SP development spokesman addresses British Parliament

15 October 2008

SP development spokesman addresses British Parliament

SP Member of Parliament and development spokesman Ewout Irrgang today addressed the British Parliament on the subject of the free trade agreements between the European Union and former European colonies in Africa., the Caribbean and the Pacific – known as the ACP countries - the so-called Economic Partnership Agreements (EPAs).

Stop EPAs - demonstrators

The EPAs are free trade agreements currently being concluded with seventy-seven of the EU member states' colonies in the ACP. In these agreements, most ACP countries are being asked to open their markets at a level exceeding 90% - and within 12 to 15 years. Irrgang finds this completely undesirable: "By forcing countries to open their markets so quickly, you are exposing them to being buried under cheap and often subsidised western products. This will prevent them from ever being able to build their own robust economies, with sufficient employment and food security.”

The EPAs must also, in the EU's view, include agreements on the liberalisation of investments, state tenders and public service provision. Again, Irrgang finds this undesirable. “It's ridiculous to ask these countries to liberalise their public services. This won't lead to better and more accessible provision, only to more profits for European corporations at the expense of people who need better services most of all.” Irrgang adds that “The EPAs for me stand as a symbol of a contradictory politics which gives with one hand in the form of development aid and takes with the other by inflicting unfair trade on developing countries. They would be better called 'European Poverty Agreements'”

In the past the SP has sought contact with Member of Parliament from other EU member states in order to take a joint stand against the EPAs. It was in reaction to this that the British Parliament invited him.

This is the speech that Ewout Irrgang gave:
Ewout IrrgangIt is an honour for me to be invited here and to be able to speak today about the so-called Economic Partnership Agreements (EPAs).  I am known in the Netherlands, in the Dutch Parliament, as a severe critic of the EPAs. The EPAs, for me, are as a symbol of an incoherent policy which gives with one hand – development aid – and takes away with the other – unfair trade. My opinion is that European Poverty Agreements would be a better name for them. As it isn't clear to me to what extent you have been introduced into the world of the EPAS, I want to begin by briefly sketching out their history. 

The European Union has, since September 2002, been conducting negotiations on the EPAs with 77  former European colonies in Africa, the Caribbean and the Pacific – the ACP countries. These negotiations run parallel with the multilateral trade negotiations in the World Trade Organisation (WTO), but form part of the European agenda. The 'old' trade agreements, which gave the ACP countries unilateral preferential access to the European market, expired on 31st December 2007. According to the Cotonou Treaty, of which these agreements were part, they must be replaced by  EPAs, defined by the Cotonou Treaty as mutual free trade agreements conforming to the WTO, which means that they must not be in conflict with the WTO's rules - and not that they must also actually coincide with the requests or offers presented within the context of the WTO, in the framework of the Doha round. In the context of the WTO it was, in fact, decreed that the EU, as a result of its special arrangements, discriminates against developing countries which are not part of the ACP group.

In the Cotonou Treaty it says, at the same time, that for countries which do not estimate that they are in a position to sign an EPA, alternatives must be found. No ACP country must be worse off than it was before, according to Cotonou. Asymmetric treaties must be considered, and these must, in addition, further regional integration.

The least developed countries within the ACP occupy an exceptional positional in the group as a  whole. Because of their status they can take advantage of what is known as the 'Everything But Arms' agreement, under which they can, even without signing an EPA, nevertheless maintain the same access to the European market. For those countries which do not qualify as 'least developed', pressure to sign an EPA was much greater; if they did not sign one, they would have to fall back on the much less favourable general preference system. For this group of countries, after 31st  December, the walls would to a large extent rise up around Europe.

In December 2007 an interim EPA was signed with 35 ACP countries, the goal of which was to ensure that the negotiations would be wound up definitively in 2008. Although asymmetry had been the original starting point, in most of the interim EPAs it was demanded of the ACP countries that they open 90% of their markets, an opening which must, moreover, occur within a period of from 12 to 15 years.  Via the EPAs, investments, competition policy, state tenders, public services, trade facilitation and information protection must be made 'traceable. The interim EPAs thus go much further than what was proposed within the context of the WTO. The overwhelming emphasis on liberalisation in the EPA negotiations proves for me that these negotiations turn in essence upon the extension of European access to ACP markets, rather than precedence going to the development of the ACP countries. The fact that a bilateral interim EPA has been signed with only 35 countries, rather than with entire regions, confirms this: there can be no question, after all, of regional integration in this manner. In the last few months there has been a fairly inconspicuous shift in the rhetoric of the European Commission: where earlier there was talk of promoting regional integration, what we now hear discussed is the need for trade agreements which do not hinder regional integration.

