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The Week in Europe
By David Jessop

While all eyes remain firmly fixed on the extraordinary developments
surrounding the race for the US presidency, a matter of immensely greater
significance for the Caribbean has been unfolding in Europe. At issue is the
impact that Europe's 'everything but arms' proposal will have on the
Caribbean's middle income developing economies.
 
In outline, this initiative offers the world's 48 poorest nations, the Least
and Less Developed Countries (LLDC), duty free and quota free access to the
European market as of January 1, 2001 for all of their products except arms.
Only in the case of sensitive products such as sugar, rice, and bananas is
the European Commission (EC) suggesting LLDC exports should be phased in
over a three-year period. The proposal is largely a response the EU's desire
to meet its World Trade Organisation (WTO) commitments to the world's
poorest, thereby encouraging the US and Japan to make the same offer in
order to achieve developing country support for a new trade round.

However, the proposals for the LLDC, while laudable in principle, have the
effect of precipitately setting aside existing preferential arrangements for
ACP producers. Under the terms of the recently signed EU/ACP Cotornou
Convention these were meant to continue to at least 2008. 

If the regulation now in draft is agreed as planned by the EU Council of
Ministers in December, its effect on Caribbean commodity producers will be
severe. So much so, that it will result in the rapid decline of much of the
Caribbean's sugar and rice industry, do serious damage to the rum industry's
last chance to compete in the EU market and diminish further the prospects
for Caribbean bananas in Europe.

It is an issue, the impact of which has been scarcely understood in the
region. If not amended, the LLDC proposal directly or indirectly threatens
the livelihood of almost all in employment in the region. The EC's proposal
as it stands brings into question the viability of every economy in which
commodities play a significant role. That is to say Suriname, Guyana,
Barbados, St Vincent, St Lucia, Dominica, Grenada, St Kitts, Jamaica and
Belize. It has consequences that will haunt both governing and opposition
parties for decades to come. Worse, it will cause middle ranking developing
economies to revert to being amongst the poorest. It brings into question
the ability of nations to deliver agreed structural adjustment programmes or
meet their commitments to loans raised on international capital markets. It
throws into doubt the viability and stability of economies. As Guyana's
Foreign Minister, Clement Rohee, has noted, it could turn Guyana back into
the category of the poorest. "Guyana can not sustain this. It is", he said
"a virtual knock out blow". 

This is not, it must be stressed, some doomsday scenario in the distant
future. The Caribbean and other ACP producers have a very short time in
which to convince Europe's member states to amend the everything but arms
draft regulation. At the very least, it requires the EU give proper
consideration to the impact the decision will have on more developed ACP
commodity producers and EU treaty obligations with the ACP. 

An important start has been made in this process. Jamaica's thoughtful and
effective Minister of Foreign Trade, Anthony Hylton, spent the week of
November 6 in Berlin, Brussels and London ensuring that the EC and member
states fully understood and consequences for the ACP if they proceeded to
take forward their initial proposal. He found some sympathy and more
importantly a preparedness to agree a basis for consultation before the
regulation is agreed. Up to that time it had seemed that the EC was intent
on ignoring the ACP's concerns and taking the regulation rapidly through
Council in a form which effectively set aside the existing sugar regime and
arrangements for other commodities such as rice.

In Berlin, Minister Hylton had forcefully pointed out that there were
important matters of principal at stake. There, he suggested that if the EU
proceeded without consultations it was in effect abrogating Treaty
obligations entered into under the recently signed Cotornou partnership
agreement. This contained commitments on the part of the EU to consult and
undertake studies in the event of any wider liberalisation initiative that
might weaken the development efforts of ACP states. The Treaty also noted
the need to preserve the benefits of the ACP/EU trading arrangements during
the period up to 2008.  The fact that none of this has happened, he said,
contravened Article 18 of the Vienna Convention on the law of treaties which
imposes a duty on signatories to an agreement to act in good faith and
fulfil any obligation embodied in an agreement, even before formal
ratification.

By the end of the week a new picture that begun to emerge with the
possibility of a full Ministerial level consultation between the EU and ACP
before the regulation goes to the European Council. Senior figures in the
Commission, it seems, had begun to accept the need for early impact studies
on each of the ACP industries most likely to be affected. Most importantly
of all, the possibility of delay to implementation of the proposed new
regime for LLDC sugar rice and bananas, seemed likely.

What happens next depends on the reaction of Europe's member states.
Politically the key in Europe may lie with France. President Chirac has made
it known that he is concerned. In confidential exchanges with the European
Trade Commissioner, Pascal Lamy, he is understood to have made clear that
the exclusion of the most sensitive products (sugar, rice and bananas) can
not be ruled out. It is the wish of the French Presidency, he is understood
to have suggested, supported by a majority of France's EU partners, that the
Union should take its time to reflect on the consequences which the
Commission's proposals may have for community producers as well as the
French DOM and the non LDC African, Caribbean and Pacific nations.

If, as now seems to be the case, a period of reflection is secured it must
be recognised that this is just a breathing space. It does not provide
solutions on sugar and rice in particular. Europe's interest remains the
same: preference for all ACP commodities ending by 2008.

Caribbean Heads meet on November 15 in Barbados to consider the actions they
must take in Europe in order to defend the region's interests. The challenge
that they and the industries involved now face is how to secure, over time,
new WTO compatible regimes that deliver a similar outcome to present
preferential trade regimes for competitive Caribbean commodities.

David Jessop is the Executive Director of the Caribbean Council for Europe
and can be contacted at [log in to unmask]
November 10th, 2000



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