African Union Trade Ministers Say NO to Singapore Issues in EPAs, NO to TRIPS plus and Call for an Ammended art. XXIV GATT

01 June 2005
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African Union Trade Ministers Say NO to Singapore Issues in EPAs, NO to TRIPS plus and Call for an Ammended art. XXIV GATT
Cairo, Egypt, 5-9 June 2005

The June 5-9 Conference of the African Union Trade Ministers held in Cairo ended with a Declaration calling for the Singapore/NAMA issues to be out of EPAs; for ammendements on article 24 GATT to allow for "necessary special and differential treatment"; and demanding that no TRIPS plus issues be introduced in the EPAs.

See also Memorandum of Civil Society Organisations


AU Conference of Ministers of Trade
3rd Ordinary session
5-9 June 2005
Cairo, Arab Republic of Egypt

AU/TI/MIN//DECL. (III)

AU'S Ministerial Declaration on EPA Negotiations

We, the Ministers of Trade of the Member States of the African Union, meeting in our Third Ordinary Session in Cairo, Egypt, on 8-9 June 2005 to consider a number of issues including the Economic Partnership Agreement (EPA) negotiations between our countries/regions and the European Union affirm the following:

  1. EPAs as Development Tools
  2. We reiterate that EPA negotiations should reflect the understanding and agreement in the Cotonou Partnership Agreement that EPAs should serve as instruments for development and poverty reduction. They must also support the deepening of intra-African trade. In this regard, emphasis should be placed on the need for urgent and easily accessible substantial additional resources for building supply capacity, infrastructure development, diversification, competitiveness of African economies and to deal with anticipated adjustment costs.

  3. Regional Integration and EPAs
  4. We place emphasis on regional integration as a key objective for African countries and realise that the process will continue well after the December 2007 deadline for conclusion of EPA negotiations. The EPA negotiations need to be seen in this context and should be supportive of this objective. Recognizing the limitations that overlapping membership to multiple RECs might pose to the implementation and maximization of possible gains from the EPAs, we request the RECs to urgently harmonise their trade integration policies before they conclude and sign the EPAs.

  5. Speed of Negotiations
  6. We recognise the principles that governed the ACP countries position during the Phase I of EPA negations and note that the different EPA groupings are moving at different speeds. We recommend that the different EPA groupings should harmonise their positions on issue of common interest before final decisions are taken.

  7. The Role of the African Union Commission in Coordination of EPA Negotiations
  8. We call on the Commission of the African Union to continue the implementation of the mandate given it by the AU Summit in Maputo in 2003 to monitor, coordinate and harmonise the EPA negotiations. The mechanism which has been established should include the gathering and exchange of information on EPA negotiations among the RECs and also identification of areas of common interest. We also call upon the RECs to give the AU Commission the necessary support and cooperation by, inter-alia, submitting progress reports on EPA negotiations.

  9. Intra-African Trade Barriers
  10. We note with concern that intra-African trade barriers continue to hinder regional integration processes on the African continent. We commit ourselves to taking measures that will lead to expeditious elimination of inter-REC and intra-REC trade barriers.

  11. Asymmetry and Flexibilities in EPAs
  12. We reiterate that Article XXIV of GATT needs to be appropriately amended to allow for necessary special and differential treatment, less than full reciprocity principle and explicit flexibilities that are consistent with the asymmetry required to make EPAs pro-development. Conclusions of the market access aspects of the EPAs should take place upon completion of the amendment.

  13. Market Entry Barriers and Capacity Building
  14. We recognise the impact of SPS and TBT on market access to be an issue of major concern to Africa and therefore recommend that non-health related rules and regulations under SPS be reviewed before agreements. Adequate resources should be provided to build capacity to meet the SPS and TBT requirements, which constitute non-tariff barriers to Africa's export trade.

  15. Singapore Issues
  16. We reaffirm the position of African countries that, except for trade facilitation, the other three Singapore issues of investment, competition policy and transparency in Government procurement should remain outside the ambit of the WTO Doha Work Programme/ EPA negotiations

  17. Intellectual Property Rights
  18. We note that the African Group initiated the discussion on the clarification of flexibilities in TRIPs, particularly in relation to patents and public health as well as biodiversity. We call on African countries to take appropriate measures at the national level to make full use of these flexibilities in line with the outcome of the AU Commission Workshop held in March 2005 in Addis Ababa. We call on the EU not to introduce in the EPA negotiations any TRIPs plus proposals (which go beyond existing TRIPs obligations) which would compromise these flexibilities. If such proposals are advanced, they should be rejected.

