World Affairs
How to cheat the poor
Published 11 October 2007
Observations on unfair trade
The increase in overseas aid announced in the Comprehensive Spending Review is welcome confirmation of the government's stated ambition to reduce poverty and suffering. Gordon Brown has already promised to halt the "global poverty emergency", while the International Development Secretary, Douglas Alexander, has called tackling global poverty "the greatest challenge of our generation" and his newly enlarged department is pledged to "fight poverty through trade".
And yet, despite the rhetoric, the UK, along with colleagues in the European Union, is about to do significant damage to the prospects of 76 African, Caribbean and Pacific (ACP) countries by imposing punitive free-trade agreements on them. The next three months will be decisive.
For many years, the EU has offered the former colonies of member states, many of them in Africa, enhanced access to European markets. Being able to sell their goods under preferential terms has helped some countries develop important sources of employment and economic growth. The arrangement is due to run out at the end of this year.
In 2000, the EU promised that when the preferential deal ended in 2008 it would negotiate new arrangements giving ACP countries similar levels of access. The EU has described the deals - known as Economic Partnership Agreements or EPAs - as development tools. In fact, they are free-trade agreements that could undermine development.
The EU is using the expiry of preferences as an opportunity to get better terms of trade for their own exports in exchange for allowing continued access to EU markets. For example, the EU wants ACP countries to lift 80 per cent of the tariffs they place on EU goods and to sign up to agreements covering intellectual property, investment and competition.
Such demands go way beyond what is being negotiated at the World Trade Organisation (WTO), and could devastate the poorest countries. Individual governments would lose revenue from trade taxes; competition from EU goods and produce could lead to a rise in unemployment in farming and industry; poor countries would find it harder to promote industrialisation and manage their economies in the future.
Small farmers fear unfair competition from Europe. Justus Lavi Mwololo, a smallholder farmer in Kenya, said: "We expect cheap chicken to come here, and cheap beef. Tomatoes and other vegetables will be affected, too. We expect European milk products to flood this area and, definitely, our dairy sector will have to close." African trade ministers say they are "profoundly disappointed".
Despite these pleas, the EU is persisting with the proposals and is increasingly insistent on the December deadline. The UK, despite its stated commitment to a development-friendly trade policy, has failed to challenge the aggressive liberalisation agenda with sufficient vigour.
In a recent statement, the trade and development minister Gareth Thomas suggested that goods-only agreements should be finalised by the end of the year. While ACP countries may welcome the delay on forcing agreements covering services, investment and competition, the insistence on any deadline at this stage is unhelpful.
Thomas has argued that the ACP would have a long time to remove tariffs, but this may only be true for a small number of products. Furthermore, ACP officials have said privately that in the negotiating room the promised flexibility is simply not there. Most of the regions covered by the new arrangements need more time to negotiate deals that could help them achieve sustainable growth.
Indeed, West Africa has refused to agree a goods-only EPA by December because it believes it should have more time. With the deadline looming, ACP countries need assurance now that exports will not be disrupted if they fail to sign EPAs. It is quite wrong that they should be pressured into signing deals that go far beyond WTO rules.
In his time as foreign secretary, Robin Cook insisted that ACP countries should be able to consider alternatives to free-trade agreements. This promise is recorded in the current European Commission negotiating mandate. By insisting on the deadline and rejecting alternatives that have been proposed, Britain is in danger of going back on its word.
The UK government must do more than promise flexibility. It has to stand up to the EU, which, despite reassuring rhetoric, is still pushing anti-development proposals. The UK should publicly back the ACP in its requests for more time to negotiate, and insist on a guarantee from the EU that ACP exports will not face higher tariffs in January 2008 if EPAs are not finalised.
Britain must also help persuade other EU member states of the unfairness of the new deals, at least in their current form. Any less would be disappointing in the light of promises to put trade at the service of development.
Phil Bloomer is director of Oxfam campaigns and policy
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