During the period of about 25 years ending in February 2000, trade and other economic relations between the European Union (EU) and the African, Caribbean and Pacific (ACP) states were governed by a series of Lomé conventions. The Lomé trade regime provided preferential access to the EU market for ACP states, covering a wide range of export products subject to certain restrictions relating to the so-called sensitive products and rules of origin. EUs future trade policy towards African members of the ACP group beyond the Lomé trade regime was articulated in various proposals leading to the ACP EU Cotonou Partnership Agreement signed in Cotonou (Benin Republic) in June 2000.

This is a 20-year agreement with a clause allowing its revision every five years. It is meant to be a comprehensive arrangement governing aid and trade relations between the EU and ACP countries. But it does not yet include trade elements. Instead, it indicates the commitment of the countries involved to negotiate, starting from September 2002, a new set of trade arrangements compatible with the World Trade Organization (WTO) that will come into force on 1 January 2008.

Although its trade elements are not yet in place, the agreement already clearly indicates that these elements will represent a major departure from those associated with the Lomé Convention. In particular, it is implied that as long as they are WTO compatible, the nonreciprocal trade preferences embedded in the Lomé Convention will be transformed by the new arrangement into a relationship based on reciprocity. The proposed transformation means that for the first time, the African countries in the ACP group are confronted with the need to negotiate their trade relations with the EU.

Before and during the projected negotiations, the affected African countries (either individually or within sub-regional groups) will have to explicitly address a number of critical issues. Some key issues among these include assessing: 1) the costs and benefits of the trade arrangements specified in the agreement; 2) whether the transition period proposed will be adequate; 3) how much of the existing trade preferences can be retained, by which set of African countries, and for how long; 4) what the extent of reciprocity would be; 5) what costs would be involved in the adjustment for the obligations associated with reciprocity; and 6) whether the financial and other assistance promised by the EU would be adequate to offset the costs.

Another important issue relates to the technical feasibility of the proposed negotiations, particularly whether African countries should negotiate individually or in sub-regional groups, as well as the negotiating capacity at both the national and regional levels.

Answering this question requires identification of the options open to the African members of the ACP group. The EU has proposed that the new arrangements between it and ACP states should be WTO compatible. There are two ways to achieve this. One way is for the EU to stop discriminating by granting the same non-reciprocal trade preferences to all developing countries with similar levels of development as the ACP states. The other way is to transform Lomé preferences into Free Trade Agreements (FTAs) in accordance with Article XXIV of the General Agreement on Trade and Tariffs (GATT). The EU has settled for the second approach. This means that the proposed FTAs must respect the guidelines of the relevant GATT rules and, hence, liberalize substantially all trade among the parties over a reasonable period of time, which is usually taken to be about 1012 years. But signing FTAs with the EU is only one of the options open to African members of the ACP group. The proposals suggest that the least developed countries (LDCs) in the group have also the option of retaining their existing non-reciprocal trade preferences.

Therefore, it is only the non-LDCs in the group that must confront the question of whether or not to negotiate. The non-LDCs have three options. Some of them may decide to accept the proposal to negotiate and enter into FTAs with the EU, others may choose not to negotiate and, in this case, accept to be placed under the Generalized System of Preferences (GSP) of the EU, and others may choose neither to negotiate FTAs nor to accept the GSP but to consult with the EU with a view to designing another type of trade arrangement.

For several reasons, LDCs do not have to negotiate. Their existing preferences can be extended, since these are no longer unique to ACP states. For this group, reciprocity does not offer any real prospect of further access to the EU market; they obviously have no incentive to join in the negotiations of FTAs that will simply result in the opening of their markets to European products. EUs trade policy towards all LDCs (whether or not they are members of the ACP group) recognizes the special fragility of their economies, and this is the consideration that allows them special treatment. There is some suggestion that other vulnerable countries, such as landlocked countries or islands, may attract the same special treatment.

ACP members of this special group may choose not to open their markets to the EU and still retain their existing non-reciprocal trade preferences, with the added assurance that whatever happens, essentially all their export products will continue to have free access to the EU. This special treatment has evolved since the late 1990s. By January 1999, the EU had made its GSP for all LDCs equivalent to the Lomé trade preferences previously reserved for only its ACP partners. This special GSP allows up to 99% of the export products of all LDCs into the EU market free of duty. In 2000, the EU also started a process that will expand this degree of duty-free access to its market for all LDCs by 2005. Specifically, if EUs proposal on everything but arms is adopted, then all LDC export products, including agricultural ones, could enjoy free access to the EU.

Given the options open to them, non-LDC members of the ACP group that choose to negotiate FTAs with the EU may do so individually or through regional groups. Questions have been raised regarding whether the EU would want or be able to negotiate a series of individual economic partnership agreements with so many small African countries. But both its own proposals before the Cotonou Partnership Agreement and its recent behaviour in practice would appear to keep this option open. For example, EUs identification of UEMOA as the only regional group within West Africa with which it could sign an EPA suggests its willingness to deal with such countries as Ghana and Nigeria as potential individual EPA partners. In addition, the EuroMediterranean trade agreements with Morocco and Tunisia, and the even more recent FTA with South Africa suggest that the EU may not be completely averse to negotiating EPAs with individual African non- LDCs in the ACP group. There is no doubt, however, that the EU appears to have a strong and explicit preference for negotiating EPAs with regional groupings of African countries. In addition to the other advantages associated with this option, designers of regional EPAs argue that this option would limit the number of agreements (which helps to save the negotiation resources of the EU) and contribute to sustaining intra-regional integration efforts of African and other ACP states. But whether this option helps to deepen intra-African regional integration or not, it is clearly up to individual countries to decide whether they wish to entrust their negotiating mandate to a sub-regional grouping. In selecting this option, African countries must also consider the technical feasibility of implementing it. In other words, they must examine the pre-conditions that must be satisfied before they can negotiate and establish regional EPAs with the EU. The effectiveness with which African countries can function as regional groupings in the context of EPA negotiations depends critically on the progress of their own regional integration process.

Given the projected schedule of negotiations, considerable progress in the regional integration process in Africa is required over a very short period of time. It is not certain that such progress is achievable. For instance, a regional grouping must first be an effective free trade area or a customs union before it can negotiate and sign an EPA with the EU. It is not evident that in reality intra-African regional groups other than SACU have achieved this status. In addition, negotiating an EPA as a regional group involves prior negotiation among members of the group to decide on a common negotiating mandate and strategy. It may also require delegating the power to negotiate and reach agreement with the EU to a supranational body. These preconditions pose considerable difficulties for many potential African regional groups. Many African countries simultaneously belong to more than one sub-regional group, but each country can be involved in negotiating a regional EPA within the framework of only one regional group. Membership overlap is a problem that has plagued regional integration efforts for a long time. The forthcoming negotiations in the context of the ACPEU trade agreement may force African countries to make appropriate choices and thereby resolve this long-standing problem once and

All intra-African regional integration schemes contain both LDCs and non-LDCs. Since these categories of countries are treated so radically differently in EUs negotiating proposals, it is difficult to see how consensus can be reached regionally on negotiating mandate and strategy. The regional groupings explicitly identified in EUs proposals include UEMOA, CEMAC, the East African Corporation (EAC) and the Southern African Development Community (SADC). Each of these features the characteristic specified above; therefore, each of them will be faced with the problem that arises from the differential treatment by EUs proposals based level of development. SADC will also face a unique problem that derives from having South Africa as a member, which has already signed a separate FTA with the EU.

