by Moses Tekere *
Third World NetworkApril 2003
At the eleventh hour, the EU, in a last minute flexing of political muscle, caused sparks to fly by insisting that the ACP accept as non-negotiable a proposal requiring individual ACP states to conclude agreements with the EU on the repatriation of migrants. Post Lome IV negotiations concluded in February this year were the most difficult in the whole history of ACP-EU co-operation, especially in the area of trade co-operation. Moses Tekere explains why and examines options still open to ACP countries.
The ACP was faced with very difficult choices and questions. One thing that was however certain is that a new arrangement reflective of various changes that had taken place globally was needed.
Parties had to decide on both the nature of transitional arrangement and the nature of the post transitional trade co-operation model. Another difficulty was how such a transitional mechanism and post transitional model would capture and address the concerns of such a diverse group of countries [ACP and EU] in which there are developed, developing and least developed members.
Further, they had to ensure that obligations were commensurate with rights and benefits for unlike the current agreement where the EU is a "benefactor" and the ACP the "beneficiary," the EU clearly pushed for its commercial interests through introduction of reciprocal trade preferences.
On the other hand, several changes and processes whose outcomes have fundamental significance on EU-ACP co-operation are currently in progress, making it very difficult for ACP to accept reciprocity or even to determine the nature of both the transitional and post transitional co-operation arrangement.
It is in this light that the current agreement is a transitional instrument during which time events become clear and a new co-operation agreement with the EU will be concluded.
An analysis of the concessions made by both parties regarding contentious issues in trade and economic co-operation [Group 3] clearly shows the disproportionate nature of the concessions. The ACP paid a heavy price for maintaining the special relationship with EU temporarily, while the EU has not paid any price at all even for securing the preferential market access in ACP.
The Outcome
The main elements of the agreement in the area of trade and economic co-operation include;
An end to non-reciprocal treatment is the more fundamental meaning of the agreement, i.e. rebalancing of obligations and benefits, subordination of Lome and all regional trade and integration arrangements to WTO. The EU is now characterised by a marked shift from aid to trade as main instrument of co-operation i.e., focus on commercial links that are mutually beneficial and a shift from politically motivated agreements to those driven by economic interest. In addition the agreement has facilitated the division of the ACP into regional groups and more importantly the establishment of hub and spoke relationship between the EU and ACP regions. Finally it is difficult to see the link between the stated objectives of the agreement i.e. poverty alleviation and the instruments to be used to achieve the objective. The neo-liberal approach being proposed is already in a state of crisis given the experience of SAPs and recent crisis in the world particularly in emerging markets.
Major Lessons
Because of the inherent inequality of "donor-recipient" relationship, the negotiations field was grossly uneven. The ACP made many concessions with the hope of securing more aid while tactically the EU made aid availability and its size conditional upon reaching agreement in all areas. The size of the bundle of Euros to ACP was only announced at the end of the negotiations. The EU employed the tactics of cross conditionality by tying aid provisions, its size and conditions to ACP accepting reciprocity in trade. Being the recipients of aid, the ACP had no teeth or bargaining power.
What is more disturbing is that expectations of more aid resources by the ACP even after giving so much concessions have not materialised as the EU has not committed itself to increasing aid to the ACP. Availability of aid has also been tied to several conditionalities such as corruption, transparency, good governance and rule of law, economic performance and obedience. ACP countries have agreed to all this but the aid is neither expanding nor forthcoming.
Further, the nature of trade issues is very technical and with ACP ministers negotiating directly with EU trade experts, there is bound to be serious oversights. As a result the ACP made concessions that have serious consequences for both LDCs and non-LDCs. The ACP would have done better to respect their technical representatives and then work together instead of undermining their own structures.
Finally, the outcome of the negotiations again indicate the failure of ACP to determine their own development ideology, take initiatives and assert sovereignty in national economic policy formulation and implementation. By agreeing to free trade arrangements with the EU, the ACP further endorsed the neo-liberal approach to development despite the serious shortcomings of this approach. The Lome Convention has become an instrument through which ACP countries are further locked into a development ideology that is not suitable to their developmental concerns. More specifically the agreement serves as a vehicle for reinforcing WTO disciplines and the introduction of new issues, locking World Bank and IMF economic reforms programmes in Africa while undermining African regional integration and promoting the spoke and hub relationship of African regions and Europe.
