The future of EU-ACP relations

Source: The Broker

The European Union (EU) needs the ACP's backing to get support in international governance, and needs its raw materials and markets. But the EU is indecisive about continuing this special relationship, according to Mirjam van Reisen, Europe external policy expert. 

The ACP represents almost half the world's states but does not have a voice in global governance forums, such as the Group of Twenty (G-20), which exclude the poorest countries, noted Van Reisen, founder and director of Europe External Policy Advisors (EEPA), a group of experts on Europe’s relations with developing countries based in Brussels, Belgium, and professor Endowed Chair Marga Klompé, International Social Responsibility, at Tilburg University, the Netherlands. 

The ACP is re-evaluating its partnership with the EU and exploring opportunities with emerging countries. The EU must decide whether it wants to build a partnership with ACP countries on equal terms, wrote the expert, who is member of the Coordinating Committee of Social Watch.

This is part of a special report wrote by Van Reisen about the future of the ACP and its relations with the European Union, published by The Broker, an independent international magazine on globalization and development, and sponsored by the European Centre for Development Policy Management (ECDPM) in Maastricht.

The old man and the seas

By Mirjam van Reisen

Globalization has made the world more interdependent than ever before. Problems are no longer the responsibility of the few. Whether the global financial crisis, climate change, human security or rising food prices, no country is exempt from the impact of these problems. But not all countries are equally influential, if at all, in the global institutions that address these problems. Think of the Group of Twenty (G-20), the International Monetary Fund (IMF) and the United Nations (UN) Security Council. Each of these institutions dances to the tune of the major world powers. The African, Caribbean, Pacific Group of States (ACP), on the other hand – the obvious representative of the world’s poor, marginalized countries – barely has a say in such global institutions and hence little influence in global governance.

How, then, is the ACP going to claim the position it should rightly have in global governance, as a bloc representing almost half of the world’s nations? This is not about border conflicts or military tensions. Those problems fall under the domain of the African Union and the Unions of Caribbean and Pacific States. The ACP is well placed to fill this gap in international governance issues such as climate change, finance or trade. It can take advantage of its members’ diversity and the clout of its larger ones, such as South Africa. The ACP could further strengthen itself as a group through South-South economic linking, investing in high-quality products and creating added value for its exports. The ACP supplies essential raw materials, not only to Europe but also to emerging economies. It therefore has the potential to become a bloc of countries that global institutions feel they must reckon with.

The first step towards securing a voice for itself as a group entails re-evaluating its partnerships. The ACP Group signed a treaty, the Cotonou Agreement, in Benin in 2000 with one of its traditional partners, the EU. This treaty is due to expire in 2020, however, and the EU has not yet confirmed its commitment to renew the agreement. The ACP, meanwhile, has begun to flirt with other potential partners, including China and the other BRIC countries (Brazil, Russia and India). Whichever partnerships the ACP considers, the ACP-EU relationship is at a crossroads. More than ever, the ACP seems to be in a position to choose a path that will strengthen it as a group and will enable it to become an even more relevant and viable force in the global arena.

ACP, Europe and the new global order

In a seventies-style building in Brussels, just outside the neighbourhood where EU institutions are housed, dozens of colourfully dressed ambassadors meet regularly at a table some 30 metres long. The ACP diplomats discuss trade agreements with the EU. Some speak in English, some in French. Interpreters in soundproof boxes provide simultaneous translations.

The diplomats discuss commodities such as sugar, coffee, cotton and other goods, worth billions of euros in trade. Their talks affect the livelihoods of 1.3 billion people: 792 million in ACP countries and 501.1 million in the EU member states.

For years, Europe has regarded Africa as its back garden. Colonial powers went in and took Africa’s resources. In postcolonial times, Europe and Africa negotiated trade deals for fuel, cotton, coffee and other goods. Now, Europe needs Africa more than ever, especially with a booming commodity market. But does Africa still need Europe?

Much less than previously, according to Lord Meghnad Desai, emeritus professor at the London School of Economics and Political Science. He believes that the ACP needs to reduce its dependency. In light of ageing, strict immigration laws and a slow economic recovery in Europe, he points out that 'within 10 years the EU will need the ACP.'

Indeed, some argue that this time has already arrived. According to the Africa-Europe Faith and Justice Network, 'the EU has to rely on the import of several critical raw materials from third countries. In fact the EU is the world’s largest importer of natural resources, accounting for 23% of the global imports of natural resources. The EU’s import dependency rate for minerals ranges from 46% for chromium, 54% for copper ore, 95% for bauxite to 100% for materials such as cobalt, platinum, titanium and vanadium.