  19. Articulation and Coherence at Multilateral, Regional and Bilateral Negotiations
  20. We emphasise the need for coherence in the positions taken in negotiations at the multilateral, regional and bilateral levels and mandate the AU Commission to put in place mechanisms to ensure this coherence.

  21. AU Commission Collaboration with other relevant Organizations in further Work
  22. We mandate the AU Commission to undertake in collaboration with other relevant organizations further work on the following issues:

    1. Adjustment costs in relation to de-industrialisation and revenue losses;
    2. The treatment of EBA Scheme within the broader framework of EPAs;
    3. Implications of the enlargement of the EU and the reform of the Common Agricultural Policy, including the review of the Commodity Protocols; and
    4. Mode 4 in Services.

We thank the Government and the People of the Republic of Egypt for the warm hospitality extended to us and for the excellent facilities put at our disposal.

Done in Cairo, Egypt on 9th June 2005.


Memorandum of Civil Society to the 3rd Ordinary Session of the African Union Ministers of Trade, Cairo, Egypt, 7 June 2005

Members of the Africa Trade Network (ATN), and other civil society organisations working on issues of trade and development in Africa, take the opportunity of the third ordinary session of the African Union Ministers of Trade in Cairo, Egypt, to communicate to the ministers our views on Africa's concerns and positions on the on-going trade negotiations in the World Trade Organisation as well as within the framework of the Economic Partnership Agreements.

As with previous occasions of engagement with African governments, our aim is to contribute to upholding the unity and resolve of African countries in the on-going negotiations, as well as to support their continuing efforts to ensure that the interest of African people and economies are central in the outcomes of those negotiations.

This year is even more critical for African countries both in terms of the WTO and EPA negotiations.

As members of the WTO prepare towards the Ministerial Conference in Hong-Kong, we note that four years since the adoption of the Doha work programme, there is little evidence of progress in tackling the developmental concerns of African and other developing countries which were proclaimed as pivotal to the success of the Doha agenda. On the contrary, as evident from their proposals, the rich and powerful industrialised countries of the WTO continue to pressurise African and other developing countries to undertake further and deeper liberalisation commitments in their industrial and agricultural sectors even while the developed countries remain intent on maintaining their advantages and protection.

Thus, in spite of the legitimacy of their positions, and of all their efforts, African and other developing countries face the prospect that the current imbalances of the international trade regime - which has wreaked havoc on their economies and their peoples - will not be addressed; and that indeed these will be worsened.

These dangers are being replicated in the context of negotiations for regional and bilateral trade agreements which African countries are having to engage in. Many African regions are engaged in negotiations with the European Union for so-called Economic Partnership Agreements, which have been widely acknowledged as posing serious dangers to the sustainable development of the African regions and economies. Nevertheless the EU insists on the negotiation of EPA packages that will undermine rather than contribute to sustainable development.

As they prepare for the forthcoming WTO General Council meeting in July and subsequent gatherings on the way to the Hong-Kong Ministerial, we urge our governments to remain firm in articulating positions which promote the interests of their people and economies. In this light, we wish to bring the following recommendations on the most pressing issues on the agenda of international trade negotiations to the attention of this meeting.

Agriculture

Progress in addressing the current imbalances of the Agreement on Agriculture which have favoured the developed countries against African and other developing countries is critical for the development, food security and livelihood concerns of African countries, and a critical test as to whether or not the Doha work programme will live up to its developmental proclamations. However, the negotiations are headed in the opposite direction.

Developed countries are aggressively aiming for deeper reduction of agricultural tariffs in all developing countries, which would worsen the profound and adverse impacts on the lives of millions of peoples that have already resulted from earlier rounds of forced liberalisation, particularly in the context of the World Bank and IMF imposed conditionality. In addition, the developed countries are seeking to water down pro-development elements of the July framework, including mechanisms such as special product and special safeguard mechanisms for developing countries.

By contrast, the developed countries want concessions for themselves to protect their own interests, through a host of measures such as a new Blue Box domestic subsidy, the concept of "sensitive products" (to be subjected to lenient tariff cuts) and postponing the end of their export subsidies for as long as possible. The current proposals would allow the developed countries to continue with their high domestic trade-distorting subsidies because one important category of subsidies (Green Box subsidies) will not be subjected to any reduction, and these subsidies could be increased without control.

