EU pact with former colonies contrasts with WTO shambles

 

The devil is in the final detail of trade negotiations. If, that is, you can get them off the ground.

The EU's long-running bilateral deal with South Africa hovered close to agreement for years, held up by the vexed issue of the designation of sherries and ports.

So, predicting an agreement before the last "i" is dotted and "t" crossed may be foolhardy.

And yet, overshadowed in December by the collapse of Seattle and then the Helsinki summit, a tentative new deal on trade, aid and development appears to have emerged between the EU 15 and their 71 African, Caribbean and Pacific (ACP) former colonies, now partners in the Lome Convention. And no riots in the streets this time.

The agreement, once it is finalised later this month, will provide a sharp contrast to the shambles of the WTO, and gives the lie to the notion that developed and developing nations cannot reach mutually beneficial accommodation on such issues.

The very complexity of the successful relationship between the EU and the ACP, both in dealing with such issues in a partnership context and in the intertwining of development aid with market-access policies, provides a framework in which real trade-offs can be made. It is part of the reason the EU had fought at Seattle for a broad agenda.

In Lome, the EU has proposed a development aid package totalling €13.5 billion over the next five years for what will be the ninth European Development Fund (EDF), an increase of 5 per cent over the eighth EDF, which covered 1995-2000. In addition, there will be a European Investment Bank loan of €1.7 billion.

Not enough, said Benin's ambassador to the EU, Mr Saliou Abudu: the offer, he said, was "insufficient with respect to the objectives that we have fixed for ourselves".

But after the ministerial, which ended in Brussels at dawn on December 9th, the European Commissioner for Development, Mr Poul Nielson, said he considered that a successful conclusion was within reach in January ahead of the expiry of the Lome IV Convention at the end of next month.

The EU chief negotiator, Mr Philip Lowe, insisted that all outstanding major issues of the negotiations were resolved. It was "a major success, a significant development in the deepening of relations with the developing world", he said.

Relations between the EU and ACP have been based on preferential trade concessions granted by the EU, which give tariff-free access to 95 per cent of ACP exports in return for more limited access to ACP markets. The hope is that these preferential deals can be progressively replaced by free-trade zones between the EU and sub-regional customs unions within the ACP zone.

This point has long blocked negotiations, because the ACP countries were demanding a period sufficiently long to allow them to deal in their own way with the elimination of trade preferences and integrate themselves in the world economy.

Now an eight-year preparatory period before setting up new trading arrangements has been agreed. Beyond that timeframe, "there will be further periods of transition of between 10 and 15 years" before EU countries could export duty-free to ACP nations, Mr Lowe said. There will be further exemptions for the least developed.

Because it distorts the level playing field, the present convention is permissible only with a World Trade Organisation (WTO) waiver, which expires with the convention in February. Ministers agreed to request a new eight-year waiver for the continuing preferential access regimes in the new convention. Mr Lowe said he was confident the WTO would grant the waiver. Others are less sure.

The tentative agreement also covers a number of other key new features, most notably a ground-breaking clause on "good governance", development-speak for rooting out bureaucracy and corruption and getting good value for money. The concept will be included among the "fundamental elements" of the future agreement, in addition to requirements for democracy, human rights and the rule of law.

The infringement of a fundamental element can bring suspension of aid. Since many ACP countries feared "good governance" could be invoked too easily and represented a form of interference in their internal affairs, ministers finally agreed that co-operation would not be suspended only on the grounds of lack of good governance.

"But serious cases of corruption, whether affecting EU aid or more generally, would be grounds for invocation of the clauses of the agreement which call for consultation and if necessary partial or total suspension of aid," Mr Lowe insists.

Ministers also agreed to include "decentralised actors" - non-governmental organisations - in the formulation and implementation of the new convention. NGOs were waiting to see how extensive such consultation would be before reacting, but they have long argued for such empowering of "civil society".

One thorny issue has to be settled, however: the clause on readmission or return of illegal immigrants in the context of migration is still under discussion.