1. No category

Improving the Trade-Development-Nexus:
How to make EU trade policy more development-friendly
A thesis submitted to the Bucerius/WHU Master of Law and Business Program in
partial fulfillment of the requirements for the award of the
Master of Law and Business (“MLB”) Degree
Inez Freiin von Weitershausen
July 16, 2010
13,888 words (excluding footnotes)
Supervisor 1: Prof. Dr. Michael Frenkel
Supervisor 2: Christopher J. Whelan, Ph.D.
CONTENTS
Abbreviations………………………………………………………………………iii
Introduction……………………………………………………………………….. 1
I. The EU’s Policies of Development and Trade………………………………… 5
1. EU Development Policy…………………………………………….. 8
1.1. Characteristics and Shortcomings……………………….. 9
1.2. Grounds for Improvement……………………………….. 11
2. EU Trade Policy…………………………………………………….. 12
2.1. Revolutionising the allocation of competences…………..13
2.2. The multidimensional preference system………………...18
II. Linking Trade and Development:
Case study of EU-ACP negotiations on EPAs………………………………. 22
1. EU-ACP relations: From Yaoundé to Lomé and Cotonou…………. 25
2. EPAs: An efficient tool to fight economic marginalisation? ………. 28
2.1. Capacity building………………………………………... 31
2.2. Reform of RoO and quality of market access…………… 33
2.3. Regional integration……………………………………... 35
3. Lessons from the EPA negotiations………………………………… 37
III. An Agenda for Action………………………………………………………… 40
1. De lege lata: The Treaty of Lisbon…………………………………. 40
1.1. Extending EU competences……………………………... 42
1.2. Structural improvements………………………………… 42
1.3. Institutional innovations…………………………………. 44
2. De lege ferenda: Potential measures to promote consistency………. 46
2.1. Consolidating EU und Members States’ activities……….46
2.2 Engaging developing countries…………………………... 47
Conclusion…………………………………………………………………………. 49
Boxes
Box 1: The Eight Millennium Goals (MDGs)………………………………….
6
Box 2: UN Millennium Declaration – Selected Paragraphs……………………
8
Box 3: EU PTAs: 1957-2005…………………………………………………...
14
Box 4: Art. 133(1) TEC…………………………………………………………
16
Box 5: Art. 300(1) TEC…………………………………………………………
16
Box 6: EU Preferential Treatment: Pyramid of Priviledges…………………….
19
Box 7: Evolution of Regional Trade Agreements in the world, 1948-2008……
20
Box 8: Objectives of the Cotonou Agreement, Art. 34…………………………
22
Box 9: The ACP regions………………………………………………………..
24
Box 10: European Development Fund Cycles and Agreements………………..
25
Box 11: The EU’s vision on development with respect to EPAs………………
29
Box 12: Art 3(5) TEU…………………………………………………………..
41
Bibliography…………………………………………………………………...
51
ii
Abbreviations
AAMS
Associated African Malagasy States
ACP
African, Caribbean, and Pacific
AfT
Aid for Trade
AU
African Union
BIT
Bilateral Investment Treaty
CAP
Common Agricultural Policy
CCP
Common Commercial Policy
CFSP
Common Foreign and Security Policy
CSDP
Common Security and Defence Policy
DG
Directorate General
EBA
Everything But Arms Initiative
EC
European Commission
EDF
European Development Fund
EEC
European Economic Community
EP
European Parliament
EPA
European Partnership Agreement
EU
European Union
FASA
Foreign Affairs and Security Policy
FDI
Foreign Direct Investment
FTA
Free Trade Agreement
GATT
General Agreement on Tariffs and Trade
HR
High Representative
IMF
International Monetary Fund
LDCs
Least Development Countries
MDG
Millennium Development Goal
MFN
Most Favoured Nation
NDTPF
National Development and Trade Policy Forum
NGO
Non-governmental Organisation
OECD
Organisation for Economic Co-operation and
Development
OCTs
Overseas Countries and Territories
PTA
Preferential Trade Arrangement
RIA
Regional Integration Agreement
iii
TEU
Treaty of the European Union
TFEU
Treaty on the Functioning the European Union
UN
United Nations
UNCTAD
United Nations Conference on Trade and
Development
UNDP
United Nations Development Programme
WTO
World Trade Organization
iv
Introduction
A famous bonmot by the French political philosopher Baron de Montesquieu from 1749
suggests that “wherever there is commerce, manners are gentle”.1 Two hundred years later and
after two disastrous world wars, this insight found new popularity among political leaders and
was expressed in the various attempts to create closer connections between states through
trade. Their aim was to reduce the risk for future conflict and create long-lasting stability and
peace as prerequisites for development and prosperity.
