UNIVERSITY OF PENNSYLVANIA - AFRICAN STUDIES CENTER
Africa: Europe Trade Updates
Date distributed (ymd): 000416
Document reposted by APIC
Issue Areas: +economy/development+
This posting contains several documents relating to economic relations between Africa and Europe, including a summary of results from the Africa-EU summit in Cairo, a description of the new Lome agreement slated for adoption this year, and an analysis of the EU-South Africa trade agreement.
A posting also being sent out today contains several statements on more general issues of economic globalization.
BRIDGES Weekly Trade News Digest - Vol. 4, Number 14
11 April, 2000
BRIDGES Weekly Trade News Digest is published by the International Centre for Trade and Sustainable Development (ICTSD) with support from the Institute for Agriculture and Trade Policy (IATP). ICTSD is an independent, not-for-profit organisation based at: 13, ch des Anemones, 1219 Geneva, Switzerland. Tel: (41-22) 917-8492; fax: (41-22) 917-8093. Web: http://www.ictsd.org, http://www.iatp.org
EU-AFRICA SUMMIT: PLEDGES OF PARTNERSHIP, DEBT RELIEF
Leaders and ministers from EU and African countries met from 3-4 April in Cairo, Egypt for the first EU-Africa summit addressing political and economic issues. The summit yielded the Declaration of Cairo and a joint EU-Africa Cairo Plan of Action (CPA), both addressing the issues of trade, debt, political issues, peace building and conflict prevention, and development.
Egyptian President Hosni Mubarak said that the aim of African leaders at the summit was "not to secure more aid but rather to develop mutual partnership and co-operation programmes."
Observers noted that with respect to EU-African trade, African exporters' share of the EU market has shrunk from 6.7 percent to 3 percent over the last 25 years. EU Trade Commissioner Pascal Lamy told the summit that a new model of EU-Africa engagement was needed to bolster Africa's export growth. "The old emphasis on trade concessions hasn't worked. We need to seize on the question of Africa's capacity to meet new challenges of logistics, food standards and so on."
The Cairo Plan of Action calls for measures aimed at better integrating Africa into the world economy. According to the CPA, Ministers agreed to deepen "the link between trade and development in the multilateral trading system, in order to ensure that the benefits of further trade liberalisation and the strengthening of multilateral rules contribute to poverty reduction and sustainable development. We shall pay particular attention to this concern in the future WTO Ministerial Conferences and will cooperate in ensuring the further development of Africa's economic and industrial potential."
... the EU pledged to support African integration via technical assistance and capacity building and to address implementation issues faced by African countries with regard to WTO agreements. The EU proposals offered no specificity regarding monetary or deadline commitments on the part of the EU. On the topic of market access for the least developed countries, the EU pledged to "launch a process in 2000, which by 2005, duty free market access for essentially all products from Least Developed Countries (LDCs) will be granted and the rules of origin and cumulation provisions that apply to their exports simplified."
Ministers also addressed the issue of debt relief for African countries, which collectively owe an estimated US$350 billion dollars in external debt. France announced it would cancel all its bilateral debt with the poorest African countries, while Germany announced plans to cancel about US$350 million in debt over 3 years. In the CPA, ministers agreed to find ways to reduce the full debt burden.
Ministers plan to hold interim follow-up meetings on implementing the Cairo Plan of Action and agreed to hold the Second EU-Africa Summit in 2003.
ACP STATES SECURE NEW AID AND TRADE AGREEMENT WITH EU
By Grace Buhera
March 31, 2000
P O Box 5690, Harare, Zimbabwe
Tel: (263-4-738694/5/6) Fax: (263-4-738693) Email: email@example.com; firstname.lastname@example.org Web: http:// www.sardc.net
The African, Caribbean and Pacific (ACP) states have struck a new deal with the European Union (EU) with the extension of the current treaty which was due to expire this February. At a meeting held in Brussels, Belgium, from 2-3 February 2000, the EU and ACP states concluded a new agreement, an extension of the Lome Convention which regulates development cooperation and trade relations between the two regions.
One of the major agreements entered into is the determination of an eight-year transition period during which new negotiations on trade and economic arrangements with the EU are to be negotiated and concluded. This transition will run from 1 March 2000 to 31 December 2007 during which period market access into EU will continue under current arrangements. A further 12 years was agreed upon as the implementation period.
In addition, 13.5 billion euros were made available under the extended Environment Development Fund (EDF) to assist development efforts of ACP countries for the period 2000 through to 2005. This assistance would be used to support and promote efforts of ACP countries, which include poverty reduction, private sector development and reform of ACP economies and gradual integration of ACP countries into the global economy.
Some 12,8 million euros would be initially allocated. Of the yet uncommitted funds, one billion would go to securing the multi-lateral debt relief initiative for the world's poorest developing countries as agreed on by the seven leading industrialized nations at the World Economic Summit in Cologne, Germany, in 1999.
