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EU ACP Talks Unsuccessful

by Leroy Baker, Tax-News.com, Montego Bay

09 October 2007


After optimistic noises during talks between the European Union and some of the 79 ACP (Africa, the Caribbean and Pacific) countries at Montego Bay, Jamaica, last week on replacing preferential trade deals, the talks ended in failure to agree.

The EU has been offering the ACP countries 'Economic Partnership Agreements' to 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.

In April, EU Trade Commissioner Peter Mandelson 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."

At the weekend, Mandelson was upbeat: "The top line is that we are going to make this work; there is detail that we are still to hammer out," he said. "What we were hoping to achieve was common ground, a narrowing of the gaps, a convergence between us of key outstanding issues in these negotiations and that is precisely what we've done."

Jamaica's recently elected prime minister, Bruce Golding, said the talks with the EU had not been without difficulty: "There are issues that we have to wrestle with, because while we are committed to substantially free trade, while we are committed to WTO compatibility, there are issues that we have had to discuss that have serious implications for our own economies within the region," he said.

Before the meeting, EU Development Commissioner Louis Michel said: "Our development and trade policy is about using trade to help the Caribbean countries build stronger economies that can contribute to poverty reduction. By assisting with the creation of regional markets and accompanying the sometimes difficult adjustments these entail, the EU is standing by the side of its Caribbean partners in their drive to adapt to the challenges of globalisation. We will help our partners to prepare new structural reforms and trade policies, adjust to the changes they bring and enhance regional integration to seize the new trade opportunities brought by the EPAs."

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.

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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