Developing countries face uncertain trade fate

Concerns are mounting over the economic fate of a number of developing countries which have yet to sign deals with the EU to secure access for their agricultural products after 31 December.

Major exporters to the EU including the Ivory Coast, Ghana, Cameroon and the Caribbean states risk having duties imposed on their products because they have yet to put in place deals on market access following the dismantling of the preferential trading system that the EU has had for decades with the countries of the Africa, Caribbean and Pacific (ACP) bloc.

"If a container comes into Antwerp port on 1 January from a country which hasn’t signed a deal, duties will have to be paid," said a European Commission official.

Foreign and development ministers will debate the matter at a meeting on Monday (10 December). The Commission has warned that if deals are not signed by Monday for ministers to approve, it cannot guarantee that deals agreed after that will be in place by the end of the year, when the preferential system comes to an end.

While the Commission says that it is optimistic about the Ivory Coast, Ghana and Cameroon signing before Monday it is less optimistic about the Caribbean states.

"We cannot, as of today, guarantee that there will be an agreement including new WTO compatible trade arrangements with all ACP countries," Ján Figel’, the education commissioner, told the European Parliament last week (28 November), on behalf of Trade Commissioner Peter Mandelson.

Some member states, including the UK and the Netherlands, are expected to voice concerns on behalf of the ACP countries which will be left out. "We will have some concerns but much will depend on where we are [on the deals] on the day," said one EU diplomat.

The Commission has since 2002 been negotiating with the ACP countries the Economic Partnership Agreements (EPA), designed to replace the preferential trading system by taking a holistic approach to trade development. The Commission admitted recently that it would not have any of these agreements in place by the end of the year and said it would negotiate "interim-EPAs" instead on market access for mainly agricultural products from the ACP countries.

But even these interim deals are proving too hard for some ACP countries to accept. Just two of the six regional groupings have signed deals, including the East African Community (involving Kenya, Uganda, Tanzania, Rwanda and Burundi) and the Southern African Development Community (involving Botswana, Les-otho, Swaziland, Mauritius and Mozambique).

States defined as ‘least developed countries’, involving about half of the 77 ACP countries, will not have their market access affected from 1 January since they will continue to get duty-free, quota-free access to the EU markets. Other countries such as some of the Pacific states do little trade with the EU, while countries such as Nigeria have few concerns given their oil exports, according to Commission officials.

But there are others which depend heavily on the EU market and which stand to lose substantially. About a third of the Ivory Coast’s exports will be affected, mostly involving its banana production, while Ghana’s processed coconut and banana industry will also be hit by tariffs.

By signing interim deals countries commit themselves to negotiating full EPAs, which some fear will result in lose of revenue from reduced tariffs and expose their industry to competition.

Concerns are mounting over the economic fate of a number of developing countries which have yet to sign deals with the EU to secure access for their agricultural products after 31 December.