News and Analysis • Volume 11 • Number 3 • May 2007
Duty-free Access for ACP Countries?
On 4 April, the European Commission unveiled an offer to remove tariffs and quotas on all exports from the African, Caribbean, and Pacific (ACP) group of countries.
Since 1975, ACP nations have benefited from preferential access to EU markets. Maintaining the non-reciprocal preferences has required a succession of waivers from the WTO’s mostfavoured- nation treatment principle. In 2001, WTO Members agreed to extend the waiver (with certain conditionalities regarding the EU’s banana import regime) until 1 January 2008 – the self-imposed deadline for concluding negotiations on WTO-compatible Economic Partnership Agreements (EPAs) between the EU and six regional groupings of ACP countries under the Cotonou Agreement (see page 16).
The Commission’s new offer proposes to lift quotas and tariffs for ‘substantially all’ ACP products – with rice and sugar as the exceptions – immediately upon the signing of an EPA. Duties on sugar would be phased out through 2015, subject to special safeguard clauses. While the detailed terms for rice are not yet determined, the Commission stated that the transition period would be brief, with a duty-free import quota.
The proposal would offer all ACP nations, except South Africa, the same market access as that available to least-developed countries (LDCs) under the EU’s Everything but Arms (EBA) initiative. Brussels claims that its proposal would encourage ACP countries to build strong sub-regional markets, increase competitiveness and diversify, thus promoting their integration into the global economy.
Sceptics are concerned that the proposal might only be an attempt to step up the pace of the EPA negotiations, which for most regions are considerably behind schedule. Others fear that increased regional competition and integration among ACP countries might benefit the strongest economies among them, while leaving the rest in a worse economic position.
Critics also worry that the duty-free offer will allow the EU to gain liberalised access to ACP markets in the future, since the EPAs are to replace the EU’s increasingly contested unilateral preferences with WTO-compatible reciprocal free trade agreements. A surge of imports from the EU could raise unemployment and hold back industrial development, they say. The EU has refuted these allegations, arguing that EPA partners would only have to implement market- opening commitments over a long transition period, up to 25 years.
Aid is another sticking point in the negotiations. The EU has promised more than • 22 billion to ACP nations from 2008-13, but African countries say that without more support they will be unable to offset lost tariff revenue or develop their products to comply with EU standards.
Concern from Some Member Countries
Officials have reported that only Sweden and the UK are strongly in favour of the proposal. At a 16 April meeting of EU farm ministers, France read out a note asserting that the Commission’s offer to fully open EU markets to all products from ACP countries could threaten the balance of Europe’s sugar and banana markets, as well as undermine recent policy reforms. France also said that extending permanent duty- and quota-free access for bananas from all ACP countries could “weaken our negotiating positions in the WTO and in the proceedings currently being brought by Ecuador and Colombia” (Bridges Year 11 No.2 page 9).
While Germany, Austria, Spain, Ireland, Italy, Belgium, Portugal, Cyprus and Poland raised similar concerns, EU Agriculture Commissioner Mariann Fischer Boel argued that sufficient safeguards were in place to protect EU markets from import surges. She reminded the ministers that the EPA negotiations were “not a choice that the EU is pursuing to provide enhanced market access to the poorer countries in the ACP region. They are a necessity imposed by WTO rules and time is certainly not on our side as the waiver expires on December 31, 2007.”