Finally, one must note that trade negotiating capacity is not particularly strong in African countries, and is virtually non-existent in regional groups. This capacity must be strengthened considerably if really meaningful negotiations with the EU are to take place. Developing this capacity is not necessarily impossible, but it is considerably constrained by two key factors. First, the time available to prepare for the negotiations is very short.

Second, there are other negotiations (such as those in WTO) that will take place simultaneously with the EU ones. The combined effect of these factors could be to worsen the situation for many African countries and regional groups by overstretching what, to begin with, is a limited and inadequate negotiation capacity. African non-LDC members of the ACP group that choose not to negotiate EPAs with the EU either individually or as part of a regional group have two choices: they could accept to revert to the GSP or seek an alternative trade arrangement with the EU. Reverting to the GSP appears to be virtually the automatic choice for this group; the second option would require further study and review by the EU.

The GSP has several defects that may discourage countries from choosing it. It is unilateral and is offered at the discretion of the EU, which also may choose to withdraw it at will. In addition, it is not as beneficial as the trade preferences provided by the Lomé Convention. In particular, African non-LDCs that move from the Lomé Convention trade regime to the GSP arrangement are likely to suffer a significant loss of preferences. The African countries that would be most negatively affected include Cameroon, Côte dIvoire, Ghana, Kenya, Mauritius, Nigeria, Senegal and Zimbabwe. One study estimates that if the European Unions normal GSP were applied to all non-LDC ACP countries, these countries would suffer a total loss of ECU 767 million per year. Much of this loss (over 65%) would occur in sugar. Other vulnerable products include tuna, bananas and beef. This list of products suggests that much of the loss arises because the GSP does not cover the commodity protocols associated with the Lomé Convention. In comparison with Lomé preferences, the GSP option has other disadvantages: its tariffs and non-tariff reductions and exemptions are less generous than those offered by the Lomé Convention; the rules of origin applicable to it are stricter; and it covers fewer products, i.e. 45% of the tariff lines against as much as 95% for the Lomé Convention.

Non-LDC ACP states that choose not to negotiate EPAs with the EU and do not wish to revert to the GSP may eventually benefit from EUs preferences that become effective in 2004. According to Article 37.6 of the Cotonou Partnership Agreement, in 2004, the EU will examine all alternative possibilities, in order to provide these countries with a new framework for trade which is equivalent to their existing situation and in conformity with WTO rules. However, this presents a problem at the technical level: it is difficult to design an arrangement for the non-LDCs that both maintains the Lomé preferences and is at the same time WTO compatible.

Negotiating modalities, structures and schedules

Article 36 of the Cotonou Partnership Agreement states that the Parties agree to conclude new WTO-compatible trading arrangements whose primary objective would be removing progressively barriers to trade between them. However, it is suggested that the negotiations be as flexible as possible so as to take account of the level of development and the socioeconomic impact of the trade measures on ACP countries and their capacity to adapt and adjust their economies to the liberalization process. Particular areas where flexibility will be exercised in the negotiation process include in the provision of a sufficient transitional period, in the degree of asymmetry in the timetable for tariff dismantlement, and in product coverage. But, in the end, the extent of flexibility will be disciplined by the requirements for WTO compatibility.

The Cotonou Partnership Agreement explicitly recognizes the need for and provides a preparatory period before negotiations of the new trade agreement can start. This is specified as the period between the signing of the Cotonou agreement (June 2000) and the start of formal negotiations (September 2002), slightly more than two years. The period of negotiation spans these two assessment milestones. Formal negotiations of the new trade arrangements are scheduled to begin in September 2002 and end by 31 September 2007, so that the new arrangements can enter into force on 1 January 2008.

Preparations for negotiations

In deciding whether or not to negotiate an EPA with the EU, it is necessary for African non-LDCs to carefully consider the implications on their economies of negotiating and implementing the FTA. This consideration could suggest that, for various reasons, it might not be feasible for many of them to enter into a meaningful FTA with the EU in the time frame proposed. For instance, it is not self-evident that most African economies are sufficiently competitive to withstand the premature and large-scale introduction of dutyfree imports from the EU; and if this is allowed, the associated adjustment costs might be quite heavy. FTAs with the EU based on intra-African regional groups would face similar costs, with the added problem associated with the fact that the integration process within these groups is quite limited. In these circumstances, reciprocal access is likely to immediately be most beneficial to the EU, but to carry the very realistic threat of considerable loss of import revenues for many African non-LDCs, which are known to be heavily dependent on import duties for their fiscal revenue.

These likely negative effects of entering into EPAs with the EU as proposed in the Cotonou Partnership Agreement can no longer be regarded as mere speculation. In 1998, the European Commission requested a number of independent consultants to assess the feasibility of the proposed WTO-compatible EPAs and the economic impact that they would have on ACP economies if established. The results of these studies broadly confirm the following conclusions:

" There would be a negative impact on customs revenues. While the magnitude of the impact would vary across countries and regions, it could be quite substantial for some countries. Diversification of fiscal revenues/receipts would not compensate for this in the medium term.

" For some countries, the trade-diversion costs associated with the establishment of EPAs would exceed the benefits from the trade created; thus, diversification of African trade with non-EU trade partners would be hindered.

" While the impact (positive or negative) on the process of intra-African regional integration is still to be determined, it seems certain that by treating different countries belonging to the same regional grouping differently (in terms of market access to the EU), the EPAs are likely to further complicate the problems associated with intra-African regional integration.

" For many intra-African regional groups, the feasibility of negotiating EPAs is quite doubtful, for reasons relating to lack of technical capacity and common interest.

" EPAs with the EU could end up pushing African countries to liberalise their trade regimes at a sub-optimal level compared with what they would do either unilaterally or in the context of multilateral trade negotiations.

These defects heighten the need for further research on the future trade relations between African countries and the EU. In any case, such research is an important part of the preparations that should take place before any African country decides to participate and before the actual participation in the negotiations aimed at establishing the EPAs. The new studies should take into account the global environment, including such developments as the ongoing reviews and negotiations at the WTO and the possibility of a new round of multilateral negotiations where the proposals relating to zero trade barriers for all LDCs might be discussed and approved. In addition, the studies should take account of the unfolding events and developments relating to the trade policy of the EU, including its current GSPs for LDCs, the review of the standard GSPs in 2004, and the enlargement of the EU and the resulting deeper integration with east European countries. It would also be useful for the studies to assess the comparative experiences of the Euro Mediterranean FTAs (particularly with respect to Morocco and Tunisia) and the recent EUSouth Africa FTA.

