Apr 24, 1998

ACP NATIONS BATTLE AGAINST EROSION OF EU PREFERENCES

Port Louis, Apr 22 (IPS/Niccolo Sarno) -- Apprehension that free-trade agreements may dominate relations between EU and ACP nations when an existing trade and aid pact expires marked the 26th ACP-EU Joint Assembly this week in the small Indian Ocean state of Mauritius.  

The pact in question is the Lome Convention, linking 70 developing nations from Africa, the Caribbean and the Pacific (ACP) to the 15-member EU, the world's largest trading bloc and the second largest multilateral donor. It will come to an end in less than two years time, and formal negotiations on its future are due to start next autumn.  

"We are particularly disappointed to learn that the (EU's Executive) Commission, in its communication to the EU (ruling) Council for a negotiating mandate, is proposing Free Trade Agreements with the regions and sub-regions of the ACP group, after a transitional period of five years," Navinchandra Ramgoolam, prime minister of Mauritius, said here. Many developing countries, he added, had already been left behind or marginalised in the move towards globalisation and free trade.

 Many ACP delegates have expressed their disappointment at the EU recommendations for a five-year time limit on trade preferences.

Several trade experts insist that ACP countries need at least ten more years of the Lome trade regime before beginning a switch to reciprocal free trade.

Significantly, even Mauritius, ranked among the middle-income developing countries and often held up as a model in the field of development for its achievements, is worried about the EU plans.

The European Commission has argued that existing non-reciprocal Lome preferences cannot be continued. European Commissioner for Development Joao de Deus Pinheiro warned delegates here that it would be already difficult to obtain a five-year waiver from the World Trade Organisation (WTO), which already ruled that some Lome preferences are against free trade. He also said that an agreement on waivers could only be secured with the unanimous support of all member states.

In a recent report released in Brussels by the Liaison Committee of Non-Governmental Organisations (LC-NGOs), the European development NGOs said that "reciprocity in trade arrangements is incompatible with the fact that the ACP economies are much weaker than that of the EU."

NGOs want the EU to put strong pressure on the WTO to grant a waiver that would allow the trade preferences to continue. Pressure has been put on the EU to open negotiations with the WTO for such a waiver ever since last year when the free-trade enforcing body ruled against the trade preferences the EU grants to ACP banana exporters under Lome.

Ramgoolam, who proposed this week the holding of an ACP-EU summit in 1999 to strengthen political cooperation between the ACP and the EU, warned: "We do not subscribe to any concept of regionalisation which threatens to break-up the ACP group."

Last November, ACP leaders and officials meeting in Libreville, Gabon, said they would not allow the ACP group of countries, which have little to unite them except their common link with the EU, to split.

Just before that summit -- in October last -- the European Commission adopted political guidelines which stated clearly that "the ultimate objective would be to establish economic partnership agreements with each of the three ACP regions."

"Besides provisions on economic cooperation, regionalised economic partnership agreements could provide for the gradual establishment of free trade areas in accordance with WTO (free trade) rules and the (EU's) common agricultural policy," said the Commission.

Glenys Kinnock, European Parliamentarian and rapporteur for a working group on the future of ACP-EU relations, said that if the policy of free trade was pursued in its proposed form, the EU could be responsible for causing "the erosion of the bonds of trust built up over many years within the (ACP) Group."

The European parliament adopted a resolution last October calling on the EU to "use all legal means available" to end the attempts by the WTO to crush the Lome Convention,
"We must recognise that many (ACP) countries freely admit that they do not have the administrative capacity or expertise to undertake negotiations with the European Commission," added Kinnock. 

She feels the Commission's trade proposals have potentially serious economic, social, and political consequences for the ACP. "We should beware of rushing headlong into an agreement which includes a trade component likely to undermine the prime objective which is to ensure the means of promoting stability and prosperity in ACP countries," she said. 

ACP delegates also expressed their anger at the US' policy on free trade, and Lord Plumb, Co-President of the Joint Assembly, asked: "Can it be right that a country like the United States should lead the campaign in the WTO for the removal of ACP preferences in the banana sector?"

"What I find particularly worrying is the prospect of similar attacks on other sectors, thereby gradually eroding ACP preferences," added Plumb.

In a document contributing to the debate on the future of the ACP-EU relationship, the Brussels-based NGO 'European Solidarity Toward Equal Participation of People' claims that the EU, with the US, "played a central role in the design of the last General Agreement on Tariffs and Trade (GATT, the forerunner to the WTO), now widely perceived as detrimental to the poorest and least developed countries." 

Last September, the WTO upheld a complaint by the United States, Ecuador, Guatemala, Honduras and Mexico, which already have an 80% bananas market share. The WTO ruled that the Lome Convention's trade preferences to ACP banana exporters broke free trade rules.  

As a result, the European Commission in January approved draft modifications to its $2 billion-a-year banana trade preferences system, and the European Commissioner for Agriculture, Franz Fischler, said the EU had no choice but to implement WTO rules.  

Ramgoolam repeatedly mentioned the problem of banana trade which, as he put it, has been marked by "the unacceptable face of mercantilism driven by the self interest of a few multinationals with total disregard for the development needs of a number of small developing countries."

ACP trade experts say that an assessment of the Lome trade preferences shows that most ACP countries have failed to grow even under the protected umbrella of the Lome convention. In 1975, ACP countries accounted for 7.6% of total EU imports, but the figure had dropped to 3.8% by 1996.

Today, ACP countries, which include some of the world's poorest, account for only 2% of world trade.