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EU/2 – Corporate interests

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On 27 January the European commission released a statement entitled Trade, Growth and Development – Tailoring Trade and Investment Policy for Those Countries Most in Need. The policy reduces development goals to a narrow set of statistics, ignoring the needs of millions of poor people. Worse than that, and despite the failure of the banking system, and the global corporate tax heist, the policy continues to put corporate interests before development.

The statement’s title suggests the aim is to ensure trade and investment policy help to achieve development priorities in line with the EU commitment to policy coherent for development. However, there is little in the document to support this. Instead, it suggests that trade policy should “project EU values and interests”, and even that “effective development policy is essential in helping create better conditions for trade and investment in developing countries” – development at the service of trade, rather than trade as a tool for development.
The commission is basing its poverty analysis primarily on average income, which means that its policy is blind to the huge disparities within countries, and therefore to important development needs. Based on this flawed analysis, it is proposing to remove 79 out of 176 countries from trade preferences under its generalised system of preferences scheme – leaving, for example, Botswana and Namibia in the same trading position as Brazil. The timing of this is clearly intended to put pressure on countries to sign economic partnership agreements (EPAs).
eu22A narrow focus on a small number of countries will not be enough to attain the millennium development goals. The commission is attempting to reduce India’s trade preferences, yet the country has the largest number of poor people in the world, despite being classed as a lower middle-income country by the World Bank. Many LDCs are in regional groupings with countries that have a different classification; if the commission imposes different market access arrangements within the groupings, it will be much harder for regional markets to develop, further entrenching developing country dependency on markets that have become increasingly volatile.
What is particularly worrying about the statement is that “aid for trade”, a potentially useful tool for building developing country capacity to trade, is to be diverted to serve the interests of EU business.
The statement does nothing to address developing country concerns about the way the EU has handled negotiations to date, particularly for EPAs with African, Caribbean and Pacific (ACP) group countries. As reflected in Traidcraft’s 2007 report, EPAs: Building or Shattering African Regional Integration, the EU has ignored their proposals and used bullying tactics and artificial deadlines that cause tensions in regional blocs. Nor does the commission’s statement recognise the negative impacts that premature liberalisation, combined with a failure of developed countries to tackle their own trade-distorting practices, can have on developing countries. For example, the undermining of African cereal and dairy sectors through a combination of market opening (leaving them vulnerable to global price shocks) and continued subsidising of EU produce (which pushes down prices and contributes to EU overproduction).
In fact, instead of addressing these concerns, the EU blames the economic policies and “poor governance” of developing countries, citing in particular the “lack of stability” and “tax evasion” in those nations – fine words from the EU, that bastion of stable economies.
Most important, companies – including in the services industries like finance – that are seeking new markets in developing countries will continue to reap the benefits of trade without assuming any of the responsibilities. For example, if companies get their way on regulation of intellectual property rights in the proposed EU-India free trade agreement, India’s generic medicines industry will be hit, increasing exponentially the amount people in developing countries will have to pay for essential medicines for HIV and malaria.
eu25It is time the EU put development interests above those of big European corporations. This means listening to developing countries and offering greater flexibility in negotiations. A good start would be to offer, as an alternative to EPAs, the everything-but-arms scheme to non-LDCs in Africa that are in regional groupings where LDCs are in the majority – giving them straightforward access to EU markets and helping to support regional integration.
The EU should also stop using artificial deadlines to bully countries into signing deals that they do not think are in their interests – this means stepping back from the 2014 deadline for countries to begin implementing EPAs.
It also means a clear separation between corporate interests and development interests – it may be in the interests of the pharmaceutical industry to introduce stricter intellectual property rules, it is certainly not in the interests of poor people struggling to get access basic medicines. All these would be steps in the right direction towards a policy that was genuinely in tune with development goals.

Ruth Bergan

See the EU Trade Commissioner opinion here.

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