Bridges Weekly Trade News Digest • Volume 10 • Number 34 • 18th October 2006
ACP, UK Anxious About EU Demands In EPA Talks
EU Trade Commissioner Peter Mandelson has defended plans for new trade agreements with some of the world’s poorest countries, in spite of increasing criticism of the EU’s demands from its would-be partners, development campaign groups, and most recently from the UK government.
Speaking to EU trade and development ministers in Luxembourg on 16 October, Mandelson insisted that Brussels had "no mercantilist objectives" in the ‘economic partnership agreements’ (EPAs) it was negotiating with 79 members of the African, Caribbean, and Pacific (ACP) group of countries, mostly former colonies of EU member states.
The EPA negotiations were launched in 2002 because of the end-2007 expiry of a WTO waiver that has allowed the EU to maintain lower tariffs on ACP exports. Unlike the unilateral preferences, which have been ruled illegal under WTO law, the EPAs are to be largely reciprocal. This means that ACP countries will have to open their markets to EU exports.
ACP, UK ministers concerned
ACP ministers are worried that they will be compelled to liberalise trade in goods and services too much, too fast. At a 12 October meeting in Brussels organised by the South Centre, an international organisation based in Geneva, Senegalese Trade Minister Mamadou Diop called for postponing the deadline for signing the EPAs past 1 January 2008. Kaliopate Tavola, Fiji’s trade minister, said that "a pessimistic mood prevails" in his own Pacific region. "At the beginning of negotiations, we expected a lot of the idea of the EPAs becoming a tool for development. But as things stand now, the agreement is threatening to overwhelm our fragile economies. Some small islands may just opt out of the agreement altogether."
Their Barbadian counterpart, Dame Billie Miller, said that the EU should invest much more in building capacity and competitiveness in ACP countries before expecting them to open their markets to trade. She also said that Brussels should provide greater compensation for losses in tariff revenue that would result from liberalisation. Many ACP governments rely heavily on customs duties for revenue. Several ACP countries also fear the EU’s attempts to include rules on foreign investment, competition, and government procurement in the EPAs. The EU had wanted these issues to be part of the Doha Round WTO negotiations, but ultimately had to give up on them in the face of strong developing country opposition.
Two junior ministers in the UK government voiced similar concerns in an open letter sent to Mandelson and EU Development Commissioner Louis Michel. "The EU must… allow ACP countries as much time as they reasonably need to open their own markets, while providing effective safeguards to prevent unfair competition from subsidised European products undermining African products on their own doorstep," wrote Ian McCartney, UK trade minister, and his colleague Gareth Thomas, parliamentary minister for development. "Nor do we think it is acceptable to oblige ACP countries to negotiate rules on investment, competition, and government procurement unless they specifically request it." They expressed anxiety about the fact that little over a year remained for the negotiations, and urged the European Commission to be flexible in the event that a developing country is reluctant to enter into an EPA.
Mandelson rejects criticism
The EU trade chief countered that reciprocal trade concessions would fundamentally change the EU-ACP relationship "from one that offers tariff preferences - an eroding lifeline, to one that builds lasting regional and international markets for the ACP." He added that although the EU was willing to be flexible about the January 2008 deadline, it was "politically unrealistic to think that WTO Members would agree to extend the current waiver, and certainly not without a hefty price." Mandelson argued that trade preferences were eroding anyway, so "it does the ACP no favours to cling to the past, as some NGOs want." The Financial Times reports he had earlier said that investment, competition, and government procurement were already present in "jointly agreed road maps" between the EU and the ACP countries.
In Luxembourg, Mandelson identified some questions that he said needed to be answered during the negotiations. One was whether Brussels’ could offer complete duty- and quota- free access under the EPAs without compromising farm subsidy reforms to products such as sugar; another was about the duration of acceptable transition times for ACP liberalisation - periods of up to 25 years have been suggested.
Trade-related aid increase announced
On 17 October, the EU trade and development ministers agreed to increase trade-related assistance by EUR 2 billion. Half of this will come from the European Commission budget, and the remainder from EU member governments. Much of the new aid spending will be targeted to ACP countries, to help them implement the EPAs.
ICTSD reporting; "UK urges EU to ease trade laws for poor nations," FINANCIAL TIMES, 16 October 2006; "Brussels stands by trade-aid plan despite critics," REUTERS, 16 October 2006; "Mandelson defends tariff deals," THE TIMES, 17 October 2006; "Time running out on European trade pacts," JAMAICA GLEANER, 15 October 2006; "Britain urges EU to change stance on free trade talks," GUARDIAN, 16 October 2006; "Small nations’ Doubts About EU Get Bigger," INTER PRESS SERVICE, 12 October 2006.