Free trade planned with Third World

 

The European Commission has signalled a major shift in its relations with developing countries by announcing plans to set up free trade areas with the Third World.

The plans, which will open up the European markets to goods produced cheaply in the poorest countries are likely to be resisted by EU business and agricultural interests, especially in Ireland.

The new commitment to free trade will be outlined by the President of the Commission, Mr Jacques Santer, at a summit of developing country states in Libreville, Gabon, today.

Under current trade agreements and the rules of the Common Agricultural Policy, Irish and EU goods enjoy free access to European markets, and in the case of agricultural produce are heavily subsidised. In contrast, the produce of developing countries is generally subject to heavy import tariffs.

Development groups have long argued that the Third World should be given some equal access to western markets, thereby enabling it to trade its way out of poverty. Until now, however, the EU has resisted free markets because of fears over competition to home producers from countries with low labour costs.

The proposals for a gradual establishment of free trade areas in accordance with the CAP and the rules of the World Trade Organisation form part of a new strategy by the EU to develop a political clout to match its economic power.

Mr Santer is in Libreville to address the leaders of the African Caribbean and Pacific (ACP) states, a group of 71 mostly poor countries which have a special trading and aid relationship with the EU.

According to Mr Joao Vale de Almeida, deputy spokesman of the Commission, the combined influence on world economic affairs of the 71 ACP states and the 15 EU member-states could be considerable.

"Until now the group of 86 has not been able to exploit its clout effectively at international level", he told development journalists at a meeting in Crete.

Mr Vale de Almeida conceded the proposals for free trade areas could prove controversial, especially for those in agriculture.

The Lome Agreement which governs relations between the two groups to the year 2000 is generally agreed to have failed. Instead of prospering, the ACP states have seen their share of world trade fall to less than 1.5 per cent.

Negotiations on a successor to Lome are due to start next autumn. EU guidelines prepared for the negotiations envisage a greater focus on poverty, the establishment of several economic agreements with each of the three ACP regions and greater efficiency in the channelling of aid.

The amount of aid given to an ACP country would in future depend on merit - human rights performance and good governance - as well as need.