Fri, Nov 23, 2007 - Page 9 News List

EU bullying poor nations to seal dubious contracts

Millions of jobs and thousands of firms in the developing world are under threat because of the quick fix the WTO wants, but this battering-ram style is no solution

By Madeleine Bunting  /  THE GUARDIAN , LONDON

British Prime Minister Gordon Brown's commitment to Africa has been one of the most consistent themes of his political career, and as he arrives in Kampala, Uganda, at the end of this week for the Commonwealth summit, he might reasonably expect plenty of appreciation and warmth.

Instead, what he's likely to face is some intense presidential lobbying that will range from the privately furious to the deeply anxious.

What threatens to ambush Brown at the ceremonials is a trade deal with the EU that has come seriously unstuck. In the next few days the pressure will be on European Trade Commissioner Peter Mandelson to convince trade ministers he can extricate the EU from a very tight corner and what could be a public relations disaster.

At stake are the millions of jobs and thousands of companies in 76 of the poorest countries in the world that depend on exports to the EU.

Kenya's horticultural industry, for instance, which lands beans on your plate and carnations on your dinner table. It's a sector worth US$700 million in foreign exchange to Kenya, but come January, Kenya could face a 10 percent to 20 percent hike in tariffs on all its exports to the EU, and that could be sufficient to bankrupt some of its most successful export companies, carefully nurtured through aid programs.

GLOBAL EFFECT

It could be a story replicated across the globe from Lesotho to Namibia, from Papua New Guinea to the Pacific island of Vanuatu, from the Caribbean to Mozambique. The commission would stand accused of slamming the first tariff increase in more than 40 years on some of the least developed countries in the world.

This would hardly make for flattering headlines. The EU likes to claim credentials for promoting development, and it would wake up to a nasty new year hangover as the villain of the piece. The tempo of negotiations to avoid this is becoming increasingly fraught as EU trade negotiators bully and cajole their counterparts in developing countries.

The EU insists it has just six weeks to stitch together hugely complex trade deals; developing countries are furious that they are being rushed into agreements that will have far-reaching consequences for their economies.

So how did this pickle come about? How does trade policy end up being made on the hoof like this? Cast your mind back to 2005, and the talk during that year was that trade was as crucial as aid and debt relief to the long-term development of poor countries. The UK's Department for International Development made "fighting poverty through trade" part of its mission statement.

But trade proved the failure of 2005, the Doha round of the WTO talks ended in stalemate. The fallout of that failure to reform key rules of the WTO is now being felt, as the EU presses on to implement what many argue shouldn't still be in the WTO rulebook.

The basis of the present mess is that 76 former colonies of European countries have for more than 40 years benefited from a system of preferential, lower tariffs on their exports to the EU: It was a small gesture of colonial guilt. By the mid-1990s, other developing countries which didn't have access to the system challenged it, and the WTO ruled it as discriminatory.

HUNT FOR A SYSTEM

The hunt was launched to replace it with a system that still benefited these former colonies but wasn't going to land the EU in breach of WTO rules. The WTO gave the EU until next month to sort it out. Without a deal, these countries would be subject to tariffs on their exports.

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