Global Policy Forum

By Greta Hopkins

The European Commission is set to recommend a change of trade terms with the African, Caribbean and Pacific (ACP) countries from preferential trade to free trade. The Commission, which is the executive arm of the European Union (EU), is expected to propose a new set of trading arrangements with the 77 ACP countries (78 including associate member Cuba) on April 10.

Preferential trade has meant the ACP countries could export quotas of certain products to the EU without paying any tariffs. At the same time, they were allowed tariffs on imports from EU. Preferential trade terms also provided for compensation to ACP countries for shortfalls in export income due to price fluctuations in products such as sugar, beef and bananas.

The proposed free trade terms would mean both sides would lift all non-tariff and tariff trade barriers.

Preferential trade has been carried out under the four Lome Conventions, named after the capital of Togo in West Africa. The first Lome Convention was signed in 1975.

The changes being contemplated now follow an agreement signed in June 2000 between the EU and the ACP in Cotonou, the seat of the government of Benin, Togo's next door neighbour, and one of the poorest ACP countries. The Cotonou Agreement provides the framework for co-operation between the EU and the ACP until June 2020.

Its primary aim is to ''promote and expedite the economic, cultural and social development of the ACP States, with a view to contributing to peace and security and to promoting a stable and democratic environment.''

But if free trade is all the EU is offering under that agreement, the ACP are not interested, says Hegel Goutier, spokesman for the ACP countries.

''We are not looking for a free trade zone with the EU, our priority is an economic partnership,'' he says. ''Trade is just one tool which can be used to reach the ultimate objective which is the fight against poverty.''

Considering the size and diversity of the ACP group, there are some complex negotiations in store before the ACP's own mandate can be agreed. The ACP council of ministers will do the ground work at a meeting in the Dominican Republic June 25-27. It is hoped that the final mandate will be approved by a meeting of ACP leaders in Fiji in July.

Trade talks between the ACP and the EU are due to begin in September, and are expected to continue until 2007. The final outcome will have to be agreeable to both sides. Otherwise there will be no outcome, as with the WTO talks in Seattle.

A European Commission document recommends creation of Economic Partnership Agreements (EPAs) to establish free trade areas. The EPAs, the Commission document says, would be set up within the objectives of the Cotonou agreement.

According to the draft European Commission document obtained by IPS, '' EPAs shall be directed at fostering closer economic integration between the parties, by removing progressively barriers to trade between them, and enhancing co-operation in all areas relevant to trade, in full conformity with the provisions of the WTO (World Trade Organisation).''

The Commission proposes free trade areas not only in goods, but also in services. The document argues that services are a potentially significant growth area for the ACP. It says there are many sectors where ACP countries have an advantage. Liberalisation of services would ''act as a spur to domestic reform,'' the draft paper says.

The Commission is proposing duty free access to the EU market for all products originating in ACP countries once the EPAs come into force. ACP countries would be given a grace period of up to 12 years in which to dismantle tariffs on imports from the EU. The Commission suggests that this period could be exceeded ''in exceptional circumstances for specific sectors or products.'' But flexibility should not become a pretext to avoid difficult decisions, it says.

The Commission favours negotiating EPAs with regional ACP groupings. The Commission's Directorate General for Trade would hardly relish the prospect of negotiating 77 separate agreements.

But there are signs of opposition to such proposals already. Goutier says the ACP want to be represented at three levels during talks with the EU: at an all-ACP level, at a regional level, and at the country level. ''We don't want to end up in a situation where some regions have advantages over other regions,'' he says. ''It is very important to maintain the cohesion of the ACP group.''

Civil society groups too are concerned that the EU may not pay enough attention to the very different states of economic development within the ACP. A network of non-governmental organisations sounded a warning at the fourth ACP-EU joint parliamentary assembly (a forum made up of members of the European Parliament and representatives of ACP countries) in Cape Town in South Africa March 18-21.

The NGOs are arguing the need ''for alternative trade arrangements which ensure that those ACP countries not in a position to enter reciprocal trade arrangements with the EU are not left worse off in terms of their access to the EU market.''

Guggi Laryea from Eurostep (European Solidarity for Equal Participation of People) says ''free trade based EPAs are clearly not the only option.'' Individual countries could ''move gradually towards free trade according to improvements made in certain social indicators.''

Least Developed Countries as defined by the United Nations can opt out of free trade areas, but they would be subject to ''de facto'' free trade, Laryea says. ''If they are geographically within a free trade zone, they would not be able to protect their borders from goods coming in,'' he says.

Glenys Kinnock, member of the European Parliament, and co-chair of the ACP-EU joint parliamentary assembly, says the European Commission must be flexible in its approach. ''It is very important not to be prescriptive and ensure that options other than the Economic Partnership Agreements can be discussed,'' she told IPS. ''It is not necessarily appropriate for all countries and regions to have free trade areas.''

It took South Africa four years to negotiate its trade and development agreement with the EU, says Kinnock. ''Other ACP countries have less capacity than the South Africans and they will need a lot of support,'' she says.

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