In short, in the ongoing negotiations African and other developing countries face the danger of being forced to open their markets to the developed countries while the latter continue to protect theirs. Worse, they will be exposed to the unfair subsidies of the developed countries, with artificially cheapened products being dumped in their markets, their own farmers displaced, and their livelihoods disrupted.

In view of the above, we

  • call on African governments not to undertake further commitments to reduce their tariffs on products that are essential for food security, the protection of small farmers' livelihoods and incomes, and for rural development and poverty eradication;
  • support the proposals of African and other developing countries that their "special products" (i.e. those needed for food security, the protection of small farmers' livelihoods and rural development) should not be subjected to tariff cuts, and that countries can designate which and how many products, according to their own national context;
  • support the proposal that a "special safeguard mechanism" be created in the WTO Agriculture Agreement, so that developing countries can in a simple and effective manner increase the tariffs of agricultural imports whose prices may fall so low as to threaten the livelihoods of small farmers;
  • call for an immediate end to export subsidies by developed countries, and the rapid phasing out of all domestic subsidies that contribute to the dumping of agricultural products into other countries, especially the poor countries, with Green Box subsidies capped and subjected to strict disciplines.

Non-agriculture Market Access

African and other developing countries have suffered severe de-industrialisation as a result of policies of trade liberalisation undertaken over the past two decades, particularly under the World Bank/IMF structural adjustment programmes. This situation would be worsened if the proposals put forward by developed countries in the current negotiations in the areas of Non-Agricultural Market Access (NAMA) are adopted.

Not only are developed countries such as the US, EU and Japan pushing for draconian reductions in the levels of tariffs, through application of non-linear formula with a low co-efficient applied on a line by line basis. They are also trying to dictate the scope and level of tariff binding, whereby African and other developing countries would have to bind all of their tariffs at relatively low rates, even though members have hitherto chosen for themselves the level at which to bind tariffs. There is also an attempt to get all countries to participate in the reduction of tariffs ultimately to zero in selected sectors.

Under the proposed non-linear formula, higher tariffs would be subjected to deeper cuts. Given the tariff profiles of most developing countries this would lead to a situation where these countries would be making more dramatic cuts and thereby providing a much greater increase in market access than the developed countries. The drastic reduction of tariffs threatens to further undermine domestic industry in Africa, already suffering from decades of World Bank/IMF imposed liberalisation.

African and other developing countries have consistently rejected proposals by the developed countries, and have put forward alternatives which addressed their concerns. Nevertheless, the current text (Annex B of the July 2004 Package) upon which the WTO consultations are being held, is dominated by the proposals of the developed countries, and has failed completely to take on board the proposals repeatedly put forward by developing country members.

What we need is to restart on a new basis that fully respects the development needs of African countries, and, to that end, fully incorporates the principle of special and differential treatment, and acknowledges the Doha mandate of less than full reciprocity.

We therefore urge African ministers to remain firm in their insistence on the flexibility for developing countries to determine for themselves the level and nature of their tariff commitments, in order to retain the flexibility and policy space enjoyed even by the developed countries in the past and which is crucial for the industrialisation prospects of African and developing countries. In particular,

  • African and other developing countries should not be subjected to a "formula approach" to tariff reduction on a line-by-line basis; instead they should be able opt for approach used in the Uruguay Round, whereby developing countries reduced their tariffs according to an overall target, with countries choosing different rates with which to reduce tariffs in different products;
  • African and other developing country members should not be compelled to bind all their tariffs, nor should they be compelled to bind them at particular rates, but should have the flexibility to determine for themselves their binding coverage and the rate at which their tariffs are bound, as in previous rounds of tariff negotiations;
  • concrete measures must be provided within negotiations to enable African and other developing countries to meet the challenges of preference erosion.

Cotton

We note that since the cotton sectoral initiative was submitted, the Cotton 4 countries alone have lost 381 million US Dollars in export revenues due to cotton subsidies and that in the year 2004-5 the estimated deficit to West and Central African cotton subsidies is 400 million US Dollars. We also note that the C4 countries submitted a proposal on 22 April, supported by the African group, on modalities for rapid, ambitious and specific solution to cotton problem, in the framework of agriculture negotiations.

Dismissing the above, the US in particular is resisting to negotiate on cotton, in spite of their agreement to a rapid, ambitious and specific solution in the July 2004 Framework. Moreover, we are seeing resistance of bilateral donors to the C4 proposal for an emergency support fund for the Africa cotton sector, in spite of commitments to increased development resources to cotton sectors made by the WTO and other institutions, most recently the IMF.

