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Contributions from
the Column
Focus
A model for other world regions – progress in Europe
New consensus
The view from Paris. What the French government thinks of co-ordination
“Contribute at the global level” – ideas and priorities of accession countries
“More of the same” is not an option: putting support for ACP countries on a new base
For NGOs, support from Brussels means a lot of money – and a lot of work
12/2005
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“More of the same” is not an option
Civil society organisations in Europe are critical of the EU’s bilateral trade policy. They accuse the European Commission of merely wanting to open up markets. The Commission rejects this view. It maintains that development is its core concern in cooperation with poor countries in Africa, the Caribbean and the Pacific (ACP). Good governance, rule of law, adequate regulations, regional integration as well as better market access are essential to increase these countries’ competitiveness. That is what the EU is aiming for.
[ By Martin Dihm ]
Is the European Commission pursuing an aggressive policy in regard to the poorest developing countries? Are commissioners urging 77 former colonies in Africa, the Caribbean and the Pacific (ACP) to take extensive steps towards liberalisation in order for the EU to conquer additional markets? Are they even forcing ACP countries to implement rules which will have detrimental consequences? Such accusations are raised by a number of civil society organisations in ACP countries but much more so in Europe.
At stake are the Economic Partnership Agreements (EPA), which are being negotiated by six regional groups of ACP countries and the EU. Critics portray EPAs as the epitome of destructive globalisation. This view is distorted.
It is true that the EPA strategy departs from past approaches. Rather than granting non-reciprocal trade preferences, as was done in the past, EPAs provide for reciprocal obligations binding both the EU and ACP countries. This applies to the opening of markets and certain economic regulations, the thought of which arouses fears. Can small, marginalised developing countries really negotiate on a par with the mighty EU? Without being cheated?
Putting development first
Indeed, the EPA approach will only work if the EU puts aside its commercial interests in favour of a development-oriented course of action. It must behave as a true partner. In that sense, Commissioners Peter Mandelson (trade) and Louis Michel (development) have repeatedly acknowledged that “putting development first” is their guiding EPA principle.
A number of different measures have been funded to improve the negotiating capacity of ACP countries. Probably the most well-known one is the installation of a network of more than 55 trade-policy experts to advise the respective ministries in ACP countries.
But why shouldn’t the EU simply continue and fine-tune the preferences granted to ACP countries so far? That question was raised again and again in the years leading up to the signing of the Cotonou Agreement in 2000. The debate brought the economic marginalisation of the ACP countries into focus. This phenomenon is still evident today. 25 years of trade preferences have not brought the success hoped for. On the contrary, exports from most ACP countries have lagged well behind those from other developing countries. Therefore, “more of the same” cannot be an option.
ACP countries and the EU acknowledged this fact in the Cotonou Agreement. Non-reciprocal preferential treatment by the EU is useful – but, in itself, does not suffice. ACP countries need a more comprehensive approach combining trade preferences with other elements. These include, for example, rules of origin, rules for investments, trade procedures and sanitary standards. Furthermore, regional integration and development assistance are of particular importance. The integrated EPA package directly targets the very problems that until now have hampered productivity and competitiveness. It will speed up trade and trigger growth in the ACP countries – something trade preferences have not done.
In the course of globalisation, the granted preferences are losing significance anyway. Special EU-conditions for ACP countries are being eroded. This trend is gaining momentum because other developing countries are asserting their rights of equal treatment and fair competition in the context of the World Trade Organisation (WTO).
This trend was already evident at the WTO Ministerial Conference in Doha in 2001. One of the contentious issues there was official WTO approval for continuing EU preferences for ACP countries until 2008 (when the EPAs are supposed to come into effect) in spite of the preferences’ fundamental incompatibility with WTO principles. The approval was given against strong opposition – largely thanks to the EU making new concessions to non-ACP countries, which, in turn, contributed to the erosion of the ACP-preferences.
Becoming competitive
At Cotonou in 2000, there obviously were good reasons for the ACP countries and the EU to agree on a comprehensive, WTO-compatible approach. The objective was – and still is – to increase the competitiveness of ACP countries in the long term and to successfully integrate them into the world economy.
The basic principle of the EPA strategy is to carefully and gradually open the markets in ACP countries – primarily at the regional level, but also to the EU in the medium term. This serves two goals:
– Opening of the markets in a controlled manner should strengthen regional integration and gradually increase competitiveness.
