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Time for trade justice

Claude Moraes MEP & Martin Caldwell argue that the EU must do more to help developing countries help themselves out of poverty through a fairer trade system

Development issues have risen to the top of the political agenda, from last years Make Poverty History campaign to the World Trade talks. The recent collapse of these talks has dealt a blow to hopes that the world could build a trading system that benefits the world’s poor.

The European Union has long been at the forefront of efforts to rebalance the global trading system. Since its inception the member states of the European Union have recognised their responsibility to the developing world by giving preferential access to developing countries to the European market. But the old agreements between the EU and African, Caribbean and Pacific nations (ACP) were no longer workable in an increasingly globalised world and fell foul of World Trade Organisation (WTO) rules. However, this did not lessen our determination to provide mechanisms to support the development, through trade, of some of the poorest countries in the world. European Parliamentarians have been some of the strongest and most vocal supporters of efforts to rebalance the global trading system in favour of developing countries. The long term spokesperson for Labour on development issues has been Glenys Kinnock, who currently chairs the African, Caribbean, Pacific delegation, an influential trade and aid position within the EU. Other Labour colleagues are also heavily involved in these issues with Linda Mcavan also on the development committee.

As a result of the WTO ruling the European Union and the nations of the ACP negotiated a new preferential trade and development agreement. What is known as the Cotonou Agreement updated the Lomé conventions, and was in line with WTO rulings. In practice this meant there needed to be some reciprocity in the trade provisions so in return for preferential access for the ACP countries, they needed to provide some access to their markets for European goods and services.

This is deeply controversial in many circles as it forces ACP countries to expose their fragile economies to intense competition from European firms. However, this is simply unavoidable otherwise the EU would leave the agreement open to be undermined by other members of the WTO. The Cotonou agreement is far from perfect and it institutionalises a trading system which benefits the mighty and powerful at the expense of the developing world. Bilateral deals such as the Cotonou Agreement would be redundant if we could make progress on the Doha Development round of the World Trade talks.

As you may be aware these talks collapsed recently with all sides blaming each other for the failure. The European Commissioner for Trade, Peter Mandleson squarely apportioned blame for the failure with the United States for not being prepared to go the extra mile in regards to farm subsidies. All other parties including the European Union were willing to offer more in order to reach an agreement.

It is also clear that the European Union must accept some of the blame for not offering a root and branch reform of the Common Agricultural Policy. The CAP is bad for almost everyone but only benefits an ever decreasing number of French farmers and agri-business. It is bad for EU consumers as it keeps food prices artificially high, it is bad for EU taxpayers and most of all it is grossly unfair to farmers in the developing world. Peter Mandleson was restrained at the WTO talks on just what he could offer on the CAP and he certainly pushed the limitations of his brief as far as he could.

Unfortunately, until we see the power of the farming lobby in France reduced or politicians who are willing to grasp the nettle of the CAP then we are unlikely to get significant and meaningful reform of this outdated policy.

What is most disheartening about the failure of the Doha round is this opportunity to rebalance global trade may be lost for a number of years. A number of the key players will be holding elections and under that climate progress is unlikely to be made. The European Union must now ensure that some of the provisions negotiated recently are still implemented regardless of whether we have an all-encompassing deal.

The EU should use bilateral deals like those of Cotonou and utilise Economic Partnership Agreements to help alleviate poverty in large parts of the world. The Economic Partnership Agreements (EPAs) are bilateral deals and could be a powerful tool to aid the development of ACP countries and the EU must ensure they are properly implemented both in Europe and in developing countries. They could have a real impact on the lives of millions of people by integrating developing economies into the global system, allowing these states to share in the benefits of globalisation, but to do so on a more equitable basis. However, the EPAs are far from perfect. EPAs break the unity of the ACP and enable these states to be pressurised by the EU into unfair trade deals. For too long ACP states have been functioning as neo-colonial economies supplying raw materials and as purchasers of western products. What they really need is access to our markets and protection from undue competition. This will enable them to develop their economies and tie them into the global economy.

If these states can work to bring themselves out of poverty, everything from aid to Fair Trade products would become redundant; this is an aim we must work harder to achieve. The reality of politics is such that our aspirations must also be balanced with pragmatism. Those who work in the development sector must approach the Economic Partnership Agreements and trade issues more generally with what is politically achievable, not a wish list of aims.

In practice, this means if we want to achieve a more balanced trading system with ACP countries any agreement has to conform to WTO rules and therefore some level of reciprocity is required. The European Union has sought to reduce this level of reciprocity to a minimum thereby ensuring the maximum possible benefit to the ACP countries while remaining consistent with WTO rules.

The aims of the Make Poverty History campaign, while noble, seem ever hollower in the light of the hard politics of trade. The EU has done more than most when it comes to improving market access for the ACP states but both the US and EU must and can do more. If we want to see a global system of rules which enshrine a level playing field then we need to work harder for the Doha round to succeed.

Until then we are left with the unsatisfactory bilateral trade deals like the EPAs. The EPAs are a blunt and imperfect tool but in the absence of a successful conclusion to the Doha round they offer the best opportunity to improve market access for farmers in the developing world.

Claude Moraes is a Labour MEP for London & Martin Caldwell is a Parliamentary Researcher