Jun 15, 1998
EU OFFICIALS BACK FREE TRADE AREAS TO SUCCEED LOME
Brussels, Jun 11 (IPS/Niccolo Sarno) -- European Union ministers appear no nearer to picking an alternative system to replace, by the year 2000, the EU's giant Lome Convention trade and aid pact with the 71 nation African, Caribbean and Pacific (ACP) group of states.
But EU officials lean daily more closer to one option in particular. They back a network of new regional free trade agreements (FTAs) between the 15 nation bloc and regional blocs made up of present ACP members.
Non-governmental organisations are worried by the idea of replacing the Lome Convention and its unique system of trade preferences and aid with FTAs.
They say that under a system of regional FTAs the advantage will lie with the EU's globalised exporters, not the ACP states, whose membership includes some of the poorest nations in the world.
"The current proposals for free trade areas would transform Lome into a battering ram for free trade, forcing the infant industries of the developing countries in the ACP into unfair competition with the industrialised economies of Europe," says Liz Clements of the UK Presidency Project, an umbrella group linking development NGOs in Britain, current holder of the presidency of the EU.
And a prestigious British parliamentary inquiry committee last week rejected the option to replace Lome preferences with a FTA system as "blackmail" and "immoral".
But officials from the EU's executive Commission are increasingly pushing the FTA option as the least complex of the handful on offer -- and the option least likely to upset the enforcers of global free trade at the World Trade Organisation (WTO) in Geneva.
"We totally reject these criticisms," says Philip Lowe, general director of the Commission's directorate for development. "We think FTAs, especially at regional level, is the best way forward."
On Monday EU foreign ministers meeting in Council in Luxembourg failed to reach firm conclusions on the choice of options> The option are to be tabled as part of the EU's negotiation Mandate during when it begins talks this year with ACP states on replacing the Lome Accord.
The Mandate options will have to meet the WTO's rules in a way that the present Lome Convention's system of preferential access to EU markets does not.
The Commission suggests that between 2000, when the Lome Convention expires, and 2005, existing Lome arrangements should continue while negotiations between it and the proposed regional FTAs would take place.
The EU and the ACP states would need to cover the five year negotiation period with a waiver from the WTO, which has already ruled key parts of the Lome accord in breach of its rules.
The Commission suggests that a transitional period of 10 years or more could start in 2005 during which time it could implement the regional economic partnership agreements. These would also need WTO approval, and even then WTO would only give it if the FTAs were purely temporary and that trade access to the FTA member nations would be free for all by the end of the ten years.
The British parliamentary committee said that the timetable proposed by the EU could do "serious damage" to the economies of ACP states. Under the FTAs, ACP countries would lose their present preferential access to EU markets and would be forced to open up to EU exports.
But the Commission's Lowe said the Least Developed Countries (LDCs) and the small island states within the ACP, which have the most fragile economies, will have special agreements with the EU.
Among the 71 ACP states, 40 are LDCs, which already benefit from zero-tariff access to EU market, and 20 are small island economies for which the EU hopes to set special rules, Lowe said. "But we have no proposal on the table for the moment," he acknowledged.
Caribbean island traders were among the first and hardest hit by the WTO's opposition to Lome trade preferences. The WTO ruled in favour of the complaints of U.S. fruit trade multinationals and Central American countries opposed to Lome's special deal on banana exports to the EU from Caribbean small island states. That opposition is expected to continue under an FTA as well.
The EU's proposal to help create regional FTAs is perceived by some as premature. "Proponents of this view argue that the (EU's) Commission overestimates the readiness of ACP groupings for regional integration and proposes a time-frame which conflicts with what is politically and technically feasible," says The European Centre of Development Policy Management, an independent foundation based in Maastricht in the Netherlands.
"Without any reform to the EU's Common Agricultural Policy (CAP), free trade agreements with the EU would not improve market access for exporters in the ACP," says the Centre in a briefing document. "It would however improve market access for EU exporters."
NGOs argue that the ACP states, whether trading individually or within a regional FTA, are not equipped to compete with the marketing power and price advantage enjoyed by EU exports, many of which are heavily subsidised under the CAP.
Discount EU beef, paid for by EU taxpayers to maintain EU farmers' incomes, then dumped on the markets of the Sahel states of Africa, nearly wrecked its domestic cattle trade. The impact of CAP-subsidised produce is blamed for the loss of 2,000 jobs in the outh African fruit industry; EU canned tomatoes already undercut South African produce in Europe, Asia and even in South Africa itself.
The EU is heavily preoccupied with CAP reform, which costs a billion ECU (1.1 billion dollars) a year to run or more than 50 percent of the EU's operating budget.
"The natural aim for the EU," said the EC Commissioner for Agriculture, Franz Fischler, during a visit to Canada on Monday, "is to maximise our share of world agricultural exports in line with WTO rules while assuring a livelihood for those farmers in Europe who can not compete at a global level but who provide other services to society."
Fischler said the EU's objectives for the future development of the CAP are "to ensure that EU farmers and food industries take full advantage of positive world market developments" and "to ensure a fair standard of living for the (EU) agricultural community and to contribute to the stability of farm incomes".
The issue was one among several currently under discussion here at the Summit of the Group of Seven poor nations (P-7). The P-7 was set up to articulate the views of seven of the world's poorest nations in the same way the Group of Seven (G-7) most industrialised nations speaks for the seven richest.
The conference, which opened Wednesday here, was organised jointly by the Green Group in the European Parliament and the Council for the Development of Social Science Research in Africa (CODESRIA).
"We think it is very important that the P-7 is maintaining a voice for the poorest countries in times of globalisation," said CODESRIA's Mamadou Riouf, the coordinator for the P-7, at the opening of the three-day event Wednesday.
"This conference was organised as a deliberate counter-event to the glamorous G-7 or now G-8 (including Russia) Summit of the rich and powerful industrialised countries," said Green European parliamentarian Magda Aelvoet.
"The objective for us is not globalisation at any price, it is to have human development in the world," she said. "'We are appealing for globalisation of good quality and diversity."
The P-7 was organised for the first time in June 1997 while the G-8 Summit was taking place in Denver. This year the P-7 countries chosen are Chad, Malaysia, Mexico, Mozambique, St Lucia, Tanzania, and Uganda.
"I hope the P-7 will become a permanent forum, until we bring adequate change to protect the poor from the kinds of global policies that are pushing many of us (citizens of poor countries) to the very brink of survival," said P-7 Honorary President and Indian activist Vandana Shiva.
For example, she said, heavily indebted Indian farmers, "cannot access any more public sector lending because the low-interest rural credit has been dismantled by the World Bank under structural adjustment and trade liberalisation.
"Bit by bit, every fundamental human right of citizens, to have food and water, to have jobs, to have security, to have a culture are being dismantled," she said.