Why is Europe negotiating with Earth's largest group of poor countries free trade agreements called `economic partnership agreements' (EPAs) due to enter into force on 1 January 2008?

These negotiations result from the Cotonou Agreement signed in June 2000 between Europe and the 77 countries of Africa, the Caribbean and the Pacific (ACP), and their framework is laid down by a mandate given to the European Commission in June 2002 by the EU Council of Ministers.

An in-depth study of the negotiations taking place on the sole initiative of the Commission cannot but lead to noting that in several respects they form a surrealistic and distressing exercise.

1. The present trade regime `must' change as the non-reciprocal preferences the Union has granted its partners for over forty years have apparently `failed' to ensure their development. However the real failure of preferences resides in the complexity of the conditions of their use and European regulatory and agricultural protectionism, which have prevented ACP countries from fully taking advantage of this modest but genuine economic advantage. In contrast, nobody can affirm that preferences must be condemned because they have not settled the issue of the underdevelopment of very poor countries and have not allowed them to transform into `newly industrialised countries' like those of south-east Asia. But then, to be strictly honest intellectually speaking, this could not be their goal. Other policies and other instruments must be implemented to put an end to the vicious circles perpetuating mass poverty, trade dependence, and low attractiveness for foreign investors: so many challenges which neither developed countries nor certain elites in ACP countries have ever risen to, despite the countless recommendations given in this respect by the UN. Development cannot be reduced to the development of free trade and exports.

2. Europe wishes to contribute to the creation at its partners of a `virtuous' framework allowing investments to be attracted and combating the corruption and exodus of capital. An admirable programme, but which does not however take account of the fact that this `virtuous' framework will crumble with the collapse of the embryonic middle class and the speedier disintegration of rural communities, which will result from the four shocks caused by out-and-out free trade.

A budgetary shock, following the dismantling of customs duties which will affect the resources of poor countries where import tariffs form, at this stage of their development, a fiscal optimum, whereas the recommended replacement solutions are unrealistic and consist in taxing, disproportionately or regressively, businesses or households;

A balance of payments shock, imposing adjustments on incomes, domestic prices or existing social services, which will be all the more brutal as the currency exchange rates of our partners will be fixed;

An industrial shock, exposing ACP countries to a deindustrialisation risk through the disappearance of the network of small and medium enterprises which give a living to families wishing to educate their children and thereby contribute to enhancing the human and economic potential of countries whose wealth is sometimes plundered by `high' local personalities;

- An agricultural shock, which will challenge the sustainability of subsistence agricultures whose existence and development form the key conditions for a reduction in poverty in mainly rural countries.

Therefore when free trade is implemented without any discernment in countries that are not in a position of strength to bear it because they suffer from a food, education, health, infrastructures, technologies and savings deficit, the future of their population resides in survival in a `souk economy' and a flight from the countryside in the worst conditions. Further the best trained inhabitants and/or those in a situation of despair depart to Europe in terrifying conditions. All the work by UNCTAD, the UNDP, the FAO and the UN Economic Commission for Africa tend to demonstrate these findings.

This future highly threatening for peace and stability in zones sometimes close to Europe must be related to the central declared aim of the partnership which is `to reduce and eventually eradicate poverty' according to Article 1 of the Cotonou Agreement. The present development of the negotiations is reneging on this commitment.

3. `Surprisingly' the Commission has not wished to have an overall evaluation of the consequences of free trade. ACP countries are doing the work, on a case-by-case basis, without having any guarantees as to the seriousness of the studies carried out. Nor has any common reference framework been elaborated, under the supervision of a highly respected organisation like, for instance, the UNCTAD, to develop scenarios and analyse the observed effects.

