Reciprocate this Peter Mandelson!

Firstly, in the unlikely event that anyone has been wondering why this blog hasn’t been updated since March, well, I have no better excuse than to say “I’ve been very busy!”

Since my last post, I have been involved in campaigning against the Economic Partnership Agreements (EPAs) that the EU Commission is currently negotiating with the African, Caribbean and Pacific (ACP) states. The 76 ACP-countries include some of the world’s poorest. The current trade agreements they enjoy with the EU are not WTO compatible due to the fact that they are non-reciprocal. That is to say, ACP-exporters are currently granted more favourable access to EU member countries’ markets (in the form of lower tariffs) than European exporters get to ACP-markets.

From a development perspective this would seem like a fair deal. The EU is giving an economic leg up to developing country exporters (albeit a much smaller leg up than the one given to EU farmers by CAP subsidies). However, the WTO-waiver allowing these trade relations to continue expires at the end of 2007 and hence new agreements must be signed giving reciprocal market access before the end of the year. This means that ACP-countries will have to open up their markets by the same amount or face less favourable market access for their products in the EU, an option that most agree would be devastating for their development.

It is highly questionable whether demanding that ACP-countries open up their markets by an equivalent amount (even if done over a period of 10-12 years as will probably be the case) will be of any benefit whatsoever to their economic development. Many argue that the reverse is far more likely. A critical look at Europe’s economic history suggests that protective tariffs played a vital role in many member states’ industrial development (contrary to the arguments of many modern day proponents of free trade). One thing is for sure, the EU Commission under the leadership of Trade Commissioner Peter Mandelson is doing everything in its power to squeeze as many concessions as it can out of the ACP-states and generally breaking the spirit of ‘partnership’ under which negotiations were supposed to take place. A lack of impact assessments mean that nobody really knows what to expect if the EPAs go through. The end of year deadline is rapidly approaching and the ACP-states are presented with a serious dilemma. They either sign and hope for the best or refuse and watch their export revenues plummet!

On 29th May, as part of the campaign against EPAs, I attended a meeting with the Swedish Trade Minister’s Political Secretary, Hans Jeppson, together with other NGOs to quiz him and other people from the Ministry of Trade about the current state of affairs, both in the WTO Doha Round and the EPA negotiations. Given that the EPAs are seeking to significantly decrease the use of tariffs as a means of market protection by ACP-states I asked whether the infamous green box (i.e. domestic support for farms, see my previous post) was being discussed at all at the WTO. I was informed that thus far it was off the negotiating table. This means that domestic budget support for farms will continue to be kosher as far as the WTO is concerned whereas other forms of protection such as import tariffs are on the way out. I was informed however that there was some kind of vague plan to allow other countries (i.e. developing ones) to use the same type of domestic support in the future.

In my opinion however, this amounts to absolutely no concession whatsoever on the part of industrialised countries. Returning to the EPAs again, the notion of reciprocity is central i.e. assuming the EU phases out all forms of protective import tariffs on agricultural products coming from ACP-exporters, the ACP-countries will also be required to do the same. However, the EU will be able to continue propping up its uncompetitive farms with domestic budget support without breaking the WTO’s rules. “That’s OK” EU trade negotiators say “because ACP-countries will be able to do the same in the future (maybe)”. Well, given that we’re talking about some of the poorest countries on the planet here, do Peter Mandelson and his army of negotiators really think that this will be a viable option for ACP-countries? Will they really be able to afford the same level of domestic support that the EU currently doles out every year? I think not.

According to the Cotonou Agreement, which set the negotiations in motion in 2000, one of the key goals of the EPAs is to “promote sustainable development and contribute to poverty eradication” in ACP-countries. However, this will be impossible to achieve by merely focusing on import tariffs without also including all the other forms of support given to agricultural exporters in the EU. As well as the massive domestic support payments there are a plethora of other man-made advantages EU farms have over their ACP counterparts such as better technology and infrastructure. The odds are quite simply stacked against ACP farmers if their governments sign the EPAs (even more so than they currently are). Reciprocal trade agreements, the creation of which is the raison d’être of the WTO, should be between countries at similar stages of their economic development. It is nonsensical to believe that forcing open ACP-markets will lead to better conditions for the enormous numbers of people within their borders who depend on small-scale agriculture for their survival.

Stick that in your agreement and reciprocate it Peter Mandelson!