This briefing paper highlights why this may not be the case, and it proposes a strategy to eliminate or reduce African vulnerability to the lack of clear rules. It also highlights why it is urgent to resolve this problem as proposed by the ACP countries, before the WTO Ministerial Conference in Hong Kong, December 2005. African countries should be able to receive support in the WTO from the European partners on this issue.

The African experience in the WTO ministerial meeting in 2001 showed clearly how even just, strong and well coordinated African positions fade away because of the lack of clarity on rules governing regional trade agreements. Under the Doha negotiations, the Africans were at the final stages threatened by the demanders of the expansion of the WTO agenda with the Singapore issues. The threat was that a waiver to accept the Cotonou agreement would not be accepted. Had it not been for India, all Singapore issues would most likely have been negotiated today.

The EC insists that the EPAs should cover 90% of trade in goods. This is based on the ECs choice of implementing Art 24 of the GATT 1994 in order to avoid condemnation of its relations with the ACP by WTO panels, as was the case of the banana protocol, and the need to request waivers. The EC’s choice is only one of the possible options to follow up the preferential trade arrangements between the EU and the ACP. For instance, the EPA negotiations cannot use the provisions of the Enabling Clause to provide different and more favourable treatment among developing countries that make arrangements to reduce tariffs in regional agreements, because the EU is part of the agreement.

GATT Article 24 requests, amongst others, that regional agreements cover “substantially all trade”. The interpretations of different conditions to meet compatibility with this WTO rule on regional trade agrements have been controversial. These controversies have been central in negotiations of the Regional Trade Agreements Committee. As a result, according to the WTO , since 1995 the committee has failed to fully assess whether individual trade agreements conform to WTO provisions.

In the Doha Declaration (§29) members are mandated to negotiate with the aim of “clarifying and improving disciplines and procedures under the existing WTO provisions to regional trade agreements. The negotiations shall take into account the developmental aspects of regional trade agreements.”

Thus the understanding of GATT Art 24 of 1994 that was agreed during the Uruguay Round does not solve the problem of regional agreements covering different levels of liberalization.

ACP proposal to change GATT Art 24

The ACP Ministers decided that, within the context of the Doha Declaration, more flexibility should be sought in Art. 24 for developing countries so that they can receive special and differential treatment in trade agreements with developed countries.

In April 2004, the ACP group submitted a proposal to integrate developmental aspects in regional trade agreements by allowing special and differential treatment for developing countries. One of the arguments is that special and differential treatment is a key principle in several WTO agreements on goods. Also the GATS Art 5 provides for flexibility and more favourable treatment of developing countries negotiating regional agreements on liberalization of services.

In practice, this would mean that the product coverage should not meet “substantial trade” and that developing countries are allowed to use some protection measures rather than eliminating all restrictive regulations of commerce.

The ACP also want to safeguard the flexibility included in the understanding on the interpretation of Art 24, amongst others for interim agreements during the transition period prior to full application of Article 24 provisions. Furthermore, the ACP countries want to safeguard the provision of the “Enabling Clause” to provide different and more favourable treatment among developing countries that make arrangements to reduce tariffs in regional arrangements.

During the discussions at the WTO meetings of the Negotiating group on Rules, many countries raised different questions. The EC said it would submit written questions, but had failed to do so by beginning November 2004.

The GATT Art 24 was negotiated at the time when there was nearly no regional agreements between industrial and developing countries. Given the lack of clarity with WTO principles of Special and Differential Treatment and GATS Art 5 on Regional Agreements on trade in services, the ACP proposal should seriously be considered by all WTO members and their constituencies. The proposals, if implemented, would avoid the setting of unreasonable liberalization standards that undermine ACP economies, and destroy livelihoods of impoverished ACP peoples and small producers. More discussions and transparency about the EC’s position on this proposal are urgently needed.

-Acknowledgments to the SOMO foundation discussion paper “Attention needed for ACP Proposal to change WTO rule on Free Trade Agreements” by M.v. Stichele, 19/11/04.
-See the WTO decision ”Differential and more favourable treatment reciprocity and fuller participation of developing countries”. Taken on November 28 1979 (L/4903)
-http://www.wto.org/english/tratop_/dda_e/dohaexplained_e.thm#regional
-WTO Document TN/RL/W/155 (www.wto.org )
-See WTO decision ” Differential and more favourable treatment reciprocity and fuller participation of developing countries”, Nov. 28 1979 (L/4903)