4. Europe wishes to be seen as the big friend of the least developed countries (LDCs) for which it has adopted the so-called `Everything-but-Arms Initiative'. However it can be seen that the 39 ACP countries which are also LDCs are also concerned by free trade, which makes the very notion of LDCs meaningless. This classification is nevertheless drawn up by the UN and recognised by the WTO. In these negotiations, the Commission is acting in defiance of the differentiation principle set forth by Article 2 of the Cotonou Agreement, which lays down that cooperation arrangements and priorities with ACP countries, including in the trade sphere, shall vary depending on the partner country's level of development.

5. The negotiation of EPAs is supposed to strengthen regional economic unions of ACP countries. These unions are fragile for they are recent. It has been seen nonetheless that the Commission has called on the Southern Africa Customs Union to complete its customs union by 2008, and not 2010 as planned by the schedule for this region: this example proves that Europe is seeking to impose its regional configuration choices on ACP countries in a logic which can be likened, at worst, to neo-colonialism and, at best, to profound ignorance - just bear in mind the time it took Europe to unite - of the rhythms necessarily governing the unification processes of the African continent, one of the biggest political ambitions of the 21st century.

6. The EU-ACP financial cooperation instrument, the European Development Fund (EDF), is currently programmed to support the rollout of EPAs. This exercise is tantamount to exercising `soft' pressure on our partners to force them to sign EPAs. Further, our solidarity-based cooperation with these countries has been diverted from its philosophy, morphing into `aid for trade'.

7. The negotiation of EPAs is entirely dominated by the Commission Directorate-General for Trade. The Directorate-General for Development is resigned to being a mere cash register. Further, the latter is in no way associated with overseeing what would be a bearable liberalisation process for poor countries. That's why ACP countries feel that the negotiation is entirely dominated by a single concern: the determination to align the EU-ACP trade regime with the rules of the WTO, the international organisation whose entire philosophy tends to disdain or merely tolerate, without discernment and under ultra-restrictive conditions, the need for some discriminations, even positive, for the weakest and most vulnerable countries. Then there is the fact that Europe wishes to get negotiations on three subjects - investment, competition and transparency in public procurement - imposed in EPAs. As it accepted to abandon these topics at the Cancun WTO ministerial conference this attitude equates to reneging bilaterally on the commitment given multilaterally to developing countries.

8. Last, the Commission is not telling the truth when it pretends it is seeking alternative solutions, as laid down nevertheless by the Cotonou Agreement, for non-LDC ACP countries which would decide not to sign EPAs. The solutions it is thinking of are either legally, technically and politically unfounded or `non-WTO compatible', which would not be a serious problem in itself if some of its proposals were not merely pure fantasy.

The present situation leads to the following diagnosis: these negotiations are heading straight for failure. None of the ACP country spokespersons met by the rapporteur considered that the 6 processes started with the 6 ACP regions would all be finalised by 31 December 2007. Is proof required? In April 2006, the West African finance ministers decided to prolong the discussions or work on certain topics until September 2006, which the Commission negotiators themselves consider as a step backwards. In February 2006, South Africa associated with its South African neighbours to propose to Europe a trade regime that highly embarrassed it: Europe must respond to an offer made by poor countries which have allied with an emerging power theoretically not concerned by EPA negotiations in order to re-establish a more favourable balance of power in structurally biased negotiations.

Worse still: if the Commission persists, Europe will commit a political, tactical, economic and geostrategic mistake.

In effect, the only question worth asking is: how will EPAs help Subsaharan Africa to reach the Millennium Development Goals adopted by the UN in September 2000? In no way, while some of the goals will be reached in this part of the world only a century behind schedule the UNDP says. Can we really assume the responsibility of leading Africa, which in a few years will be home to the greatest number of persons living on less than one dollar a day, to more chaos, on the grounds that OMC rules are being complied with? Do we believe this chaos will be limited to Africa, which would already be unbearable?

Also, has the Commission never asked itself why Africa is constantly positioning itself opposite us at the WTO? Many will reply that agricultural subsidies are to blame. This is only part of the truth: we are in the process of permanently alienating our partners because we are negotiating a framework in which we commit to maintain access to our market for very poor countries while telling them that they must now open theirs without any real restrictions. We are therefore bringing into the same ring a featherweight and a heavyweight, and we expect them to jump in joy?

