This briefing reviews the evolving approach of Commissioner Mandelson to the EPA negotiations in the light of these criticisms by looking at the issues faced in three main areas:
the ‘flexibility’ to be allowed on the extent and time-frame for the introduction of tariff-elimination commitments by ACP countries;
the importance of addressing ‘flanking measures’, in particular with reference to raising the ability of ACP countries to confront the EU’s developing food safety policies;
the links between the current rhetorical approach to EPA negotiations and the forthcoming WTO Ministerial meeting in Hong Kong.
What is a pragmatic & flexible approach to EPA negotiations?
The first quarter of 2005 has seen a growing body of opinion being expressed on the extent of reciprocity that should be required from ACP countries under EPAs and the time-frame for their introduction. The Africa Commission set up by Tony Blair argued that liberalisation should not to be forced on Africa ‘through trade or aid conditions’,4 with new trade agreements being constructed in ways which ‘reduce reciprocal demands to a minimum … individual African countries should be allowed to sequence their own trade reforms, at their own pace, in line with their own poverty-reduction and development plans’.5 The House of Commons Select Committee report took a similar view, arguing that least developed countries (LDCs) ‘should not have to offer reciprocal market access to the EU until they have graduated from LDC status’6 and argued for ‘better alternatives to EPAs to be provided’. It expressed concern that in ‘presenting the alternatives as a second-best option, with no development component, the Commission is going against the spirit of what was agreed in Cotonou’ and was placing ‘the ACP in the position of having no real choice, and reinforces their unequal position in the negotiating process’.
In a direct reflection of the conclusions of the Africa Commission report, the UK DTI and DfID issued a memo on the UK position on EPAs which called for them to become instruments for ‘long term development, economic growth and poverty reduction in ACP countries’. More specifically, it called for each ACP regional group to make its ‘own decisions on the timing, pace, sequencing and product coverage of market opening in line with individual countries’ national development plans and poverty-reduction strategies’, with regional groupings having ‘the flexibility to move towards more open markets along a non-linear path if necessary’. It called for EPAs to ensure that ‘ACP regional groups have maximum flexibility over their own market opening’, with an unconditional 20-year plus for market opening, and argued for the EU to commit itself to the immediate opening of EU markets ‘with no strings attached’, and with simple and liberal rules of origin. In this latter regard, the Africa Commission went further, calling for a simple 10% value-addition criterion for African products to be granted ‘originating status’ and hence to benefit from the nominal duty-free market-access provisions granted under the Cotonou Agreement and the Everything But Arms (EBA) agreement.
Commissioner Mandelson appeared to respond to much of this implicit criticism in his speech to the ACP-EU Joint Parliamentary Assembly in Mali on 19 April 2005, when he maintained that the EC would be ‘very pragmatic and flexible’7 with regard to the reciprocal tariff-reduction commitments required of ACP regions. He further maintained that ‘safeguard mechanisms for vulnerable sectors … will clearly be part of the package’ negotiated under EPAs. This echoed his somewhat reluctant admission before the House of Commons Select Committee that ‘if necessary he would seek a revision of Article XXIV in order to incorporate his desire to create asymmetrical reciprocity over a considerable period of time, ‘as befits the needs and the rate and the pattern of development of the ACP countries themselves in their particular regions’.8 This appears to go against the standard EC view that reform of WTO rules on free-trade areas (article XXIV) is not needed, since the existing provisions provide sufficient flexibility for the conclusion of development-oriented EPAs.
It was this kind of discrepancy between the Commissioner’s pronouncements and established EC positions which led the Zambian trade minister to conclude that Commission trade negotiators rather than the ACP needed to read more closely the Commissioner’s speeches. However, is there really so much space between Commissioner Mandelson and his officials? Probably not, for while talking about ‘flexibility’ and being ‘pragmatic’, Commissioner Mandelson continues to take the view that ‘ultimately, artificially insulating ACP economies from the global economy creates dependency and therefore vulnerability, and we must … bring about the necessary integration.’9 Even if it is acknowledged that this will require ‘time’, ‘great care’ and ‘support for the most vulnerable’,10 he is firmly of the opinion that there can be no ‘blanket exemptions and permanent carve outs’,11 but rather there should be a ‘breathing space for countries on a case-by-case basis until they are in a position to comply.’12 Commissioner Mandelson thus makes it clear that from his perspective ultimately the objective of EPAs is full liberalisation; the issue is simply over what time-frame should be allowed for this journey to full liberalisation to be completed.
