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Brussels rejects moves to link trade with aid

Financial Times | November 28 2006

Brussels rejects moves to link trade with aid

By Andrew Bounds in Brussels

Despite public rhetoric that new trade agreements with some of the world’s poorest countries are a development tool, in private the European Union is insisting on excluding aid from the negotiations.

Internal documents seen by the Financial Times confirm that the European Commission has rejected attempts to link the two in the so-called economic partnership agreements with 70-plus mostly former colonies.

A leaked letter from Stefano Manservisi, head of the development directorate, and Karl Falkenburg, deputy head of trade, to Fijian trade minister Kaliopate Tavole reveals Brussels’ tough negotiating stance.

"In your draft EPA submission, detailed development co-operation provisions form an integral part of the text," the Commission officials write. "As you know, this is not acceptable to us."

They call for aid and EPAs to be "mutually reinforcing" but kept separate. The ACP - African, Caribbean and Pacific - states want aid to help them compensate for the shock of opening their goods and services markets to Europe under the EPAs. Their preferential trade access to the EU was struck down at the World Trade Organisation in 2002 and a waiver expires at the end of 2007, by which time the EPAs should be signed.

Brussels argues that by creating regional trading blocs mirrored on the EU the countries would be better able to cope with globalisation.

"There may be costs associated with an EPA. But we should not forget about the benefits," the Commission pair write. They also press for issues such as government procurement, competition and intellectual property rights, which were removed from multilateral world trade talks as too controversial, to be included.

Another document shows Brussels rejected a review clause proposed by African states to allow them to freeze liberalisation after 10 years if EU promises on aid were not met. "While we are not against well-defined review clauses, we think that they should be limited in their scope and mainly aimed at accelerating or extending liberalisation," Commission negotiators said, adding that the market opening should not be linked to "undefined development targets. It may void the agreement of its sense."

But Mauritius, one of the east and southern African (ESA) states demanding the clause, said they would not back down. "We will insist in order to ascertain whether the EU is honouring its commitments on development, promoting regional integration and providing timely and adequate resources," said Sutiawan Gunessee, ambassador to the EU.

"This will also test the trust and confidence of the EU in terms of building market first for the ESA region before opening it."

"With such a clause you are trying to micromanage trade rather than rules in trade," said Peter Thompson, who heads the EPA negotiations for the Commission yesterday.

 source: FT