The outcomes of the European Commission studies also reflect the more fundamental problems overlooked in previous international trade negotiations in which African countries have been involved, including the ACPEU ones. These negotiations all centered on market access, focusing primarily on terms and conditions under which participating countries agreed to exchange market access. This objective is relevant for countries with the capacity to produce sufficiently and to export. In sub-Saharan Africa (SSA), unless fundamental reorientation is made, we cannot take it for granted that the negotiations will promote development. Weaknesses in human resources, physical infrastructure and institutions related to international trade have been identified as key impediments. In particular, the adequacy and effectiveness of technical and other assistance relative to the needs of developing and least developed countries are questionable. It is important that the negotiating countries aim at integrating a development agenda. This, therefore, may be viewed in terms of expanding the focus of market access to accommodate concerns for human and institutional capacity and other supply-side issues. The trade regime arising from the new framework should complement the focus on enhanced market access with sufficient flexibility in the use of policy instruments to properly address the lingering

supply constraints and create the type of environment required for long-term investment in which reciprocity, with mutually beneficial outcomes, could be an attainable long term objective. African regional integration schemes suffer another major deficiency that needs to be addressed before market access can lead to trade and export expansion. This relates to the absence of a policy lock-in mechanism that can compel participating countries to enforce mutually agreed commitments. By raising competitiveness, information technology, transportation and other communication cost-reducing policies will significantly reduce the scope for an uneven pattern of benefits. Furthermore, benefits are more likely to be evenly spread if the countries engage in deep integration through policy coordination in several areas. Policy coordination will facilitate the implementation of regional projects, which reduces transactions and eases integration in dynamic

The first step in preparing for future negotiations on the trade elements of the ACPEU Cotonou Partnership Agreement is essentially a domestic measure. It requires each country or region to identify long-term trade interests within the framework of sustainable overall development strategies. An important aspect would be development of modalities for eliminating a range of supply constraints to enable African countries to more effectively reap the benefits of their fuller integration into the global economy and that foster joint action through regional and sub-regional cooperation to facilitate the process. It is around these that appropriate negotiating strategies should be developed.

Concluding remarks

It is clear that it is not necessarily all African members of the ACP group that should participate in negotiating the proposed EPAs with the EU. As many as 34 of the 48 African countries in the ACP group are classified as LDCs. These do not have to negotiate EPAs with the EU, since they still can retain their non-reciprocal benefits without doing this. Of the remaining 14, one, South Africa, has already signed a separate FTA with the EU. Therefore, only 13 African countries must decide whether or not they will participate in the negotiations. The need for studies and other pre-negotiation preparation also applies to only these countries, except in cases where the aim is for regional EPAs that combine these with other countries. These countries and their regional integration schemes need to recognize the associated constraints if they choose to negotiate EPAs with the EU. First, they will be negotiating not necessarily to gain new concessions from the EU but primarily to prevent the loss of what they already have. Second, their room for manoeuvre will be strictly limited partly by WTO rules relating to FTAs and partly by the options established by the EU. Third, the negotiations will be carried out in the context of considerable uncertainty, given that so many other developments will be unfolding simultaneously at both the global level and in the EU itself. These factors together will pose a difficult challenge for African countries that decide to negotiate.

* Njinkeu is with the African Economic Research Consortium (AERC) that is based in Nairobi, Kenya while Oyedije lectures at the University of Ibadan in Nigeria. This abridged article is reproduced with the kind permission of the AERC. The full article was published as an AERC Special paper 37 in March 2002.

Introduction

In the ACP-EU Partnership Agreement signed in Cotonou in June 2000, the ACP States and the EU agreed to conclude new WTO-compatible Economic Partnership Agreements (EPAs), including New Trading Arrangements (NTA), which will replace in January 2008 the current non-reciprocal trade régime.

This important political decision was taken by the ACP Group not without reticence for various reasons. It was based more on pragmatism rather than the belief or conviction that the ACP States would benefit from the EPAs. This deliberate political choice was not one based on any qualification to be eligible to negotiate EPAs. The Cotonou Agreement leaves the final decision to the ACP states which are prepared to and are in a position to conclude EPAs. They are not expected to be subjected to any prior eligibility criteria to determine which regional grouping should negotiate on their behalf nor is there any commitment on their part as regards the nature and depth of regional integration like the existence of a Customs Union or a FTA.

There is a need to be careful with the notion of criteria otherwise at a later stage the EU may come up with political and economic criteria, and criteria relating to ACP States' ability to adopt and implement EU laws e.g. hygiene conditions, standards, norms etc. These will be too onerous and dangerous for the ACP states.

There is a risk that after the Doha WTO round of global trade talk very little commercially meaningful and effective trade preference would be left in the EU for the ACP States to make it attractive to enter into new reciprocal trading arrangements with the EU. This is all the more so because it is not clear at this stage what additional trade preferences the EU can provide to the ACP in the EPAs. Otherwise there might emerge a situation of reverse trade preferences being provided by the ACP States to the EU under future EPAs. Particularly with the reform of the EU Common Agricultural policy, it is likely that a drastically reduced level of preference will be left even if the ACP were to have preferential access for their agricultural products whose export to the EU are now restricted under its Common Agricultural Policy (CAP).

There is no guarantee that the EPAs would increase foreign direct investments inflows into the ACP States when it is common knowledge that this did not materialise even with twenty-five years of non-reciprocal and relatively high level of preferences from which admittedly some ACP States actually benefitted. The proposal of creating integrated economic/market areas under EPA's is good but is also not clear, except perhaps the idea to include in the future EPA's new issues like competition, investment, environment, intellectual property right and social standards.

The latter issue (social standards) is still of a controversial nature within the WTO although for the other Singapore issues, there is now agreement to start negotiations under WTO to formulate rules and disciplines provided there is an explicit consensus at the 5th WTO Ministerial Conference on the modalities relating to the negotiations.

Background

In accordance with Article 37(5) of the Cotonou Agreement negotiations of EPAs will be undertaken with ACP countries which consider themselves in a position to do so, at the level they consider appropriate and in accordance with the procedures agreed by the ACP Group, taking into account regional integration process within the ACP. The European Commission, while agreeing that this is the primary responsibility of the ACP Group, is nonetheless of the view that the decision of the ACP Group is not entirely at the discretion of the ACP States. It argues that the Cotonou Agreement constitutes the framework for the negotiation of EPAs. The Commission has gone even to extent of insisting on the definition of ACP geographical configuration and has spelt out criteria for ACP regions and sub-regions to be eligible to negotiate EPAs.

