By Sir Ronald Sanders The writer is a business consultant and former Caribbean diplomat

	Protesters in Brussels make the case for ACP farmers

The deadline of December 31st was set in the year 2000 in the Cotonou agreement which gives 77 ACP countries preferential access to EU markets and which replaced the Lome Convention signed in the early 1970s.

Without this preferential access for products such as bananas and sugar, many of these countries would have suffered economically and several of them would not have been able to sustain peaceful and stable societies.

Extended preference

The EU was allowed to extend preferences under the Cotonou deal only on the basis of a waiver by the World Trade Organisation (WTO) which insists on reciprocity in trade and disallows preferences except for specifically identified least developed countries.

The WTO waiver expires at the end of 2007, hence the deadline to complete the negotiations of the EPAs and sign them by year end.

All might have been well, but three things happened to cause alarm in all of the regions with which the EU is negotiating.

EPAs

The EU did not stick to its commitment under the Cotonou agreement to ensure that the EPAs contained a strong development aspect.

It sought to include in the negotiations not only trade in goods but also services and the right of EU investors to compete with local companies for government contracts and it sought to link the aid it would give to the liberalisation of ACP markets.

Representatives of several ACP countries had expressed their unease with the introduction into the negotiations of matters that had been rejected by developing countries at the global trade negotiations (the Doha round) that have been paralyzed in the WTO.

Many governments feel that the EU is bringing through the backdoor into ACP countries the issues they failed to get on the table at the WTO.

	The EU was committed to ACP countries joining the EPA

But, because they clearly have more power in bilateral negotiations with ACP countries than they have in the wider community of developing nations that would include Brazil, India and China, the EU Commissioners are flexing their muscles.

The EU initiatives

These initiatives by the EU – and in some cases, the way in which they were handled – rankled governments in ACP countries where many non-governmental organisations have already been vocal that, in their estimation, the EPAs would be more harmful than helpful to the populations of many ACP nations.

Several Eastern and Southern African nations have announced that they are prepared to sign only parts of the Economic Partnership Agreements (EPAs) that relate to market access and development.

South Africa has been particularly strong in resisting EU pressure, so much so that the head of political, economic, and trade sectors of the European Commission’s delegation to South Africa, Jorge Peydro-Aznar, publicly criticised South Africa’s unwillingness to engage on issues such as opening its economy to EU services and competition for government contracts,.

Deadlines

Speaking for the South Africa’s Department of Trade and Industry, a trade official is reported to have blamed the EU if the deadline for completing the EPA is not met.

He argued that the EPA talks should be confined to the urgent matter of ‘trade in goods’ rather than seeking to introduce “second-generation” issues that have not even been fully canvassed and understood at a multilateral level.

And, the EU Commissioners have not been above making threats to reduce aid to regions which do not sign on to the EPAs by year end.

What's the programme?

According to an IPS report, the EU Commission told governments of the Pacific countries that 48 per cent of funds for a regional finance programme for 2008-13 would be “re-programmed” if they did not sign the EPA on time.

The Commission also warned that if the Pacific countries restricted a signed EPA to trade in goods only, the regional funding would be cut by a further 25 per cent.

The Pacific countries reacted with anger.

The linkage

The Vanuatu Trade Minister, James Bule, is reported to have written to the European Commissioner for Development, Louis Mitchell, stating that the 14 Pacific countries “will not accept the European Commission imposing this type of linkage” between aid and trade.

For many of these countries, including those in the Caribbean, there are profound difficulties in the EPAs as they are being advanced by the EU.

Tariffs on imported goods remain a vital source of revenue for some governments.

Tariff reductions

Tariff reductions mean less government revenue to fund vitally needed infrastructure and for providing social services to their communities.

If they reduce tariffs, they have to increase income taxes, company taxes and value added taxes placing a bigger burden on their populations and making their local businesses less competitive globally (as in the case of tourism) and locally against imported goods.

In many small countries in the ACP grouping, it is widely felt that local companies still require a period of transition in which tariffs on imported goods gives them time to make their operations better able to compete with goods from outside.

Unemployment

There is also concern that if these companies collapse, unemployment will increase while the purchase of imported products increases employment abroad.

And the South Africans are right in asserting that trade in services, government procurement and competition have not been sufficiently well studied to allow ACP countries to negotiate in an informed manner.

It is now uncertain what agreements will be signed by year-end.

Who's to blame?

But, ACP governments are well aware that they will be judged by their people on the effects on these EPAs.

However this ends up, the ACP countries have only themselves to blame for their weakness in these negotiations with the EU.

For, despite strong efforts from the Caribbean, they negotiated as six different groups, persuaded by the EU to break from the tradition of joint and unified negotiations that had benefited them in the Lome Convention and the Cotonou agreement.

The ACP still have time before year-end to unite and to cause the EU to listen.

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