ACP–EU trade cooperation after 2000: an assessment of reciprocal trade preferences

Abstract

The establishment of the World Trade Organisation (WTO) in 1995 reflected and reinforced significant shifts in global orthodoxies in favour of the liberalisation of world trade, and posed problems for trading arrangements such as the Lome Conventions between the European Union (EU) and the 70 African, Caribbean and Pacific (ACP) states, which had initially been established in the very different setting of the mid-1970s. Integral to the Lome Conventions has been the principle of non-reciprocity, under which the EU offered preferential conditions for access to its markets by products originating in the ACP states, without any requirement for reciprocal concessions (other than most-favoured-nation status) by the ACP. These preferences are due to expire with the 4th Lome Convention in February 2000. Because they are non-reciprocal, these preferences cannot qualify under Article XXIV of the General Agreement on Tariffs and Trade (GATT) of 1947. Being available only to a particular group of developing countries, they are discriminatory and cannot be regarded as being covered by Part IV of the GATT, or the Enabling Clause of 1979, since these measures only sanction special, differential and preferential treatment for all developing countries. As a result of the changed climate of opinion in the World Trade Organisation (WTO), emphasising the obligation of members to bring their trade measures into conformity with WTO disciplines, the EU sought and obtained a waiver from Article I (principle of non-discrimination) for the remaining duration of the Convention, leaving open the arrangements to be put into effect after 2000.In the public discussions and consultations on a successor arrangement to Lome, the European Commission has emphasised the need for such an arrangement to be compatible with WTO requirements, so as to ensure the legal security of preferences. It is therefore envisaged that Lome preferences will be available only to the least developed countries (LLDCs), but will be generalised to all of the least developed countries, including for example Bangladesh, Bhutan, Cambodia, Lao D.R., Maldives, Nepal and Yemen, and not just to members of the ACP Group. The Commission has proposed that the non-LLDC ACP countries should be offered a series of regional and sub-regional free trade agreements. Not only would such arrangements seek to be WTO compatible, but the Commission also sees reciprocal regional agreements as stepping stones to fully liberalised trade and the integration of the developing countries into the world economy – an important development cooperation objective of the Maastricht Treaty.This article examines the Commission's proposals, and analyses the likely static and dynamic effects of a free trade agreement on the African ACP countries. It concludes by questioning whether the Commission's proposals would assist, rather than hinder, the regional integration and greater participation of these countries in the world economy.