Symposium: Trade issues in the context of Lomé IV and 1992

The ACPs and the Community are wondering how to make a success of LomV, even before it takes effect, and with this in mind, a “ High-level Seminar on Strategic Trade Issues in the context of LomV and 1992” was held in Brussels from 9-11 July.

Many leading ACP figures were there, in particular more than 25 ACP Ministers, including Joshua Nkomo, the Vice-President of the Government of Zimbabwe. Some ACPs were represented by their Ambassadors in Brussels.

The Community representatives were Manuel Marin, Vice-President of the Commission, who opened the meeting, Dieter Frisch, the Director-General for Development, and Peter Pooley, Deputy Director-General. Dr Garret Fitzgerald, the Irish Prime Minister at the time of the signing of Lom (1975), also attended.

Manuel Marin said that the Community thought the Uruguay Round was a unique opportunity to lay down the basic rules for international trade in the future and that, naturally, the new agreement would have to take account of both traditional partners and the new economies which are just taking off, as well as the special problems of those countries which have not yet made a significant mark on the world trade scene. “We need to be aware”, he pointed out, “of the fact that the real problem facing ACP countries is not the erosion of preferences but rather the fundamental reasons which have prevented them from enjoying those preferences.

In fact, competition is the key word here. The ACPs will have not only to cope with the intensification of competition in their traditional markets but also seize the new opportunities offered by a dynamic world economy. In order to take up the challenge launched by this competition, it is necessary to abandon certain practices and develop new habits...

As for the trade system itself, the ACP countries need to be present in the Uruguay Round both individually and collectively... The Community can only do so much; the rest you must do yourselves through your representatives in Geneva”.

Joshua Nkomo said that Europe’s Single Market of 1992 was an unprecedented departure whose success was already apparent to everyone. But the best finest aspect of it was that it would be an example to “ those of us who want to work to create a unified market as part of the Lagos Action Plan. We are convinced”, he said, “ that the path thus traced will be worthy of being followed by other regional and international organisations. But we remain sceptical about our ability, as ACP States, to meet the standards laid down for the access of goods to the enlarged market. This will no doubt cause trade flows with various parts of the world, including countries and zones which have achieved a better standard of economic development than ours. The basic question is how can we survive the competition with which we shall be faced. The bulk of the products we export to the Community market can easily be replaced by products from the Community itself, from newly industrialised countries or from Eastern European countries in the throes of change”.

A thoroughgoing dialogue

Once each party had outlined its position, extensive exchanges of views were held on the GATT negotiations and the Uruguay Round, the implications of the Single Market of 1992 and relations between Eastern and Western Europe, the trade provisions of LomV and various questions related to ACP firms, employment and services.

The basic issue was why, when it came to trade, the ACP States failed to derive full benefit (or got less benefit than the Asian countries) from their privileged relations with the Community. Participants answered this with both well-worn and new (in the ACP-EEC context) arguments along two lines.

First of all, they repeated, the chronic ACP trade deficit with the Community was due to the constant decline in the price of ACP exports (commodities) and the dwindling investments which European and other developed nations were making in the Group. In addition, the manufactures exported to the ACP States were getting more expensive all the time, as a representative of the ACP Secretariat-General, in particular, tried to make clear. Although the rise (and fall) of commodity prices had never kept pace with that of industrial products from the developed world, it was not the sole reason, or even the main reason, for the ACP-EEC trade deficit today - a point which was illustrated by the ACPs themselves, in particular the delegates from Cd’Ivoire, Dominica and Trinidad and Tobago.

Siaka Coulibaly (Cd’Ivoire) that there was no point in having access to a market - in this case the market of the Twelve unless you had something to sell. In a market economy with free competition, it was quality and price which won the day and the ACPs and Africa in particular did not currently fulfil these conditions. The GATT agreements, he said, would only be of any help to the ACPs and Africa in particular in the long term, and only then if the Community realised that the real ACP problem was the weakness of the structures of their respective economies and not, in the immediate future, access to the markets.

The Dominican Minister, Mr Maynard, and the representative of Trinidad and Tobago, Mrs. Sheelagh De Osuna, both underlined the contradictions in the various trade agreements between the developed countries and the Third World. The power of the developed nations and the weakness of the developing ones created a permanent state of imbalance, to the detriment of the latter, Mr Maynard said. The developing nations were asked to go in for full application of the rules of a liberal economy, but how could they compete if their markets were not protected, when the developed countries had a very efficient protectionist policy even if they did not call it that? Mrs. De Osuna pointed to the Caribbean Basin Initiative (the tax and customs facility package which the USA offered the Caribbean for exports of processed products to the American market), which was proving a failure because the Americans crossed all Caribbean products which were competition for US products, particularly textiles and sugar, off the list. These two outstanding ACP speeches suggested that the ACP States should rethink their whole system of production, marketing and management. It was the price they would have to pay if they wanted to keep their heads above water in international competition and take advantage of any trade agreements. The barriers to ACP trade with the Member States began at national level.

This was in fact the whole PMDT (processing, marketing, distribution and transport) strategy discussed at length during the LomV negotiations. The second area of discussion was world trade trends as a reason for the decline in the ACP situation. This was the line taken by Ireland’s Professor Dermot McAlesse, who reminded the meeting that manufactures represented 73 % of the value of world trade in 1988, an increase of 17% over 1980, when the figure was 56 %. Many developing countries had a worthwhile part to play in this, he said - by 1987, eight out of 28 countries in sub-Saharan Africa had gone beyond the level of their export earnings in the seventies. This, Peter Pooley said, was why, “ in the real world, where we all have to gain our living, a trade preference is only of value where a trade exists. The sad and solemn fact is that for very many ACP countries, the preferences accorded have little or no value, because a trade does not exist: or if it once did, it has now diminished”. As Manuel Marin had already said: “ There is no doubt that those developing countries which have had most success with their development are able to integrate themselves more closely in the multilateral system and to abide by the obligations resulting therefrom”.

The various points of view and the discussion they triggered - an interesting debate but with some surprisingly simple questions can be summed up in the following way: trade preferences, but to do what? In an international political reshuffle, can the ACPs just go on presenting themselves as the “ victims “ of an “ unfair “ international economic order?

Investment or rather disinvestment - in the ACP States, ACP financial transfers to the developed nations and the transfer of technology were also discussed. Investments were falling off because the ACP States were not creating the right conditions for profit (red tape and the lack of sound management were just some of the reasons) and ACP financial transfers were always being made to the benefit of the developed world. And, on the subject of the transfer of technology, it was Siaka Coulibaly again who said that “ technology isn’t transferred, it’s acquired “.

Trade at last!

Dieter Frisch, Director-General for Development at the Commission of the European Communities, and Mr de Carvalho Guerra, the Angolan Ambassador, wound up the seminar after spokesmen had reported on works of work of the four working parties (see box). The Angolan Ambassador said that countries with weak economies were unlikely to benefit from all the possibilities offered by LomV unless they went into partnership with European firms. “ At last we come to trade”, Dieter Frisch responded, welcoming the fact that the discussions had not “ skated over the problems, dealing with one-off questions”, as was all too often the case in trade.

“A return to closed markets” was in any case impossible, but it was important Mr Frisch said to “avoid any doctrinal responses to the question of whether the aim should be to integrate the ACP economies into the world economy”. Effectiveness was the most important thing and unduly open economies should sometimes be avoided. He declined to accept a “global analysis of the phenomena” which failed to take account of the extreme diversity of situations and thought that they should “ look very carefully to see just where a preference can help the ACPs”.

M.H.B. and L.P.