Africa: Trade, Europe, 06/02/00

Africa: Trade, Europe, 06/02/00

Africa: Trade, Europe Date distributed (ymd): 000602 Document reposted by APIC

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Region: Continent-Wide Issue Areas: +economy/development+ Summary Contents: This posting contains the first issue of a new newsletter from Action for Southern Africa on trade and development issues. A related posting today contains news stories summarizing reaction and content of the final version of the Africa Growth and Opportunity Act passed by the U.S. Congress and signed by President Clinton in May.

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Southern Africa - Europe Trade & Development Update

Volume 1 Issue 1 May 2000

About ACTSA's Trade & Development Update Trade and Development Update is a new initiative from Action for Southern Africa. It will aim to help policy-makers, researchers and campaigners keep up to date with the latest news and policy developments in trade between Europe and Southern Africa. It will particularly highlight Southern African initiatives and analysis.

Produced quarterly, it is free and available by E-mail. If you would like more information, to subscribe or if you have suggestions or contributions, contact Liz Dodd at: ACTSA 28 Penton Street London N1 9SA UK Tel: +44 20 7833 3133 Fax: +44 20 7837 3001 E-mail:

ABOUT ACTSA Action for Southern Africa (ACTSA) is a lobbying and campaigning organisation based in the UK. ACTSA challenges policy and decision makers in the UK, Europe and internationally to support peace, democracy and development across Southern Africa. Formed in 1994, ACTSA is the successor organisation to the Anti-Apartheid Movement.

Lome successor waiver blocked

Panama - with the support of Guatemala, Honduras and Ecuador - is threatening to hold up the process of granting a new WTO waiver for the successor to the Lome Convention until the separate banana dispute is settled. The deal which took two years to negotiate and will establish the basis for aid, trade and political co-operation between the EU and 71 African, Caribbean and Pacific (ACP) countries over the next twenty years is due to be signed in Suva, Fiji on 8 June. It is widely believed, given the history of the banana dispute, that the US is behind this blocking move. The waiver request is expected to be discussed at the WTO General Council on 7 July.

Glenys Kinnock, British MEP and Rapporteur to the European Parliament's Development Committee on the negotiations comments, "Any suggestions that the WTO waiver should be blocked, or indefinitely delayed, has no political, economic or moral credibility. The US should consider its position very carefully at this time and should give unequivocal support to Europe and the ACP's new partnership."

For a more detailed analysis of the new Suva Convention see below.

Getting to grips with grappa

In February, Italy and Greece threatened not to ratify the landmark Trade, Development and Co-operation agreement between the EU and South Africa which was signed by their representatives in October 1999, unless South Africa agreed to stop using the terms grappa and ouzo. This threatened the whole deal estimated to be worth stlg10.6 billion. South Africa only produces 30,000 bottles of grappa a year and produces no ouzo.

The EU's protectionist stance prompted an uncharacteristic outburst from South African President Thabo Mbeki, who described the EU as an "unreliable partner for trade negotiations". At the EU-ACP Joint Assembly held in Abuja, Nigeria in March, South African delegate and chair of the South African Parliament's Portfolio Committee on Trade and Industry, Rob Davies noted that "certain vested interests" had almost been allowed to hijack the new strategic relationship between the EU and South Africa.

British MEP, Caroline Lucas also warned that the EU's behaviour had set a worrying precedent for future talks between the EU and ACP countries.

A compromise was finally hammered out where South Africa agreed phase out the use of the terms pending a decision on the issue of geographical indications within the Trade in Intellectual Property (TRIPS) of Southern African activists - issued in April noted that "The US declares itself champion of 'free trade', but unilaterally restricts the US market only to those African countries that submit to its conditions."

Too little, too late

Following the devastating floods in Mozambique and fresh calls for total debt cancellation, the World Bank and IMF agreed to cancel one year's worth of payments and to provide soft loans to help with the relief effort. Campaigners have dismissed these gestures as little more than worthless. The Mozambique Debt Group condemned the World Bank's "sickening lack of humanity for all those Mozambicans who for years have sacrificed to pay the debt service." The Group has appealed to the World Bank to: Cancel Mozambique's foreign debt completely; Give grants and not loans to help the emergency situation; Not use funds released under HIPC to help in the emergency.

WTO agriculture talks take off

New WTO negotiations on agriculture got off to a relatively smooth start with delegates quickly agreeing on a timetable for the first phase. Following some controversy, Peruvian Ambassador, Jorge Voto-Bernales will Chair the Special Negotiating Sessions of the Committee. The WTO Director-General, Mike Moore described the first meeting as "constructive and businesslike?This is the WTO working at its best."