It is here where the confusion arises. For many, the length of the time-frame and the extent of the exclusions and exemptions should be based on the attainment of clearly defined development bench-marks, for example LDCs graduating out of their least-developed status as a result of the structural development of their economies (as the House of Commons Select Committee suggested). For the EC however, it is felt that the ‘breathing space’ should refer to a specific pre-defined time-frame, so as to provide a stimulus for the implementation of the necessary internal policy reforms in ACP countries, with extensive commitment to tariff eliminations being made within these agreements. Traditionally the EC has taken a fairly hard line on the time-frame, insisting on 10 to 12 years for the full implementation of any agreement. More recently however, there has been some degree of flexibility with 15 years unofficially being suggested as the transitional period. This however still falls far short of the ‘unconditional 20-years-plus for market opening’ called for in the DfID/DTI paper. In terms of product coverage, according to IDS reports, EC officials have indicated that they would be anticipating the elimination of tariffs on 76% of current southern African imports from the EU, 79% of current central African imports from the EU, 80% of current eastern and southern Africa imports from the EU and 81% of current west Africa imports from the EU.13 For regions consisting largely of LDCs this constitutes an extensive programme of liberalisation.
Within the framework of the ‘EPA-light’ concept, it is argued that with regional market integration still in its infancy in all African regions involved in EPA negotiations and with a long way to go before functioning regional markets will have been created which actually give rise to real trade flows and provide an environment for investments to develop regional production structures to serve regional markets, it is impossible to determine in which product areas tariffs will still be required in order to nurture the development of regional industries to supply regional markets. This is particularly problematical in the agriculture and food products sectors, where the process of CAP reform, linked to EU enlargement, is transforming the price competitiveness of EU agricultural and simple value-added food products. This process of reform and EU enlargement is far from complete, and African negotiators can have no clear understanding of the scale of the competitive challenge which will be faced in the future in priority areas for the development of regional supply capacities given the current structure of African economies. How, therefore, can they determine which areas should be subject to tariff reductions and which areas should be subject to exclusions, special arrangements or special safeguards in the tariff offers that they will need to formulate in the coming 18 months?
It is in this context that the ‘EPA-light’ concept is suggesting a phased negotiation of reciprocal tariff-reduction commitments, with, in the first instance, the absolute minimum being done in terms of tariff elimination in order to secure WTO compliance, in line with a very limited definition of the total product coverage which should be applied in reciprocal trade arrangements between a developed giant like the EU and largely least developed economies. This would allow the focus of EU-Africa economic cooperation to shift to the key issue of building real regional markets and establishing an effective framework for investment in the development of regional production to serve regional markets, within the framework of wider regional development-integration programmes.
The issue of further tariff-elimination commitments could then be revisited in say 8 years, to determine where further tariff removals would act as an additional stimulus to enhanced regional competitiveness. Where the development of real regional markets and investment flows had been effectively stimulated and the impact of CAP reform and EU enlargement on the price competitiveness of EU exports was better known, then further tariff-elimination commitments could be envisaged, where this supports the regional competitiveness agenda. In this way the risks implicit in the ‘slippage’ of what are highly ambitious (although developmentally narrow concepts) regional market integration schemes in Africa, can be minimised, and careful attention can be paid to securing the intended pro-poor development outcomes.
This type of approach would appear to be implicit in the criticism of the current EC approach to EPA negotiations contained in the Africa Commission report, the House of Commons Select Committee report and the DTI/DfID position on EPA negotiations. However the question arises: to what extent is the EC and the wider body of opinion in EU member states likely to be open to this type of approach?
CONCRETISING FLEXIBILITY
Given Commissioner Mandelson’s assertion that the standard WTO criteria do not apply to a North-South agreement, questions arise as to what this means in terms of:
The percentage of total trade to be subjected to tariff-elimination commitments under various EPAs (90%? 85%? 80%? 75%?);
The degree of asymmetry in the product coverage of ACP commitments and EU commitments (EU 100% while the ACP liberalises only 60%?);
The length of the transition period for the phasing-in of tariff-elimination commitments entered into;
The nature and ease of application of safeguard measures;
The notion of having a staged agreement, in which minimal reciprocal commitments are entered into initially, with further tariff-elimination commitments being negotiated once functioning regional markets have been created and new regional production structures have been established and consolidated (CTA, Agritrade Monthly Review, May 2005 http://agritrade.cta.int/).
