EU urges developing countries to sign up to free trade deals

EU_Africa_relations.jpg

As the deadline for ACP countries to conclude controversial Economic Partnership Agreements with the EU draws closer, the Commission and EU business interests called on anti-poverty activists to put an end to their “caricatural” criticism of negotiations, which they insist are essential to eradicating poverty.

Anti-poverty activists, on 27 September 2007, organised an international day of action against the EPAs to highlight the damage that forcing poor countries to lift their tariffs on products from Europe would have on African livelihoods. 

They say the new reciprocal agreements that the EU is “forcing down the throats of developing countries” will give superior European companies unlimited access to developing markets, killing off local industry. 

However, EU Trade Commissioner Peter Mandelson has repeatedly warned that ACP exports will face steep tariffs and lose out on new business investments if they do not sign the EPAs by the end of the year. 

The talks have been going on for five years but progress has slowed, notably due to difficult negotiations on transition periods for tariff phase-outs. 

Another sticky issue is the investment and competition clauses that the EU wants included in the EPAs, despite the fact that they were removed from the WTO Doha Round of global trade negotiations. The withdrawal followed intense lobbying from developing countries, who feared that these could limit their capacity to protect their domestic firms against multinational corporations. 

Positions

In an open letter to anti-poverty campaigners, EU Commissioners for Trade and Development Peter Mandelson and Louis Michel  stressed that the current framework "has largely failed to deliver development" and that the new EPAs will help ACP countries to build stronger economies and regional markets, thus giving more opportunities to local businesses, building confidence and attracting new investment. 

"Calling for an end to EPA negotiations when there is no credible alternative is playing poker with the livelihoods of those we are trying to help… ACP countries deserve better than attempts to caricature them as weak and helpless," they wrote. 

They insist that the 2008 deadline cannot be dismissed, saying non-ACP developing countries "expect us to honour our promises" and that "they can and will challenge us unless we agree new WTO-compatible arrangements". 

Furthermore, they stress that the EPAs will not force ACP countries to open their markets immediately, as they will "be able to protect and exclude sensitive products and take advantage of long transition periods to nurture growing industry…During this time the EU will provide very substantial technical and financial support to help with implementation of the new arrangements." 

The Commissioners are supported by the Association of European Chambers of Commerce and Industry (Eurochambres), which represents over 19 million enterprises in Europe, which criticised NGOs' "mystifying and demonising campaign against EPAs". 

"Trade is at the very heart of development," stressed the association, pointing to the fact that regional integration will create enlarged markets that are more attractive to invest in, and that investments from European countries will foster a beneficial transfer of know-how in crucial areas such as services. 

In Africa, traders are also concerned. Last week, the East African Business Council (EABC) expressed concern that the delay in talks is affecting exports heading to the EU. "The uncertainty is detrimental, affecting business plans particularly for the EU-destined export companies as they cannot easily negotiate favourable contracts with European Union partners for transactions beyond the life of the current EU-ACP agreement which guarantees duty free access," Arun Devani, the chairman of the council said. 

However, the African Centre for Trade and Development (ACTADE), urged governments not to sign the EPAs saying that they will prevent countries from protecting their markets from EU imports. ACTADE's executive director Elly Twineyo said: "Previous agreements had non-reciprocal trading relationships – ACP countries could protect their markets from EU imports while ACP exports had better access to EU. But EPAs mark a radical departure from this." 

Fair Trade NGO Oxfam insists that "very few ACP countries will be ready to sign an EPA by the end of the year, and must not be coerced into doing so. Viable alternatives need to be considered, at least for an interim period... The EC's claim that they are being flexible is belied by their behavior in the negotiations, where they continue to insist on the deadline and reiterate demands in areas such as services, investment and government procurement, that would have negative implications for development." 

Anti-poverty NGO ActionAid adds that EPAs will result in the dumping of cheap agricultural products and the loss of local businesses. "The European Commission is using strong-arm politics to push African countries to sign up to trade agreements that will undermine the right to food," said Bibiane Mbaye, ActionAid Policy Coordinator for Western and Central Africa. 

The European Trade Union Confederation (ETUC) has called on the Commission to extend the negotiation deadline beyond the end of December 2007. 

"The reality of many ACP countries today is that they are being required to simultaneously negotiate a regional customs union, a bilateral deal with the EU and a multilateral negotiation process through the World Trade Organisation," said ETUC General Secretary John Monks. "Very few countries in the world would be able to successfully take up such a challenge in five years, and the poorest countries are certainly not in a position to do so". 

Background

The European Union has been negotiating so-called 'economic partnership agreements' (EPAs) with its former colonies in Africa, the Caribbean and the Pacific since September 2002. 

The aim is to replace the non-reciprocal trade preferences granted by the EU to the 77 ACP countries under the existing Cotonou agreement, which was originally intended to span from 2000-2020, but has been contested by other developing countries for being incompatible with World Trade Organisation rules. 

A total of six EPAs are being negotiated, on a regional basis, with groups of countries in West Africa, Central Africa, Eastern and Southern Africa, the Southern African Development Community, the Caribbean and the Pacific. The hope is to encourage regional economic integration and the elimination of trade barriers among ACP countries, in order to stimulate south-south trade exchanges and boost economic growth. 

A WTO waiver allowing ACP countries to continue benefiting from the current framework until the new reciprocal trade agreements are concluded will expire on 31 December 2007. 

After that, countries that have not concluded an EPA with the EU will lose the generous preferences accorded under Cotonou and will have to trade with the EU under the less-favourable terms of the Union's General System of Preference, which are available to all developing countries. 

Further Reading

Subscribe to our newsletters

Subscribe