The Main Problem
It is not clear how the above reciprocity will reduce poverty and stimulate sustainable economic growth. In Africa, there is no conclusive evidence regarding the role and impact of trade liberalisation and globalisation on human development, livelihoods, social welfare and economic development. In a number of cases where trade liberalisation was undertaken as "divine rule" and without a clear national and regional trade and development strategy, it has brought more misery, increased hardships, deterioration of human development, destruction of poor peoples" livelihoods, environment, marginalisation of poor countries and their communities and high rates of inequality. The question is, given their level of development are ACP countries in a position to compete equally with the EU in a free trade arrangement?
A free trade agreement with the EU should be based on national and regional development programmes if they are to address the crucial problems facing ACP member states. ACP countries are already undertaking trade liberalisation programmes within the national context of SAPs and within the regional and multilateral context. Liberalisation of trade with the EU should therefore be welcome and viewed as reinforcing instead of undermining efforts at national, regional and multilateral levels.
The "NEW ERA Proposal" ® A Way Forward for ACP
Given the differences in the levels of development between the EU and ACP states there is great need to craft a visionary, unique and innovative free trade area agreement that addresses trade liberalisation and development concerns in a direct and comprehensive manner. Traditional free trade models based on time-bound removal of tariff irrespective of the level of development achieved cannot be appropriate where partners are at very different levels of development.
In view of the emerging free trade agreements with the EU and the need for regions and individual countries to take decisions regarding the specific nature of such arrangements during the preparatory period [2000-2 roll over of current Lome IV and 2003-2007 negotiations of free trade agreements with EU], African countries and regions will need to consider all their options.
One such model is the 'new enhanced regional agreements' [NEW ERA]. The fundamental objective of NEW ERA is introducing free trade arrangements, according to achievement of some basic thresholds in African countries or as determined by regional integration groups rather than basing reciprocity on mere time frames. The new economic regional agreements [New ERA] with the EU should be designed to complement and reinforce trade liberalisation programmes within SAPs, ECOWAS, UDEAC, EAC, SADC and COMESA and WTO. Free trade arrangements with the EU will not resolve the above problems.
Other measures would have to be put in place. First, introduction of reciprocity should be tied to assistance for the ACP to achieve development thresholds that will enable them eventually to compete with EU firms under conditions of free trade. ACP countries are facing various capacity constraints; human development, debt burden, deficiency in economic infrastructure, weak private sector, commodity dependence, etc that reduce their ability to compete with the EU. To address some of these constraints the EU should commit itself to providing support and this can be done by tying the opening of ACP markets for EU products to provision of support towards resolving these constraints. With such an approach, phasing in of reciprocity would be related to achievement of development thresholds in ACP countries and the aid from the EU towards achieving those thresholds is the price payable by EU for accessing ACP markets.
The advantage of tying phasing in of reciprocity to development thresholds is a possibility of 'early harvest' in terms of fuller reciprocity in favour of the EU if they provide more aid.
In other words, introduction of reciprocity according to achievements of certain developmental thresholds would mean that if these or some of the thresholds are achieved sooner than the deadline then there is possibility of 'early harvest' in terms of reciprocating in favour of the EU. There is also a possibility of combining the thresholds and time frame, which would address the concerns of both parties.
With this, African countries would not seek long transitional periods since the landmark for reciprocity will be the thresholds. Secondly, the EU has to pay a price for the market access they are seeking in the ACP/Africa since by accepting reciprocity the ACP are also paying for maintaining current market access conditions in the EU. The outcome is a win-win situation in which the EU secures market access and ACP get support to address their development constraints.
This proposal would require appropriate amendments of WTO provisions on RTAs, in particular Article XXIV of GATT 1994 [on regional trade] and the 1979 Enabling Clause to allow development based thresholds instead of time-based thresholds. An issue of particular significance to Africa is the call for a "decision to ensure that any review of the regional trade agreements [FTAs] or other new Agreements within the WTO do not undermine the regional integration efforts by developing countries."
Essential Elements of the NEW Enhanced Economic Agreements Include:
Moses Tekere is the Director, Trade and Development Studies Centre [TRADES CENTRE] and a lecturer in economics at the University of Zimbabwe in Harare.
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