While there is likely to be considerable support for the UK position amongst the governments of Sweden, Finland, Holland, Ireland, Belgium, Germany, France and even Denmark, there is likely to be indifference if not downright hostility amongst new EU member states. This being said these new member states, particularly in eastern Europe, are more concerned about the aid diversion effect of EU development policy than the trade effects, and could well be won over to the UK position, if these types of concessions in the content of EPAs were seen as having fewer financial implications than the Commission’s current proposed approach.
The importance of addressing ‘flanking measures’
In his recent pronouncements Commissioner Mandelson has placed growing emphasis on the development-aid dimension of EPAs and how this will help ACP countries meet the new challenges they will face in the global trading environment. This dimension is used in particular to differentiate EPAs from the non-reciprocal EBA preferences which African LDCs enjoy. It is implied that this development-aid dimension of EPAs will equip LDCs to take advantage of the kind of trade preferences which they have been unable to exploit under the non-reciprocal EBA arrangement. It is implied that better targeted aid under a successor to the current 9th EDF will equip African countries to take full advantage of the closer trade relationship that the EPAs imply. However the assumptions behind this rosy projection of future African capacities to exploit trading opportunities stands in stark contrast to the current experience of EU aid deployment. Commissioner Mandelson has recently taken a much higher profile on issues arising from the EU’s food safety policy, which falls under the portfolio of Markos Kyprianou, the Health and Consumer Protection Commissioner. Commissioner Mandelson has taken up the call by Mr Kyprianou’s predecessor, David Byrne for more aid to deployed in developing the capacity of ACP countries to meet EU food safety standards. Indeed, he has gone further and has spoken of the need to find ‘ways in which we can combine extra compliance time with support for capacity building to ensure that trade flows’.14 In typical fashion however this has been qualified by the stipulation that this must be done on ‘a case-by-case basis’.15
The seriousness of the challenge posed by stricter EU food safety standards (which are an integral part of the trajectory for CAP reform) cannot be underestimated. In the eastern and southern African configuration for EPA negotiations food and agricultural exports represent fully 55% of the region’s exports to the EU. IDS research has shown that ‘the application of new SPS requirements has already limited the poverty-reducing effects of some agricultural activities in Africa. For example, the number of smallholders that are able to engage in horticulture exports in Kenya has fallen sharply in recent years’.16 This is a trend which raises the question of the need for ‘reform of the unconstrained nature of SPS setting in the EU … if Africa is not to be further marginalised in world trade’.17
It was no doubt this type of research which led the Africa Commission to call for the better design of EU food safety standards so as to ‘minimise the barriers they may create’ and the provision of ‘urgent’ assistance to African countries in meeting EU food safety standards. There is however little sense of urgency on this issue within the EC services dealing with aid deployment to African countries. No attempt has so far been made to support national efforts to mobilise resources for addressing food safety control issues. National officials dealing with these issues in African countries tend to get shifted from pillar to post, as EU aid officials focus more on ‘bedding in’ the new system of ‘de-concentrated’ aid management, rather than assisting governments in responding to the challenges arising from a rapidly changing trade environment. Help from within EU delegations to African countries in mobilising resources to get to grips with the food safety compliance challenge is largely absent. Even where such help has been demonstrated it has tended to fall foul of administrative indifference in Brussels and a lack of effective follow-through on rhetorical commitments by the Commissioners responsible.
The reality of EU aid commitments and disbursements is such that, in a context where the new crucial EU food-and-feed control regulation comes into effect in 2006, there have to date been no attempts to free up existing NIP funds for addressing this urgent issue despite that fact that payments obligations for over €8,600 million will only fall due in 2007, 2008 and 2009. It is entirely conceivable that given the importance of food safety compliance issues to Africa’s trade with the EU, funding could be freed up from existing NIP funds to finance initial diagnostic studies of the state of national food safety control systems and the implementation of emergency programmes of upgrading to EU food safety standards so as to avoid any disruption of current food and agricultural trade flows on food safety grounds.