Admittedly the negotiation of EPAs should be coherent with the general objectives and principles of the Cotonou Agreement. Hence, the EPAs have to be placed in a developmental context and not geared only towards trade liberalisation as being expounded by the Commission. Since the Cotonou Agreement recognises the sovereignty of ACP States to determine their development policy and model, the choice of the regional grouping to negotiate EPAs cannot, therefore, be derogated or left at the discretion of the EU although the EPAs may take into account the development co-operation policy of the EU generally.

However, there is no obligation under the Cotonou Agreement for the ACP States to define geographical configuration and fulfil eligibility criteria in order to negotiate EPAs. In fact, the Cotonou Agreement provides for an opt-out clause for ACP States not in a position to negotiate EPAs and to benefit from an alternative WTO compatible framework that will guarantee the current level of trade preferences at least.

In order to prepare itself, the ACP Group has agreed on an Action Plan for the negotiation of EPAs scheduled to start in September 2002 and adopted the procedural guidelines that are being up-dated following the holding of regional seminars. The Action Plan, which is a roadmap leading to the September 2002 rendezvous, deals mainly with the issue of the adoption of the procedural guidelines, the definition of geographical configuration and capacity building necessary to conclude NTAs, as envisaged in Article 7 of Annex IV of Cotonou. It has to be stressed that this Article deals primarily with the regional indicative programming exercise for the 9th European Development (EDF) of the Cotonou Agreement, and not the definition of geographical entities to negotiate EPAs, although the two processes may have a link in terms of capacity building for the negotiation and subsequent implementation of eventual EPAs. It is now feared that the long delay in the release of resources to implement the Action Plan might adversely affect the preparatory process.

The EU adopted in February 2001 the "Everything But Arms" Initiative which provides, as from 5 March 2001, for duty-free and quota-free access to the EU markets for the products of all the 49 least developed countries, including the 9 non-ACP LDCs. But liberalisation for rice, sugar and bananas will be staggered and phased in gradually with complete liberalisation by 2009 for sugar and 2006 for bananas. It has de facto created two categories of ACP States within the ACP Group.

The Organisation of African Unity (OAU), an important component of the ACP Group, has adopted a new Constitutive Act on the establishment of an African Union which entered into force in May, 2001. Besides, the Sirte Declaration adopted by the OAU Summit in 1999 underscores the need to accelerate the process of integration envisioned by 1991 Abuja Treaty on the establishment of the African Economic Community. However, this does not hide the fact that, even within Africa, integration at sub-regional groupings' level, like ECOWAS/WAEMU, SADC/SACU, COMESA, CEEMAC. etc, differ considerably; but they are all committed to move gradually and eventually towards integration at the continental level as envisaged originally in the 1991 Abuja Treaty and now in the Constitutive Act on Pan African Union. The New Economic Partnership for African Development is expected to give a boost the African Integration Initiative

A decision has now been taken to implement a free trade area of the Americas (FTAAs) in 2005 among the 34 countries of the Western Hemisphere including the ACP Caribbean States. This was reaffirmed by the 3rd Summit of the Americas held in Quebec City in April, 2001. The Caribbean States are also members of the ACP Group. The FTAA may hace an influence in the nature, form and membership of EPAs.

These 34 countries have recognised the wisdom of negotiating one FTA within a common negotiating structure and setting. Admittedly they all belong to the same geographical region, but with the onslaught of globalisation and the unprecedented progress in information and communication technology, physical barriers posed by geography and distance are rapidly being overcome.

Hence, geography, though a limiting factor, should not be an excuse to divide the ACP Group in order to negotiate EPAs with ACP regions and sub-regions. The ACP States of the Pacific region have also decided to create a free-trade area in that region. But this agreement will include non-ACP countries, like Australia and New Zealand, with whom most Pacific States have strong trade and economic links. If the Pacific ACP States decide to negotiate a separate EPA with the EU, they will have to address the problem of membership. This will not be easy.

In October, 2000, the US enacted the African Growth and Opportunity Act (AGOA) to provide under its Generalised System of Preferences enhanced and improved market access for a large number of products of export interest to the Sub-Saharan African countries. The AGOA, which is valid for 8 years, makes provision for the US to negotiate free trade areas with a certain number of Sub-Saharan African States. Thus, the US will also be competing with the EU for market access in the Sub-Saharan African countries in future. Admittedly the EU might have an advantage in view of its historical and privileged relations and its liberal development aid policy towards the ACP States, particularly Sub-Saharan African States.

The growing level of discontent over the present form of corporate-led globalisation and unbridled liberalisation as evident from the recent mass demonstrations, and unfortunately violent ones at time, may result in a review of certain WTO trade rules. In fact in the context of the Doha Ministerial Declaration, there are provisions to look at certain rules including the possibility of clarifying or revisiting the rules on regional trading arrangements.

Options

The above events and specific characteristics of the ACP Group may have a serious effect on the level and procedures to be agreed by the ACP Group to negotiate EPAs with the EU. In the circumstances, there might be a need to consider a possible new option to negotiate initially within a single setting/framework one collective EPA involving all ACP States and the EU assuming that the choice will be left to the 40 ACP LDCs either to join initially or subsequently such an EPA. Consideration may thus be given for one All -ACP Framework EPA with the EU in order to build on the ACP solidarity and unity, to obtain the best possible deal with the EU. There could be other options including:

(i) bilateral EPAs, involving individual ACP States and the EU. The Commission does not rule out such an option provided certain conditions are met (size, trade/economic interest and political importance).

(ii) EPAs jointly and/or separately between the EU and ACP countries having similar specificities like the island member States of the Indian Ocean, Caribbean and Pacific. The Commission seems to discount such an option;

(iii) EPAs at the regional or sub-regional level, namely SADC, COMESA, IOC,WAEMU, ECOWAS, CEEMAC, Pacific and Caribbean separately between each Organisation or jointly with the EU, or with a sub-component of a larger grouping e.g, SACU within SADC or WAEMU within ECOWAS and EU.

(iv) The recent decisions of the BLNS (Botswana, Lesotho, Namibia and Swaziland) to adopt the EI-South Africa Trade and Development Co-operation Agreement explains the difficulties some ACP states will find in adopting the Commission's position on REPAs;

(v) EPA at the African continental level as envisaged in the 1991 Abuja Treaty and the Pan African Union Constitutive Act;

An all-ACP/EU EPA option

The proposal for one single All-ACP-EU Framework Economic Partnership Agreement within one setting may have the following advantages and disadvantages:

It preserves the unity and solidarity of the ACP Group in which lies its negotiating strength. This has been evident in the negotiations of the successive Lomé Conventions and recently the Cotonou Agreement. It is generally recognised that no ACP region/sub-region or individual State can secure a better deal with the EU than one that can be achieved collectively as an ACP Group with membership cutting across the three regions of the Group. The EU-South Africa TDCA is a case in point.

