African News Dimension Network, South Africa
Aid issue hinders progress in Africa, EU trade talks
Monday, 13 February 2006
By ANDnetwork .com
According to officials, dispute over whether Europe should provide aid to help African states prepare for increased competition ahead of a new trade regime, is hindering progress in talks between the two blocs.
A dispute over whether Europe should provide aid to help African states prepare for increased competition ahead of a new trade regime is hindering progress in talks between the two blocs, officials said yesterday.
The European Union is negotiating with the African, Caribbean and Pacific (ACP) economic alliance to bring new trade agreements into force by January 1, 2008.
But critics say the Economic Partnership Agreements (EPAs), intended to replace the 2000 Cotonou Agreement that allows for preferential trade to the EU, make unfair trade demands and will hurt poor countries by eroding fiscal revenues.
The dispute over aid is expected to dominate talks between the EU and 15 African countries which are due to start today under the chairmanship of EU Trade Commissioner Peter Mandelson.
"Progress has been modest and we have basically had a two year lapse and not much has happened mainly due to divergence over the issue of development which has impeded negotiations," said Narainduth Boodhoo, deputy director of Mauritius’ trade policy unit.
The EU is eastern and southern Africa’s largest trading partner. The value of total trade flows between the two blocs is 10-billion euros annually, with African exports dominated by diamonds, textiles, fish, tobacco and sugar.
African nations say potholed roads, patchy supplies of power and water, limited education and healthcare are all factors that reduce their ability to produce goods competitively.
They want EU funds for development if trade barriers are to be broken down.
But EU trade delegates insist the EPAs will themselves stimulate the funds required with increased inflows of foreign direct investments into the region as well as opening more markets for African products.
"On the EU side, it is being affirmed that market liberalisation will automatically lead to development. But can development automatically ensure in the absence of the capacity to produce?" said Madan Dulloo, Mauritius’ trade minister.
Although the African bloc has not yet come up with a total figure on how much they need, Mauritius estimates it alone requires 500-million euros.
Trade negotiators are already expressing concern that the EPAs may not be ready in time for the deadline.
"Time is beginning to be short and we have about one year or so to negotiate all the text and it will take a few months to ratify it after that," Karl Falkenberg, head of the EU delegation, told Reuters.
The WTO, which wants an end to preferential trade, has provided a waiver for the Cotonou Agreement. But, officials say if a deal on EPAs is not struck by the set deadline, existing trade would break WTO rules and may be subject to challenge.