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ACP Spurns EU's Trade Offer

by Ulrika Lomas, for LawAndTax-News.com, Brussels

09 April 2007


EU Trade Commissioner Peter Mandelson last week unveiled a trade package offered to the 78 ACP countries under which all remaining quota and tariff limitations on access to the EU market would be lifted, although a proposed phase-in period for rice and sugar attracted criticism.

"Trade and development for ACP countries is about much more than just access to the European market," said the Commissioner. "But by removing all remaining tariffs and quotas for all African, Caribbean and Pacific countries we will create the best possible opportunities for these economies."

The offer covers all products, including agricultural goods like beef, dairy, cereals and all fruit and vegetables. It will apply immediately following the signing of an agreement - with a phase-in period for rice and sugar. The only exception will be South Africa where a number of globally competitive products will continue to pay import duties. The offer would:

  • Eliminate all tariffs and import quotas for all ACP countries.
  • Give all African Caribbean and Pacific countries the same full access to EU markets that all Least Developed Countries have under the EU's "Everything But Arms" Duty and Quota Free market access system.
  • Not be tied to the requirement of equivalent openness from the ACP countries. Flexibility under WTO rules means that ACP counties will have to offer market access, but this will phase in over many years. The ACP will also retain the right to protect sensitive products where the removal of import duties could threaten local producers.
  • Apply in full from day one - planned to be 1 January 2008 - with the exception of a transition period for rice and sugar. The transition periods for rice and sugar will ensure compatibility with EU market reforms and ensure stability to protect the interests of both the EU and ACP producers who supply those markets.

The Economic Partnership Agreements which the European Union is currently negotiating in parallel with 6 African, Caribbean and Pacific (ACP) regions (The Caribbean; West Africa; East and Southern Africa, Central Africa, Southern Africa and the Pacific) will replace the trade chapters of the 2000 Cotonou Agreement between the EU and the ACP countries, whose exemption from WTO rules will expire at the end of 2007 after it was attacked by other countries outside the Cotonou agreement, which is seen by them as ex-colonial preference.

However, Junior Lodge, negotiator for the Caribbean ACP countries, gave a hostile reaction to the offer: "The European Commission offer threatens to poison the negotiating climate, especially at a time when both sides are making strides," he said. "We therefore hope that good sense will prevail and the European Commission will offer all ACP regions a more constructive and attractive market access offer."

For the last year, Peter Mandelson has been doing his best to parlay the conflicting interests of the ACP countries, the EU member states, the WTO's 'Aid for Trade' program and the quarrelsome European Parliament into a coherent developing country strategy.

This is a bone-breaking dossier. The ACP countries want to retain preferential access to the EU for products such as sugar and bananas, plus they want more development aid, but they don't want to liberalize their own tariff barriers; the WTO wants an end to all preferential arrangements; the EU member states want to protect their old colonies, but not to spend any more money on aid. And so on.

In an effort to square the circle, the EU last autumn proposed economic partnership agreements (EPAs) with the 70 plus ACP developing countries, which would combine increased development aid with extended liberalization periods. Predictably, no-one liked what they saw.

EU member states didn't exactly rush forward to find the EUR$2bn that the Commission wants to offer. And the ACP countries have been saying for years that EU aid is much promised but often delivered slowly or not at all.

Mr Mandelson told the European Parliament, which had criticized the Commission's package: "Let's be clear about the value of development aid. It is a means to an end - it's a way of translating policy reform into practice. The money is now on the table but what we really lack are specific, quantified proposals on how to use it."

Specific programmes are often hobbled by protectionist member states and/or cash-strapped producer countries. Sugar and bananas are two examples. The Commission wasn't allowed to cut the EU's sugar price by as much as the WTO demanded because of resistance from Caribbean producers, while at the same time hopelessly uneconomic EU sugar-beet producers were bribed to accept a new regime with five times as much money as was being offered in aid to the Caribbean.

British Trade Minister Ian McCartney and Development Minister Gareth Thomas wrote in a letter to the Commission: "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 subsidized European products undermining African products on their own doorstep." Easy to say, but hard to achieve, especially against the looming 2008 WTO deadline for an end to protectionist regimes.

Mr Mandelson told development ministers last year that the EU was highly conscious of the difficulties involved in regional integration for some ACP states, but he insisted that the EU and the ACP could not "substitute development assistance for policy when it is the right policies that will drive economic growth and development".

He told the ministers: "Economic Partnership Agreements will fundamentally change our relationship, from one that offers tariff preferences - an eroding lifeline, to one that builds lasting regional and international markets for the ACP."

"In short, we aim to create prosperous trading partners out of development aid recipients, moving progressively, over time, from dependency to opportunity".


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