Commissioner Mandelson meets ACP Ministers

EU Trade Commissioner Peter Mandelson last week met trade ministers from the African Caribbean and Pacific (ACP) countries in Brussels. A press release issued by the Commission quoted Mr Mandelson as telling the ministers gathered for the EU-ACP Joint Ministerial Trade Committee that the EU and the ACP regions must renew their commitment to the successful negotiation of Economic Partnership Agreements (EPAs). This is interesting from a Maltese perspective because many of the countries in the ACP group are members of the Commonwealth whose representatives participated in the CHOGM in Malta last year and because these countries offer trade opportunities to our small economy now that we form part of the EU.

Economic Partnership Agreements (EPAs) are being negotiated by the EU with the six African Caribbean and Pacific regions and will replace the trade chapters of the Cotonou Agreement between the EU and the ACP countries, when the WTO waiver that covers these agreements expires in 2008. The EPAs are intended to be broad agreements, helping build regional markets and diversify economies in the ACP regions and ultimately opening trade between the EU and these markets in a way that reflects regional sensitivities while integrating ACP economies into the global economy in a sustainable way.

The Commissioner argued that EPAs offer the best possible framework for a new generation of trade relations between the EU and the ACP countries and that for this reason the EU was totally committed to producing flexible, development-friendly final agreements. He added that the EU looked to ACP countries to preserve their own commitment to reform. Mr Mandelson stressed that meeting the 2008 WTO deadline to renew the trading agreements meant that the EU and the ACP needed to work together. "The word partnership in Economic Partnership Agreement is not there by accident".

Mr Mandelson argued that a system of preferential access had not helped strengthen or diversify ACP economies and that the EPA process would help build strong regional markets in the ACP regions and integrate those markets into the global economy. Mandelson said that although the full integration of ACP economies into the global economy is vital for their sustainable development, the EU was committed to ensuring - and defending in the WTO - sufficient flexibility "to protect fragile industries and build competitiveness".

Mandelson told ministers that he believed that many of the fears associated with the EPAs were unjustified.

He argued that there was no evidence and little likelihood that EU goods would flood ACP markets following eventual liberalisation because the real level of tariff protection in the ACP countries is fairly low. Furthermore, the EU does not grow tropical crops and almost 90 per cent of EU exports to the ACP are made up of complex high-end industrial goods.

Responding to worries that lowering tariff barriers would result in heavy revenue losses for ACP countries, Mandelson said "we should treat these predictions with very great caution". He argued that studies suggesting heavy losses assume immediate and complete liberalisation and ignore the cumulative benefits of reform.

He said that the EU would "ensure there is no sharp drop in Government income by timing and phasing tariff reductions". Mandelson argued that a move to funding government revenues through the fiscal returns from a growing economy would "finally break the dependence on unreliable and declining tariff revenues as source of income".

Mandelson also assured ministers that the EU was not pushing for an immediate agreement on setting a single tariff for integrated ACP regions and would not insist that external tariffs be set at the lowest existing levels.

Although development funding is not a part of the EPA negotiation, Mandelson assured ACP ministers that EPAs are a central priority in the €22.7 billion 10th European Development Fund. Mandelson also said that if amounts available were not sufficient to address EPA requirements, then funding could be reviewed.

However Mr Mandelson noted that financial assistance is a means to an end and could not replace effective reform and economic diversification in ACP regions: "Policy reform will drive trade, trade will deliver growth and Africa alone needs seven per cent growth per year to meet the Millennium Development Goals".