Feb 6, 1998
DEVELOPMENT: EU TALK OF FREE TRADE WITH ACP WORRIES NGOS
Brussels Feb 4 (IPS/Niccolo Sarno) -- The European Union confirmed Wednesday that it will ask the World Trade Organisation for a waiver to cover the parts of its giant Lome trade and aid pact with 71 developing nations that the WTO says break global trade rules.
The WTO want trade preferences granted the African, Caribbean and Pacific (ACP) group of developing nations under the Lome Convention must be stopped. The EU want a waiver to cover a temporary transitional period while finding alternative ways to help the 71 states build trading capabilities that will keep them afloat in the WTO's free markets.
"The EU is suggesting a single waiver, for a transitional period, after which we expect that no waiver will be required," said European commissioner for development aid Joao de Deus Pinheiro. "Asking every year for a waiver does not give security to t hose who wish to invest in the ACP area.
"We intend to have our (Lome) arrangements compatible with WTO rules in every sense. But I think WTO itself should come out with some flexibility for the poorest countries, and there are hints that will be case after the next (WTO) Geneva meeting and after my next meetings with (WTO chief) Renato Ruggiero."
The EU's executive Commission adopted a draft mandate for the renegotiation of the Lome convention with the 71 partner states.
The present convention, the fourth, expires in 2000.
But European NGOs are more worried by the permanent arrangements that will follow the temporary transitional period covered by any WTO waiver -- assuming the WTO grants it.
They note the Commission's apparent desire to push ACP countries towards reciprocal free trade agreements, with only a minimal grace period of five years to prepare them for trading with the EU, arguably the richest, most developed, largest and most protectionist economic bloc in the world.
"This ignores the basic inequality between EU and ACP economies and the scale of poverty in the South," says the Liaison Committee of European NGOs.
NGOs want one-way only trade in goods from the ACP to the EU -- like tropical fruit -- classed as 'non-reciprocal' and for the EU to open talks with the WTO to grant a waiver that would allow these trade preferences to continue.
The have been have been putting pressure on the EU to open negotiations with the WTO for such a waiver ever since last year when the WTO ruled against the EU trade preferences allowed Lome banana exporters.
"Rather than sacrificing their development policy to trade liberalisation, the EU and ACP should push within the WTO for a general waiver for Lome," said the Liaison Committee.
Even if the waiver is only temporary, many commentators insist that ACP countries need at least ten more years of the Lome trade regime before beginning a switch to reciprocal free trade.
Peter Gakunu, trade expert at the ACP secretariat here, says an assessment of the Lome trade preferences shows that most ACP countries have failed to grow even under the protected trade and aid umbrella of he Lome convention.
In 1975, ACP countries accounted for 7.6 percent of total EU imports, but the figure had dropped to 3.8 percent in 1996. Today ACP countries, which include some of the world's poorest, together account for only two percent of all world trade.
Zimbabwean Nancy Kachingwe, of the Eastern and Southern Africa Mwengo network of NGOs told IPS that "to take preferences away, even within five years after 2000, would be pretty disastrous for a lot of economies which depend on preferential exports to t he EU."
Kachingwe believes that, as global tariffs are reduced under WTO arrangements, ACP countries will face more and more competition even in markets where they have preferential access.
"There has to be a time period for the industry to restructure and prepare itself for the time when there would not be any preferences any more," Kachingwe told IPS.
"The horticulture industry in Zimbabwe, for example, has grown a lot because of the Lome preferences, and there has been a lot of investment to export flowers to Europe. If that would be removed, it would put again the whole industry in jeopardy.
"We should start looking at reciprocity and free trade areas when the (EU) farm subsidies issue has been sorted out. Only then I can see a free trade area agreement which might be beneficial to ACP countries.
The agricultural sectors, often the only sector in ACP countries even close to becoming competitive in global markets, would be especially hard hit by any attempt to open up a free trade area between the EU 15 and the ACP 71 -- so-called 'reciprocity'.
"For the time being, would probably have an overall negative effect on the economies and on the agricultural sector in particular," Kachingwe added.
Under its system of farm trade subsidies, or Common Agricultural Policy, the EU clears out its surplus agricultural produce and dumps it on developing country markets, keeping EU farmers well-paid but crippling those in other countries. EU beef is often sold in the South for less than local farmers' cost prices.
Heavily subsidised EU meat exports to South Africa in 1996 nearly smashed the Namibian cattle industry. Though it supplies some 70percent of the cattle and meat exports in southern Africa, the EU dumping cost the Namibian meat industry some $67 millions in lost trade. South Africa's domestic meat industry is estimated to have suffered a loss of some 110 million dollars.
Experts say such situations would only worsen under extended reciprocal trade agreements.
"From the Southern perspective, there seems to be a very clear trade agenda in the European external policy, but there isn't a clear foreign policy or development policy which has an identity of its own," says Kachingwe.
"It seems that much of these (foreign and development) policies are being subordinated now to the trade agenda," she noted, "possibly because that is where there is really a European consensus on what to do between the EU institutions and the member states."