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Africa: Trade Updates
Africa: Trade Updates
Date distributed (ymd): 000416
Document reposted by APIC
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+
Summary Contents:
This posting contains several documents relating to economic
relations between Africa and Europe, including a summary of
results from the Africa-EU summit in Cairo, a description of
the new Lome agreement slated for adoption this year, and an
analysis of the EU-South Africa trade agreement.
A posting also being sent out today contains several
statements on more general issues of economic globalization.
+++++++++++++++++end profile++++++++++++++++++++++++++++++
BRIDGES Weekly Trade News Digest -
Vol. 4, Number 14
11 April, 2000
BRIDGES Weekly Trade News Digest is published by the
International Centre for Trade and Sustainable Development
(ICTSD) with support from the Institute for Agriculture and
Trade Policy (IATP). ICTSD is an independent, not-for-profit
organisation based at: 13, ch des Anemones, 1219 Geneva,
Switzerland. Tel: (41-22) 917-8492; fax: (41-22) 917-8093.
Web: http://www.ictsd.org,
http://www.iatp.org
EU-AFRICA SUMMIT: PLEDGES OF PARTNERSHIP, DEBT RELIEF
Leaders and ministers from EU and African countries met from
3-4 April in Cairo, Egypt for the first EU-Africa summit
addressing political and economic issues. The summit yielded
the Declaration of Cairo and a joint EU-Africa Cairo Plan of
Action (CPA), both addressing the issues of trade, debt,
political issues, peace building and conflict prevention, and
development.
Egyptian President Hosni Mubarak said that the aim of African
leaders at the summit was "not to secure more aid but rather
to develop mutual partnership and co-operation programmes."
Observers noted that with respect to EU-African trade, African
exporters' share of the EU market has shrunk from 6.7 percent
to 3 percent over the last 25 years. EU Trade Commissioner
Pascal Lamy told the summit that a new model of EU-Africa
engagement was needed to bolster Africa's export growth. "The
old emphasis on trade concessions hasn't worked. We need to
seize on the question of Africa's capacity to meet new
challenges of logistics, food standards and so on."
The Cairo Plan of Action calls for measures aimed at better
integrating Africa into the world economy. According to the
CPA, Ministers agreed to deepen "the link between trade and
development in the multilateral trading system, in order to
ensure that the benefits of further trade liberalisation and
the strengthening of multilateral rules contribute to poverty
reduction and sustainable development. We shall pay particular
attention to this concern in the future WTO Ministerial
Conferences and will cooperate in ensuring the further
development of Africa's economic and industrial potential."
... the EU pledged to support African integration via
technical assistance and capacity building and to address
implementation issues faced by African countries with regard
to WTO agreements. The EU proposals offered no specificity
regarding monetary or deadline commitments on the part of the
EU. On the topic of market access for the least developed
countries, the EU pledged to "launch a process in 2000, which
by 2005, duty free market access for essentially all products
from Least Developed Countries (LDCs) will be granted and the
rules of origin and cumulation provisions that apply to their
exports simplified."
Ministers also addressed the issue of debt relief for African
countries, which collectively owe an estimated US$350 billion
dollars in external debt. France announced it would cancel all
its bilateral debt with the poorest African countries, while
Germany announced plans to cancel about US$350 million in debt
over 3 years. In the CPA, ministers agreed to find ways to
reduce the full debt burden.
Ministers plan to hold interim follow-up meetings on
implementing the Cairo Plan of Action and agreed to hold the
Second EU-Africa Summit in 2003.
ACP STATES SECURE NEW AID AND TRADE AGREEMENT WITH EU
By Grace Buhera
March 31, 2000
SARDC
P O Box 5690, Harare, Zimbabwe
Tel: (263-4-738694/5/6) Fax: (263-4-738693)
Email: msachikonye@sardc.net; sardc@sardc.net
Web: http://http://www.sardc.net
The African, Caribbean and Pacific (ACP) states have struck a
new deal with the European Union (EU) with the extension of
the current treaty which was due to expire this February. At
a meeting held in Brussels, Belgium, from 2-3 February 2000,
the EU and ACP states concluded a new agreement, an extension
of the Lome Convention which regulates development cooperation
and trade relations between the two regions.