However, despite their much heralded close cooperation, Commissioner Mandelson and Commissioner Michel (the EU Development Commissioner) have not yet taken the necessary steps to allow the freeing up of existing NIP funds to meet priority areas, with the existing aid commitment/payment obligations from which funds have been diverted then being fully met under a first round of funding approvals within a 10th EDF.
Equally, despite Commissioner Mandelson’s call to look at ‘the bottlenecks in existing programmes’18 which so reduce the efficiency and effectiveness of EU aid deployment in addressing all manner of supply-side constraints which are time sensitive in a context of trade liberalisation, there is no evidence that this is likely to give rise to a comprehensive review of the causes of delay in EDF aid deployment and a dynamic programme of action to address these bottlenecks. Of course Commissioner Mandelson cannot be held responsible for the shortcomings in EU aid deployment as this falls outside of his portfolio of responsibilities. However, he should perhaps exercise a little more caution in talking up the aid dimension of EPAs, when on the ground in ACP countries there is a growing frustration over the inability of the concerned authorities to secure allocated funding for priority actions arising from the evolution of EU trade and agricultural policies.
Where the EC is following through on the Trade Commissioner’s rhetoric is in integrating ‘EPA support in the ongoing regional indicative programmes’ and in placing ‘regional integration and EPA implementation … at the core of the EC response strategy’19 under a successor to the 9th EDF. This is in many respects a highly cynical manoeuvre. First, because the EC has far more discretionary power over the deployment of regional funds than it does over NIP funds and has, under the Cotonou Agreement, used these discretionary powers to finance a range of global pan-ACP programmes which it favours (from debt relief via the World Bank, through the global fund for HIV/AIDS to the Commission’s own water facility). The second cynical aspect of this development in EDF aid deployment is that by expanding support to regional secretariats, which play a central role in EPA negotiations in most African regions, the EC is generating a form of institutional financial dependency which leaves regional secretariats highly vulnerable to EC pressure when ‘push comes to shove’ in the hard-headed process of trade negotiations.
| All ACP Commitments & Payments (million euros) | |||||||
|---|---|---|---|---|---|---|---|
| 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |
| Commitments | 4,127 | 3,185 | 4,055 | 3,500 | 2,750 | ||
| payments | 2,431 | 2,565 | 2,995 | 3,400 | 3,100 | 2,900 | 2,650 |
This being said, the increasing rigidities in the EU aid deployment process are such that even African regional secretariats which are playing key roles in the preparation of EPA negotiations are finding it increasingly difficult to get money out of the EU aid system for ‘time-sensitive’ initiatives associated with a dynamically changing trading environment. There is thus a growing gulf between Commissioner Mandelson’s rhetoric over the centrality of the development aid dimension of EPAs and the ability of the EU aid system to deliver support on the ground to ‘time-sensitive’ activities. In this context, Commissioner Mandelson’s assertion that the EC’s recognition of the importance of the development aid dimension of EPAs will mean ‘increased money under the new financial perspectives’20 is simply a commitment to expanding the level of funding within the EU aid system which remains unspent.
Addressing the Urgent Priorities of Food Safety Compliance & the Impact of EU Sugar-sector Reform
Within the EU aid system there is no shortage of funds. The problem faced is the long pipeline in moving from aid programming, to primary commitments (signing of the financing proposal), secondary commitments (signing the actual contracts for the implementation of the activities agreed) and disbursement (the actual payments made for services renders or goods supplied). This process ties up billions of euros for many years and means that the EU aid deployment system is poorly equipped to provide assistance in responding to the challenges arising from a radically changing trading environment. If the EU aid system is to assist African countries in getting to grips with the challenge of food-safety compliance, sugar-sector reform and the implementation of EPAs, then a new approach will be needed. In the short term, consideration should be given to:
The EC instructing its delegates in ACP countries to facilitate (to the extent necessary) the re-deployment of existing NIP funds which will not be spent until 2007, 2008 and 2009, in support of emergency programmes of food-safety compliance, sugar-sector restructuring or preparations for EPA implementation;
The establishment of provisions under the proposed EU budget-financed sugar-restructuring facility and the post 9th EDF instrument for the financing of cooperation with ACP countries, for the reimbursement of existing planned projects and programmes from which funds have been temporarily diverted to address trade-related priority issues.
This would undoubtedly constitute a radical step from the perspective of EU aid management. However it should not be beyond the administrative capacities or institutional imagination of the EC to find a procedure to deliver assistance in areas which are such glaring priorities and where current EU rhetoric is so far removed from the day-to-day reality of EU policy delivery.
