In a previous post I examined the recent ruling from the WTO Dispute Settlement Body over the EC’s banana quotas for ACP countries. This was simply the latest in a number of issues that have been damaging to the interests of ACP countries. Another concerns the dispute between Brazil, Australia and Thailand on one side and the EC on the other over sugar. This had the positive effect of reducing the EC’s colossal sugar subsidies. In the latest year reported to the WTO these were reported to be €5.6 billion, on a crop of sugar worth a total of €4.8 billion. But the ruling also had a strongly negative effect on ACP countries because it removed the preferential market access quotas that they previously had. These quotas allowed ACP countries to export a certain amount of unrefined sugar to the EC at the EC’s high internal price rather than the much lower world price. The effect of removing this was estimated to cost the ACP countries $352 million a year.
Finally, there is the issue of Economic Partnership Agreements (EPAs) currently being negotiated by the EU. These result from the expiry at the end of 2007 of the previous Cotonou Agreement that granted preferential market access to ACP countries into the EC market. The Cotonou Agreement was not compliant with WTO rules since it did not include any reciprocal preferential market access for EC exports into ACP countries, but was entirely one-way. As such, it could be challenged by other developing countries that were not part of the ACP group that felt that their exports were harmed by the arrangment. In order to prevent this, the EU had to have a waiver and to compensate those countries that were disadvantaged by the agreement.
With the expiry of the waiver at the end of 2007 the Cotonou Agreement had to be brought into conformity with WTO rules. The EU therefore embarked on the neogtiation of so-called EPAs with all those countries that stand to lose their preferences, although Least Developed Countries can opt to take advantage of the EU’s Everything But Arms initiative instead. However, the EBA is unilaterally given by the EU, which therefore has the right to alter or even withdraw it should they want to. EPAs are receiving growing criticism from a range of NGOs. Analysis of the agreements as they stand being undertaken at ODI has concluded that these concerns are at least partially well-founded and that the ACP countries should be worried.
Whatever the outcome of the EPA negotiations as they grind on past the original deadline of 31st December 2007, they form just an element of the negative effects WTO rules, in particular non-discrimination, has been having on ACP countries, half of which are also Least Developed Countries. Non-discrimination and the banning of preferential trade agreements was written into international trade rules right back in 1947 and the creation of the GATT, when the US wanted to remodel the global commercial system to ensure that it had access to the markets and exported raw materials of the rest of the world, which required the dismantling of Britain and France’s preferential trading agreements with their colonies. Sixty years later, this principle is having the unintended consequence of dismantling some of the (already weak) measures taken by the EU to provide markets for the exports of some less developed and vulnerable states.