It will ensure coherence between the overall objectives of the Cotonou Agreement/EU development co-operation policy and the objective of trade and economic co-operation while building on regional and sub-regional economic integration initiatives.

It will preserve the integrity and sanctity of the Commodity Protocols, in particular those whose membership spans across the three regions of the ACP Group, namely Africa, Caribbean and Pacific. No separate EPA can provide this guarantee which is important for the effective implementation of the Protocols. Such a situation exists within ECOWAS and WAEMU in West Africa, CEEAC and CEMAC in Central Africa, and IOC, COMESA, EAC, IGAD and SADC in Eastern and Southern Africa. Some countries will have to choose which grouping will negotiate an EPA on their behalf. This might prove quite difficult.

Disadvantages

There might be an impression that an All ACP-EU EPA will impose serious adjustment obligations on ACP LDCs and thus undermine their development capacity. This may be overcome by leaving the choice to the LDC ACP States, as indicated above, to form part or not of such a collective ACP/EU EPA which will be a negotiated and contractual agreement compared to the EBA which is a unilaterally-determined initiative by the EU applicable to all LDCs and not restricted only to the ACP LDCs.

It may be argued that, since the level of development among the LDCS and even non-LDC ACP States is different, it will be difficult to define a common negotiating mandate. But this is equally true for a REPA which is the preferred option of the Commission. SADC is a typical case in point. It comprises 7 LDCs, 2 islands, one developed country from the WTO point of view, and a customs union involving five of its members.

Similarly it can be argued that that the All ACP-EU EPA proposal may not facilitate the process of integration at the regional or sub-regional integration which the REPA option claims to promote as it proposes to build on existing regional integration initiatives. But the question of integration has to be seen in a wider context. This is the more so because the Cotonou Agreement itself has set the gradual and smooth integration of the ACP States into the world economy as one of its objectives. The proposal for an All-ACP-EU EPA is another way of achieving this objective instead of REPAs. Besides, at the level of Africa, as stated above, the Abuja Treaty aims at continental level integration with the various sub-regional economic integration groupings acting as building blocs. Over the implementation period these blocs are expected to merge into one single and continental entity within the African Union.

Recommendations

What should be high on the agenda of both partners is the finality of the proposed negotiations on EPA. The EU and the ACP may appear to differ on the approach REPAs versus an ALL-ACP Framework EPA, but they agree that the final objective is the gradual and smooth integration of ACP States into the world economy. This should be the guiding principle behind any decision on the level and procedures to negotiate EPAs.

The above option on an ALL ACP-EU EPA may be taken into account while considering a decision on the procedures and level to negotiate EPAs as required under Article 37(5) of the Cotonou Agreement. The ACP Group is expected to take a decision on this important issue early next year. But there is no legal obligation to do so. The only binding commitment in the Cotonou Agreement are to commence formal negotiation on EPAs in September 2002 and start implementation of new WTO-compatible trading arrangements by January, 2008 at the latest.

* Gunessee is the Mauritian ambassador to the EU. This is an abridged version of the paper prepared in December 2001.

Negotiations for a new round of trade relations between the EU and the 77 African, Caribbean and the Pacific (ACP) countries - of which Kenya, Uganda and Tanzania are members - start on September 27 in Brussels.

The negotiations are scheduled to take place within a six-year time frame. Dubbed the Economic Partnership Agreements (EPAs), the new strategy is expected to come into force in January 2008 and is a major shift in EU's trade policy towards developing countries. It is expected to open up the EU market to ACP countries especially the so-called non-Least Developed Countries (LDCs) like Kenya, that were left out of the Everything-but-Arms initiative launched early last year.

The preferential Everything-but-Arms initiative allows all goods except arms, from 49 LDCs (including Uganda and Tanzania) to be exported duty and quota-free to the EU market. The long duration is expected to give the ACP countries a sufficient transition period to implement the results of the negotiations.

"The commission has allowed for flexibility in negotiation and implementation of EPAs in order to respond to the differing needs and conditions within each ACP country or region," said the EU in a statement.

At present, 93% of exports from ACP countries enter the EU duty and quota-free. Among the key elements of the negotiations will be further abolition of tariffs, removal of non-tariff barriers and assessment of technical hurdles like rules of origin. The new strategy favours regional trading blocs over individual countries in terms of accessing the $80 billion European market.

This scheme is a successor to the Lome Convention which lasted for 25 years (1975-2000) and is being transacted under the Cotonou Agreement sealed in June 2000.

A senior official at Kenya's Ministry of Trade and Industry said the country will have to choose between the East African Community (EAC) and the Common Market for East and Southern Africa (Comesa) in the negotiations. "It is quite challenging," said Muturi Mirie, a senior assistant director at the ministry. "Consultations are currently going on, but Comesa member countries would want to negotiate as one entity."

But Kenya is in a tricky situation because under the EAC, Uganda and Tanzania are already accessing the European market and may not see the need to discuss EPAs with Kenya. The same line of reasoning could apply to Comesa, where more than half the 20 member countries are LDCs. In the event that no agreement on EPAs is reached, it would mean that Kenya's products (mostly horticultural) to the EU would attract duty.

At stake for Kenya is a market that accounts for 32 per cent of its total exports earnings valued at about $3 billion annually. The bulk of Kenya's fresh produce is exported to the EU, which accounts for about 90 per cent of the country's horticultural exports. The UK market is the leading destination, with a 30 per cent share, followed by France, Germany and the Netherlands.

It is estimated that Kenya's horticultural industry could pay up to $30 million in tariffs to the EU trading bloc annually.

But the EU says the new trade policy would broaden its bilateral trade co-operation with the ACP countries by tackling non-tariff trade barriers, strengthening regional trade integration and enhancing the competitiveness of the ACP economies. through a comprehensive package of aid. and trade measures.

* This article was first published on 16 September in the East African newspaper where Omondi is a journalist.

Directors Comment: The current ACP-EU negotiations are a farce

The ACP-EU negotiations that have just begun (starting September 2002) are in a morass, in a quagmire. It would be difficult, if not even impossible, to find anyone who really understands what is happening, or what is likely to happen in the negotiations that have just begun. Why? Because a worse tangle of knots than the complex of issues and circumstances that envelop the ACP-EU negotiations would be difficult to come across. Indeed, a better analogy perhaps is a jungle, where a horde of deer is trying to huddle together to negotiate with a pack of lions. And this is no exaggeration, for consider the following.

In the Lions Den

Consider, first, the membership of the African, Caribbean and Pacific (ACP) countries. They are 78 countries in all, home to some 630 million people. They span over three continents, the bulk of them being in Africa. Scattered all around the world their only qualification is that once upon a time (not too long ago), they were all colonies of the European empire. There were also other colonies such as India and Malaysia, and semi-colonies such as Argentina, that have chosen to stay out of this charmed circle of former colonies. What makes the ACP countries different is that they are amongst the poorest of the worlds nations. It would seem that, besides being part of the old European empire, poverty and their individual and collective weakness are their other qualifications for being members of the ACP. South Africa appears to be different from the others; in fact, it is not. In GDP terms it is twice the size of the rest of the SADC countries put together, but this giant economy is still about the size of Belgium, one of the smallest European economies.

