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For real trade justice

Peter Mandelson — © Guardian Newspapers Limited 2004

Europe's export subsidies have to end, but don't forget they also provide benefits for developing countries.

IN A little over two months' time, the future course of global trade and development will be shaped at a meeting of Trade Ministers in Hong Kong. This is when the final contours of the Doha Development Agenda, the current trade negotiations round, are likely to become clear. For some, the task at hand is simple: you just sweep away Europe's and everyone else's tariff barriers and the world can trade happily ever after.

I want trade to be put at the service of development. But turning aspiration into reality is complicated. Last week, I visited the Caribbean. Their Trade Ministers share my passion for trade justice. But for them justice is about the EU not reducing its tariffs so that they continue to benefit from the preferential access and quota arrangements denied to other countries. In sugar and bananas, for example, this accounts for a large portion of their competitive advantage. Calls for sweeping reform of the EU's common agricultural policy (CAP) strike apprehension rather than joy into their hearts.

The same double-edged consequences apply to the British Government's demand for an early end-date for agricultural export subsidies. Yes, I want to negotiate this. Yes, reducing trade-distorting agricultural subsidies is vital. This is a classic case where multilateral negotiation in the Doha round provides vastly more development benefit than unilateral action. But we should be clear that, in the short term, ending export subsidies may mean more expensive food imports for the struggling poor in the rapidly growing cities of many developing countries.

Against this complex background, the European commission wants to forge with our African, Caribbean and Pacific partners modern trade and development programmes that, over time, replace dependence on the commodity-based preference arrangements that are no longer sustainable under WTO rules. These economic partnership agreements (EPAs) are regarded with scepticism by some NGOs. Their views are based on false assumptions about these prospective reforming agreements. The old-style preference regimes between Europe and developing countries have not provided a pathway out of poverty. If anything they have reinforced a damaging dependence on limited tropical commodities that often suited their one-time colonial masters.

Our partnership agreements are an attempt to help move developing countries out of this straitjacket. They are about much more than preferential market access to Europe, which is already largely achieved. Under the EU's "everything but arms" policy, all least-developed countries (including three-quarters of African countries) are being offered tariff and quota-free access to EU markets for everything, including agricultural products. African countries not in this category enjoy heavily preferential access under the EU's generalised system of preferences.

Much as people may think otherwise, the CAP does not keep out the vast bulk of Africa's agricultural exports, which is why 80 per cent of sub-Saharan exports come to the EU. This is a record of market access that other developed countries, including the United States, Japan, and Canada, have yet to match. It is time they did.

But these progressive policies have not made poverty history. That is why EPAs have been designed to create the conditions for fostering sustainable development. They can do that, first, by actively promoting regional economic and market integration. Within the EU, over the past half century, this process has helped European countries specialise, benefit from economies of scale, and boost investment. A single set of rules for trade in goods, services and investment makes it easier to trade — regionally, then more widely.

I believe this European example can work in the developing world. EPAs are not about Europe trying to force open markets for our benefit or imposing an ultra-liberal free trade ideology on poor countries. Gradual trade liberalisation, first within an African, Caribbean or Pacific region, then leading to a progressive integration of these regions into the global economy, will allow developing countries to seize international trade and investment opportunities.

(Peter Mandelson is the EU's Trade Commissioner and a former Trade and Industry Secretary in the Blair Government.)

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