The Commissioner’s ‘charm offensive’
The clearest articulation by Commissioner Mandelson of the wider concerns which inform, if not drive, the EC’s current rhetoric on the development dimension of EPAs was his speech at the LSE on 4 February 2005. This saw the launch of what Commissioner Mandelson referred to as ‘an action plan for progress,’21 designed to make ‘the multilateral trading system work at long last in the interests of the world’s poor’.22 According to the Agritrade summary of this speech, this proposed action plan had 13 main elements:
delivering development through market opening at the multilateral level;
maximising the use of special and differential treatment in the WTO;
promoting South-South market opening;
establishing pro-development rules and standards;
promoting greater convergence of food safety standards, whilst paying attention to the cost implications for developing countries;
addressing preference erosion;
a generalised extension of the EBA by all OECD countries;
improvements to rules-of-origin provisions by harmonisation across all OECD markets;
introducing a strong development dimension into the EPA negotiations;
establishing mechanisms for monitoring the effectiveness of development assistance within the EPAs;
establishing internationally a special trade adjustment fund which goes beyond existing IMF and World Bank efforts, with the EU going it alone if an international consensus is not possible;
improved coordination of EC and member state aid and trade policies;
greater transparency on the impact of trade preferences on development, via the presentation of an annual white paper on the impact of trade preferences on EU imports from weak and vulnerable countries.23
According to Commissioner Mandelson’s vision this ‘pro-poor’ trade agenda would be pursued in the coming months via the WTO negotiations, coordinated action in the G8 and unilateral EC action both within and outside of the context of the EPA negotiations. However, this announcement has been met with a degree of scepticism, not only by the Zambian trade minister but also by Caribbean private-sector representatives who suggested that Commissioner Mandelson would have to work hard to energise the Brussels bureaucracy if he is to create ‘the development mechanisms necessary to drive an economic revolution in the developing world’.24
Reflections on the Action Plan for Progress
This constitutes quite an agenda for action. It reiterates the importance of addressing problems created by standards and stricter food-safety controls, a long-standing commitment, where to date there has been little movement.
It highlights the importance of rules of origin and harmonisation across OECD markets, yet ignores the EC’s repeated rejection of the extension of AGOA style derogations from rules of origin for clothing and textile exports to the EU – involving the introduction of a single-stage processing requirement for originating status to be granted to African exports to the EU.
It emphasises SDT for developing countries, whilst overlooking the reluctance of the EC as an institution to see the principle of SDT applied to the provisions of Article XXIV, in ways which would allow far more flexibility in the definition of what constitutes a free-trade area where LDCs are involved in free-trade area arrangements with developed economies.
It talks of the strong development dimension of EPAs and the need for special trade-adjustment facilities and improved aid effectiveness, whilst ignoring the current constraints faced in the EC in responding in an expeditious manner to ‘time-sensitive’ projects related to trade negotiations, trading capacity and addressing supply-side constraints on competitiveness.
It talks of the benefits of multilateral liberalisation, while ignoring reports that the process of preference erosion which is underway will leave many current preference-dependent economies suffering net losses from multilateral liberalisation. The talk of South-South market opening and the extension of EBA preferences to LDCs by all OECD countries, also ignores the fact that even in trade with the EU, African suppliers still tend to focus on traditional markets and have shown little capacity to diversify markets to other EU countries, even where duty-free access is provided.
What was most notable in Commissioner Mandelson’s speech was the implicit recognition that there was a need to convince developing countries, particularly those in the ACP, that they actually had something to gain from the current round of WTO trade negotiations. This is in fact a real challenge. CAP reform, bilateral liberalisation and multilateral liberalisation are all eroding the margins of preference which ACP countries have traditionally enjoyed. While African LDCs could potentially benefit from a generalised application of EBA market-access arrangements by all OECD countries and simpler, harmonised rules of origin, given the pattern of exports to the EU which tend to focus on traditional national markets, it is far from clear whether such benefits would actually be realised, given the increased importance of non-tariff measures in inhibiting market entry. Indeed, according to a recent paper produced by the Commonwealth Secretariat, the annual loss of income transfers in agriculture as a result of preference erosion in the most preference-dependent economies is likely to be around ‘$402 million, with welfare losses of $318 million’.25 Indeed, ‘estimates for the sugar sector alone range from $288 million to $297 million’.26 This rises still further when quantity adjustments are added in, bringing losses to between $350 million to $447 million, with some estimates suggesting losses even larger than this (up to twice as large).
