Oxfam warns of possible Domino Effect as rumours spread that free trade deal agreed between Southern Africa and the EU

“Developing countries are under a lot of pressure to open up their markets to the EU too fast, with potentially devastating impacts on livelihoods and economic development.”
Published: 26 November 2007

According to press reports this morning quoting European Commission sources, the Southern African region last night initialled deals covering trade in goods with the EU.  Oxfam has seen what is believed to be the latest copy of the proposed text, from which much vital detail is missing. Final offers will be exchanged on 6 December.

"To our knowledge this is essentially an agreement to agree. The details of how quickly trade between the two blocs will be liberalized are missing but developing countries are under a lot of pressure to open up their markets to the EU too fast, with potentially devastating impacts on livelihoods and economic development," said Luis Morago, Head of Oxfam's EU Office.

"A domino effect may well be caused as other regions feel they cannot hold out against the pressure being exerted by the EC any longer. This is obviously what the Commission would like to happen," he added.

Dr. Paul Goodison, an expert in EU trade, said: "The text is lacking detail on how quickly the Southern African region will liberalize its trade, but where there are details we can see that it is not good for developing countries. The headline offer of duty free quota free market access to the EU is undermined by the small print and as a result of this deal, Swaziland will actually see a 35,000 tonne cut in access for its sugar to the EU market."

Oxfam's initial analysis of the text suggests that while all counties have agreed to sign a deal on goods by the end of the year, only Mozambique, Swaziland, Botswana and Lesthoto have agreed to continue talks on services and investment in 2008. That these are the smallest countries in the region, some heavily dependent on EU aid, suggests that they are being picked off as a way of weakening resistance in other quarters.

Morago: "The way these negotiations have been conducted so far is inimical to development, with countries who are massively dependent on the EU as a market for their goods and as a major aid donor, being told they must either sign deals now that involve drastic liberalization, or face an increase in tariffs from January next year that would devastate their export industries. This is not fair negotiation but brinkmanship."

With just 5 weeks to go, no African, Caribbean and Pacific (ACP) region has signed a final deal with the EC. Reports last week that East African countries had signed, turned out to be untrue. However, the pressure is mounting and the threat by the Commission to raise tariffs as of January 1 has put developing nations into a very difficult position.

Oxfam believes that while greater trade openness and economic cooperation between the EU and ACP could help boost development, no region should be coerced into signing agreements before they are ready. Free trade agreements between unequal partners are not the way to promote development.

The WTO deadline should not be used as an excuse because there are alternatives, according to Oxfam and other experts. For example ACP countries could be admitted into the existing enhanced Generalized System of Preferences, so that they can continue to sell goods to Europe while negotiating final agreements, or the EC could ask for an extension of the waiver granted by the WTO.

Contact Information

For more information contact Amy Barry on +44 (0)7980 664397