On the other side from ACP is a group of 15 European countries, which is growing in numbers, extending their reach to some countries of the former Soviet bloc. They are determined to continue some kind of relationship with their former colonies. Some of the motivation behind continuing this relationship may be nostalgia for an empire. But for the main part it is because there are deep economic and political ties between them and the former colonies, especially those in Africa, which cannot be severed overnight. Whether these relations should be severed, or not, is a different question, a possibility or an option that nobody should dismiss out of hand.

Unequal power

The second complication in the ACP-EU negotiations is that it is inherently, structurally and historically an unequal relationship. The official party line from the ACP countries and the European Commission (EC) is that the negotiations are between equals. No matter. The fact of the matter is that the process of negotiations, and the final outcome, are pretty much determined (to say influenced, or even strongly influenced, would be to underrate the power of Europe) by the EC almost one-sidedly. Of course, the EC bureaucracy, indeed even some of the ACP political leaders, may vigorously deny this. But those close to the events, in Brussels and in Geneva, would find it difficult to deny the truth of this.

First, it must be understood that history and politics command economics, and economics, in turn, reinforce political control. Why, for example, should the Democratic Republic of the Congo (a country with massive natural resources) be one of the poor LDCs whilst Belgium is a developed county? Because, among other reasons, Belgium and the Western countries, for over forty years, have been meddling into the internal affairs of the Congo, making it difficult for the people of the DRC to exercise their right to self-determination. Why should oil-rich Angola be an LDC whilst resource-poor Portugal is a developed country? Because, among other reasons, Angola was torn apart by the conflicting Cold War interests of the West, including Portugal, and the Soviet Union. It would be naïve for anyone to suggest that the DRC and Angola are on an equal footing with Belgium and Portugal. And then let the DRC and Angola negotiate alone (or backed by the weak collectivity called the ACP) with Belgium and Portugal who act on a united front, along with such giants as Germany, France and the United Kingdom. The myth of equality is just that a myth.

A landscape of useless options

Secondly, in the ACP-EU negotiations, the EC drives the procedures and processes and sets time limits and targets. Of course, once again the official line is that these are arrived at as a result of negotiations. However, everybody knows that the EC is in a hurry to get rid of the Lome-type preferences, and convert the EC-ACP relations into a reciprocal relationship between equals, in conformity with the WTO regime. The WTO, too, in theory, is a product of negotiations between equals that constitute the membership of the WTO. Everybody also knows that the ACP countries, for their part, are in no hurry to get rid of the Lome-type preferences. But they have very little choice in the matter. As Sutiawan Gunesse says in this Bulletin, the ACP countries took a political decision to negotiate the EPAs (the Economic Partnership Agreements) not without reticence. The decision was based more on pragmatism rather than the belief or conviction that the ACP States would benefit from the EPAs.

Ademola Oyejide and Dominique Njinkeu, in their article in the Bulletin, show succinctly that the LDC countries really have very little choice. In relation to Africa, they argue that only 13 African countries really need to decide if to negotiate or not. Out of 48 African members of the ACP, 34 are LDCs that do not stand to gain anything from negotiations, and may indeed lose out if they became part of a regional EPA. South Africa is out of it for it has already negotiated a separate FTA with the EU. So what are the 13 non-LDC African countries going to do about it? They have three options, say Oyejide and Njinkeu. One, they can choose to negotiate with the EU, either as independent countries, or as part of an EPA. Two, they can revert to the old GSP regime. Or, three, they can look for another alternative. But these are not real options. Going back to GSP is no real option the non-LDCs could lose Euro 767m through this route, says one study. The countries that would be most negatively affected include Cameroon, Côte d'Ivoire, Ghana, Kenya, Mauritius, Nigeria, Senegal and Zimbabwe. Another alternative that of waiting for the EU preferences to become effective in 2004 - is no option either, for the time is more or less past, and in any case, they would be WTO incompatible.

So their only (forced) option is to negotiate an Economic Partnership Agreement (EPA) with the EU. But how should they do it? As individuals or as a region? If the former, then what leverage do they individually have in the negotiations? And if the latter, through which regional grouping should they advance their interests? Consider Kenya, for example. Within the East African region, it is the only non-LDC. The others nine countries are all LDCs - Burundi, Djibouti, Eritrea, Ethiopia, Rwanda, Somalia, the Sudan, Uganda and Tanzania that have no particular interest in negotiating since they are already covered under special dispensations such as the special and differential provisions for them in the WTO, and the Everything but Arms offer of the EU made in March 2001. So what is Kenya to do? As the article by Vitalis Omondi in this Bulletin says, Kenya has high stakes in keeping things pretty much as they are. The bulk of its exports valued at $3 billion is with the EU. The EU accounts for 90% of its horticultural export. Under which EPA framework can Kenya protect its interests?

Or take Southern Africa, or the SADC region. South Africa has already negotiated with the EU a separate Free Trade Agreement (FTA). That effectively ties down Lesotho, Swaziland, Botswana and Namibia that have a customs agreement with South Africa through the Southern African Customs Union (SACU). That leaves out 9 more countries in the region, of which 6 are LDCs (Angola, Malawi, Mozambique, Tanzania, the DRC and Zambia), and 3 are non-LDCs (Mauritius, the Seychelles, and Zimbabwe). They are to decide through which geographic configuration they should negotiate with the EU. It should challenge the wits of the best minds to suggest what this configuration might be. Nobody has found an answer to this yet. And then there are political difficulties between the EU and one of the members of the SADC, namely Zimbabwe. Rightly or wrongly the EU accuses the government of Zimbabwe of acting improperly in relation to the land issue, and the presidential elections. Zimbabwe, in turn, accuses the EU to be meddling in the internal affairs of Zimbabwe. The last straw for the EU was when its Chief Observer, Mr. Schori, was denied permission to observe the Presidential elections. The Zimbabwe government says the EU was never invited in the first place, that instead the Government had invited the ACP to observe the elections, and that by forcing itself on the country, the EU was acting arrogantly and showed lack of respect for the ACP leadership. The EU has imposed smart sanctions against Zimbabwe. So under this climate, how can the SADC region (minus South Africa, Lesotho, Swaziland and Botswana) negotiate with the EU? How can Zimbabwe negotiate with the EU when the latter has imposed sanctions on its government?