Logically and understandably this is unbearable for our partners. And if we were to persist down this path we would contribute to the splitting, if not the end, of the EU-ACP partnership.

So what should be done to avoid this disaster scenario and the resulting crisis of trust?

1. First, it is necessary to resist the excessively simplistic proposals by the Commission, which says it is ready to take all the necessary precautions for our partners, by providing in particular transitional periods for the implementation of free trade extending to up to twenty years and asymmetrical liberalisation allowing 20% or even 30% or more of ACP country trade not to be liberalised. This approach equates to seeking the goal of a WTO-compatible reciprocal trade relation to `parameterise' the liberalisation effort. On the contrary, it is necessary to start with the development goal in order to precisely define what can be liberalised and what should not be liberalised so as not to destroy the fragile economic balances of a poor country.

2. It is therefore absolutely necessary for politicians to give a new negotiating mandate to the Commission, following a Franco-British initiative. These two Member States, for obvious historic reasons, must and can, given the British position, be in the forefront in this respect.

3. The Cotonou Agreement sets forth a formal and comprehensive review of the planned arrangements in 2006, which should normally be done this autumn. The Member States must use this deadline clause to require the Commission to adopt a radical change in approach and demonstrate to our ACP partners that we grant their needs all the strategic and political attention they deserve.

The following six principles should frame the new negotiating mandate:

- The present regime for the access of ACP country exports to the European market must be kept and combined with a major technical assistance programme in the health and plant health fields and an upgrading of their production capacity;

- Trade liberalisation with the European Union must not take place until after a consolidation phase of ACP economic and customs unions;

- The scope, steps and length of the implementation of liberalisation must be defined not on the basis of arbitrary figures but using the departure point and state of advancement of each ACP country on a `progress trajectory' related to the achievement of the Millennium Development Goals;

- The list of sensitive products excluded from the liberalisation field must cover production essential for maintaining and developing subsistence agricultures, in particular, and the present and future industrial fabric chosen sovereignly by ACP countries;

- The negotiation of new trade related topics must not open unless expressly called for by ACP countries;

- The European Union must subscribe to the proposals made by ACP countries at the WTO to grant special tariff treatment to agricultural produce related to their food security, as well as to their trade preferences, and to revise Article XXIV of the GATT which frames the formation of free trade areas.

4. At the same time, aid to ACP countries must comply with the following three requirements:

- An absolute requirement concerning compliance with the principles of good governance. This must give rise, where applicable, to the adoption of sanctions and shall be accompanied by a major international initiative to recover Subsaharan country capital invested in banks for personal gain, so as to repay it in the form of aid to robbed populations;

- Priority support for national programmes strengthening education, health and food security for populations, which must be followed by massive support for infrastructures, for industrial and agricultural policies, and for the setting up of partnerships between European and ACP businesses;

- Cancellation of ACP country debt, beginning with African ACP countries, and by assigning the resources obtained to `contracts achieving Millennium Development Goals'.

5. Having at last become attractive, these negotiations will then be concluded more rapidly, after which a power struggle will begin at the WTO to get the new agreements recognised. Europe and the ACP countries automatically stand to gain. What country indeed will dare dispute the legitimacy of free trade between rich and poor countries based in this way on the achievement of the UN Millennium Goals?

Once the try has been converted, ACP countries and Europe will be able to propose an overall reform of WTO rules to put an end to their fundamental imbalance resulting from the lack of a special and differentiated treatment worthy of this name for developing countries. The final aim of the partners must be to obtain subordination of the WTO to the UN so that the latter becomes the favoured and logical place for world economic and social governance.

N° 3251 - Rapport déposé par la Délégation pour l'Union européenne sur la négociation des accords de partenariat économique 

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