Issues still to be resolved with EU

By David Cronin

BRUSSELS, Belgium, September 14, 2007  – Caribbean governments have alleged that the European Union is trying to prevent them from signing trade deals with other poor countries on their own terms.

The EU’s executive, the European Commission, is hoping to secure a series of Economic Partnership Agreements (EPAs) with 76 African, Caribbean and Pacific (ACP) countries by the end of this year.

While the Caribbean has signalled its willingness to accept the Dec. 31 deadline, its negotiator with the EU, Jamaican official Junior Lodge, has identified a number of major issues that still have to be resolved.

Under the EPA proposals it has put forward, the Commission seeks that any trade concession which the Caribbean grants to a country enjoying more than a 1 percent share of world merchandise exports — such as China, Turkey, India and Brazil — must be automatically conferred on the EU, too.

Lodge said that this provision could prevent the Caribbean from liberalising its rum trade with India and Brazil, without applying the same measures to Europe, also a rum supplier.

He claimed that the EU’s stance on this matter is being driven by its so-called Global Europe policy. Unveiled last year, this commits the EU to removing any obstacles encountered by western firms wishing to do business abroad, including those designed to shield domestic firms in poor countries.

“We are violently opposed to this,” Lodge told IPS.

Caribbean representatives are also riled by an EU demand that they would not use tax breaks to lure foreign investors.

Lodge suggested that the EU was displaying a double standard as several of its own member states — like the Czech Republic and Estonia — have made extensive use of such fiscal incentives.

He also expressed unease with a call by the Union that it be furnished with details of EU nationals with offshore accounts in the Caribbean. The Bahamas, in particular, has said that it fears the EU is trying to shut down its offshore financial services industry.

“This is unacceptable for us,” Lodge added. “We think the EU will have the moral ground to make such a demand when it has its own offshore financial services regulated.”

The latest state of play with the EPA negotiations was debated by the parliamentary assembly banding together the EU and ACP blocs, which met in Brussels Sep. 12-13.

Hans-Joachim Keil, the Samoan trade minister and head of the negotiating team from the Pacific, said that rules of origin being applied by the EU on imports from the grouping of island states need to be altered.

At present, goods from the ACPs are theoretically allowed to enter the EU market without any tariff being levied.

Yet ACP products that use ingredients from elsewhere in the world are not eligible for that benefit. A shirt from Fiji made with cotton from India, for example, is classified by the Union’s bureaucracy as an Indian garment.

“Rules of origin is a very tricky issue,” Keil told IPS. “Unless it is solved, there will be no agreement.”

Marc Maes, a campaigner with the Belgian anti-poverty group 11.11.11, told the assembly that there is “very little” in the provisions of draft EPAs drawn up the Commission that would promote the development of ACP countries.

He queried if a promised EU ‘aid for trade’ scheme would be sufficient to compensate ACP countries for the losses they would incur in customs and tariff revenues as part of the liberalisation introduced by the accords.

In May, the EU’s governments and the Commission committed themselves to granting 2 billion euros (2.75 billion dollars) in annual aid for trade by 2010.

But Maes noted that just 700 million euros of that amount is additional to money already earmarked as development assistance. The 700 million euro sum would then be split in two between the ACP and other poor countries, Maes explained.

Boyce Sebetela, a member of parliament in Botswana, said: “It is becoming clear that the EPA process needs to be reviewed. The EU’s trade demands are supreme and our development demands are not being met.

“We may have won our independence and political liberation struggles. But it is clear that we need to launch a new trade and economic revolution if people are to get anything out of these EPAs.”

A Commission representative denied that development issues have been sidelined in favour of the EU’s commercial interests. The official defended the EU’s demand that trade preferences granted by the ACP to other developing countries should also apply to the Union.

“This is not an offensive positive,” the official said. “If we give full access (to the EU’s markets) without quotas to all ACP countries, we would expect that if they give preferential treatment to someone else, they should also give it to us.”

But Alain Hutchinson, a Belgian Socialist member of the European Parliament, said he could only “deplore the absence of a development dimension” in the draft EPAs.

He argued that there are “too many uncertainties” remaining for the Dec. 31 deadline imposed by the Commission to be considered as reasonable. “There has been too little of the partnership element in the debate between the Commission and the ACP negotiators,” he said. (IPS)