We urge African governments to

  • continue to give strong support to the proposal for a rapid, ambitious and specific solution to the cotton issue, and the particular date-lines proposed by the four West African cotton producing countries for achieving such solutions;
  • remain vigilant that revisions to the Blue Box do not enable reclassification of illegal subsidies;
  • request that EU, US and other bilateral and multilateral donors reconsider their position on emergency support fund;
  • provide technical and political backing to the C4 initiative, under the African Union.

Services

The WTO's General Agreement on Trade in Services enshrines the right of countries to decide whether to liberalise any of their services, which services to liberalise, to what degree and at what pace, a right reaffirmed in the "Guidelines and Procedures for the Negotiations on Trade in Services" modalities for the special treatment of LDC's. In spite of this, African and other developing countries are unceasingly under tremendous bilateral and multilateral pressures to provide "offers" in response to the "requests" made on them. This is because the GATS is being used by the developed countries to open up service sectors in African and other developing countries for their global service corporations.

African countries know from their experience under the World Bank/IMF structural adjustment programmes (SAPS) that opening up their services to foreign operators and ownership has impacted negatively on people's access to services and governments' development policy instruments.

In this context

  • we urge African governments not to proceed with offers through bilateral processes unless:
    - there is comprehensive impact assessments of the liberalisation of all services;
    - the multilateral working group on domestic regulation, government procurement, subsidies and safe-guards have been concluded satisfactorily for Africa's development needs.
  • we call on African governments to insist on their right to regulate services and liberalize according to their national policy objectives; and
  • we demand that developed countries and their services firms should not put any pressures on developing countries to open up their services sectors to foreign ownership and participation. In particular, the developed countries should not demand that developing countries open up services sectors that are sensitive (especially from a human development point of view), such as water, health, education and other public services. Moreover, other sensitive sectors that are crucial to the economic well-being of developing countries, such as financial services, energy and utilities, should not be subjected to any pressures for liberalization.

Trade Facilitation

We remain convinced that trade facilitation should not be dealt with through a multilateral agreement in the WTO. However, we note that African governments have agreed that this be negotiated within the Doha round.

Because we are aware of the importance of improving African trade facilities in the context of Africa's own national and regional development strategies, we call upon African governments to:

  • refrain from making any commitments in the WTO that do not arise from and serve their development needs;
  • refrain from making commitments in this regard that are beyond their economic capacities;
  • refuse to accept any demands from the developed countries without full, targeted and long-term finance and technical assistance in this sphere in the framework of Africa's own defined priorities;
  • insist that any agreement in this area is not subject to the dispute settlement provisions of the WTO.

Economic Partnership Agreements

The threats to the economic development of African countries in the WTO are replicated, in some instances more severely, in the context of the negotiations for the Economic Partnership Agreements with the European Union.

Notwithstanding the attempts by officials of the European Commission to paint the EPA in a more positive light, the EPAs are essentially free-trade agreements between unequal partners, which will tie up Africa's regions to Europe in an imbalanced framework and undermine Africa's producers, economies, and autonomous efforts at regional integration.

At a time when even Member States of the European Union are raising serious concerns about the EC negotiating mandate for EPAs, we call on Africa governments to heed the call from their citizens for a stop to the EPAs in their current form. We call on the governments to work for an alternative framework with the EU which:

  • is based on the principle of non-reciprocity;
  • allows for national and regional support and protection for African producers, and to this end, protection for Africa's domestic and regional markets;
  • reverses the pressure for trade and investment liberalisation;
  • recognises the necessary policy space for African countries to pursue their own development strategies.

Conclusion

We urge African governments to build on the unity of the African Union (AU), the Least Developed Countries (LDCs) and the African, Caribbean and Pacific (ACP) States in Cancún, and to strengthen strategic alliances with other developing country groupings in the WTO - above all the G33 and G20 - in order to increase their combined negotiating power, and to counterbalance the power of the developed countries.

Signed by
Africa Trade Network (ATN)
Third World Network (TWN)-Africa, Ghana
ENDA-Tiers Monde, Senegal
Alternative Information & Development Centre (AIDC), South Africa
EcoNews Africa, Kenya
Southern & Eastern Trade Information & Negotiation Institute (SEATINI), Zimbabwe
Centre pour le Commerce International et Development (CECIDE), Guinea
Oxfam International