David and Goliath battle
MAUREEN PENJUELI (Thursday, September 11, 2008)
Pacific trade officials head to Brussels this week to hammer out the details of a new Economic Partnership Agreement with the European Union — amidst worldwide concern that the EU has failed to offer genuine development agreements to its ex-colonies in Africa, the Caribbean and the Pacific (the ACP).
The deals, which were supposed to see Goliath (the EU) develop mutually beneficially trade relationships with David (ACP countries), have faced criticisms from dozens of NGOs, churches, trade unions and leading academics throughout the three regions.
Representatives of civil society from more than 70 of the world’s developing countries are beginning to stand up to the EU denouncing the EU’s proposed Economic Partnership Agreements as a new form of ’free trade colonialism’ to be resisted.
Even within the European Union, leading politicians and officials are beginning to wonder what has gone wrong.
An official report commissioned by the French President (the current holder of the EU’s rotating presidency) is a devastating indictment of the "tactics — pressure, paternalism and threats — employed by the Commission to impose its point of view and interests" in the EPA negotiations.
Christiane Taubira, the member of the French national assembly who authored the report at the request of her country’s government, has recommended that the mandate given to the European Commission to negotiate EPAs with ACP countries should be amended. Her report advocates stripping some of the EC’s mandate to negotiate trade agreements, arguing that the Commission is pushing ACP countries to open their markets beyond what is required even at the World Trade Organisation.
Even some of the supporters of the EPA have admitted that ACP countries had ’a gun at their heads’ when they were offered these new free trade deals — with the EC effectively threatening to have aid cut to ACP countries and increase taxes on their exports to Europe if they did not sign, thereby threatening the livelihoods of people in some of the poorest countries in the world.
In the Pacific, Papua New Guinea and Fiji both initialled interim agreements on goods-trade, under threat of dramatic increases in tariffs on tuna and sugar exports to the EU and the potential loss of jobs for thousands.
At the heart of this David and Goliath battle, the real issue that has stirred the anger and wrath of developing countries, is a blatant and aggressive pursuit of the EC’s Global Europe trade strategy, which seeks to open developing country markets to European goods and services and ensure a supply of raw materials for European companies. The EC’s ’Global Europe’ trade strategy places the interests of European corporations and capital ahead of the development interest of developing countries.
The EC has denied this to be the case, arguing that the deals would provide ’tools for development’, but unfortunately for the Commission the details of the texts and the tactics employed to pursue them tell a different story.
Despite enormous pressure, more than half of the ACP countries refused to initial a deal with the EU by the ’deadline’ of December 2007 and of those that initialled an interim-EPA under pressure, many are calling for renegotiations of contentious clauses and not to sign the deal in its current form. The Caribbean, which is the only region to have initialled a comprehensive EPA, has postponed the signing of comprehensive agreement several times already due to increasing pressure within the region for countries not to sign the deal as it stands.
Here in the Pacific, an exchange of letters has taken place between the Pacific’s chief trade negotiator Hans Joachim Keil and the EC’s Trade Commissioner Peter Mandelson in recent months.
Keil explained to Mandelson that "the EC’s proposed draft is unacceptable at this time as the implementation of the obligations would require significant financial, technical and human resources beyond the current capabilities of the Pacific ACP countries". Keil expressed concern especially that the EC had failed to offer new access to the EU for Pacific workers, saying "our proposals have not been accepted by the EC, which has not been in a position to demonstrate the flexibility needed to enable PACPs to be genuine service providers in the EU market in the near future".
This should be an important signal to the European Commission as it prepares for the next round of negotiations with the Pacific (September 15/16) — that what it put on the table falls well short of addressing the development aims of the Pacific, and in some areas undermines them.
With the Economic Partnership Agreement negotiations effectively in crisis, will Europe heed these signals and reign in the Commission?
Already there are signs that the Commission is preparing a last-ditch assault to push its deals through - with threats that if the Caribbean walks away from the ’comprehensive EPA’ it initialled in 2007 the region would miss out on EU development funding.