The network also points out South Africa's highly sensitive position as 'the world’s largest supplier of two of the raw materials which are considered by the EU as particularly critical – rhodium and platinum – and [South Africa] has already been identified by the EU as one of the countries which apply trade restrictions on raw materials. Were South Africa to sign an Economic Partnership Agreement (EPA) that includes a chapter on investments, it would no longer be able to give preference to historically disadvantaged people. As the former World Bank Chief Economist and Nobel laureate Joseph Stiglitz said "If you’re from a developing country, try to make sure that your government doesn’t sign a bilateral investment treaty."

The growing competition over raw materials may open the door for the ACP to play a greater role in global governance one day. The EU has already tried to divide the ACP several times in the past, so the ACP might turn to other countries, such as China, for support. China is one of the main trading partners and largest investors in Africa now, and has been strengthening its relations with many of the continent's states. For now, the ACP still considers Europe family. 'But actions speak louder than words,' warns Anil Sooklal, South African ambassador to the EU. 'It is no use considering the EU as family, if we don’t act as partners.'

For some, free trade is the answer to the ACP’s problems. It can eradicate poverty, according to Desai. He sees the WTO as the only global institution where all states are equal. ‘No permanent members, no veto powers. And free trade is necessary for every country to develop,’ he told ambassadors from ACP countries at a presentation in Brussels in June 2011.

‘Development doesn’t come from granting special status. It doesn’t come from requesting your money back from former colonial powers. Development comes from hard work, high savings and free trade.’ Desai favours realpolitik over idealism, and emphasizes that the participation of all countries in decision-making processes of all countries is an essential condition for global governance.

Free trade was the idea that underpinned the EU’s proposal to the ACP in 1998 that eventually led to the agreement in the Cotonou Agreement to negotiate EPAs. Stiglitz warned against bilateral investment agreements, such as the EPAs; does this also warrant a closer look at the EPAs and which countries or blocs benefited from these? And what is the EU’s stance on the matter?

Shaky ground

The EU has been negotiating trade deals with the ACP since the latter was founded in 1975. In 2000, the parties even agreed to abolish non-reciprocal trade preferences after a transition period of ACP-EU trade cooperation. The Cotonou Agreement is a unique partnership, which is legally binding and based on equality and mutual respect. However, this form of cooperation between the EU and the ACP is now on shaky ground. ACP diplomats are rightly concerned. The EU's interest in cooperating with the ACP seems to be waning, and the question is whether the EU intends to prolong it after 2020.

The European External Action Service (EEAS), launched in December 2010 and headed by Baroness Catherine Ashton, does not have an ACP division. To make things worse, the ACP is not mentioned any more in the EU Lisbon Treaty (see box on Lisbon Treaty), which was meant to herald a new era in external relations and development cooperation in the EU. The EEAS's administrative set-up does not recognize the special status of the European Development Fund (EDF), which funds ACP-EU cooperation.

The negotiations on EPAs, moreover, have been cumbersome since the Cotonou Agreement was signed. The EU and ACP had agreed in 2000 to discuss more free trade. The idea was to conclude bilateral agreements between the EU and the ACP countries. But the expected effects of the proposed liberalization on ACP countries appeared negative for many of the developing countries. Moreover, the architecture of the negotiations was also too difficult: the EU chose to negotiate between or with regional groups of ACP states, but these groups differed internally. The EPA negotiations came to a slow-down in 2009.

'Some of the most important issues that concern the ACP,' according to ambassador Sooklal, 'are the EDF process and EEAS' new structure. These are signals to the group saying that Europe is not giving them the same level of attention as previously.' The EU's problem is that it feels locked in its historic relations with the ACP, whereas what it really wants is to remodel its international cooperation framework so that it is pertinent to today's problems. The EU lacks the imagination needed to recognize the potential its partnership with the ACP has in today's world. 

It is no surprise, then, that ACP diplomats are puzzled that their group is not mentioned in the Lisbon Treaty. Zimbabwe's new ambassador to the EU, Mary Margaret Muchada, compares the situation to a personal relationship. 'If your boyfriend keeps mum about the relationship after 2020 and doesn’t mention us in the treaty, no wonder we are looking for new boyfriends,’ she says, explicitly naming China as Europe’s competitor.

The ACP countries, meanwhile, are warning the EU that negotiating and ratifying new agreements are likely to take years. It is therefore essential that a swift decision is made on when to start negotiations. In addition, the ACP will not, and should not, depend on the EU to take the initiative to decide where the partnership will go next.

Breaking up is hard to do

The secretary-general of the ACP secretariat in Brussels, Mohamed Ibn Chambas, does not foresee a breakup with Europe, however. 'It’s more like a traditional relationship,' he says. 'We make new friends, while keeping the old. That is what it is. Value in diversity.' Chambas says the relationship with Europe needs to be reoriented, and stresses the importance of ‘aid by trade’. 'Look at Africa not as charity,' he advises, 'but as an investment. We can grow with more infrastructure, better port facilities. Not just aid.'