– Compatibility with the WTO will be guaranteed, providing EU support for ACP countries with a sound and permanent legal basis.
The markets of the ACP countries are small and segmented. On their own, they do not present any opportunity to become competitive in global trade. However, stronger regional integration will make it possible to gradually increase production and competitiveness and to prepare to open up to the EU and other international partners in the long run.
Nevertheless, some critics see EPAs as a disruptive factor for regional integration (Melber, 2005). It is true that several of the regional ACP groups negotiating EPAs with the EU are not ideally suited for integration. This applies to Eastern and Southern Africa. Some countries there have made several conflicting commitments to integration, for example, by agreeing to become members of two different customs unions.
These incompatible structures have historical roots and result from the complex political relationships in the region. They already existed before the EPA process began. It goes without saying that they hamper regional integration. However, the EPA process is proving helpful in precisely this area. The necessity of clearly choosing between different integration options is on the agenda and being discussed in the countries concerned with increasing intensity. Of course, the sensitive question of regional membership can only be answered by the ACP countries themselves. EPA negotiations are catalysts for – but cannot replace – decision-making in the ACP countries.
Apart from the gradual opening of the markets, trade and investment also depend on the reliability of rules and regulations. Important principles are already defined in the Cotonou Agreement and should become elements of the EPAs, as they will prove useful for preparing the ACP economies to gradually integrate into the world economy. Transparency, fairness and predictability of governmental behaviour (with regard to investment, competition, trade or public procurement) are basic components of a growth-friendly business environment.
Presently, most ACP countries have too few investments – except, perhaps, for the sector of raw material extraction. Often, those who have money take it out of the country as quickly as possible in order to invest in other countries with better business environments. This trend must be turned around if ACP countries are to focus on growth and succeed in fighting poverty. Doing so will not be possible without the rule of law based on clear and trustworthy norms.
Another significant component of the EPA concept is to provide development assistance in areas which prove relevant in the negotiations. For instance, ACP countries have to meet the sanitary and phytosanitary standards of the EU (and other important consumer markets) if they are to export foodstuffs. The fact that many of them are not able to do so has long been identified as a huge obstacle to exports. This issue is on the EPA agenda. Money has already been set aside to help the partners overcome the problem in practical terms.
In accordance with the Cotonou Agreement, development cooperation administered by the Commission should continue to focus on the ACP countries’ trade and integration needs in future. On the other hand, incorporating trade and regional integration more and more into the respective development strategies will be crucial. Increased coordination with other development actors – for example, EU member states, which have announced they will considerably increase their development funds for Africa in future – should prove useful.
Civil society perspectives
The relatively novel EPA concept and the fact that EU trade policy is structured on a development-oriented basis is attracting a lot of interest, not only in ACP countries. Reactions among non-governmental organisations (NGOs) in Europe are mixed. The private sector lobby sees, above all, the long-term potential for more investments in – and trade with – ACP countries, based on transparent, reliable and modern rules.
Other NGOs stress the significance of more governmental transparency, including in public procurement. Since indicators for such transparency correlate closely to those for development, any progress in terms of governance will support the fight against poverty.
A third group of NGOs aspires to articulate the interests of “the ACP” themselves. This group believes that a fundamental anti-EPA position would serve the countries concerned best. Ideological positioning and distrust of the Commission’s “true” intentions seem to matter quite a bit in this context. Indeed, the reactions from the ACP countries themselves tend to vary much more – depending on who one talks to. It is obviously of immense importance for ACP countries to gradually enhance competitiveness, transparency, the rule of law and governance. Why some European NGOs take so little account of these issues remains a mystery.
The criticism of the EPA policy is certainly valuable to some degree. It helps keep the focus on the priority of development in the trade debate. But to the extent that it is displaying a fundamental ideological bias, it is weakening the cause of pragmatically supporting constructive change and reform in Africa. However, clichéd thinking in the categories of good and evil is not helpful at all. EPAs deserve constructive and informed criticism – not least for the sake of the poor people waiting for an improvement of their situation.
Dr. Martin Dihm
is deputy head of unit at the European Commission’s Directorate-General for Trade. He is writing here in a personal capacity.
martin.dihm@cec.eu.int
Reference:
Henning Melber, 2005:
Globalisation blocks regional integration, D+C/E+Z, March, p. 116-118
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