by Munetsi Madakufamba
Wide-ranging consultations are on in the Southern African Development Community (SADC) to find a new preferential trade and aid agreement with the European Union (EU) ahead of the expiry of the Lome Convention.
The Lome Convention, which is due to expire in February 2000, is a preferential trade and aid pact between the EU and 70 African, Caribbean and Pacific (ACP) countries including all SADC member states except South Africa.
An evaluation of the two-decade long relationship has sparked wide-spread debate on future ACP-EU relations.
Figures published in November last year by the European Commission in the Green Paper “on relations between the EU and the ACP countries on the eve of the 21st century” suggest that generally many ACPs have not achieved the desired levels of economic and social development in the last 20 years, the lifetime of the Lome Convention.
The Green Paper, which is regarded as a platform for discussion, seeks to “provide food for thought,
trigger wide-spread debate and pave the way for dialogue between those concerned by the expiry of the Lome Convention”.
In response to this challenge, the SADC Food Security Technical and Administrative Unit (FSTAU) with Friedrich Ebert Stiftung early this month organised a two-day workshop on “post-Lome IV opportunities for SADC Agriculture”.
The workshop aimed to brief member states on SADC’s current utilization levels of the EU-ACP Lome IV agreement, to highlight proposed future options with emphasis on major changes, and present a common SADC position to the EU.
The Lome Convention was sealed in the Togolese capital, Lome, in 1975 and went through five-year phases from Lorne I up 10 December 1989 when Lome IV was signed as a ten-year arrangement.
Lome IV underwent its mid-term review in December 1995 in Mauritius, a year after the Uruguay Round negotiations were concluded. As Lome IV approaches its expiry, the EU is, through the Green Paper, provoking debate from governments, academics, trade unions and nongovernmental organisations (NGOs).
Negotiations on a successor to the Lome Convention are due to start in September 1998. But consultations have already started, though still at a slow pace in the ACP group. The SADC FSTAU Friedrich Ebert Stiftung workshop, which was held in Harare, is one of such initiatives at regional level.
It is widely believed that the Lome system has not delivered as much as was expected. Forty-one of the 70 ACP countries are among the least developed countries of the world.
However, five of the 11 ACP-SADC countries, viz Botswana, Mauritius, Namibia, Swaziland and
Zimbabwe are reported to have fared well in their agricultural exports under Lome, and are not classified as least developed. There are therefore divergences in the level of utilization of trade preferences. As a result, SADC, like all other ACPs, needs a common strategy on the successor to Lome.
The Green Paper proposes the following possibilities: the status quo in terms of development aid, but differentiated trade provisions; a global agreement supplemented by bilateral agreements; the break-up of Lome into regional agreements; and finally, a global agreement with the least developed countries.
Each of these options have varying implications for SADC, both at the national and regional level. All options though, are under pressure from the globalisation process which is the major reason for the need to bring Lome in line with current world standards.
The spread of the market economy and the demise of exclusive or privileged ties have altered the terms of supply and demand on the international market. The conclusion of the Uruguay Round trade negotiations created a new multilateral context which is speeding up the globalisation of the economy driven by technological change and the liberalisation of economic policies that started in the 1980s.
However, new fault lines are developing because of the effects of social exclusion. The marginalisation of developing countries is widening, and so is the gulf between rich and poor within national boundaries.
Apparently, some basic principles of the current Lome Convention are not in conformity with the World Trade Organisation (WTO), the legal and institutional foundation of the General Agreement on Tariffs and Trade (GATT) born out of the Uruguay Round.
The WTO, an international free trade agreement to which most ACP and EU states are signatories, forbids most-favoured-nation (MFN) status and generalised system of preferences that ACPs enjoy under Lome.
WTO regulations stipulate that no member state or grouping can accord exclusive duty-free access into its market without extending similar treatment to all other countries at the same level of development.
The current arrangement which grants the 70 ACP countries exclusive duty-free access to the EU market should therefore be extended to all developing nations within the WTO framework.
However, the ACPs, in particular SADC countries e opposed to the WTO regime especially insofar it promotes multilateral investment agreements. This was evidenced by the unified stance taken by
ADC at the recent WTO Ministerial meeting in Singapore.
SADC issued a joint statement expressing their reluctance to sanction trade related investment measures which, if passed, will allow giant international corporations to compete on equal terms with infant companies in developing nations, posing a potential danger to domestic capacity building.
They therefore want to retain existing preferential trade arrangements, in particular the Lome Convention, as these are still crucial to SADC trade and development needs, as well as those of other developing nations.
But many events, in addition to changes in the global market and WTO rules, seem to work against the future of Lome. The EU itself is undergoing radical changes, both in terms of domestic and foreign policy. Its external relations have been marked by new initiatives as regards developing countries and economies in transition.
Its geo-strategic interests are shifting elsewhere. Already the EU has concluded association agreements with most European countries of the former Eastern bloc, which are now applying for membership. At the same time, it is supporting the process of economic and political change in the republics of the former Soviet Union and has concluded trade agreements with several of them.
The EU is also entering into new relations with previously non-member countries in the Mediterranean. Latin America and Asia. These new developments present ACPs with even stiffer competition not only in terms of development aid but market penetration.
This therefore calls into prominence the need for a thorough and conclusive debate on the new angle that future ACP-EU relations will take. Both parties agree that in the past there was little or no private sector involvement in the cooperation framework. As a result, many countries have failed to utilise the preferential treatment to attain the required levels of development.
In many cases, awareness of preferential access into the EU market has been limited to the government and few large exporters, thus contributing to the under-utilisation of the preferences.
The under-utilisation of the Lome Convention has not only been a result of lack of information dissemination, but difficulties in applying its complex rules and procedures. This is even worse to micro-enterprises which often lack capacity to interpret the requirements.
For example, rules of origin which forbid ACP exporters from accumulating inputs from countries outside the Lome pact, irrespective of whether they were cheaper or closer. Such rules do not only limit the competitiveness of ACPs, but also act as a disincentive to investment and diversification.
In addition, when ACPs are forced to operate on a limited input base, they resort to exporting primary products which are cheap to prepare. However, over-dependence on primary products, which are prone to cyclical world market prices, has been attributed to declining economic performance in many ACP countries.
The growing divergences within the ACP group present another challenge in post-Lorne discussions. While other countries and regions are doing well, others are stagnating or even declining. Regional integration in southern Africa, for example, has started with establishing a free trade area, in West Africa it is the other way round.
ECOWAS is working on establishing a common currency as a step towards a common market.
To this end, any future cooperation agreement should therefore be flexible enough accommodate all these divergences, whether on a geographical or other distinction.
Professor Joao de Deus Pinheiro, EU Commissioner for relations with the ACP, who advocates for closer links between the EU and ACP regional organisations, says regional cooperation has both political and economic benefits.
“Regional integration will be a key theme in next convention,” he told the Courier, a bi-monthly publication of the Commission of European Communities.
While debate on the future of Lome is currently raging in the EU, it has been rather slow in the ACP.
Since the negotiations will begin in a year’s time, the ACP group should move faster with consultations across the spectrum of stakeholders if they are to present an organise position. (SARDC)
