The Week in Europe
By David Jessop

On April 9th, Europe's Commissioners approved a document establishing the
position that the European Union will take this September when trade
negotiations begin with the group of 77 African, Caribbean and Pacific
States (the ACP).

The negotiating mandate, which still has to be approved by the European
Council of Ministers, proposes the establishment of economic partnership
agreements (EPAs) between Europe and the regions of the ACP. If agreed, EPAs
are intended to lead to free trade between Europe and the Caribbean. That
is, to open and unrestricted competition between the two regions in each
other's markets in almost all areas of trade whether it be in agriculture,
manufacturing or services.

Europe's draft mandate for the next ACP/EU negotiations, produced for the
first time by the EU's Trade Directorate rather than those responsible for
development, had been circulating within the EC since late last year.
However, up unto the last two weeks it had proved difficult to resolve
differences between three key Commissioners. Such concerns largely revolved
around the draft text's provisions relating to agriculture and its
development content.

Senior officials responsible for development policy had argued that the
mandate needed to be more development oriented and reflect better the
concerns of the Development Commissioner, Poul Neilson. He wanted more
flexibility over transitional timetables for ACP countries especially for
the least developed ACP nations, less focus on free trade, and a greater
stress on the introduction asymmetrically of new trading relationships. That
is to say arrangements that would enable the ACP to take advantage of the
opening of Europe's markets well before regions such as the Caribbean had to
open their own markets to unfettered competition from Europe.

But, the strongest protests over the Trade Directorate's draft came for very
different reasons from the Agriculture Commissioner, Franz Fischler. Given
his responsibility for the continuing viability and the protection of
European agriculture, he objected to any suggestion that the 'total
liberalisation' of trade between the ACP and EU should be the ultimate
target.

Officials in the Agriculture Directorate argued that the Trade Directorate's
original proposal to give all ACP states rapid quota and duty free access
for sensitive products including sugar and rice would have negative
connotations for Europe's Common Agricultural Policy. They noted that the
present equilibrium in the EU market would be difficult to maintain and that
domestic production in individual ACP countries would be diverted for
export. They suggested that country-specific studies were required,
highlighting amongst other matters the need to undertake from an EU
perspective a cost benefit analysis of the effect of full liberalisation of
the sugar or rice regimes.

As a result of both interventions the revised document agreed by the College
of Commissioners is softer, less specific, to some extent more flexible than
the first draft and contains changes broadly beneficial to the region.

There is now recognition that the creation of free trade arrangements
between a highly developed EU and 77 developing countries can not take place
at a parallel speed or on a parallel basis. Gone is the earlier suggestion
that the EU and ACP must both undertake a simultaneous transition over ten
years. Instead the text now proposes that the transition period for the EC
will not exceed ten years while that for the ACP will take into account
specific constraints on the ACP nations concerned and that WTO rules will be
applied in a flexible way.  The revised text also recognises environmental
concerns will become a factor in the pace of transition.

In practical terms all of this suggests that the negotiating directive might
have the effect of protecting the unique position of the Caribbean sugar
industry for longer than anticipated. It also implys that locally owned
services such as supermarkets, the small hotel sector or indigenous travel
agents may be protected from the full force of global competition for a
longer period than the first draft suggested. Equally the agreed mandate
would appear to confirm that European agricultural concerns may delay the
hoped for benefits for sectors such as rice.

Despite these changes there should be no illusions. The text still
represents a substantial negotiating challenge to the ACP and its regions
both in terms of its detail and overall approach.

In its press announcement on having achieved EC agreement on a negotiating
mandate the Commission argues that EPAs will be an instrument for
development. This may be so in parts of Africa but is very hard to
understand in the context of much of the Caribbean.

Every Caribbean nation has its own unique economic and political
constraints. Trinidad may well benefit from a carefully phased-in EPA as may
the Dominican Republic and Barbados. But beyond this a continuum of
potential disadvantage runs from nations like Jamaica through Dominica to
Haiti.

So far there is no explanation from Europe of how in practical terms nations
such as Guyana dependent on agriculture or small Eastern Caribbean nations
will be able to transform themselves and become globally competitive.  So
far few Caribbean nations have shown the ability to compete successfully on
any substantial scale within either the regional, the US or European market.
As a result much of the region would appear to stand little chance of doing
so in the longer term against vastly larger producers in Europe or others in
the Americas or the Far East able to profit from the economises of scale
provided by free trade.

A more likely scenario of EPAs without a prior WTO agreement on special and
differential treatment and an enormous resource transfer will be poverty and
economic instability.

David Jessop is the Executive Director of the Caribbean Council for Europe
and can be contacted at [log in to unmask]
 April 11th, 2002