New free trade agreements are being negotiated right now between the European Union (EU) and 77 former colonies. They are a real threat to the future of millions of people across the world, yet there is almost no effective public debate about the process.
Economic Partnership Agreements, or EPAs, are under discussion between the EU and countries in Africa, the Caribbean and the Pacific (ACP). The ACP group includes some of the poorest countries in the world, where more than half the total population lives in poverty.
Under previous trade agreements, ACP countries had special access to sell certain products in European markets. The EU now wants to change this trade relationship and has proposed EPAs instead. We at Traidcraft are deeply concerned about what are essentially free trade agreements, for a number of reasons.
Firstly, reciprocal trade liberalisation will not help poor countries develop. EPAs are agreements between very unequal partners.
In return for the access that poorer countries have had to European markets for 30 years, the EU is now demanding that these countries open their markets in return. This could mean European companies having almost complete duty free access to poor countries’ economies within a very short time period.
It may sound reasonable, but European companies and producers have all the advantages of size, technology and developed economies. European agricultural producers also benefit from subsidies. If the ACP countries open their markets to European goods, their own producers will not be able to compete with the imports from Europe. It is likely that many people will lose their livelihoods.
Under the EU plan, the scope and pace of this liberalisation is set by arbitrary time periods rather than by poor countries’ individual development, financial and trade needs.
The EU’s negotiating mandate for EPAs makes it clear that it sees reciprocal trade liberalisation as fundamental to the agreements. We believe that reciprocity is not an appropriate basis for trade between countries and regions at such different levels of development.
Secondly, the EU is using these trade negotiations to reopen discussions about issues that the ACP countries have already rejected at the World Trade Organisation (WTO).
These include investment, competition policy and public procurement—the so called “Singapore” issues. The poorer countries say that having agreements on these issues will restrict their choice of policies and will not bring any benefit to their economies.
We believe that given the clear rejection of negotiations on these areas, the EU should drop them from its negotiating mandate.
Thirdly, the negotiating process itself is seriously flawed. Many ACP countries have weak trade negotiating capacities and are heavily dependent on EU aid. The European Commission has taken advantage of its political and economic power to dictate the pace and terms of EPA negotiations to ACP countries.
We can draw lessons from what has happened in the past when poor countries have been forced to open their markets before they are ready.
Past evidence includes the impact of Structural Adjustment Programmes in Africa and of the North American Free Trade Agreement on Mexican agriculture.
We can expect EPAs to lead to significant losses in government revenues and cause deindustrialisation in ACP countries.
Even the European Commission’s own internal report questions EPAs. An impact assessment in West Africa by international accountants Price Waterhouse Coopers concluded that EPAs could undermine efforts to develop a modern industrial base and reduce exports of traditional crops. It added this may lead to internal conflict and struggles over resources.
The EU says that arrangements under the old trade agreements are not compatible with WTO rules and therefore need to be renegotiated. This is not necessarily true, but even if it were, it does not follow that EPAs are the only WTO compatible solution.
The EU also claims that countries do not have to sign up to EPAs if they don’t want to. But so far the ACP countries have not been offered any alternatives that would ensure they will not be worse off if they decide not to sign up.
Despite a clear commitment to look at alternatives to EPAs, the British government has yet to deliver. As part of the trade justice movement, we believe Britain and the EU should work with the ACP to investigate all possible alternatives.