David Jessop FOR MUCH of the last two weeks, a debate has been under way in Europe about the purpose of Economic Partnership Agreements (EPAs). These are the asymmetrical trade agreements that Europe hopes to put in place by 2007 with the objective of introducing in a decade or more thereafter, freer trade with the regions of the African, Caribbean and Pacific group (the ACP).
At issue is whether the approach adopted by the European Commission is aimed at encouraging development or facilitating new trade opportunities for Europe.
The origin of this now very public debate involving the United Kingdom government, non-governmental organisations, the European Commission and development specialists, stems from a policy briefing published on March 22 by the Britain's Department for International Development (DFID) and its Department of Trade and Industry.
Their paper made clear that Britain believes that EPAs must deliver long-term development, economic growth and poverty reduction in ACP countries and that in the EPA negotiations, Europe should take a non-commercial, non-aggressive approach.
SIGNIFICANT POLICY CHANGE
The content of the British document suggested a significant change in policy as it diverged from the U.K.'s previous emphasis on compatibility with World Trade Organisation (WTO) rules in that it recognised implicitly the need for special and different treatment for all members of the ACP group.
The U.K. paper observed that it was up to each ACP region to make its own decisions on the
timing, pace, sequencing and
product coverage of an EPA and recognised the need for a flexible approach. It proposed, when
necessary, a non-linear approach to the introduction of new trade measures and the absence of
conditionality in related aid
programmes. It argued that developing countries can benefit from the process of trade liberalisation 'in the long run', 'provided they have the economic capacity and infrastructure to trade competitively'.
Surprisingly, the document
suggested also an EPA transition period of twenty or more years, complete duty and quota-free access at the inception of any EPA and the making available of additional financial resources. It proposed too that the EC offer the regions of the ACP alternative to an EPA.
In short, the British position reflected what much of the Caribbean has been saying for the last two years, so much so that sources suggest that in the last week, the Caribbean has written formally, supporting the British Government's policy paper.
While the importance of the U.K. policy statement should not be underestimated, it needs also to be seen in a broader context.
When published, the document was aimed at offsetting criticism in the run-up to the British general election from a number of non-governmental organisations grouped into a 'stop EPAs' coalition. Seen in this context the paper tries to have the UK occupy the middle ground between the stance of a European Commission widely perceived as seeking trade advantage for Europe and the powerful NGO lobbies that oppose all trade
liberalisation for developing countries.
There the matter might have rested as far as public debate was concerned, but on May 19, Britain's Guardian newspaper published extracts from a leaked internal memorandum sent on April 11 by the Director-General of the EC's Trade Directorate, Peter Carl, to the Heads of Europe's Delegations in the ACP.
UNWELCOME SHIFT
The reported language annoyed the development lobby. Newspaper reports indicated that Mr. Carl's note referred to the U.K. statement as representing a 'major and unwelcome' shift focusing
exclusively on 'risks' rather than 'opportunities'. They noted his comments that some of the British recommendations were well away from the negotiating directives agreed by all EU member states and were in parts incompatible with WTO agreements. They reported his suggestion that the EC Trade Commissioner, Peter Mandelson, would press London for a revised line.
However, a reading of the full instructions to EC delegates
suggests other concerns. The tone of the document says much more about the EC's approach to
negotiations. Implicitly and
explicitly, it makes the point that only the commission has
competence in trade negotiations; that all member states signed up to its negotiating mandate; and
that the British position is not an indicator of future EU EPA policy.
NEW TRADE ARRANGEMENT
More interestingly, the instructions to EC delegates make clear that the EC believes that if it does not take a relatively aggressive posture towards the ACP over EPAs it will not generate the supply side responses that it hopes a new trade arrangement will trigger. Trade liberalisation in the eyes of the EC, the note makes clear, can be 'even in the short to medium term, a powerful engine for development and growth'.
Without detracting from the overall importance of the British Government statement, here the EC has a point. At the recent meeting in Georgetown of CARICOM's Committee on Trade and Economic Development (COTED) a number of smaller states questioned why there was any need to move forward rapidly on trade negotiations with Europe. Although this view was rejected, this tendency to inaction in the face of rapid global change goes some way towards legitimising aspects of the EC's approach to negotiations if not always its content.
Despite all of this, EPA negotiations remain on track for the Caribbean. A little over a week ago, a technical session between the Caribbean and the EC on regional integration, a key precursor to an EPA, concluded successfully. Sources suggest that despite differences, a good working relationship exists between the two negotiating teams and most of the technical work is on schedule.
However, some difficulties remain and need to be resolved rapidly if negotiators are to move on in September to consider issues such as the fine detail of tariff reductions, special Caribbean requests in relation to services and the development of a legal text.
There is concern about whether eleven remaining studies central to the final part of the negotiating process can be completed in time given the painfully slow processes within the EC when it comes to approving support. Other issues also have to be resolved. These include the question of the
percentage of trade that the
agreement should cover and the length of the transitional period after the entry into force of an EPA.
Britain's newfound development focus in relation to EPAs is
welcome. EPAs potentially have real value if very gradually
introduced with the high levels of flexibility now being suggested by the United Kingdom government. If, as seems to be the case, the Caribbean completes its EPA negotiation well before any other region of the ACP, its development content will be the measure of Europe's true intent.
David Jessop is the Director
of the Caribbean Council
and can be contacted at david.jessop@caribbean-council.org.