The real test of whether the EC can change its approach to negotiations with the Pacific will be the negotiations next week in Brussels. And the stakes are very high. Pacific trade ministers have already stood up to the EU to explain that the Pacific is not in a position to negotiate on issues like services, investment, intellectual property rights and government procurement.
This was undoubtedly the right thing to do. New commitments in these areas could lead to a range of problems — including a reduced ability to govern foreign investment in the public interest, an undermining of universal access to services, and reduced access to medicines. Implementing these commitments would also be very costly for Pacific countries.
This leaves some key issues remaining on the table. The EU has always said an EPA with the Pacific must include a reciprocal free trade deal on trade in goods to comply with the World Trade Organisation. Other issues include negotiations for a development agreement on fisheries, and agreements on environment and labour standards.
Some of the contentious issues that will be negotiated next week include:
- Optional protocol on goods: The Pacific will propose that a deal on goods trade between the Pacific and the EU should be included in the EPA as an optional protocol. This would allow Pacific states to sign on if they felt it was in their interests, whilst other states could trade under existing arrangements. This would mean, for example, that least developed countries in the region could continue to trade under the EU’s ’Everything But Arms’ preferences system. If the EC is committed to development in the region, the EC should allow this flexibility to be built into any EPA with the Pacific.
- Infant industry safeguards: Infant industry safeguards are supposed to allow countries to protect selected industries for a time, to allow them to develop to a point where they can be more competitive in the open market. The interim EPAs initialled by PNG and Fiji contain rules that make it extremely difficult for Pacific governments to actually use any infant industry policy, and what safeguards there are have to be phased out within 20 years. The EU’s proposals actually prevent Pacific governments from using tariffs to nurture new industries, making it difficult to develop value-adding processes to extract value from Pacific natural resources. The EC should accept Pacific proposals for genuine infant industry safeguards to be included in any EPA with the Pacific.
- Export Restrictions: The EC is insisting that the EPAs contain a provision to eliminate all export restrictions. This would mean that Pacific Island Countries would not be able to limit or tax exports of their natural resources to save them for local value-added processing. In Fiji, this would have a direct impact on the current policy of restrictions on export of raw logs — to help foster a local timber processing industry. In PNG, export taxes on logs are worth millions of kina each year to the government. Those export taxes are also a way of reducing unsustainable logging and monitoring the number of logs leaving the country. The EC should remove the provisions banning export restrictions from any EPA with the Pacific.
- Most Favoured Nation: The MFN clause in the initialled Interim EPA means that trade concessions offered by the Pacific to other countries must automatically be offered to the EU as well. This means the EU will get a ’free ride’, potentially gaining new access for its exports, investments and services companies without having to offer anything in return. The EC should remove completely the MFN provisions within any EPA with the Pacific.
European nations used a mixture of tariffs, quotas and local-subsidies to develop their industries for centuries, before they shifted to supporting supposedly ’free markets’ (though the EU continues to maintain some of the world’s highest subsidies for its agriculture sector). Now, the EU is pushing developing countries to abandon these very same policies - and leave themselves instead at the mercy of the global market, at a time when prices of oil and food are skyrocketing and global markets face massive fluctuations.
We can be assured that our trade officials (and perhaps even our ministers who will be in Europe for a different meeting) will be put under political pressure to sign an EPA of the EU’s design.
During these last phases of negotiations, we call on our Ministers and trade officials to be resolute in defending the Pacific’s development aspirations. Our Ministers must have the political will and courage to walk away from a bad deal with the EU.
The strength in facing the mighty Goliath is in our numbers. Trade officials and Ministers from around the Pacific need to stand strong in regional solidarity — and if need be, they should stand strong with the governments of nations across Africa and the Caribbean and tear the whole EPA up and start again.
* Maureen Penjueli is Coordinator of the Pacific Network on Globalisation (PANG).