Global Policy Forum

By Brian Kenety

Top European Union (EU) officials this week met in Gabon with African trade ministers to press the case for regional integration as the best way for developing countries to meet the challenge of globalisation. ''I am here to make the case for open regional co-operation as a way of integrating developing countries into the world economy,'' Poul Nielson, European Commissioner for Development Co-operation and Humanitarian Aid, said Tuesday. ''I cannot tell you how to do it. Nor will I claim that opening up to your neighbours could not have transition costs. I am here to say that I am personally convinced it is the only way of meeting the challenge of globalisation,'' he said.

Addressing the African trade ministers Monday, EU Trade Commissioner Pascal Lamy said he was convinced that launching a new round of the World Trade Organisation (WTO) was a prerequisite for establishing an equitable multilateral trading system. Nielson also pressed that point Tuesday, whilst focusing on the mechanics of building regional infrastructure. ''I'm conscious that a new round will only be beneficial to your countries under certain conditions. I'm here to offer Europe's support,'' he said.

The Cotonou Agreement, the trade and aid Partnership Agreement signed by EU member states and the 77 states of the African, Caribbean and Pacific (ACP) group in June this year, identifies ''integration into the world economy'' as a fundamental strategy in the fight against poverty. This strategy is further underlined in the recent joint declaration of the European Council and European Commission on development co- operation policy, which identifies trade and development and regional integration as priority areas for EU relations with all developing countries.

The EU and the ACP member states will shortly start a process leading to the opening of negotiations on future trade relations. These negotiations will start September 2002, while the start date for the implementation of the resulting Economic Partnership Agreements is foreseen as the Jan. 1, 2008. ''The challenge of trade negotiations requires improved capacity in trade policy formulation and negotiation techniques,'' said Nielson. Prior to and during negotiations, specific technical assistance is foreseen to assist the ACP in the preparation for and conduct of these negotiations.

A financing proposal for 20 million euros will shortly be presented for approval by the Commission to ensure funding for this technical assistance. These resources will be used to finance specific study work aimed at developing negotiation positions for ACP countries and regions; provide training in negotiating techniques for ACP officials leading negotiation teams; fund technical assistance support to ACP regional economic groupings in the area of trade policy and; finance targeted technical assistance to ACP regional groupings aimed at consolidating economic integration initiatives. ''Europe is willing and able to support your integration into the world economy (...) Commissioner Lamy and I thought this occasion was a welcome opportunity for both of us to travel to Africa to convey this message. It also underlines that our approach is not the old, cheap and dangerous slogan 'trade, not aid'. Our approach, the one we agreed together in Cotonou, is 'trade and aid','' said Nielson.

Examples of where Brussels could offer support for regional integration, include approving funding for roads needed to establish or complete a regional network. Changing land use patterns may have regional implications and therefore watershed management was also a shared concern, noted Nielson. The intensification of livestock grazing in Zimbabwe and South Africa, and the resulting reduced capacity of the areas to absorb and retain sudden heavy rainfall, is part of the explanation behind the severity of the flooding in Mozambique, he said. ''The time has come to revitalise the role of African railroads. The container-technology and the transport needs of landlocked countries is a perfect mix,'' he said. Efforts should be made to facilitate regional interconnections of power transmission lines to ensure the optimal use of hydroelectric power and other sources of energy, he said, in offering another example of how regional co-operation could be improved.

Nielson also noted that tax reform would lead to the gradual and regionally compatible introduction of VAT (value-added tax) as a supplement or eventual substitution to import and export levies ''is better for economic growth and less prone to corruption''. The Cotonou Agreement provides a solid, mutually agreed framework for discussing corruption, said Nielson. ''I want to stress that the fight against corruption is more than a legal and moral imperative. It also makes economic sense the kind of sense Ministers of Finance appreciate. I'm told that in Benin, a government campaign against corruption generated 15 percent increased resources to the state budget,'' he said.

For these reasons the Commission, the executive arm of the EU, fully supports the principles to promote and facilitate collaboration among African countries to address corruption adopted under the auspices of the Global Coalition for Africa in February 1999. ''We welcome, in particular, the importance given by the signatories to the importance of regional collaboration in the implementation of these principles,'' said Nielson. On the rule of law, he said the EU was ''offering a deep and long- term partnership''. Political gestures like creating special offices reporting directly to the Head of State are important, he said, ''but the real challenge is to make the rule of law the rule, rather than the exception in everyday social and economic life''.

As such, he said that the EU stands ready to support judicial reform, training of judges, the establishment of local courts, and other measures. African development is still constrained by the small size and lack of diversification of its economies, said Nielson. ''Private initiative is recognised as an engine of economic growth, the important source of employment in the ACP countries. Our policy must therefore contribute to creating confidence in domestic and international enterprise so that 'normal business will be able to do normal business' in ACP countries,'' he said. The Commission's policy will assist in improving the business environment and investment climate, strengthening financial and non-financial intermediary organisations and supporting greater competitiveness of ACP enterprises. An Investment Facility, endowed with 2.2 billion euros, is being set up as a new facility to give access to finance for investment purposes on a commercially run basis, noted Nielson.

He said that the Commission is also ready to approve significant allocations to regional efforts to implement standardisation and quality promotion. ''(Phyto-sanitary standards) are not just needed to reassure a concerned European consumer. Witness the economic disaster to pastoralists in North African communities when trade in livestock with Saudi Arabia caused 18 casualties in that country,'' said Nielson. The EU's top development official also spoke Tuesday of the need for ''attention to production towards local African needs'' including support for the private sector's efforts in this regard. ''In the presence of so many trade ministers, I have two examples to illustrate this point: a foreign potential investor would like to know whether soap produced from a plant in Uganda could also be sold free of customs duties in Kenya. Otherwise the market is too small. Uganda might be able to attract that investment, if its trade barriers with Kenya were dismantled,'' he said. Another example given was the production of impregnated malaria bed nets. ''There is unquestionably a huge pan-African market, yet there is no African production. Bed nets are imported from Hong-Kong. The intra- regional trade barriers on the African continent are too important to make local production interesting.''

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