Something new out of Africa on the trade front

Andrew Marshall, in the last of a series, examines changes in the EU's commercial ties with former colonies
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The Independent Online
Europe's trade relations with the developing world need to be reformed completely, according to senior European Commission officials, who said a 30-year-old programme that largely governs commercial ties with Africa was obsolete and had worked poorly.

They want either to replace the Lome Convention or adapt it into a series of more flexible deals that no longer put developing countries into arbitrarily chosen groups.

The origins of the existing plan lie in trade concessions made by European Union nations to their former colonies. Lome covers 70 of the world's poorest states, mainly in sub- Saharan Africa but also in the Caribbean and Pacific. They are at the top of a pyramid of EU trade preferences for developing countries, with developing Mediterranean countries lower down and Asian, Latin American and some Middle Eastern states at the bottom.

There is little evidence, the Commission contends, that this system has worked. "One would expect the countries at the top of the pyramid of trade preferences to have recorded the largest gains," a Commission document said. "In point of fact, [their] exports have been declining, along with their share of the EU market." In particular, EU officials point to the failure of African economies to capitalise on their trade access.

Changes in world-trade rules also argue against the scheme, the Commission said. The Uruguay Round reduced tariffs for many products, undermining the advantage conferred by preferential arrangements. Lome also requires a waiver from world-trade rules; this may prove a problem in the future, Commission officials said. "You could shrug off the Gatt; you can't shrug off the World Trade Organisation [WTO]," one said.

New proposals for trade with South Africa do not go down the Lome road. Instead, they advocate moving towards free trade in 10 or 12 years, with reciprocally negotiated trade instead of concessions. The main reason is that South Africa is a mixture of extreme poverty and a developed industrial sector; but officials said that beyond this they wanted the deal to reflect the new realities of trade. It would have been very difficult to get a waiver from the WTO, they contended. And in any case, trade with developing nations is set for a rethink, so why not try a new model?

The existing 10-year LomeConvention, the fourth, was agreed in December 1989. It is unlikely to be renewed in anything like the current form. Instead, there are likely to be regional arrangements similar to the one likely to evolve from the EU's proposed pact with Pretoria or individual deals which will look much more like conventional trade agreements than the present scheme.

Aid officials are sceptical about the explanations offered over South Africa and the longer-term trends in Lome. Action for Southern Africa (Actsa), which campaigns for better links with the region, said free trade between South Africa and Europe could undermine regional-integration efforts. ''It's very difficult to see how they can move towards regional free trade if one component, and the largest, already has a free-trade agreement with Europe,'' Ben Jackson of Actsa said. As for Lome, "there are still some very valuable components," he added.

And the new focus on free trade may harm small, vulnerable economies, warned Actsa.This trend, coupled with programmes that imposed liberalisation and deregulation as conditions for multilateral aid, raised fears that the West was imposing free-market solutions.

But it is evident from trends in EU aid and trade relations with the developing world, and in particular Africa, that a great shift is under way.

It mirrors thinking in other development co-operation areas: an era is coming to an end when post- colonial relationships shaped ties with developing countries, especially in Africa.

"That post-colonial era now seems in many ways to be coming to an end," Peter Pooley, former Commission director-general for development, said.

In aid and trade, the EU is having to rethink its policies and find new ways to explain and justify them. "It is long overdue," one senior official said.

But it may mean that developing countries, particularly from Africa, have to fight much harder to make themselves heard in Brussels.