Peter Mandelson's response to The Trade Escape WTO rules

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					Peter Mandelson’s response to The Trade Escape: WTO rules and alternatives to free trade
Economic Partnership Agreements

Brussels 06-10-2005

Dear ActionAid,

Thank you very much for your e-mail message of 4 September 2005 and the enclosed report on
alternatives to Economic Partnership Agreements (EPAs) with ACP countries. We have examined your
report with great interest and appreciate your active discussion on the new trading and economic
agreements between the ACP and Europe.

The decision to negotiate Economic Partnership Agreements and the decision on the essential modalities
of the EPA process have been taken jointly by the ACP and the EU in the framework of the Cotonou
Agreement after an extensive debate. In the same context we agreed with our partners to assess in 2004
the situation of non-LDC countries, which, after consultation with the Community, decide not to be in a
position to enter into an EPA. We also agreed that the EU will examine all alternative possibilities in order
to provide these countries with a new framework for trade equivalent to their existing situation and
compatible with WTO rules. At the request of the ACP side, the EU agreed not to apply the 2004 deadline
for discussing alternatives and to extend the deadline for such an assessment to 2006. To date, no
country, LDC or non-LDC, has indicated that it will disengage from the EPA negotiations and no country
has requested for an alternative to the EPA. All ACP countries are currently actively engaged in the
negotiations.

ActionAid commentary: African, Caribbean and Pacific countries have agreed to negotiate
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Economic Partnership Agreements with the EU but they haven' agreed that these should be Free
Trade Agreements - that ACP countries should cut their tariffs on up to 90% of imports from the
EU over 10-12 years.

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ACP countries have agreed to talk but they haven' signed any final agreement. Indeed they have
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repeated expressed their unhappiness about the direction in which EPAs are headed. On 22
June 2005 ACP ministers issued a statement which, “Expresses grave concern that the
negotiations have not proceeded in a satisfactory manner having failed to start addressing most
issues of interest and concern to the ACP regions, in particular the development dimension and
regional integration priorities.”

Peter Mandelson has already gone on record to say what the alternative is (ahead of any
consultation) and that it is "second best". Peter Carl, his top trade official, described alternatives
as "impractical" in an internal EU letter leaked to The Guardian newspaper. Legal advice from Kate
Cook of Matrix chambers said that the European Commission was undermining alternatives to
EPAs through such comments and therefore breaking both international and European
Community law. What ACP country would ask for an alternative that has already been described
as "second best" and "impractical"?

Your analysis of the current EPA negotiations concludes by strongly advocating the development of
agreements that would not include binding market opening elements on the ACP side. In this context, we
believe that permanent protection of large sectors impedes ACP economies to become more competitive
and thus constitutes an obstacle to development. Under an EPA, ACP countries would open their markets
first of all regionally among themselves. Later, gradual market opening vis-a-vis the EU will be
accompanied by the necessary transitional protection to encourage competitive local production and by
corresponding support programmes. There will of course also be safeguard and review clauses in EPAs
so that any sudden or unforeseen negative impacts can be addressed.

ActionAid commentary: ActionAid is not advocating "permanent protection". Indeed the executive
summary of The Trade Escape says: "Proposed Economic Partnership Agreements must be
radically reformed so that the European Union makes no liberalisation requirements of ACP
countries. ACP countries would continue to enjoy preferential access to the European market
while maintaining the right to protect their industries from unfair competition. ACP countries
would also be able to decide to unilaterally cut tariffs in a strategic and targeted way if they
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considered it in their developmental interests to do so." The EU' vision of EPAs is not about
"gradual market opening vis-a-vis the EU" but rapid and blanket market opening that would be
completed over a period of 10-12 years. To expect an African LDC to have reached a European
level of economic development within 12 years is plainly ridiculous.

We are convinced that asymmetric EPAs, properly designed and accompanied by adequate flanking
measures, will be an effective tool to deliver long-term development, growth and poverty reduction to the
ACP countries.

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ActionAid commentary: ActionAid is convinced that the EU' plans for EPAs will achieve the
opposite: kicking away the ladder to long-term development, less growth and more poverty for
ACP countries.

Yours faithfully,

Louis Michel [EU development commissioner]
Peter Mandelson [EU trade commissioner]