Warning that poor will suffer from trade plan

Date: 27/11/1997

By Mark Turner

Development organisations are warning that new European Commission free trade proposals for African, Caribbean and Pacific countries could, ironically, usher in a new era of European protectionism.

They warn that draft new guidelines for the EU's Lomé Convention could force many ACP members to join the Union's generalised system of preferences (GSP), in practice transferring back to Europe duties worth more than 40% of their contribution from the annual development budget.

"All the non-least developed ACP states could be affected negatively by this," warned Oxfam senior policy analyst Phil Bloomer.

Oxfam and other development organisations in the umbrella group Eurostep have asked EU development ministers to be aware of the inherent dangers of the free trade proposals when they debate Lomé reform at a meeting tomorrow (28 November).

In a letter, Eurostep says it has "great concerns about the trade and investment aspects of the guidelines", which "pose serious dangers for the Union's poverty eradication goals".

Under preliminary Commission proposals, the more advanced ACP countries would be urged to enter free trade agreements by 2003, or 'graduate' from Lomé-style trade aid to GSP. Although recent drafts offer more gradual liberalisation, Oxfam feels they are still unclear and give rise to concerns. It adds that free trade within three years is "completely unrealistic" and unlikely to be approved by the World Trade Organisation.

"Given the collapse of fast-track [trade legislation] in the US, there are many countries who may feel threatened by this, and could claim that the EU is unfairly diverting trade," said Bloomer.

On the other hand, the GSP option "would lead to a loss in export earnings for these countries equivalent to 43% of the European Development Fund transfers to ACP countries in 1994," warns the letter.

A spokesman for Development Commissioner João de Deus Pinheiro denied the ACP was being forced into a corner. "All we propose is under the principle of partnership," he said. "Nothing will be imposed on the ACP. The hard core of our proposal is that things have not worked well in the past, and we are looking for other ways to improve competitiveness in these countries."

Despite its concerns, Oxfam has praised new aid guidelines from the Commission. "We believe that the Commission has done a very good job on the aid aspects of the paper. It reflects many of our concerns," said Bloomer.

Report of concerns from Oxfam and other NGOs about new European Commission draft proposals to reform Lomé.