Ministers seek to bridge divide over successor to Lomé

Date: 22/07/1999

The EU is struggling to win over the ACP countries to its vision of a free trade future. As trade ministers from the two sides prepare to meet next week, Gareth Harding explains why

IN THE cosy world of EU politics, where public debates are often anodyne and deals are usually struck behind closed doors, it is rare to see key figures slug it out openly over contentious topics.

But early this month, two of the most senior negotiators from the EU and its African, Caribbean and Pacific partners clashed publicly at a conference in Brussels over how to overhaul the trade and aid agreement which governs relations between between Europe and its former colonies.

ACP Deputy Secretary-General Carl Greenidge and European Commission Development Director-General Phillip Lowe are no strangers to each other, having spent the last ten months trying to thrash out an agreement to replace the fourth Lomé Convention.

But at this stage, with only six months to go until the convention expires, the two would have hoped to be closer to signing a successor agreement.

As their public spat earlier this month demonstrated, the gulf between the EU and its ACP partners is almost as wide as when the sides set out their negotiating positions last September - and few expect it to be narrowed significantly when trade ministers from both blocs meet next Thursday (29 July).

The first Lomé accord was signed more than a quarter of a century ago, and it has been updated periodically over the years, most recently in 1989. But now the Union would like to see it replaced by free trade agreements with regional groupings of ACP states such as the Southern African Development Community in 2005.

This is partly because it believes the preferential treatment its member states' former colonies enjoy is likely to face a challenge from the World Trade Organisation. But the Commission also points out that ACP countries have failed to reap the rewards of the trade advantages offered to them under the existing accord.

In the last 15 years, the share of ACP exports to the EU has plummeted from 7% to 2%, while trade within the bloc has also fallen as a proportion of total commerce.

The Commission believes that integrating ACP states into the world economy is the best solution. "We need to place the ACP in the WTO framework," said Lowe earlier this month. "When you fix trading principles across the world, you should not discriminate against countries on the same socio-economic footing."

However, ACP countries want to retain as much of the present agreement as poss-ible and are critical of the EU for jettisoning many of its core principles in the current talks.

The 71 states, which include most of the world's poorest countries, are also fiercely opposed to a rapid opening up of their economies, arguing that developing countries need time to adjust to the rigours of the free market. "You cannot feed your children on a liberalised market unless you can produce for the market or have access to it," said Greenidge at the recent Brussels conference.

Another area where the two parties are at loggerheads is over the whole concept of Regional Economic Partnership Agree-ments (REPAs), which the EU strongly favours. The Union has already signed a free trade agreement with South Africa and is in the process of discussing a similar deal with Mexico and the Mercosur group of countries.

Lowe insists that "regional agreements are the way other parts of the world are moving", adding: "Why should we put Africa in a separate category?" But ACP countries view REPAs as "complicated and divisive" and argue that many states do not fit neatly into regional groupings.

Lowe admits that over the past three months, only "rather slow" progress has been made in the trade negotiations. But the Union's chief negotiator believes that the outline of a compromise is beginning to take shape and could be agreed at the next ministerial meeting in November.

According to Lowe, both sides must first pledge to open up their markets. The time frame for meeting this goal can be worked out later, he says, but the important thing is to start moving in the direction of free trade.

"The catastrophe scenario painted by non-governmental organisations ignores the fact that there is a long period of adjustment in our timetable," he says. Even after free trade agreements have been signed after 2005, the EU has pencilled in a 15-20 year period of gradual liberalisation to cushion the impact of change.

As an incentive to sign up to REPAs, the Union is dangling the carrot of greater market access in front of ACP countries' noses. Industrial goods already enter Europe tariff-free, but the Commission is holding out the prospect of access to the EU's lucrative agricultural and service markets to try to get the former colonies on board. It is also offering financial support to make up for the loss of earnings from tariffs and fluctuations in commodity prices.

"Our approach is based more on incentives than obligations or constraints. If we give ACP countries time and recognise the sensitivities, we have the basis for an agreement," insists Lowe.

Despite the director-general's upbeat assessment, many problems remain to be sorted out at the 29-30 July meeting.

First and foremost, trade ministers will have to come to an agreement on the basic principles that underlie any future agreement and this has so far proved far from easy.

Although the two sides agree that any future partnership should embrace respect for democracy, human rights and the rule of law, ACP states are firmly opposed to including 'good governance' as a key objective. Greenidge dismisses the term as a "nebulous concept" and a "politically attractive fad of little importance." The bloc also does not take kindly to being lectured on sound management by a European Commission which has been mired in sleaze for much of the year.

But the EU is clinging to the concept as a means of ensuring that aid is not abused and that African governments at least pay lip-service to the need for watertight administration. "If there is one thing that strikes European taxpayers as essential, it is the fight against corruption," says Lowe.

The two chief negotiators have no illusions about the uphill task facing them to strike a deal on a successor agreement by the February 2000 deadline.

"These negotiations promise to be the most difficult the group has faced since its establishment," said Greenidge recently. "It is especially difficult because of the extent of the gap between the positions of the group and the EU."

Lowe places the blame for the snail's pace of the talks firmly on the ACP's shoulders. "The real frustration is that there is a lack of any coherent alternative to what we are proposing. They are very cautious about suggesting anything new," he claims.

Nevertheless, the Commission's top development official believes once a deal is done, "the prize for ACP countries is huge".

He points out that not only will the developing countries have greater access to EU markets, but the Union will also provide financial support to tide them over in the period between the end of preferential tariffs and the start of free trade agreements.

It is a carrot which the ACP bloc will find hard to resist.