Poor countries lose out under market opening, warns minister

Date: 03/10/02

By David Cronin

EFFORTS to open the markets of poor countries for EU goods will lead to major revenue losses for their governments, a politician from the African, Caribbean and Pacific (ACP) bloc has warned.

Samoa's Trade Minister Hans Joachim Keil attacked proposals by the EU for a 'high level of reciprocal market opening' between developed and developing states. Keil, who is also the chairman of the ACP ministerial trade committee, argued such plans would 'in many cases be inappropriate in the context of the ACP-EU trading relationship'.

'The most obvious costs will be in terms of the loss of revenue to governments as a result of tariff reductions on imports from the EU,' he said. 'The majority of, if not all, ACP countries rely heavily on trade taxes and attach a lot of importance to revenue from taxes on imports.'

The knock-on effects, Keil added, are likely to include cutbacks in public spending on health and education. The revenue losses would be even more difficult to absorb due to continuously falling levels of aid to poor countries.

Keil was speaking as talks on establishing economic partnership agreements (EPAs) with ACP nations got under way in Brussels last weekend.

The European Commission is hoping that the agreements can be finalised to come into effect in late 2007.

Pascal Lamy, the trade commissioner, said the negotiations are not trade talks in the classic sense.

Due to the strong emphasis on regional cooperation envisaged, their main objective will not be to open the ACP markets to EU goods but to promote greater integration of markets in the Southern hemisphere, he remarked.

EU imports from the ACP rose from €28.6 billion in 2000 to €31.2 billion last year, with exports to the ACP growing by €1 billion from €26.4 billion in the same period. Nigeria, Ivory Coast, Angola and Cameroon are the Union's main trading partners in the ACP area.

Meanwhile, aid agency Oxfam has launched a fresh broadside against the EU's sugar support regime.

The attack comes as Brazil and Australia lodged a complaint with the World Trade Organization, accusing the EU of damaging their own sugar sectors through 'unjustified' farm policies.

Oxfam says the 140 tariff imposed by the EU on sugar imports is crippling producers in many countries. 'Mozambique has seen its sugar farmers denied a route out of poverty because they have almost no access into Europe's sugar market and face tough competition from subsidised European sugar in other markets,' said the group's EU spokeswoman Jo Leadbeater.

'The loss of income is equivalent to nearly three-quarters of annual EU aid provided to Mozambique.'

Efforts to open the markets of poor countries for EU goods will lead to major revenue losses for their governments, Samoa's Trade Minister Hans Joachim Keil has warned.