One might ask oneself why the ACP countries agreed to this. If it didn't suit them, couldn't they have said so? In theory perhaps, but practice shows that what is at work here is an extremely unequal basis of negotiation. The GDP of the biggest group of ACP countries, West Africa, remains at a level 80 times smaller than that of the 25 EU countries, excluding in other words the two most recent members, which stands at 13,300 billion dollars. This is to say nothing of the smallest ACP group, the Pacific, which has a combined income of 9 billion dollars. Among the ACP countries are found 39 of the 50 least developed countries in the world. Many ACP countries are dependent on development aid  from the EU and are threatened, as I said earlier, with being forced to fall back on the less favourable Generalised System of Preferences (GSP).  This makes it difficult for them to take a tough stance in negotiations. In the runup to 31st  December the European Commission, moreover, threatened on a number of occasions, in a way which amounted to blackmail, to raise import tariffs on goods from Africa and elsewhere, should no agreement be signed by this deadline.

SP actions
In the Dutch Parliament I have suggested that these free trade agreements resemble a disguised recolonisation of developing countries. They are devastating for these countries' economies, for employment, food security and government revenues in these regions. According to the NGO Christian Aid, liberalisation of the African economies to the south of the Sahara has already cost them around 272 billion dollars. With such a sum they would have been easily able to clear their debts. According to the World Bank the EPA treaties will cost between 10 and 20 percent of these countries' government income, a figure confirmed by research from the European Centre for Development Policy.
If the ACP countries decide to bring their agricultural sectors below the 10% level of market protection, little protection will be possible in order to build up their own industry, as many Asian countries did. They will also miss out on considerable state revenues as a result of the scrapping of import tariffs. Should they bring their industrial sector as far as possible under the level of 10% market protection, the agricultural sector will be handed over to the wild west of the free market. In practice this means that they will be flooded out with subsidised agricultural products from the EU. With this, the EU is creating for itself a credibility problem. It cannot, as it claims, lend all of its support to achieving the Millennium Development Goals and at the same time give support to unfair trade agreements. 

I have, because of this, argued strongly for alternative EPAs, which according to the Cotonou Agreement should be possible and must be offered to countries which do not feel themselves in a position to sign an EPA. Different ACP countries and regions have also on numerous occasions asked for such, as for example recently at the last ACP summit in Accra in September.
An alternative could be a GSP+, an extended Generalised System of Preferences.[i] A GSP+ would give developing countries preferential access to the European market  on condition that certain economic criteria and criteria relating to good governance are respected, and  27 international conventions signed and implemented (regarding, for example, human rights and labour rights, environmental protection, and drug control).   Access to the European market would be at a higher level under the GSP+ than under the 'ordinary' GSP. GSP+ provides almost the same level of access to the European market as did Cotonou (an average of almost 97%, depending on the nature of a country's exports). What is important is that the leading export sectors of the ACP countries, such as horticulture, fisheries and wood, would have tariff-free access to the EU market under GSP+. My preference would be for this, because it approaches the best of the 'old' system, especially[ regarding preferential access to Europe, without forcing developing countries to open their own markets. In short, the gain without the pain. It would take only one Council Regulation to bring GSP+ into effect for ACP countries (based on Article133 of the Treaty Establishing the European Community). It is therefore not a question of a lack of ability, but rather of a lack of will (on the part of the EU).

GSP+ is, on a number of points, certainly less favourable to a number of ACP countries than was the old system. It makes, for example, somewhat more exacting demands in relation to the rules of origin than did Cotonou. A solution must be found to this. It offers, also, no solution for bananas, rice and sugar, which is also unacceptable.[ii] An EPA could certainly offer a solution on these points for the countries involved, but the question is just how long the advantage would last. For sugar and rice the European market will be slowly opened further. EBA is still at the moment operating transitional periods applying to sugar and rice, but these expire in 2013 and 2010 respectively. For bananas the EU is continuing to negotiate with a number of exporting countries over free trade agreements. Ecuador, Colombia and Costa Rica will be especially keen to register gains on bananas, and preferably of course,  unlimited access. This would probably wipe out any advantage for the EPA countries. Even now, in the the EPAs themselves, preference erosion is at work, because as things stand all of the EPA countries have unlimited access for their bananas, with the result that Chiquita has already announced investments in a number of EPA countries, including Mozambique. Because of this the advantages enjoyed by the traditional ACP banana-producing countries – the Caribbean states, Cameroon, Ivory Coast and Ghana - are collapsing.   Countries which choose GSP+ would accept this loss and balance it off against gains on the other points. It's important to note that ACP countries must announce before 31st October whether they wish to make use of this.