EUs financial muscle

A third piece of evidence that it is the EC that drives the process (and therefore the likely outcome) of the ACP-EU negotiations is that the ACP countries are dependent on the funds from the EC even to operate from their offices in Brussels, and now in Geneva. It would be interesting for some post-graduate student to undertake a study of how the EC may have used its financial muscle to influence the process of negotiations. This writer was exposed to at least one demonstration of it. At the November 2001 meeting of the ACP countries in Brussels (where this writer was part of the Uganda delegation), the Chairman of the ACP Trade Committee, Mr. Nikurayi from Kenya, reported that there was slippage in implementation of the ACP Action plan. The Cotonou Agreement explicitly recognizes the need for and provides a preparatory period before negotiations of the new trade agreement can start. This is specified as the period between the signing of the Cotonou agreement (June 2000) and the start of formal negotiations (September 2002). The EC had promised to provide funds for the ACP to organise regional seminars and analytical studies, but because of the delay in the release of the funds by the EC, these could not be done timeously. Was the EC holding back the funds deliberately, or was it an instance of its bureaucratic laxity? Who knows? No matter, for the next question is: should not the negotiations (that have now begun in September 2002) have been postponed in view of the fact that the ACP countries were prevented by EC laxity or negligence from carrying out the necessary preparatory work? Should not the ACP countries be given time to prepare themselves, even if only to give at least some substance to the fiction that they are negotiating as equals with the EC?

A host of issues crying out for study and analysis

Lack of preparations on the part of the ACP is one of the most iniquitous aspects of the current ACP-EC negotiations. There are a whole host of issues that need to be carefully studied and understood before serious negotiations begin. Oyejide and Njinkeu, in the article in this Bulletin, list seven such issues. One answer might be that these issues could be studied between now (after the negotiations have begun) and December 2007, when the negotiations are scheduled to have been completed. This is like trying desperately to paddle to stop the boat whilst it is rushing headlong down the gorge out of the control of the paddlers.

One thing is clear. The ACP countries should not take the offers of technical assistance (TA) by the EC seriously. They are like similar TA promises by the WTO to the developing countries (DCs). These are aimed (and there is ample evidence to prove this) primarily to get the DCs to adapt and conform to the agenda of the rich countries that provide the funds for the TA activities. (see SEATINI Bulletin, xxxx). Of course, the financially strapped ACP countries have few options, but if they really intend to engage in serious negotiations, then they must find funds for their research and brainstorming seminars either from their own internal sources, or from some sympathetic Western NGOs, civil society organisations and foundations that believe in justice and fair play in the conduct of relations between Europe and Africa.

So where do we go from here?

As indicated earlier, the ACP-EU negotiations are in a morass, or in a jungle where a flock of deer do not even know whether they should negotiate with a pride of lions as individuals or as groups. If they decide to negotiate as groups then they do not know through which geographic configuration they should do so. Most of them know what the issues are that affect the interests of their people, but they do not know what the implications are of the various policy options, and indeed even what alternatives there might be. In fact, most of them do not wish to engage in the negotiations at all. They are doing so reluctantly, being forced into the den of lions by the process of globalization and the necessity to be WTO-compliant.

The ACP is divided; the EU is united. The ACP countries are divided among different continents. They are divided between LDCs and non-LDCs. They are divided by the Everything But Arms offer of the EU for which some qualify and the others do not. They are divided by the competing interests of the EU (through Cotonou) and the USA (through AGOA). The AGOA (the African Growth and Opportunities Act) divides Africa between those who qualify and those who do not, at least for this year, for the USA can decide unilaterally, every year, which country in Africa qualifies and which does not. They are divided within their own regions, where the EU has negotiated with a country (such as South Africa in the SADC region) whist the others cannot even make up their mind through which modality they should negotiate. They are divided within, inside, their own countries, where, for example in the case of Zimbabwe, the EU openly sides with the opposition, and yet has to negotiate with the government in power. The ACP-EU negotiations are in a mess.

There are only two strategies open to African countries members of the ACP one is immediate to short term, and the second a long term one. In the immediate to short term, African countries (and ACP) must act pragmatically, they must recognise the present reality. The ACP cannot stop the negotiations, why? because the EU will not let them, unless it is the EU that does not wish to negotiate. For Africa and ACP countries it has always been a matter of trying to catch up to the agenda set by the EU. Before they have digested the old issues, new ones are thrown on them, and before they have assessed the impact of old agreements, they are forced to sign new ones. This is so not only with respect of Cotonou, but also with respect to the WTO. So they must do the best they can to catch up and in the mean time to minimise damage to them. This is Damage Control - the DC strategy. In this respect there are a few issues that they should keep in mind.

In the immediate run, they must be flexible on procedural and organisational issues. To be specific, this means that they must work through whatever organisation serves their interests best on a particular issue and at a particular point in time. For example, they must use the ACP channel in order to protect the common ACP terrain, for instance, on issues related to GSP and on special and differential (S&D) treatment that are allowed by the WTO (Chapter VII of GATT) but mostly ignored by the Western countries. They must seek to get these S&D provisions legally binding rather than leave them, as at present, as simply best endeavour clauses. Furthermore, they must work together as ACP countries to remove the structural imbalances and inequities within the WTO that impact them adversely no matter what agreement they reach with the EU. It may be argued that the ACP must not bring the WTO issues on to the agenda of the ACP-EU negotiations. But whether they like it or not, the two are very much linked, and whether they do so or not, the EC is certain to link the two.

In this context the ACP countries must not allow the EC to mislead them about what was agreed at Doha. The EC is going to argue (and Pascal Lamy, the EC Trade Commissioner, has been going around saying) that at Doha the WTO members had agreed to negotiate, for example, on the four Singapore issues investment, competition policy, government procurement and trade facilitation at the next WTO Ministerial. This is simply not true. The ACP members who attended the Doha conference would remember that negotiations on these four issues are not to begin until and unless there is explicit consensus on these at the next Ministerial. Therefore, in their discussions with the EC, the ACP members must not get manipulated by the foxy Pascal Lamy and his team of negotiators to twist their arms (with carrots and sticks that they normally use) to agree to something that they did not agree to at Doha. This is an example of damage control.

Another general issue that the ACP countries must be clear about is the so-called market issue. The EC negotiators will try to wave the market carrot (as they did with the EBA offer) to lure the ACP into giving concessions, for example, on services or on environmental exports. This the ACP must resist. The market issue, whilst important, is not the only issue of strategic concern to the ACP and to Africa. And it is not the question of supply side either, though that too is important and has not been adequately provided for in the last 25 years of the life of Lome. The issue is much deeper and more complex. One of the difficulties about getting lured with the market carrot is that it reduces a complex matter to only one aspect of it. Take agriculture, for example. The issue of access to EU market is important, but it is overplayed by the EU. For Africa, agriculture is more than market to EU market. Agriculture is the mainstay of the livelihood of the bulk of Africas population, and therefore access to land as well as other natural resources and the inputs for production are far more important than access to the EU market. Africa must not compromise on these during trade negotiations. This is true, for example, of fishing and other means of livelihood for the people of Africa. The EU is negotiating bilateral agreements (for example, with Angola and Senegal) that has put to danger the livelihoods of thousands of fisherfolk, So Africa must not allow the market mania to distort their sense of priorities.