One of the major agreements entered into is the determination
of an eight-year transition period during which new
negotiations on trade and economic arrangements with the EU
are to be negotiated and concluded. This transition will run
from 1 March 2000 to 31 December 2007 during which period
market access into EU will continue under current
arrangements. A further 12 years was agreed upon as the
implementation period.
In addition, 13.5 billion euros were made available under the
extended Environment Development Fund (EDF) to assist
development efforts of ACP countries for the period 2000
through to 2005. This assistance would be used to support and
promote efforts of ACP countries, which include poverty
reduction, private sector development and reform of ACP
economies and gradual integration of ACP countries into the
global economy.
Some 12,8 million euros would be initially allocated. Of the
yet uncommitted funds, one billion would go to securing the
multi-lateral debt relief initiative for the world's poorest
developing countries as agreed on by the seven leading
industrialized nations at the World Economic Summit in
Cologne, Germany, in 1999.
The EU is making 680 million euros available to the World
Bank's trust fund to be used to offset the debt of the poorest
developing countries. Some 320 million euros have also been
made available for EU's bilateral debt relief activities.
The purpose of the meeting was to negotiate a framework
leading to a successor agreement to Lome IV, whose expiry
date was set at February 2000.
The ACP states and the EU have enjoyed development
co-operation under Lome whose aim is to support the "ACP
States' efforts to achieve comprehensive, self-reliant and
self-sustained development". The first Convention (Lomé I) was
signed on 28 February 1975. Lome II and III were signed in
1979 and 1985 respectively.
The current Convention, Lome IV, covers the period from 1990
to 2000 and has been the most extensive development
cooperation agreement between the North and the South both in
terms of scope (aid and trade) and the number of countries
involved.
The convention states that ACP cooperation is to be based on
partnership, equality, solidarity and mutual interest. The
convention also recognises the principal of sovereignty and
the right of each ACP state to define its own development
strategies and policies, affirming development centred on
people, respect and promotion of human, political, social and
economic rights.
In 1994, the Lome IV underwent a mid-term review, which
resulted in approval of the 8th EDF to cover the five-year
period between 1995-2000. The recent extension has paved the
way for the 13.5-billion-euro development fund which runs for
another five years to 2005.
According to South Africa's Deputy Trade and Industry
Minister, Lindiwe Hendricks, the new Lome agreement is
expected to be signed in May 2000. The agreement will then be
ratified by the EU's 15 member states and ACP's 71 states by
September 2002, before it comes into force.
Among other issues discussed at the Brussels meeting, which
was attended by ministers and government officials from the
participating states, were the level of aid to ACP nations,
good governance, corruption, market access for countries not
classified as least developed and the duration of the new
convention. The outcome of the talks was generally favourable
for the ACP countries and a number of important agreements
were reached, according to analysts.
On the delicate issue of migration, the ACP and EU agreed to
put in place measures to control migration on a bilateral
basis while at the same time upholding the commitment to
respect human rights and fulfillment of obligations arising
from international law.
In order for this arrangement to be compatible with World
Trade Organisation (WTO) rules and regulations, the EU is
expected to ask for a waiver to continue with the current
trade preferences. Internal arrangements are being made to
ensure continuity of trade flows from ACP to EU.
The implications of these agreements for the ACP states are
that they will continue to benefit from the current trade
preferences during the eight-year preparatory period without
disruptions. Duty free items and those on concessionary duty
will continue to benefit during the transition period.