But there are serious differences of opinion as to how the talks fit in with the wider WTO process which is in a state of confusion following the breakdown of the Seattle Ministerial in November 1999. The Cairns group of agricultural producers, which includes South Africa, insists that the talks are 'stand alone'. But the European Union, which is reluctant to dismantle its own support systems and barriers under the Common Agricultural Policy, argues that the agriculture talks must be part of a wider, comprehensive trade round. Other Southern African countries stress that agricultural talks should concentrate on addressing the special problems of poorer countries, who they argue have seen very little benefits from liberalisation so far.

A break for LDCs?

At the first ever Africa-Europe Summit organised by the EU and OAU in Cairo 3-4 April 2000, the EU reiterated its pledge to launch a process this year which would mean that by 2005, Least Developed Countries (LDCs) would have duty free access to the EU market on 'essentially all products'.

But only weeks later proposals by the 'quad' (US, EU, Japan and Canada) to extend this offer were criticised by developing countries, when it emerged that they would not include improved market access for LDCs in precisely those areas where they are most competitive - textiles and farm goods.

EU civil society trade consultations

On 19 April, European Union Trade Commissioner, Pascal Lamy and representatives of a wide range of European NGOs met for the first in a series of consultation meetings aimed at making dialogue between the European Commission and stakeholders more solid, stable and focused.

They discussed the WTO post-Seattle and also agreed a programme for future meetings which will be monthly and focused around a specific set of issues each time, including trade and health, services, agriculture, environment, investment, competition, WTO reform and regional trade. The first issue groups will take place 29-30 May in Brussels.

For more information on the consultations contact Haitze Siemers at DG Trade on +32 2 299 0185 or E-mail Or visit DG Trade's web site

New HIV Initiative launched

On 11 May UNAIDS announced that five pharmaceutical companies (Boehringer Ingelheim, Bristol Myers Squibb, Glaxo Welcome, Merck & Co, and Hoffman-La Roche) have indicated that they are willing in principle to discount the price of HIV drugs by up to 80 per cent, but few have provided concrete details. Executive Director of UNAIDS called the initiative "a promising step in a long-term process". Campaigners greeted the announcement with considerable scepticism. Medecins Sans Frontieres noted, "This agreement does nothing to stimulate countries' rights to produce or import inexpensive quality drugs. The net effect of implementing this type of program may be to further consolidate the AIDS-drug market in the hands of a small number of multinational drug companies."

Just days earlier United States President, Bill Clinton had signed an executive order affirming the right of African countries to seek low-cost drugs to treat AIDS as long as their actions were compliant with the WTO agreement on intellectual property - TRIPS. This move potentially threatens the dominant drug companies, as it allows countries to but cheaper generic drugs. But the US, which wants to see the TRIPS agreement tightened up, retains the right to challenge whether measures taken are in fact TRIPS compliant.

The Suva Convention - implications for Southern Africa

Concluding a process that began in 1996 when the EU published their Green Paper on future EU-ACP relations, on 3 February 2000, agreement was reached on a new relationship between the EU and 71 ACP countries, including all members of the Southern African Development Community (SADC). The agreement will be known as the Suva Convention after the city in Fiji, where it is due to be signed on 8 June.

The new Agreement, which will last 20 years and covers aid, trade and political co-operation, retains some of the hallmarks of previous Lome Agreements, such as partnership. In addition to this, civil society groups successfully lobbied to improve the Agreement's commitment to poverty focus, participatory approaches and to mainstreaming gender, environment and institutional capacity considerations.

On the controversial subject of trade there are mixed reactions. On the positive side, determined and skilful ACP negotiators, led by Anthony Hilton of Jamaica, managed to keep ACP options open, with alternatives to the EU's preferred Economic Co-operation Agreements (ECAs) or regional free trade areas, still on the table. There is a commitment to look at alternatives prior to the start of negotiations in 2002 and also to review progress of negotiations in 2006.

Timetable to a new EU-ACP trade regime

2000-2008 Preparatory period - current preferences maintained

2000 Begin to liberalise essentially all imports from all LDCs

Sept 2002 Formal negotiations towards economic partnership agreements begin

2004 Assess situation of ACP non-LDCs not in a position to enter ECA's

2006 Assess progress in negotiations towards ECA's

2008 New trading arrangements to enter into force

2008-2020 Transitional liberalisation period

Meeting in Abuja, Nigeria in March, the EU-ACP Joint Assembly stressed that any review of progress in the talks must be based on an analysis of the proposal's impact on poverty eradication and sustainable development. The Assembly also commented that any future trading relationship should broaden ACP access to EU markets, especially in the areas where they are most competitive.