Significantly, given the emphasis in Commissioner Mandelson’s statement on the benefits to be gained by multilateral market opening, South-South market opening and improving rules of origin, this Commonwealth report notes the multiple economic handicaps faced by many preference-dependent economies and concludes that in this context, preference erosion constitutes ‘a significant negative external shock’,27 with these countries being ‘unlikely to be able to finance the necessary adjustment to a more liberalised trading environment without external assistance’.28 In this context, it suggests the need to establish an improved framework for supporting preference-dependent economies, since the ‘existing support framework for preference-dependent economies is not sufficient’.29
Commissioner Mandelson’s reference to the establishment of a special trade adjustment facility, with the EU going it alone if necessary and the need for ‘a new facility for Africa on infrastructure and trade’, need to be seen in this light. Unfortunately, the task of convincing ACP countries (which includes many preference-dependent economies) that they have something to gain from a further round of multilateral tariff liberalisation is made more difficult by the conclusion in the Commonwealth Secretariat report that ‘the scale of the losses implies preference-dependent economies will incur net losses from multilateral liberalisation’.30 This is bad news for Commissioner Mandelson and accounts in large part why the Commission is working so hard to ‘talk up’ the development benefits of trade agreements both at the level of the WTO and EPAs.
In addition, it makes Commissioner Mandelson’s statements on the importance of addressing preference erosion particularly pertinent. However, the assertion that since the process of preference erosion affects only a limited number of sectors, this issue could probably be addressed ‘through enhanced trading opportunities and through readjustment assistance’,31 rather neglects the critical aspect of the specific nature of the ‘enhanced trading opportunities’ to be opened up and the modalities for the effective and timely delivery of ‘readjustment assistance’. Would the ‘enhanced trading opportunities’ for example, include doubling the current duty-free access for Swazi and Zimbabwean sugar, thereby allowing for increased exports to the EU to replace the revenue lost from lower EU prices? Will the necessary administrative changes take place inside EU aid management systems to allow readjustment assistance to be provided within a time-frame which helps countries to prepare for the impact of preference erosion, rather than simply helping them to respond to the profound economic and social adjustment effects flowing from preference erosion?
There is little evidence to date that real thought is being given to these issues. Since the launch on 24 January 2005 of the EC working document on the ‘Action plan on accompanying measures for sugar protocol countries affected by the reform of the EU sugar regime’, there has been little sign of concrete steps to allow an early deployment32 of EDF aid in support of first phase sugar-sector restructuring/ diversification activities. In terms of the market opening which will be required of African countries as part of the Doha Development Round, the EC has repeatedly stressed how ‘practically nothing’ will be required from G90 countries, which includes all sub-Saharan African countries except South Africa (and by implication Botswana, Lesotho, Namibia and Swaziland). However, this needs to be seen against the background of Africa’s trade orientation towards Europe and the ongoing EPA negotiations, which are not about tariff reductions but about tariff elimination, with the EC wanting to see tariffs eliminated on between 76% and 81% of current imports from the EU and the EC wanting to see WTO+ agreements on trade in services and in trade-related areas. This throws statements referring to how the EU is seeking ‘practically nothing’ from African countries in the DDR into a rather different light, for what this EC position effectively represents is an effort to enhance the margins of preference which EU suppliers will enjoy on African markets over other suppliers, once EPAs are implemented.