For Botswana, Mauritius, Namibia, Swaziland and Zimbabwe, the
current quotas on beef and sugar will stay in place. Malawi
will benefit from the 18 million euros that was allocated for
road projects and rural development and 7.8 million euros
allocated to help set up Malawi National Blood Transfusion
Service. Zambia will, among other concessions, get 6.5 million
euros to boost exports and provide short-term assistance to
producer associations, their members and groups of
enterprises.
The more favourable preferential terms granted the ACP
countries for accessing the Common European Market was more
important than the financial development assistance covered by
the agreement. The new agreement sees, particularly, the
strengthening of political relations between the ACP and EU
states.
Given the fact that the transition period is up to 31 December
2007, it is important that ACP states start to prepare for new
trading arrangements with the EU. (SARDC)
SOUTH AFRICAN COUNCIL OF CHURCHES
PUBLIC POLICY UPDATE
THE EUROPEAN UNION-SOUTH AFRICA TRADE AGREEMENT:
Implications for Post-Lome Trade Relations
14 April 2000
For more information, contact:
South African Council of Churches
Public Policy Liaison Office
P.O. Box 2591; Cape Town, 8000
Tel. (021) 423-4261; Fax. (021) 423-4262
Email. liaison@sacc.org.za; Web. http://www.sacc-ct.org.za
[excerpts: full text will be available on
http://www.sacc-ct.org.za]
... The collapse of negotiations at the World Trade
Organisation (WTO) ministerial meeting in Seattle last
November should be seen as a success to the extent that
developing countries--and African nations in
particular--exposed and frustrated the attempts of the
industrialised powers to negotiate private deals outside the
plenary sessions. The lull also provides churches and other
organs of civil society a chance to analyse the impact of
emerging trade regimes, build awareness of the relationship
between trade policy and economic justice and popularise the
campaign for fair trading practices.
From Lome to TDCA: A Paradigm Shift
The recently-concluded trade agreement between South Africa
and the European Union (EU) heralded a major shift in the EU's
approach to trade relations with the developing world. The
Lome Convention has governed trade between the EU and a group
of 71 states in Africa, the Caribbean and the Pacific--the ACP
countries--since the first agreement (Lome I) was reached in
1975. In the post-colonial period, European nations
consolidated their relationships with developing countries by
instituting a pyramid of preferences in which former colonies
enjoyed the most unrestricted access to European markets,
followed by the rest of the developing world. ...
By the mid 1990s, however, the EU was searching for a new
model. The existing Lome IV agreement was set to expire at the
end of February 2000, and EU officials argued that the system
of preferences embodied in Lome was incompatible with "free
market" WTO rules. In an atmosphere of hard-nosed commercial
competition with the United States and Japan in a globalised
economy, the EU gave top priority to securing the emerging
markets of its comparatively affluent Eastern European
neighbours (especially Poland, Hungary, and the Czech
Republic)--the countries most eligible for incorporation into
the European Community. Secondary preference was extended to
the Baltic countries, the Mediterranean states, and the
Middle East. Despite the rhetoric of "partnership" (and
"free" trade), ACP countries--and Africa in particular--were
to be peripheralised once again.
The trade negotiations with South Africa were the first the EU
conducted in terms of this emerging paradigm. In September
1994, shortly after the inauguration of South Africa's first
democratic government, foreign ministers from the EU and the
Southern Africa Development Community (SADC) met in Berlin.
The meeting produced the "Berlin Declaration" in which the EU
pledged support for South Africa's transition to democracy and
regional economic integration.
However, when South Africa applied two months later for full
membership of Lome (minus certain privileges--such as use of
price stabilisation mechanisms and preferential access to
European markets for beef and cane sugar exports--that might
have damaged other ACP countries), the EU rejected the
request. It argued that, as a relatively developed nation,
South Africa was not eligible for Lome preferences under WTO
rules. Instead, it offered South Africa a bilateral Free
Trade Agreement. South Africa made a counter proposal: a
Trade, Development and Cooperation Agreement (TDCA) that
would address the country's development needs while promoting
regional integration.