In the wake of the Seattle debacle, ACP countries also managed to secure a longer transition period to the new arrangements than the EU had initially been prepared to consider. But many are still concerned that the time scales are too tight to allow ACP countries the necessary time to adjust their economies, build both economic and negotiating capacity and fully explore other options. The agreement also retains a commitment to compliance with WTO rules, without exploring the option that the EU and ACP between them have enough political clout to alter those rules.

The key beef and veal, and sugar protocols, which are of enormous economic importance to Southern Africa, will be maintained, although there is provision to review them in the light of whatever new trade arrangements are agreed on. The SYSMIN and STABEX instruments, which were designed to provide support for countries affected by fluctuations in commodity prices, will be absorbed into balance of payments support under national aid programming.

Over the next two years, groups within the ACP, including SADC, will be investigating the pros and cons of an Economic Co-operation Agreement for their area and assessing on what terms it would be beneficial.

According to a recent study by Gottfried Wellmer (see below), the disadvantages of a move towards an Economic Co-operation Agreement far outweigh the advantages for the SADC region. The impacts would include loss of customs revenue for SADC countries, this is estimated to be as much as 30% of total customs revenue for Tanzania, 23 per cent for Mozambique and 70 per cent for Seychelles. In terms of industrial development, SADC countries will be threatened by cheaper imports from the EU and loss of the EU market through competition with other trading partners. In addition there are serious concerns that such an arrangement with the EU would undermine SADC's own moves, now behind schedule, to establish a regional free trade area.

Many will also be looking to the lessons of the difficult and protracted EU-South Africa negotiations. After the EU refused South Africa full membership of the Lome Convention, South Africa agreed to a bilateral arrangement with the EU on assurances that this would be asymmetrical and would allow South Africa to protect its industries as its struggled to overcome the legacies of apartheid inefficiency. But throughout the talks, which lasted five years, South Africa was faced with considerable European protectionism, including the initial exclusion of 40 per cent of South Africa's farm goods from better trade access.

As Member of the European Parliament and rapporteur on the negotiations Glenys Kinnock warns, "EU Member States' should be wary of allowing national interests to supersede the development needs of developing countries and the EU's commitment to development co-operation."

New Trade Research

New research: SADC - EU trade relations

World House, Bielefeld and Coordination Southern Africa (KOSA) of Germany recently published Gottfried Wellmer's study, "SADC Between Regional Integration and Reciprocal Free Trade with the EU: A Study on Future Trade Relations between the EU and SADC States." This can be ordered direct from the publishers for DM12.00 plus postage.

For more details contact: World House Bielefeld/KOSA August Bebel Street 62 D-33602 Bielefeld Germany Tel: +49 521 62802 Fax: +49 521 63789 E-mail: Web:

Launch of new Trade Research Centre

In March the 'Trade and Development Studies Centre Trust' (TRADES CENTRE) opened in Harare. Formerly known as the Lome Trade Research Unit and headed up by Dr. Moses Tekere, the centre aims to provide policy-relevant research and analysis particularly focusing on the relationship between trade and development in the context of WTO, post-Lome IV ACP-EU co-operation and EU-SADC co-operation.

The centre will provide Southern Africa and other developing counties with technical support to back up their position in trade negotiations.

For more information contact: Dr Moses Tekere TRADES CENTRE Tel: + 263 4 740259 Fax: +263 4 702322 E-mail:

News Series of trade briefings

Chris Stevens of the Institute for Development Studies in the UK has produced a series of 10 very useful background briefings on WTO- related issues, including agriculture, regional trade and intellectual property rights. Although put together before Seattle they are highly relevant and can be found at the IDS web site.

Institute of Development Studies University of Sussex Brighton BN1 9RE UK Tel: +44 (0)1273 606261 Fax: +44 (0)1273 691 647

Useful Web Sites

Official SADC site

ACP Secretariat

Organization of African Unity

ACP-EU Joint Assembly

Africa Policy Information Centre (US)

Southern African Research and Documentation Centre (SARDC)

Alternative Information and Development Centre (AIDC)




World Bank


European Commission Trade

European Commission Development


Development Bank of Southern Africa


Message-Id: <> From: "APIC" <> Date: Fri, 2 Jun 2000 12:12:41 -0500 Subject: Africa: Trade, Europe

Editor: Ali B. Ali-Dinar

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