Free trade and development: a “cheat”

The Economic Partnership Agreements between the EU and ACP countries (Africa, Caribbean and Pacific) are an outright “cheat”. This is the verdict of Roberto Sensi, of the Campaign for the World Bank Reform, on the so-called EPAs (Economic Partnership Agreements), the agreements for the liberalisation of the market between these two areas of the world which are still on the negotiating table (signed in Cotonou, the capital city of Benin, on 23 June 2000 and implemented two years later). Their original purpose was based on the assumption that free trade can enhance the development of these countries by alleviating poverty, as the preferential treatment system did not work, “but the only beneficiary is Europe”. The opinion of Sensi is confirmed by the fact that, by the deadline of 31 December 2007, only 35 countries out of 77 had signed the agreements (not ratified by any Parliament as yet, nor by the European one, and not even notified to the WTO, the World Trade Organization). So the game is not over yet.

Why are the EPAs a cheat for African, Caribbean and Pacific countries?
“For many reasons. First, free trade and egalitarianism do not correspond to greater development due to the high social and environmental costs that it brings with it. Second, the EPAs did not abolish tariffs on processed products: they are 9% for cocoa mass, but they rise to 30% for chocolate, so it is impossible for ACP countries to start up the industrialization process and the European Union will keep preferring to buy raw materials only. In countries where agricultural subsidies are non-existent and where there are no economic policy tools except tariffs, the process of development shall always be held a prisoner by international politics. It is not access to the European market that helps Africa, but, rather, the possibility to safeguard some sectors, to strengthen the domestic markets and develop the regional ones. A development model that is based on exports is not sustainable for ACP countries”.

Why do the EPA negotiations include the liberalisation of services and investments, two aspects that were excluded from the principle of reciprocity imposed by the WTO on goods only?
“Because investments and services are a much more attractive market niche for the European Union, as is demonstrated by the fact that the mining industry is an exclusive prerogative of large western multinationals. And that’s not all: the negotiations include the strengthening of intellectual property rights, the standardization of health and phytosanitary certification systems as well as environmental rules, labour and consumer protection, definition of new rules on public contracts. How can ACP countries stand up to competition and export something other than raw materials, agricultural products or natural resources? Economic agreements between equals are not the case here”.

How are Economic Partnership Agreements funded?
“Its is the European Development Fund that covers the implementation costs of the EPAs for Africa, Caribbean and Pacific countries. Trade aid is scarce and highly debatable, at least in the way it has been defined within the OECD and the WTO, i.e. subject to processes of free trade opening. This makes ACP countries extremely vulnerable as was shown by an exchange of messages between the Directorate General for Development and the ACP countries that participate in the negotiation round on the EPAs. In a letter that was sent on 30th July 2007 to the Trade Ministers of the Pacific region and made public by Oxfam New Zealand it was stated that the regional action plan of the European Development Fund would depend on the outcome of the negotiations. It went on to say that if the agreements were not concluded successfully, the amount of 95 million euros allocated for the regional programmes would be cut by 45% and even more if the agreements did not include the liberalisation of investments and services. The message is clear: if you want the money, you must sign the EPAs”.

The most favoured nation principle contained in the EPAs states that a country cannot grant a better commercial treatment to another country without extending such benefit to all member states. Why?
“Because the European Union fears the Chinese invasion. In a few years time China has become one of the major African partners. The trade balance between the dark continent and the Asian giant has risen from 11 billion dollars in 2000 to 56 billion in 2006. The key sector as far as development is concerned is mineral extraction. An important means to increase Chinese presence in Africa is also aid: the Asian colossus plans to increase its development fund by 33%. China has also opted for a quick cancellation of the African countries’ debt. Moreover, in its bilateral agreements China does not impose the condition of reciprocity on the free trade opening process like the European Union. Last but not least, the Beijing regime has not a colonial past to ask forgiveness for, it does not pay much attention to human rights violations and a state’s democraticity does non constitute a prejudicial factor in trade negotiations ”.