEWS, 16 February 2004; "Commission adopts action plan to help developing countries fight agricultural commodity dependency and support the development of the cotton sector in Africa," EC RELEASE, 12 February 2004.