SUNS4371 Wednesday 10 February 1999

Trade: Future of Lome Treaty still clouded

Dakar, Feb.8 (IPS/Niccolo' Sarno) -- The 71 nations of the African, Caribbean and Pacific (ACP) group and the 15-member European Union (EU) are still wide apart on the future of the Lome Convention, the trade
and aid agreement between these two groups of former colonies and metropolitan powers.

The current, Lome-IV, is due to expire in February 2000.

Five months of talks on the Convention which links the two blocs have failed to chart an acceptable course to meet the trade rules set by the World Trade Organisation (WTO). Most concerned over the future are the
32 ACP members who are not in the category of the Least Developed Countries (LDCs) and stand to lose their preferential access to EU markets next year.

"The greatest challenge for our negotiations is in the area of trade," said George Saitoti, Kenyan minister for development and president of the ACP Council of ministers during a two-day session of the ACP Council that opened Monday.

The European Union reiterated that it wanted to establish free-trade agreements with the ACP regions, as the basis for a set of Regional Economic Partnership Agreements (REPAs).

"The EU negotiating position is that the past and current trade regime is not sustainable and new ACP-EU trade arrangements must be negotiated," said Saitoti.

But according to many ACP delegates and a set of studies released (last November) by the EU's Executive Commission, the 'free trade' arrangements were not expected to have a positive impact on ACP States.

"The studies do not point to workable and viable arrangements for our groups," said Saitoti noted.

The EU believes that Caribbean countries could form a new free trade agreement based on the existing CARICOM and CARIFORUM agreements while Southern African countries could build on their SACU-SADEC customs union agreements.

More time would be needed to form free trade areas in West Africa, East Africa (Kenya, Tanzania and Uganda), in Central Africa and in the Pacific to enlarge existing economic, monetary and custom unions.

The ACP countries, however, held that "the extent of regional economic integration and/or partnerships amongst the ACP countries is still limited, even in the sub-regions identified by the European Union."

An ACP document said that "reciprocal (market) access would be of most immediate benefit to the EU and, in the medium-term at least, carries the threat of a loss of import revenues for those ACP states heavily dependent on import duties."

Saitoti declared that "besides providing a source of raw materials for their industries, the cooperation has benefited the EU in terms of the strong economic ties that have been developed and sustained over time."

The 15 EU members want the new trade arrangements to replace the present non-reciprocal trade preferences, given to all ACP countries, to be defined by the future Convention. But the ACPs say that the nature of these arrangements should only be negotiated during a preparatory period beginning September 2006.

The duration of this preparatory period - the period before the new trade arrangements came into force - remained a major bone of contention at the current talks..

The position of the ACP group was that it should last at least another 10 years, during which preferential access to the EU market should also be improved. They also said that the trade arrangements should be
voluntary since most ACP regions did not have the necessary capacity to negotiate and implement these agreements.

Many ACP delegates, here in Dakar, said it was unrealistic to believe that ACP countries would be able to prepare and negotiate Free Trade Agreements with Europe within five years.

The European Union, on the other hand, said that the new trade arrangements should be put in place as soon as possible, and proposed a preparatory period of five years during which the current market access would remain unchanged.

Among opening statements at Monday's negotiating session, Germany's minister for foreign affairs and president of the EU General Affairs Council, Joschka Fisher, said that "the ACP States can improve their
position in world trade only by closing ranks more tightly at regional level."

Joschka also reminded participants that Europeans had much to gain from economic development and prosperity in the ACP States. "We ourselves will profit if the ACP States' economic strength can be boosted and their position in world trade enhanced," he said. Despite preferences granted to them, exports from the ACP regions to Europe declined over the past decade.

Lome observers pointed out that time was running out and, with just 12 months left before the Convention expired, pressure was growing on all sides to reach some form of agreement this year.

There was a risk, therefore, that the ACP group would "commit themselves to the principle of REPAs - or other trade arrangements - but on terms which, although reassuring, would be too general to offer a firm guarantee as to what would be the real content of these agreements, warned a statement by the European Centre of Development Policy Management, an independent foundation based in Maastricht in the Netherlands.