Talks began in earnest in early 1997 and continued for two
years as negotiators battled over the details of roughly 8000
tariff arrangements associated with specific agricultural
products. Finally, in January 1999, the two teams agreed on
a common text for ratification by their respective
governments. ... In February, the trade chapter came into
effect, pending final EU ratification.
The TCDA's Implications for South Africa and Southern Africa
... During the negotiations, two major studies assessed the
agreement's likely impact on South Africa and Southern Africa.
The first, conducted by UNCTAD, concluded that EU imports to
South African would increase faster than South African
exports to the EU. ... A second survey, looking at fiscal
policy and labour markets, was commissioned by members of the
Southern Africa Customs Union (Namibia, Botswana, Lesotho, and
Swaziland--South Africa did not take part) and was carried out
by Britain's Institute for Development Studies and the
Botswana Institute for Development Policy Analysis. This
foresaw a more mixed economic impact.
More recently, Germany's Coordination Southern Africa (KOSA)
published an analysis of the agreement's impact on SADC. This
predicted the agreement will have a particularly severe impact
on SACU countries. The study foresaw a potential loss of
income of between 5 and 9% for Botswana, 13-21% for Lesotho,
8-14% for Namibia and 14-23% for Swaziland. The report also
concluded that the agreement will impede regional integration
by undermining the SADC free trade protocol and by requiring
South Africa and its neighbours to deal with the EU on
different terms. (South Africa asked the EU to delay free
trade negotiations for ten years to permit regional
integration to get a head start, but the EU refused.)
Implications for Post-Lome Trade Agreements
Key elements of the TCDA approach--bilateral negotiations,
insistence on reciprocal lowering of trade barriers, and
continued protection of vulnerable European markets,
especially agricultural markets--seem set to become central to
the EU's general model for a post-Lome, post-cold war,
globalised trade policy toward the developing world.
In terms of WTO rules, least developed countries may still
negotiate preferential agreements with industrialised nations.
However, the parallel--and growing--use of free trade
agreements like the TCDA is likely to force less developed
nations to choose between preferences and regional
integration. ...
ACP countries will be expected to confront these choices soon.
The EU timetable gives Lome members a two-year window (2000-
2002) to decide if they want to negotiate (Regional)Economic
Partnerhsip Arrangements or stick with preferential
agreements. With six years for negotiations and a twelve-year
implementation horizon, the EU is aiming to secure virtually
unfettered access to global markets by 2020. Unless, of
course, the ACP countries can build on their success at
Seattle to force a radical rethinking of global trade policy
and practice so that fair trade, not free trade, becomes the
principle underpinning new trade agreements.
This update was compiled from material presented at a 27 March
2000 seminar in Cape Town sponsored by the SACC and the
Ecumenical Service for Socio-Economic Transformation (ESSET).
The seminar featured a presentation by Dr. Theobald Kneifel of
the Ecumenical Service for Advocacy Work on Southern Africa
(KASA) in Heidelberg, Germany, with a response by Dr. Robert
Davies, MP, Chair of the Portfolio Committee on Trade and
Industry.
Additional material was drawn from Gottfried Wellmer's study,
"SADC Between Regional Integration and Reciprocal Free Trade
with the European Union: A Study on Future Trade Relations
between the EU and SADC States", published last month by World
House Bielefeld and Coordination Southern Africa (KOSA). This
publication is available from the publishers at a cost of
DM12,00 plus postage:
World House Bielefeld/KOSA
August Bebel Street 62 D-33602 Bielefeld GERMANY; tel. +49 521
62802; fax. +49 521 63789; e-mail. welthaus@aol.com; web.
http://www.welthaus.de
This material is being reposted for wider distribution by the
Africa Policy Information Center (APIC). APIC's primary
objective is to widen international policy debates around
African issues, by concentrating on providing accessible
policy-relevant information and analysis usable by a wide
range of groups and individuals.
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