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EU/1 – Trade is not aid

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At the end of January, Karel De Gucht, EU Trade Commissioner, announced a new initiative to boost trade development and growth in the developing countries urging countries to finalize trade talks by end 2013. In Karel De Gucht’s view the negotiations for Economic Partnership Agreements (EPAs) which aim at introducing gradually free trade between the European Union and the 79 countries of Africa, the Caribbean and the Pacific have been lasting for too long. So far, only the Caribbean countries signed such deal in 2008. 

eu12In an interview with SouthWorld, the EU trade commissioner deplores that by contrast, in his opinion, Africans do not understand well what the stakes are. “We devoted a lot of time to explain what the agreements are about and to what extent they could bring positive gains to our African partners” explains Karel De Gucht. But he is optimistic for the future. Despite these problems, he notices now some flexibility and thinks that some of these agreements could be signed this year.
There are two main reasons for his optimism. One is that inside Africa, a major regional integration attempt is taking place to form one single region from Cape Town to Cairo. Last June, the heads of states of the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC), met in Sandton (South Africa) and launched negotiations for the establishment of an integrated market of 26 countries. In De Gucht’s opinion, this will help to speed up EPA negotiations, since this integration process will help harmonize positions in their talks with the EU. In addition, EPAs would help to reduce the gap and create a more homogeneous entity between the current trade status of the Least Developed Countries (LDCs) which benefit from the “everything but arms” initiative and the status of middle income countries (MICs).
Yet, some ACP countries are not too happy about the deadline for the conclusion of the EPA talks set by the Commissioner for the next 1 January 2014, which they consider as an ultimatum. “One should not forget that we are negotiating for quite some time. We agreed on market access regulation as an intermediary solution during the talks before the ratification of the EPAs. But some countries did not even embark on this process while others did. And that has created an disparity that cannot last forever. At some point, one has to put an end to it” retorts Karel De Gucht.
eu13Accordingly, some countries such as Cameroon and Ivory Coast signed interim EPAs but did not continue to negotiate. Some countries, like Nigeria or Angola, did not sign any agreement. In the Commissioner’s opinion, this is not acceptable: “And that is why a deadline is needed”. The situation will differ for those countries who don’t strike a deal with the EU by this time. If they are LDCs, they will continue to benefit from the “everything but arms” regime but if they belong to the MIC they will see a difference of treatment.
Now, the EU’s rhetoric is not just about stick but also carrots. At the end of January, the Commissioner launched an initiative for trade, development and growth. Accordingly, the European Commission will be assessing in depth the reasons why some initiatives in the past were not successful. For instance, in 2009, the EU invested almost €11 billion in aid for trade in the developing countries but the effect on trade flows could not be seen, although 70% of EU agricultural imports actually originate from developing countries, which shows that the EU market is not closed to exports. Rwanda’s 60,000 coffee and tea farmers were among the beneficiaries. They received funding to create new washing stations, to rehabilitate existing storage systems and to purchase pesticides to protect the crops.
Now, in order to improve access to the EU market, the Commission plans to target more those countries which need more aid and those sectors which can generate trade. “We should not only look at tariffs because in most cases they do not even exist, owing to the EBA regime from which they benefit, but we could focus much more on the trade environment. How can we get rid of the red tape for instance? How to simplify procedures”, explains Karel De Gucht.
Then, a lot can be done as well to help African exporters to meet EU’s sanitary and packaging standards which are sine qua non conditions to access the EU market. The EU can also help to increase support to the infrastructures (telecommunications, transport, energy) which lack in many cases and also in identifying the products which are the most likely to find a market.
Then there is also the need to improve governance levels. In order to score successes, “we need to care not only about the products but also about the environment in which they are created” , says the EU Commissioner.
In his view, there is no particular need to create new instruments but certainly to find new ways to use the existing ones. There is room for improving their efficiency; bearing in mind that trade is a very important vector of development as showed by China, which managed to pull out hundreds of millions of people out of poverty, thanks to trade and to the openness of the world markets.
The EU Commission is also offering a full package to promote trade for small operators in developing countries. It includes the extension of practical information on trade policies and market information and the facilitation of the use of intellectual property tools to helm them maximise the value of their goods through developing product identity and quality, using trade marks, geographical indications and designs. The Trade Commissioner is also willing to facilitate access to finance for small exporters, to extend the simplification of procedure for obtaining proof of origin. The EU is also seeking to boost foreign direct investments by including provisions in the trade agreements that grant investors greater legal security regard market access to Europe.

François Misser

See a critical view of De Gucht’ opinions, here.

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