One must not rule out the possibility that major multinationals will relocate their production facilities to Africa in the future, says Chambas. 'Why not attract industry from China? There are some jobs nobody wants to do. If China moves up, Africa will be the new frontier.'

In the meantime, more and more African producers are trying to export finished goods instead of commodities. There is more profit selling high-fashion designer dresses made of cotton, than just selling bales of cotton. But some EU rules bar these finished products. 'Europe is making it difficult for us to export,' says Muchada. 'That is certainly a problem for some of our organic farming products, like fruit pulp for ice cream.'

So, what is the future, if any, of ACP-EU cooperation? ACP ministers have been deliberating on how to strengthen the group's unity and solidarity. In 2014, the presidents and other rulers of ACP countries will meet and decide on their future position. After that, they propose to meet jointly with the heads of states of the EU member states at a summit to agree on the shape of the ACP-EU partnership.

A crucial decision will need to be taken on the future of the Cotonou Agreement now that the EU is preparing to negotiate the union's budget for the next seven years (the next Multiannual Financing Framework). This budget concerns hundreds of billions of euros. If the agreement is not continued, the EDF's financial support would eventually be integrated into the EU's overall budget.

So far, the EU has not indicated what will happen when the ACP-EU partnership formally ends in 2020. This is something that makes ACP countries nervous. Ambassador Sooklal suggests that the ACP looks beyond Europe. 'The ACP is trying to be proactive in this situation, trying to make the group more relevant. It is thinking as well how to strengthen its relations with its new partners because the ACP should not just see itself in the context of post-2020. There is a very large world that needs to interact with the group and a lot of other players to make and keep good relations with.’

The ACP-EU partnership has hardly helped developing countries to grow over the past two decades. The ACP's share in world trade even diminished during this period, says Patricia Francis, executive director of the International Trade Centre (ITC). Every day, people worldwide use sugar, drink coffee, buy cotton clothes or even fill their tanks with fuel originating in Africa, the Caribbean or the Pacific. But producers in ACP countries have hardly added value to the products they sell in the last few decades.

Strained relationship

The EU used to be able to count on the ACP vote in international negotiations, but no longer. Why is this the case? Did negotiations between the ACP and the EU on the EPAs mortgage the relationship that once used to be so evident?

The Cotonou Agreement was meant to help trade between the EU and the ACP. The two blocs decided to conclude a new trade regime, the EPAs, intended to establish reciprocal free trade agreements between the EU and ACP sub-regions. The EU emphasized the need for compliance with the WTO, requiring the liberalization of at least 80% of ACP trade (by tariff lines and trade volume) in order to be ‘WTO-compatible’.

The EPA negotiations turned out to be very difficult. In fact, they alienated some ACP countries from the EU, while the intention had been to strengthen the relationship. In the end, the ACP remained a substantially united bloc of countries – out of the group's 79 countries only 25 signed the agreements, mostly small Caribbean states.

From the beginning, the tone of the negotiations was difficult, and the EU was perceived as trying to bully the ACP into agreement. Former EU development commissioner Louis Michel bluntly told the ACP countries: 'When you open the market, you will benefit unless you think that global self-sufficiency allows you to survive. If this challenge isn’t met then perhaps one should continue to be involved in charity work ... There is no plan B.

In May 2010 Hage Geingob, Minister of Trade and Industry made an appeal in Namibia’s National Assembly, 'I call on our friends in Europe not to abandon us and to work with us towards a lasting solution. After all, the EPA is about partnership towards the shared goals of poverty alleviation and economic development. Let’s not use bully tactics or old colonial arrogance. Let’s be partners who are equal in sovereignty.

In the negotiations with Namibia, the commissioner of trade, De Gulch, subsequently promised 'to back off on EPAs' after the concerns that had been raised. Nevertheless, in January 2011, the ACP Council of Ministers still complained that 'EC negotiators have continued to exert severe pressure on ACP States to sign up to agreements that do not fully reflect their concerns.

Many commentators and researchers have argued that the EU had emphasized free trade more than necessary in order to gain greater access to ACP markets, including in the areas of investment, services and government procurement, areas of considerable interest to European companies. Critics have claimed that the vulnerable ACP economies have been asked to liberalize much more than the EU, and that this contradicts the WTO regime, which is based on the principle of preferential treatment for weaker economies. In 2001, the ACP opened an office in Geneva, illustrating the relevance of defending the interests of the group in the WTO.

The European Commission has always defended the EPAs for their ‘development ‘orientation. European trade commissioner, Karel De Gucht pointed out that ‘EPAs will help make ACP countries more competitive by lowering import costs and providing access to affordable quality services. They will help create a transparent and predictable business environment and help ACP countries to attract the investment they so desperately need. And they will promote regional integration and create bigger markets – we in Europe know how important that is!’

Read Mirjam van Reisen´s complete report at The Broker.