Still on organisational flexibility, while African countries must stand together with ACP on such matters as indicated above, they must use whatever organisational form is necessary to advance their common interests. In some cases, they must negotiate as AU. In other words, they must insist that on these matters the EC negotiates a REPA with the AU as a continental body. The above-cited instances (market access, agriculture, fishing, etc) are examples of such issues. Then, again, on other matters they must negotiate as regional organisations. For example, the LDC members of the East African region must not let the EU isolate Kenya, which is the only non-LDC member in the region (see above). They must insist that, for example, the EBA offer be extended also to Kenya. On no account must Africa let Europe divide them. Similarly, on the Southern African front the countries of the SADC region must not let the EU isolate Zimbabwe. The land issue goes to the core of the EUs dispute with Zimbabwe. Whatever policy each SADC member might have on the critical land issue, they must not allow the EU to divide them on this issue. They must stick together whilst negotiating with the EU on REPA. Furthermore, SADC must persuade South Africa to join in the negotiations with the EU even if it has a separate FTA with the EU.

Organisational flexibility and continental and regional unity are the key to the negotiations with the EU. If the present African political leadership allowed the EU to divide Africa, then they must be ready to face censure from future generations. On no account must African countries create a situation where a single one of them is thrown into the lions den on its own. That would be inexcusable.

This much for the immediate to short run. In the long run, the ACP countries (and African countries in particular) must recognise that the whole negotiation (with the EC) is based on a false premise. It is that the more Africa gets integrated into the global economy, the better for their growth, and that this growth will eventually filter down to the people, the bulk of whom are poor. Time and again this theory has been proven to be false. Leave alone the filtering part of the argument; even the growth aspect has eluded Africa. As for integration, Africa is far more integrated in the global economy than even Europe. Africa, for example, depends on foreign trade far more than Europe, which is much more internally integrated than Africa. The question is not the degree of integration, but the quality of integration. Africa produces low value products and gets less and less for their exports. Its poverty is deeply rooted in the structure of global trade, and the place it occupies in this trade. Ultimately the real test is whether the people are in control of their resources. African natural resources are still in the control of foreign capital, either directly at the level of production or indirectly at the level of the market.

Lome was an ACP-EU agreement that did not help Africa. After 25 years of cooperation, says the European Centre for Development Policy Management Centre, ECDPM, there is no significant change in life of the ACP people. (see: ECDPM, The New ACP-EU Partnership Agreement, Cotonou Infokit). Matters under Cotonou are even worse. There is considerable retrogression even from the bad days of Lome. There is, for example, a serious erosion of the principle of partnership under Cotonou, where the principle of reciprocity among unequal partners is replacing the principle of non-reciprocity under Lome. This is quite ridiculous, but the ACP countries lost this battle during very early stages of the negotiations leading to Cotonou. Secondly, the Lomé culture of aid entitlements is replaced by the performance criterion, which means that the already dwindled ODAs will further shrink for those countries that cannot perform, which is likely to be the case for most of the African countries. Furthermore, the negotiations have to be WTO compatible. Apart from entrenching the asymmetries and imbalances of the WTO agreements, this means Africa is now saddled with a whole range of issues (agreed at the last Ministerial Meeting of the WTO at Doha) for which Africa is ill-prepared.

Furthermore, the Cotonou Agreement introduces good governance as a fundamental element of the partnership, alongside the essential elements of respect for human rights, democratic principles and the rule of law. The distinction between fundamental and essential is significant in that the latter's violation could lead to the suspension of cooperation. This was another battle that the ACP lost during early stages of the negotiations. This, too, is quite ridiculous. Corruption is not something peculiarly to Africa or to the third world. In France, for example, Roland Dumas, a former foreign minister, was charged of securing his ex-mistress, Christine Deviers-Joncour, a job as a lobbyist with ELF, a state-owned oil company, and to have received payments from her of money she had received from the company. In 2001 Christies Sir Anthony Tennant & Southebys Alfred Taubman, the worlds largest art auctioneers, were charged an "international conspiracy" lasting six years to fix commission rates. They eventually agreed to pay out some $512m in compensation to clients in connection with a civil suit alleging price-fixing. And, of course, it is well known that the Italian Prime Minister, Silvio Berlusconis holding company, Fininvest, controls Mediaset, Italy's biggest private television group, embracing three out of the country's six national channels, which rakes in half of all television advertising and owns films, mobile-phone and Internet companies. Mr Berlusconi and his family also own Italy's biggest publishing house (Mondadori), a leading newspaper (il Giornale), an influential weekly (Panorama), a football team (AC Milan), a big bank (Mediolanum) and much else besides. European banks are regularly involved in laundering billions of dollars through creating instruments that enable rogue foreign banks and their criminal clients to legitimise their ill-gotten gains. Indeed the scale of corruption that led to the collapse of the multinational Enron and WorldCom, two of the largest American conglomerates far surpasses anything that has taken place in Africa.

In short, the EU has double standards. On Zimbabwe they are prepared to apply sanctions on the issue of governance as they determine it. What possibility is there for Africa to apply sanctions against say France, or Germany, or Italy?

In the long run, therefore, for three reasons Africa should seek to phase out their links with the EU on a systematic, deliberate and planned basis. One, the past 25 years of relations with the EU have not helped Africa; two, the theory that integration into the global economy brings growth is founded on a palpable fallacy; and three the Cotonou Agreement is an Unequal Treaty its fundamentals need to be renegotiated. The planned and deliberate phasing out of a dependent relationship with the EU could take decades, but every long journey begins with the first step. Once Africa is united along the lines suggested by the AU, Africa can then renegotiate with the EU (and with other trading partners) on a more equal basis than at present. In the present conditions, the ACP-EC negotiations are a farce.

		SEATINI BULLETIN Southern and Eastern African Trade, Information and Negotiations Institute Strengthening Africa in World Trade
Volume 5, No. 18	Produced by the International South Group Network		30 September 2002
IN THIS ISSUE!
African preparations in the context of the ACP-EU Cotonou partnership agreement * Ademola Oyejide * Dominique Njinkeu Negotiation of economic partnership agreement under the ACP-EU * Sutiawan Gunesse Kenyan produce at stake as EU seeks EPA *Vitalis Omondi Director's Comment: The current ACP-EU negotiations are a farce				Pages 1-7 Pages 7-11 Pages 12-12 Pages 12-19

SEATINI BULLETIN

Strengthening Africa in World Trade

Volume 5, No. 18

Produced by the

30 September 2002

IN THIS ISSUE!

African preparations in the context of the ACP-EU Cotonou partnership agreement * Ademola Oyejide * Dominique Njinkeu

Director's Comment: The current ACP-EU negotiations are a farce

Pages 1-7

African preparations in the context of the ACP-EU Cotonou Partnership Agreement