The fact that the August 2004 WTO framework agreement effectively secures international endorsement for the current trajectory for CAP reform is also an area of concern for African countries. CAP reform is enhancing the price competitiveness of EU agricultural and simple value-added food-product exports to Africa. Under the process of reform, despite a 50% decline in average cereal prices since 1991, EU15 cereals production increased from 180.9 million tonnes in 1991/92 to 242.2 million tonnes33 in the 2003/2004 season (a 33.7% increase). This expansion of low-priced EU cereals production has been a major factor fuelling the growth in EU exports of cereal-based food products and poultry meat parts to west African markets which have increased significantly since 1996. What is more, while some argue that this expansion is a transitional phenomena which will fade away once ‘decoupled’ support programmes are fully introduced, EC projections of likely levels of production in EU15 and EU25 countries up to 2012 suggest that this change will simple slow down the rate of expansion of EU production and not reverse it. This is particularly so since the rolling out of the CAP in new member states is, in eastern Europe, stimulating increased investment and increases in agricultural production which on average are over twice the rates of increase in production in EU15 countries.34 This raises fundamental questions about the non-trade distorting nature of new CAP instruments, instruments for which the August WTO framework agreement has secured international acceptance and endorsement. It is against this background that Trade Commissioner Mandelson is placing such emphasis on being seen to be taking the concerns of developing countries and particularly African developing countries, seriously. His recent statement to west African cotton farmers delivered in Bamako on 19 April 2005 is illustrative of just how far the EC is willing to go in selling itself as a friend of Africa in global trade negotiations. In this speech Commissioner Mandelson set out EU proposals for expediting assistance to west African cotton producers. According to the Agritrade website, he committed the EU to ‘exceptional treatment for cotton in the WTO negotiations … calling for the WTO membership to fast-track cotton in agricultural negotiations.’36 He argued that this means ambitious agreements to:
eliminate all forms of cotton export subsidy in developed countries;
provide duty-free access for cotton imports by all developed and advanced developing countries;
substantially reduce trade-distorting domestic support for cotton producers in developed countries.37
He also highlighted the increasing level of EU aid to the cotton sector including:
an additional €210 million over four years for the worst-affected cotton producing countries;
the willingness of the EU to provide ‘significant direct government budget support, in addition to pre-existing development assistance’;38
the scope for additional support from the FLEX instrument to deal with short term crises;
the provision of €25 million for a World Bank global index insurancefacility;
This looks a very impressive catalogue of EU support to the west African cotton sector, particularly so when one considers the singular absence of any similar EU response to the crisis in the coffee sector in the eastern and southern African region. However, it needs to be seen against the backdrop of the vast under-spend which exists under EDF assistance programmes to the region, the French government’s desire to spread the burden of budgetary support, and the wholly inadequate performance of the FLEX mechanism which replaced the Lomé Convention’s more functional STABEX (export stabilisation) scheme.42 With regard to the commitment to a new facility for African infrastructure and trade, it remains to be seen just how this is to be established and operationalised given the backlog and delays experienced in existing EDF-financed programmes.
| Changes in Agricultural Production in New EU Member States (EU15) 35 | ||
|---|---|---|
| Product | % Change 2002–2011 | EU10 (EU15) |
| Wheat | + 12.02% | (+ 5.80%) |
| Coarse grains | + 4.92% | (+ 0.38%) |
| Total cereals | + 7.69% | (+ 3.10%) |
| Poultry meat | + 37.16% | (− 0.40%) |
| Pig meat | + 15.38% | (+ 4.07%) |
| Cheese | + 13.99% | (+ 11.21%) |
| Skimmed milk powder | + 5.51% | (− 40.88%) |
In this context, what lies behind all the rhetoric and recent decisions to fast-track EU support to the west African cotton sector? Well, Commissioner Mandelson rather gave the game away when he stressed that ‘increased development assistance can be leveraged to even greater effect if we collaborate in the multilateral trade arena to drive through a reform strategy which controls and reduces global trade distortions in cotton’43… and appealed to his west African audience to ‘use the DDA together to answer your pressing and legitimate concerns and build a trading system that meets the minimum requirements of fairness’.44 Herein lies the key to Commissioner Mandelson’s growing emphasis on delivering on the development dimension of EPAs; namely, his concern that African ACP countries may not wholly believe that they have anything to gain from a new WTO agreement on tariff reductions, trade in services, trade-related areas and a duplicitous ‘stitch up’ on permitted and prohibited forms of agricultural support. This does however potentially open up an opportunity for African trade negotiators and economic planners. In the run up to the Hong Kong Ministerial meeting in December 2005, a window of opportunity exists to extract significant trade concessions from the EU which deliver real and immediate benefits to African economies. It remains to be seen whether African political leaders can exploit this window of opportunity (a window which is potentially easy to exploit as a result of the mounting UK-based criticism of the EC’s current approach to EPA negotiations) to secure a framework for future trade relations with the EU which retains the economic policy space for the development and nurturing of regional development integration, which focuses on the structural transformation of national economies, based on enlarged regional markets and a vision of equitable regional development.