by Chakravarthi Raghavan

Geneva, 5 Apr 2000 -- The WTO's Council for Trade in Goods is to hold informal consultations on the request for waiver in respect of the partnership agreement, successor to the Lome-IV accord, between the European Union and the Africa-Caribbean-Pacific countries.

The consultations, trade diplomats said, are for the limited purpose of enabling countries to pose questions or seek clarifications on the waiver request and the details of the agreement.

The waiver request for the Partnership Agreement to succeed Lome-IV has been put forward jointly by the EC and Jamaica on behalf of the ACP countries to members of the WTO, and seeks in effect continuance of the Lome-IV waiver for a further period of eight years. In this period, both the EC and the ACP countries have said, the two parties are agreed to negotiate and conclude what they hope would be a free-trade agreement fully compatible with the WTO.

The waiver for Lome-IV tariff preferences granted on 14 October 1996 expired on 29 February 2000. The new EU-ACP agreement is to be formally signed in Fiji on 8 June, and in the interregnum the EC/ACP trade is governed by transitional arrangements.

The waiver request before the Goods Council was explained by the EC Ambassador, Mr. Roderick Abbot, and the Jamaican ambassador, Mr.Ransford Smith (on behalf of the ACP country-members of the WTO), and received what a trade diplomat described as a "cool" reception from the US and some Latin American banana exporting countries concerned over how the EC was going to implement the banana ruling, a request for same concessions from other least-developed countries not members of the ACP group, a slightly sympathetic but nuanced reaction from some other developing countries who were however concerned about its effects on their own tariff and trade preferences on the EC market under the GSP schemes, and the EC 'conditionalities' through a so-called 'positive approach' that ran counter to the GSP principles and the GATT's enabling clause.

The waiver request, in terms of Art IX:3 of the WTO agreement, has a 90-day time period to be acted on, and failing a decision, provides for the issue to be decided by a three-fourths' majority. Normally, such requests also go before a working party to enable members to seek clarifications, and examine the agreement in detail.

There was some argument in the Goods Council Wednesday as to when the 90-day period kicks in -- from the date of the submission of the request or the Goods Council being seized of it. Only an English text of the over 600 pages of the new agreement has reportedly been made available, and some of the banana exporters insisted on a Spanish version before the subject could be said to be officially before the Council.

The United States and some others also raised the issue of how a decision would be reached - insisting or expressing their preference for a decision by consensus, and arguing that a prior commitment on this from the EC and ACP would influence their substantive positions. Jamaica seemed to imply that while favouring a consensus, it would not rule out the right to take the issue to a vote.

Though no waiver request has ever been voted upon at the WTO, since it came into being, and the consensus-decision making has become a fetish purportedly based on GATT practice, in fact under the old GATT, waiver requests have been voted upon.

At the Goods Council, the EC said they were not looking for a decision at this meeting. Abbot outlined what he termed the new features of the agreement, intended to be "a development vehicle, rather than a trade vehicle". Over the next few years, during the life-time of the present agreement, there would be negotiations between the EU and ACP countries for an agreement fully compatible with the WTO rules. But these negotiations would be difficult because of the varying situations: 15 industrialized countries in the EU on the one side, and 71 ACP members with a range of low- to medium per capita incomes.

In the interim, from 1 March, the EU needs a waiver in terms of the trade/tariff preferences for the ACP countries. The trade regime being applied since 1 March was identical to that under Lome-IV, with an important exception, namely, it did not have a protocol relating to the banana regime. This last, and the EC measures to comply with the rulings, were still being discussed with the various interests and parties to the dispute.

Jamaica's Amb. Ransford Smith said the agreement and the preferences were of fundamental importance to the ACP countries. It should be seen against the background of the reality of the world trade, and the disjuncture with the objectives set out in the preamble to the GATT. The share of developing countries in world trade, he noted, had peaked a quarter century ago, and now was largely dominated by the industrialized countries who accounted for 80% of world trade - with developing countries accounting for less than a quarter, with Africa as a whole for only 3.5% of world trade and the 48 LDCs, 39 of whom were members of the ACP, accounting for just about 0.5 percent of world trade. The EU-ACP partnership agreement, he argued, should be seen in this context, and it responded in a "comprehensive and integrated manner" to the challenge posed by the objectives of the Marrakesh agreement.

A major innovation in the agreement, according to Smith, lay in moves for smooth and gradual integration of the ACP states into the world economy, and for an agreement that would be fully compatible with the WTO. The negotiations for such a WTO compatible agreement are to commence in 2002. Smith noted that similar waivers had been granted by the WTO in respect of preferential agreements favouring the Andean countries and for the Caribbean Basin Initiative of the US.

But the trade regime now in place, pending a full-fledged partnership agreement, continued the Lome-IV preferences and needed a waiver in terms of Art.I of the GATT (most-favoured-nation principle). In the first phase, the non-reciprocal trade preferences of Lome-IV would be substantially maintained. The EC would provide duty-free access to ACP products, and for agricultural products more favourable treatment than that accorded to third parties. The banana protocol would no longer provide the preferential treatment granted earlier, and any preferential access to ACP bananas would be in the context of the Community's new import regime on which consultations were proceeding with relevant parties, and would be WTO compatible. The new agreement also rolled over the Lome protocols on sugar, beef and veal.

In respect of the LDC members of the ACP, the EC would provide by the end of the new multilateral trade negotiations or 2005 at the latest, duty-free access to "essentially all" products, Smith explained.

The new agreement would also cover services trade, and the EC had committed itself to give sympathetic consideration to ACP priorities for improvements in the EC's schedule, and support the efforts of the ACP countries to strengthen their capacity in supply of services. And in the context of strengthened cooperation, it also covered competition policy, protection of intellectual property, standardization and certification, sanitary and phytosanitary measures, trade and environment, trade and labour standards, fisheries, food security and consumer protection.

In comments, Malaysia (for the ASEAN) expressed the hope that the EC would press ahead with initiatives for preferences for non-ACP developing countries. The ASEAN would need time to analyze the agreement and the waiver request, and would seek clarifications from the EU. Brazil recognized the importance of the agreement for the ACP members, but said it needed time to digest the over 680-page document, and would also need clarifications from the EU. India supported the initiative of the EC to help the trade of the developing countries but wanted assurances that its own GSP benefits would be protected.

The US said it supported the "aims of the agreement", but had several concerns. There was also a lack of documentation, since the EC had not yet tabled a formal draft decision for waiver. Also, the US wanted to be sure that the new agreement ensured EC compliance with the DSB rulings in the banana cases. The US would work on the waiver, but ensuring its own rights and the EC not being absolved of obligations under the DSB banana rulings.

The banana exporters - Panama, Honduras, Guatemala, Ecuador and Colombia expressed concerns over the technical aspects and lack of details on the banana regime. (SUNS4643)

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

[c] 2000, SUNS - All rights reserved. May not be reproduced, reprinted or posted to any system or service without specific permission from SUNS. This limitation includes incorporation into a database, distribution via Usenet News, bulletin board systems, mailing lists, print media or broadcast. For information about reproduction or multi-user subscriptions please contact < >