I have also proposed in the Dutch Parliament making renegotiation possible on points which are controversial for ACP countries. This is a motion from the SP which was adopted by general vote of the whole parliament. My party believes that ACP countries must be able to renegotiate controversial points should they wish to. Such points might include, for example, the standstill clause, the definition of ‘substantially all trade’ and the transition periods, all of which were consequences of the time pressure with which these countries were confronted. This is possible, also, because the interim EPAs are not legally binding. They have not, in fact, been officially signed, but only initialled. Renegotiation is in my view a less favourable option than arguing for the GSP+, because it has already gone along in part with the liberalisation agenda. But it is better than nothing. In short, it's a sort of second best option.

I have, furthermore, argued for official and effective revision causes to be added to the EPAs. If  agreements should turn out to be bad for the development of the ACP countries then they should be able to revise the concluded EPA. Obviously this is also a second-best option, or even indeed a third-best, given that it would only come into play when the damage is already partly done. In the present interim EPAs there are revision clauses, it's true, but these are extremely specific and leave little space for truly effective revision. If we use the Cariforum EPA as an example, we can see that in Article 246 it states that revision may only be carried out when its goal is to broaden the scope of the EPA when, for example, Cotonou expires. There is nothing in it regarding revision clauses in the event of failure to achieve the Millennium Development Goals and/or because of reasons of development. My party is arguing therefore for development indicators, which have also been proposed by the ESA region. We want to see the establishment of a monitoring mechanism in order, if necessary, to change or undo agreements in the event of disappointing results.  

To summarise, my party's standpoint is that EU-ACP trade cooperation must be founded on an approach which

  • is based on a principle of non-reciprocity, as laid down in the GSP (Generalised System of Preferences) and special and differentiated treatment within the WTO
  • protects the national and regional markets of ACP producers
  • unconditionally excludes new trade-related questions and WTO-plus provisions
  • allows the ACP countries sufficient space to pursue their own development policies and supports them in this

Current debate
The negotiations over the EPAs are continuing still. It is also far from certain that they will be completed successfully in 2008, although the European Commission will of course make every effort to ensure this and has in its hands the power and means to do so. It is a fact, moreover, that falling back on the 'austere' GSP (which is to say, not the GSP+) hangs over those ACP countries not classed as 'least developed' like a dark cloud. Guyana provides a good example of this, and one of current relevance.

In a summit in Barbados on 10th September, the government leaders of the Cariforum countries could not agree on the EPA. Guyana and Haiti were not at that point willing to sign the agreement in its entirety, whereas the others were. On 15th October, today therefore, a decision would have to be taken on this. Haiti is the only least developed country and has thus nothing to lose. Guyana has, on the other hand, a great deal to lose (because of the danger of the GSP, and has particular problems with the 'new' subjects in the EPA. For these reasons they proposed that only an EPA on goods be signed. From a letter written by the President of Guyana, Bharrat Jagdeo aan Barosso, it emerges that Mandelson is not inclined to agree to this.

In Brussels preparations are being laid to remove Guyana, should she not indeed sign the agreement today, from the list of countries able to take advantage of 'relaxed' conditions of access to the EU. My party is of the opinion that (1) no country – including Guyana – should be removed from the list as long  as negotiations continue, and (2) that the negotiating position must remain that no country should be forced to sign parts of the EPA which it does not wish to sign (which conforms, also, to the conclusions of last May's General and External Affairs Council). I have called on the Dutch government to support this and I call on you to do the same with your own government. This blackmail must stop!

Lastly I want to draw your attention to September's Accra declaration which I mentioned earlier, in which it was announced that a number of prominent people from the ACP countries would  this month contact EU member states with a view to high level consultations over EPAs. Any form of dialogue between the two parties must in my opinion be promoted and I hope, therefore, that the British government, in common with the Dutch government, is prepared to participate in this.

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