Despite a few SOD Reports on regional trade, for those unaccustomed to the dynamics of regional trading blocs, the topic remains rather daunting. What is it that makes them special, and why is it so pooh-poohed by the likes of incumbent DG of the WTO Mike Moore? Actually, the WTO boss considers regional trading blocs to be "discriminatory", as he enunciated in the penultimate issue of the UK's DfiD Magazine. Small wonder, then, that we begin with an overview of such trade blocs, despite their minimal representation in November's focus on Regional Trade.
The article to introduce us to regional trade featured in WTOIL 29 November. Entitled "What Do We Know About Regional Trade Blocs?" and written by academic Carmen Cacho, from the University of Denver who is also designer of the "Regional Economic Integration" Webpage, he attempts to put trade blocs into perspective by explaining how compatible they are with trade liberalisation. He also looks at whether they conflict with multilateralism, and even whether they can be "welfare enhancing". He argues finally that "regional agreements and the multilateral trading system can be complementary as a result of deliberate policy choices."
He draws the conclusion that trade blocs have a positive effect, and advances the view, ultimately, that regional trading blocs "create new opportunities for trade"; "lead to more trade creation than trade diversion"; "provide momentum for non-discriminatory trade liberalisation efforts"; and "are open to new members". Finally, he argues something that would put a big, fat smile on Mike Moore -- that the multilateral trading "arrangements" are capable not only of "accommodating regional trade agreements", but "disciplining" them, too.
After that brief "lesson", we turn to the issues that really made headlines in this focus on Regional Trade for November - ACP Group and Agriculture.
With respect to the Brussels-based 77-Group African Caribbean and Pacific Group, they were ostensibly a force to be reckoned with. There is a necessary distinction to be made between the G77 that is comprised of 133 members today. The ACP, however, is made up of 77 members from those respective regions, and has dealt with the EU under what was the Lome Agreement till June 2000, when they met in Cotonou, Benin. Hence, the Cotonou Accord.
Established by the Georgetown Agreement of 1975, the ACP was, in 1999, subject of a WTO dispute. The US multinational, Chiquita, was suing the EU, and along it the ACP, as they have close ties with it (at least the British and the French by virtue of their colonial ties, though the Germans and the Scandinavians would beg to differ). The genesis of the dispute lay with what the US believed to be preferential agreements (as enjoyed by the EU-ACP relationship). The reality, it is alleged, was that the multinational had greased the palms of the Clinton administration and had also duly reminded it of how considerable a sum it had contributed to his presidential campaign. The US won the case at the WTO.
The situation today is slightly different, especially with the signing of the Cotonou Accord in 2000. Though only 15 countries have, to date, ratified it, the EU is doing very little to ensure that ratification is widespread throughout the ACP signatory countries. Little wonder that some perceive this relationship as another example of neo-liberalism at play.
This time, the state of play at Doha with respect to ACP participation was somewhat formidable, and the articles reflect this perception, too.
In an article that featured in WTOIL 29 November, "ACP Group Is Satisfied With the Outcome of Doha", the title said it all. In the article, circulated by Guggi Laryea of the Brussels-based Eurostep, Laryea argued that "the secretary-general welcomed the agreement that arose over the draft agreement on the 'TRIPs Agreement and Public Health'...and the assertion of the special and differentiated treatment for the less developed countries."
In a subsequent article, entitled "EU-ACP Gets WTO Nod", from the allafrica.com website, Nairobi-based journalist Aggrey Ouma, argues that Kenya's Trade and Industry minister Nicholas Biwott, argued that the agreement at Doha "will be of immense benefit [to the ACP]". Biwott maintains that "ACP countries can now sell their goods to the EU market without attracting punitive tariffs." He also called it "the greatest achievement" made by ACP countries.
Ouma also provided insight, albeit minimal, into what the implications of this agreement is to the government of Kenya : "the Government has preferential market access in the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA), the US market through the Africa Growth and Opportunity Act (AGOA) and the EU-ACP bilateral markets." Phew!