The EU is making 680 million euros available to the World Bank's trust fund to be used to offset the debt of the poorest developing countries. Some 320 million euros have also been made available for EU's bilateral debt relief activities.
The purpose of the meeting was to negotiate a framework leading to a successor agreement to Lome IV, whose expiry date was set at February 2000.
The ACP states and the EU have enjoyed development co-operation under Lome whose aim is to support the "ACP States' efforts to achieve comprehensive, self-reliant and self-sustained development". The first Convention (Lome I) was signed on 28 February 1975. Lome II and III were signed in 1979 and 1985 respectively.
The current Convention, Lome IV, covers the period from 1990 to 2000 and has been the most extensive development cooperation agreement between the North and the South both in terms of scope (aid and trade) and the number of countries involved.
The convention states that ACP cooperation is to be based on partnership, equality, solidarity and mutual interest. The convention also recognises the principal of sovereignty and the right of each ACP state to define its own development strategies and policies, affirming development centred on people, respect and promotion of human, political, social and economic rights.
In 1994, the Lome IV underwent a mid-term review, which resulted in approval of the 8th EDF to cover the five-year period between 1995-2000. The recent extension has paved the way for the 13.5-billion-euro development fund which runs for another five years to 2005.
According to South Africa's Deputy Trade and Industry Minister, Lindiwe Hendricks, the new Lome agreement is expected to be signed in May 2000. The agreement will then be ratified by the EU's 15 member states and ACP's 71 states by September 2002, before it comes into force.
Among other issues discussed at the Brussels meeting, which was attended by ministers and government officials from the participating states, were the level of aid to ACP nations, good governance, corruption, market access for countries not classified as least developed and the duration of the new convention. The outcome of the talks was generally favourable for the ACP countries and a number of important agreements were reached, according to analysts.
On the delicate issue of migration, the ACP and EU agreed to put in place measures to control migration on a bilateral basis while at the same time upholding the commitment to respect human rights and fulfillment of obligations arising from international law.
In order for this arrangement to be compatible with World Trade Organisation (WTO) rules and regulations, the EU is expected to ask for a waiver to continue with the current trade preferences. Internal arrangements are being made to ensure continuity of trade flows from ACP to EU.
The implications of these agreements for the ACP states are that they will continue to benefit from the current trade preferences during the eight-year preparatory period without disruptions. Duty free items and those on concessionary duty will continue to benefit during the transition period.
For Botswana, Mauritius, Namibia, Swaziland and Zimbabwe, the current quotas on beef and sugar will stay in place. Malawi will benefit from the 18 million euros that was allocated for road projects and rural development and 7.8 million euros allocated to help set up Malawi National Blood Transfusion Service. Zambia will, among other concessions, get 6.5 million euros to boost exports and provide short-term assistance to producer associations, their members and groups of enterprises.
The more favourable preferential terms granted the ACP countries for accessing the Common European Market was more important than the financial development assistance covered by the agreement. The new agreement sees, particularly, the strengthening of political relations between the ACP and EU states.
Given the fact that the transition period is up to 31 December 2007, it is important that ACP states start to prepare for new trading arrangements with the EU. (SARDC)
SOUTH AFRICAN COUNCIL OF CHURCHES PUBLIC POLICY UPDATE
THE EUROPEAN UNION-SOUTH AFRICA TRADE AGREEMENT:
Implications for Post-Lome Trade Relations
14 April 2000
For more information, contact:
South African Council of Churches
Public Policy Liaison Office
P.O. Box 2591; Cape Town, 8000
Tel. (021) 423-4261; Fax. (021) 423-4262
Email. email@example.com; Web. http://www.sacc-ct.org.za
[excerpts: full text will be available on
... The collapse of negotiations at the World Trade Organisation (WTO) ministerial meeting in Seattle last November should be seen as a success to the extent that developing countries--and African nations in particular--exposed and frustrated the attempts of the industrialised powers to negotiate private deals outside the plenary sessions. The lull also provides churches and other organs of civil society a chance to analyse the impact of emerging trade regimes, build awareness of the relationship between trade policy and economic justice and popularise the campaign for fair trading practices.
>From Lome to TDCA: A Paradigm Shift
The recently-concluded trade agreement between South Africa and the European Union (EU) heralded a major shift in the EU's approach to trade relations with the developing world. The Lome Convention has governed trade between the EU and a group of 71 states in Africa, the Caribbean and the Pacific--the ACP countries--since the first agreement (Lome I) was reached in 1975. In the post-colonial period, European nations consolidated their relationships with developing countries by instituting a pyramid of preferences in which former colonies enjoyed the most unrestricted access to European markets, followed by the rest of the developing world. ...
By the mid 1990s, however, the EU was searching for a new model. The existing Lome IV agreement was set to expire at the end of February 2000, and EU officials argued that the system of preferences embodied in Lome was incompatible with "free market" WTO rules. In an atmosphere of hard-nosed commercial competition with the United States and Japan in a globalised economy, the EU gave top priority to securing the emerging markets of its comparatively affluent Eastern European neighbours (especially Poland, Hungary, and the Czech Republic)--the countries most eligible for incorporation into the European Community. Secondary preference was extended to the Baltic countries, the Mediterranean states, and the Middle East. Despite the rhetoric of "partnership" (and "free" trade), ACP countries--and Africa in particular--were to be peripheralised once again.