Among the most successful efforts in this regard was the initiative of six European
countries to cooperate in various industrial sectors. Soon they were joined by neighbouring
countries, they expanded the scope of their cooperation and today the European Union (EU)
constitutes a group of 27 countries that cooperate on almost all levels which used to be solely
a matter of sovereignty and responsibility of the individual nation state. Despite the EU’s
short-comings and flaws with regard to democratic efficiency and legitimacy,2 the process of
European integration on the basis of trade is generally seen as a success story3: countries
opening-up their national borders let to growth and development, reduced poverty and nonmilitary ways of dispute-resolution, cohesion and regional integration.
These observations might explain why trade (liberalization) today is often perceived as
a ‘silver bullet’ for development, i.e. a simple, guaranteed solution for a difficult problem, also
with regard to other regions in the world. Due to its own positive experiences and the fact that
the Union is today the world’s largest trading block, accounting for 20 per cent of global
imports and exports,4 the EU is indeed one of the main drivers in the evolution of trade policy.
Under the unambiguous title ‘Trade benefits for all’, the European Commission (EC)
accordingly recalls its history and states on its homepage: “Open trade among its members
underpinned the launch of the EU nearly 50 years ago and has brought growing prosperity to
1
Cited in: Humphreys, Macaratan: Economics and Violent Conflict, Harvard 2003, p. 8.
For an overview of the most discussed short-comings and state of the arguments, see: Mény, Yves: De la
Démocratie en Europe: Old Concepts and New Challenges, in: Journal of Common Market Studies 2002,
Vol. 41, No. 1, pp. 1-13.
3
Some critics argue however, that not all MS have benefitted from integration in an equal manner and fear a
potential for social unrest if adequate policy measures are not taken. For an economic analysis, see: Malhotra,
Davinder K./ Mariotz, Elizabeth: Performance of European Union Trading Bloc: Did Integration Help Nations?,
in: Journal of Global Business and Technology, Vol. 1, No. 2, 2005, pp. 34-50.
4
European Commission: The EU and Trade, Brussels 2010.
Available online: http://ec.europa.eu/ireland/about_the_eu/eu_in_the_world/trade/index_en.htm (22.6.2010).
2
1
all its Member States (MS). The Union therefore takes a lead in efforts to open up world trade
for the benefit of rich and poor countries alike.”5 Together with multilateral institutions such
as Worldbank, IMF and OECD, the EU has shared the credo that “more open and outwardoriented economies consistently outperform countries with restrictive trade and [foreign]
investment regimes”6.
Other voices, however, point out that trade alone is not a sufficient explanation for
growth and that “trade has not always been at the core of the various paths that developed or
developing countries have adopted towards development.”7 Accordingly, trade only became
central to development thinking when export-oriented countries such as China, India, Brazil or
Vietnam were able to overcome their development traps.8 Critics raise the points that trade
liberalization does not necessarily lead to growth and can even be harmful for the liberalizing
country9, or – and this is the more frequent argument – that rather than trade alone, a wide
variety of factors, including the existing levels of development and education, the strength of
domestic institutions and quality of governance, macroeconomic stability and the existence of
measures to tackle corruption as well as the level of human capital are of immense importance
when explaining economic growth and development.10
Central argument and objective
This thesis does not aim at solving this debate or at discussing en detail the relationship
between barriers to international trade and economic growth, although it is one of the most
important issues for development theory and “few questions have been more vigorously
debated in the history of economic thought.”11 Rather, it uses as its basic assumption the
5
European Commission: European Union in the World - Trade Policy, Brussels 2009.
Available online: http://ec.europa.eu/world/what/trade_policy/index_en.htm (17.6.2010).
6
OECD: Open Markets Matter: The Benefits of Trade and Investment Liberalisation, Paris, 1998, p. 36.
7
Makhan, Davina: Linking EU Trade and Development Policies, Bonn 2009, p. 22.
8
For further information on the concept of development traps such as conflict, natural resources and bad
governance, see: Collier, Paul: The Bottom Billion, Oxford 2008.
9
Bhagwati, Jagdish.: Trade Diverting Customs Unions and Welfare-Improvement: A Clarification, in: Economic
Journal, Vol. 81, 1971, pp. 580-587..; Kemp, Murray/Wan, Henry: An Elementary Proposition Concerning the
Formation Of Customs Unions, in: Journal of International Economics, Vol. 6 , No. 1, 1976, pp. 95-97.; Levy,
Philip: A Political Economic Analysis of Free Trade Arrangements, in: American Economic Review, Vol. 87,
No. 4, 1997, pp. 506-519.
10
Kneller, Richard / Morgan, C.W. / Kanchanahatakij, Sunti: Trade liberalisation and economic growth, in: The
World Economy, Vol. 31, No. 6, 2008, pp. 701-719.