In the same vein, Biwott, in another article from allafrica.com that featured in WTOIL 15 November, entitled "Grant ACP Better Trade Terms Says Biwott", advocated, pre-Doha, that it was the Kenyan government's view that "special and preferential treatment for developing countries is a core principle of the WTO and should therefore be binding and incorporated into the architecture of future WTO agreement and rules." He maintained that the ACP countries supported the establishment of a 'development box' in agriculture that would provide them with enough flexibility to address concerns such as food security, sustainable development, rural livelihoods and poverty alleviation."
If that sounds too much, then you probably did not see the article that featured in WTOIL 8 November. This particular article, entitled "Position of the ACP Group Towards WTOMC4, 2001", was just that - with a bit more sting.
The ACP group enumerated the following as those they felt uncomfortable with: "Transparency in Government Procurement; Trade Facilitation; Trade & Environment; Core Labour Standards", which they exhorted to remain "under the purview of" the International Labour Organisation (ILO).
Furthermore, the ACP argued with respect to regional trade a line that would have made the hair on Mike Moore's head fall off. In their view, regional trading arrangements "can be complementary to the multilateral trading system". No dispute there - please see above. Secondly, they accentuated that "regional trade arrangements among developed countries should not discriminate against the interests of developing countries"[article 35]. Thirdly, they argued, such blocs among DCs are "essential to reversing the process of marginalisation and constitutes a dynamic basis for their effective integration into the Multilateral Trading System."
In fact, the ACP was surprisingly proactive in their statement, arguing that they were insufficiently competent to address some of the newer issues that have been the source of angst for many an NGO working on the development box aspect, food security issues, and/or agriculture. This was actually the second important item to appear in the November WTOIL's focus.
According to "Agriculture - One of the Most Difficult Issues in WTO", written by Lusaka-based journalist Reuben Phiri, "agriculture has been recognised as one of the most difficult sectors under the WTO, because of the existence of subsidies", as COMESA secretary-general Erastus Mwencha maintained. (WTOIL 8 November)
It seems like NGOs have been here before.
Nonethless, Mwencha echoes succinctly their frustrations when he argues that "agriculture accounts for 30-40 percent of GDP in the region and employs many people." He continues that "it has the highest potential" for DCs to take off economically. Yet, as the theory thus far suggests, and the reality has proved, the contentious Common Agriculture Policy, not to mention the OECD's 1 billion-dollar/day subsidy of its countries, remains very much the bane of negotiations. Mwencha contends that "conventional barriers like import and export licensing, quantitative restrictions, foreign exchange allocations and high transit charges had already been abolished in COMESA."(Please see SOD Report 1.4: The Big Four: MERCOSUR; ECOWAS Tales, and NAFTA") He draws the conclusion that despite all these obstacles that "continue to constrain and impede the growth of intra-COMESA trade..." regional integration "offered the only opportunity for survival of developing countries in the face of globalisation of world trade and investment."
At least when all seems doom and gloom, it's good to know that Latin American friends are there to help, as evidenced by the article that appeared in WTOIL 8 November. Entitled "Agriculture Tops Agenda for Chile", the falklands.com website that periodically publishes info pertinent to the Mercosur region, argues that Chile, "together with other agricultural nations from the Cairns Group (includes New Zealand, Australia and Mercosur...) will deland an elimination of production and export subsidies."
It continues that support for agriculture "gobbles 60% of the European Union budget, and the US Congress has just passed a bill with an annual 40 billion US dollars support system for American farmers, that will extend for ten years." Chile actually is calling not for a war on subsidies "that developing countries will naturally loose since they don't have sufficient resources", but Chief International Trade rep Ricardo Lagos Weber argues, Chile can "attempt to limit subsidies."
Only time will tell.
© E.K.Bensah, 2002