The trade negotiations with South Africa were the first the EU conducted in terms of this emerging paradigm. In September 1994, shortly after the inauguration of South Africa's first democratic government, foreign ministers from the EU and the Southern Africa Development Community (SADC) met in Berlin. The meeting produced the "Berlin Declaration" in which the EU pledged support for South Africa's transition to democracy and regional economic integration.
However, when South Africa applied two months later for full membership of Lome (minus certain privileges--such as use of price stabilisation mechanisms and preferential access to European markets for beef and cane sugar exports--that might have damaged other ACP countries), the EU rejected the request. It argued that, as a relatively developed nation, South Africa was not eligible for Lome preferences under WTO rules. Instead, it offered South Africa a bilateral Free Trade Agreement. South Africa made a counter proposal: a Trade, Development and Cooperation Agreement (TDCA) that would address the country's development needs while promoting regional integration.
Talks began in earnest in early 1997 and continued for two years as negotiators battled over the details of roughly 8000 tariff arrangements associated with specific agricultural products. Finally, in January 1999, the two teams agreed on a common text for ratification by their respective governments. ... In February, the trade chapter came into effect, pending final EU ratification.
The TCDA's Implications for South Africa and Southern Africa
... During the negotiations, two major studies assessed the agreement's likely impact on South Africa and Southern Africa. The first, conducted by UNCTAD, concluded that EU imports to South African would increase faster than South African exports to the EU. ... A second survey, looking at fiscal policy and labour markets, was commissioned by members of the Southern Africa Customs Union (Namibia, Botswana, Lesotho, and Swaziland--South Africa did not take part) and was carried out by Britain's Institute for Development Studies and the Botswana Institute for Development Policy Analysis. This foresaw a more mixed economic impact.
More recently, Germany's Coordination Southern Africa (KOSA) published an analysis of the agreement's impact on SADC. This predicted the agreement will have a particularly severe impact on SACU countries. The study foresaw a potential loss of income of between 5 and 9% for Botswana, 13-21% for Lesotho, 8-14% for Namibia and 14-23% for Swaziland. The report also concluded that the agreement will impede regional integration by undermining the SADC free trade protocol and by requiring South Africa and its neighbours to deal with the EU on different terms. (South Africa asked the EU to delay free trade negotiations for ten years to permit regional integration to get a head start, but the EU refused.)
Implications for Post-Lome Trade Agreements
Key elements of the TCDA approach--bilateral negotiations, insistence on reciprocal lowering of trade barriers, and continued protection of vulnerable European markets, especially agricultural markets--seem set to become central to the EU's general model for a post-Lome, post-cold war, globalised trade policy toward the developing world.
In terms of WTO rules, least developed countries may still negotiate preferential agreements with industrialised nations. However, the parallel--and growing--use of free trade agreements like the TCDA is likely to force less developed nations to choose between preferences and regional integration. ...
ACP countries will be expected to confront these choices soon. The EU timetable gives Lome members a two-year window (2000- 2002) to decide if they want to negotiate (Regional)Economic Partnerhsip Arrangements or stick with preferential agreements. With six years for negotiations and a twelve-year implementation horizon, the EU is aiming to secure virtually unfettered access to global markets by 2020. Unless, of course, the ACP countries can build on their success at Seattle to force a radical rethinking of global trade policy and practice so that fair trade, not free trade, becomes the principle underpinning new trade agreements.
* * * *
This update was compiled from material presented at a 27 March 2000 seminar in Cape Town sponsored by the SACC and the Ecumenical Service for Socio-Economic Transformation (ESSET). The seminar featured a presentation by Dr. Theobald Kneifel of the Ecumenical Service for Advocacy Work on Southern Africa (KASA) in Heidelberg, Germany, with a response by Dr. Robert Davies, MP, Chair of the Portfolio Committee on Trade and Industry.
Additional material was drawn from Gottfried Wellmer's study, "SADC Between Regional Integration and Reciprocal Free Trade with the European Union: A Study on Future Trade Relations between the EU and SADC States", published last month by World House Bielefeld and Coordination Southern Africa (KOSA). This publication is available from the publishers at a cost of DM12,00 plus postage:
World House Bielefeld/KOSA
August Bebel Street 62 D-33602 Bielefeld GERMANY; tel. +49 521 62802; fax. +49 521 63789; e-mail. firstname.lastname@example.org; web. http://www.welthaus.de
Message-Id: <200004170151.VAA14207@server.africapolicy.org> From: "APIC" <email@example.com> Date: Sun, 16 Apr 2000 22:37:57 -0500 Subject: Africa: Europe Trade Updates
Editor: Ali B. Ali-Dinar
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