11
Rodríguez, Francisco./Rodrik, Dani: Trade Policy and Economic Growth: A skeptic’s guide to the crossnational evidence, in: Macroeconomics Annual, Vol. 15, 2000, pp. 261-325, p. 263.
2
common ground of academic discussions and the opinion shared by the EC12, that “trade can
create opportunities for growth and human development” and that “trade liberalisation is a
necessary, but not sufficient condition for development, and hence has a strong potential to
serve development and poverty reduction objectives.”13 In order for trade to be an efficient
instrument for Third World development, the different EU policies need to be coherent,14 i.e.
they must “support, and (…) not undermine, specific efforts to help and sustain the
development process.”15
On this basis, the aim of the thesis is to analyse how European trade policy can best be
designed to make it a strong and consistent instrument in the EU’s overall policies towards
developing countries and how it can enable those countries to follow the paths of the EU
towards growth, peace and regional integration. This question is of particular interest when
bearing in mind that the EU as a multilevel-system faces additional challenges in making its
development and trade policies coherent and consistent. Therefore the thesis will address
questions such as the (obstacles to) cooperation between the EU and its Member States, the
coordination of trade and development policies and the EU’s capability of working together
with the developing countries in identifying and meeting their needs.
Structure
The first part of the paper (I) will introduce the European Union’s policies of trade and
development by presenting the relevant actors and instruments, milestones and problems, and
classify them according to whether they are mostly determined by multi-, bi- and unilateralist
policy approaches.
The second part (II) will then analyse the negotiations of the EU-ACP Economic
Partnership Agreements (EPAs) that are regarded as the “EU’s flagship endeavour to make
better use of trade for development.”16 This case study shall provide insight on how linking the
policies of trade and development has recently been improved but shall also point out where
12
European Commission: Trade, Brussels 2010.
Available online: http://ec.europa.eu/trade/wider-agenda/development/ (16.6.2010).
13
Makhan 2009, p. 54.
14
According to the OECD definition policy coherence is the “systematic promotion of mutually reinforcing
policy actions across government departments and agencies creating synergies towards achieving the agreed
objectives.” OECD/DAC: The DAC Guidelines, Poverty Reduction, Paris 2001, p. 74.
15
OECD: Policy coherence: Vital for global development, in: OECD Observer, Vol. 7, 2003, p. 1.
16
Makhan, Davina: Coordinating EU trade and development policy-making in a new context, in: Trade
Negotiation Insight, Vol. 9, No. 2, 2010.
3
unresolved challenges remain.
The third and final part (III) will try to provide an outlook of how the relationship of trade
and development policies in the EU will evolve with regard to institutional and personal
changes after the implementation of the Lisbon Treaty and due to an increased need for
consistency and efficiency in the context of the financial and economic crises.
Research methodology and literature
The thesis touches upon legal, economic and political issues and hence is an interdisciplinary
attempt to examine the arguments that can be brought forward in order to stress the case for
better linking EU trade and development policies. The legal realm is of particular importance
for understanding the distribution of competences and institutional prerequisites of policy
making. Economic understanding is required for the analysis of the EU trade preference
system and the positions argued in EPA negotiations. Political factors are finally taken into
consideration when asking which (other) impediments hinder EU Member States from
working together more closely in improving the trade-development nexus.
Both, primary and secondary sources were used to make the analysis as objective and
precise as possible. With regard to the relevant development and trade activities, the thesis
relies on information such as treaties, official documents and speeches provided by the EC, the
EP and the OECD. Also of interest (until 2007) is the biennial publication by the WTO The
Trade Policy Review of the EU as it provides insight into how trade specialists view the EU
and, no less important, into how the EU sees its own role. The critical analysis of EU trade
policy is mostly based on the works by Holland, Meunier and Nikolaidis. The development
chapter mainly draws on the conclusions of Wanlin and Bartelt/Dann and on publications by
the Overseas Development Institute in London.
Of particular importance for the case-study on the EU-ACP negotiations is the work by
Makhan in the context of the German Development Institute’s ‘European Policy for Global
Development’ project as well as the analysis by Wright on contexts and strategies in the
negotiations. Finally, the research by Koeb and Woolcock was essential for assessing the
impact of the Treaty of Lisbon on the chances for improving the trade-development nexus.
4
I. The EU Policies of Development and Trade
In 1992, in the context of the Maastricht Treaty, the European Community introduced the
concept of the ‘3Cs’ (coordination17, complementarity18 and coherence19) as a means to
increase the effectiveness of development cooperation of the EU Member States and the
European Commission in general and to strengthen the relationship between their respective
trade and development policies in particular. