Doubts cast over WTO waiver for ACP deal

Date: 20/04/2000

By Gareth Harding

THE EU's request for a waiver which would allow its African, Caribbean and Pacific partners to keep the trade privileges they currently enjoy could face a bumpier ride through the World Trade Organisation than previously expected after a number of countries challenged the move.

The European Commission submitted its plea for an eight-year opt-out from WTO rules this month after reaching agreement with the 71 ACP states on a new trade and aid accord.

The waiver would allow many of the world's poorest countries to retain their right to lower tariffs and other preferential market measures. The Union argues that this is essential to prepare the ACP's least-developed countries for the rigours of unrestricted free trade. It also forms a central plank of the EU's new agreement with its former colonies.

But a group of Latin American countries has challenged the application for an extension of the opt-out, arguing that it discriminates against non-ACP exporters and could be used by the Union as a way to maintain key elements of its banana regime through the back door. The WTO has already condemned the EU's banana rules three times but if the waiver is granted, ACP countries would continue to benefit from the current system.

The US is still fiercely opposed to the Union's regime, but Washington has assured its Caribbean neighbours - most of which currently benefit from privileged access to European markets - that it will not formally challenge the waiver request. It is, however, furious with the Commission for submitting a late application and shares the Latin American countries' suspicions that the EU may be using the ACP agreement to legitimise its stance on bananas.

In the face of such attacks, the Commission is busy lobbying other WTO members to support its application. The head of the institution's development directorate-general Philip Lowe said that "if the US made an issue of the banana appeal, then the EU would have to look at the whole package of WTO waivers".

The US currently enjoys opt-outs from international trade rules in its dealings with several African and central American countries. "If they block our deal, we will play hard-ball with them," warned Lowe.

The EU's request for a waiver which would allow its African, Caribbean and Pacific partners to keep the trade privileges they currently enjoy could face a bumpier ride through the World Trade Organisation than previously expected after a number of countries challenged the move. The European Commission submitted its plea for an eight-year opt-out from WTO rules after reaching agreement with the 71 ACP states on a new trade and aid accord.