Oxfam Says Deal Signed Under Pressure

from All Africa

The East African (Nairobi)

By Paul Redfern

The UK aid agency Oxfam is insisting that last week's interim trade deal between the East African Community and the European Union was a result of undue arm-twisting of African ministers behind the scenes.

Although the allegations have been denied by East African trade ministers, Oxfam says the December 31 deadline imposed for a deal to be signed, forced ministers' hands.

"Developing nations have been placed under enormous pressure to sign," said Luis Morago, head of Oxfam International's European Union office. "Despite concerns raised by many including the IMF, the Commission has ignored possible alternatives and insisted on the deadline.

"They have essentially forced the East Africans to choose between guaranteeing markets for their agricultural products today and maintaining a degree of protection to promote future industrial growth - which all developed countries have done in the past.

"This agreement will oblige the East African region to remove 80 per cent of its tariffs on EU goods over 15 years, possibly more quickly, which could lead to unemployment and loss of vital government revenue that might otherwise be spent on health and education."

The European Union itself, however, issued a press release saying, both sides "welcomed the progress made in their discussions," which took place in Brussels last week.

The EU said that with the first phase of discussions now complete, a full Economic Partnership Agreement should be should be signed next year.

EU Trade Commissioner Peter Mandelson, who has come under pressure himself to ensure that East African states were not forced to sign up to agreements which would do long-term harm to their economies, insisted that the deal was good news for the countries of the East African community.

"It will prevent trade disruption and allow the EU to open its markets fully to East African Community exports from January 1, 2008."

The interim deal only involves trade in goods, market access, development co-operation and fisheries.

It will however ensure that vital horticultural exports, including flowers, fresh fruit produce and vegetables can continue to enjoy duty-free access to EU markets from next year.

However, it does force the EAC to gradually open up its markets over the next two decades and 80 per cent of exports from the EU are expected to enter East African markets duty free after 15 years.

This could deprive East African governments of considerable revenue.

In the shorter term moreover, EAC countries will be expected to open up their markets to other European Union products as long as they do not affect "sensitive agricultural and industrial products."

Mr Morago said that other poor African countries should not sign up to similar deals.

"It suits the European Commission to spread the impression that regions are falling into line and the rest should do so too.

"But we would urge other countries to take heed of the range of voices raised against these deals and continue to ask the Commission for more time to negotiate a pro-development deal and for feasible alternatives to be considered."

But the respected Financial Times newspaper in London said the EAC trade ministers from Rwanda, Burundi, Kenya, Uganda and Tanzania were wise to sign up to an interim deal to ensure market access for their key agricultural sectors.

"Unless new deals are concluded by the New Year, some ACP countries will face far less generous trade agreements," the paper said.

Nevertheless, as the current interim deal involves just goods, the EU is likely to step up its pressure next year to get a more comprehensive agreement that also include services and investment.

The reason for the rush to complete trade deals by the end of the year is the December 31 deadline set by the World Trade Organisation to renegotiate the privileged trade access given to ACP countries under the Lome Convention.

These preferential market-access agreements had been challenged by other developing countries not given access, claiming they were unfair.

The World Trade Organisation agreed, setting in motion a deadline for a new deal.

But as Madeleine Bunting wrote in the Guardian newspaper, "The sting was that the new system of EPAs had to meet the WTO requirement for reciprocity; what started out as the EU doing some poor countries a favour became a trade deal in which the EU was given duty-free access to the markets of developing countries.

"For developing countries, the EPAs have become a nightmare. They are a Damoclean sword hanging over their heads in the form of the December deadline, with all the economic disruption and chaos that would entail, but they also have deep anxieties about what they are being rushed into agreeing."

Meanwhile, Britain has agreed a 10 year aid deal with Uganda worth £700 million.

UK Secretary of State for International Development Douglas Alexander said the Development Partnership Agreement "is an indication of the UK's strong partnership with Uganda, and is based upon our shared values of reducing poverty, tackling corruption and respect for human rights."