Oxfam has released this briefing note in response to a letter (leaked to the Financial Times) from the EU to the Pacific's lead trade negotiator, Fijian Trade Minister Kaliopate Tavola, in which the EU refused to consider almost all the Pacific's proposals on fisheries, labor mobility, investment and services; instead urging them to accept trade liberalization.
Slamming the Door on Development: Analysis of the EU’s response to the Pacific’s EPA negotiating proposals
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The Pacific Economic Partnership Agreement negotiations
In 2000, the African, Caribbean and Pacific (ACP) group of countries signed the Cotonou Partnership Agreement with the European Union (EU) that bound the signatories to renegotiate their trading relationship in a manner that would “promote and expedite the economic, cultural and social development of the ACP States…[and] centered on the objective of reducing and eventually eradicating poverty”.1
The EU has long been actively involved in the Pacific, initially through colonial rule and influence by its member states. As a number of EU states have pulled back from the Pacific, the executive arm of the EU, the European Commission (EC), has played a stronger role in managing development funding through
successive European Development Funds (EDFs). This funding has been welcomed by governments and many civil society organizations (termed Non-State Actors by the EU). The EU has pledged to continue its development cooperation activities irrespective of the outcomes of the current EPA negotiations.
The EU had previously granted ACP countries preferential access for their goods to the EU market under a series of five year agreements under the Lomé Convention, based on trade preferences for the ACP. These preferences were challenged by non-ACP developing countries and found to be incompatible with rules for non-reciprocal trade preferences under the World Trade Organization (WTO). The ACP and EU have therefore agreed to negotiate Economic Partnership Agreements (EPAs) for each region aimed at achieving the goals of the Cotonou Partnership Agreement, as well as being compliant with WTO rules. The EU, recognising the development needs of the ACP, has consistently stated that the EPAs would be development-friendly, a pledge welcomed by the ACP.
The WTO waiver allowing preferences to continue is due to expire on 1 January 2008. With relatively limited research and negotiation resources, the Pacific negotiators were able to formulate a draft EPA text by June 2006 and submit it to the EU. Oxfam’s analysis of this draft concluded that it included a number of innovative proposals to try to integrate development into an EPA, but suggested that the EPA framework was the wrong approach to promoting development.2
A major problem is the reciprocal nature of the trade agreement, particularly since the EU has a national income over one thousand times that of the Pacific.3 A reciprocal agreement between such unequal regions may have the same rules for each party, but the result will favour the EU over the ACP countries. The
comparison is that of putting a schoolboy in a boxing ring with a heavyweight pro. Even if the schoolboy is given a few extra points on the scorecard, the basic rules of boxing are the same for each, and the boy will get beaten up every time. As the EC’s own website explains, “Our experience tells us that FTAs between a
large market like the EU and small economies are not easily sustainable and often lead to a deficit for the weaker partners”.4
Over the course of the negotiations, there has been a series of reports on the negotiations, but the negotiations have been held behind closed doors and there have been few negotiating documents that could provide evidence on the positions being adopted. Such secrecy permits an almost complete lack of
accountability on the part of the negotiating parties to their societies. Pacific civil society has welcomed commitments by the Pacific governments to engage more with their parliaments and people.
Evidence of the positions that the EU has been taking has recently become available. On 28 November, an article was published in the Financial Times, based on a letter leaked from the EC, which handles the negotiations on behalf of the EU member states. The letter, dated 20 October 2006, is signed jointly by the
European Commission’s Deputy Director for Trade, Karl Falkenberg and the Director General for Development, Stefano Manservisi. It sets out the EU’s response to the Pacific’s EPA text.
This letter offers tangible evidence of what is happening behind the scenes in negotiations. The letter shows that the EU has rejected almost all of the attempts by Pacific governments to make the EPA a developmentally-sound agreement. Below is an overview of the EU’s response, supplemented with analysis of the recent (also leaked) draft EU proposal for trade in services.
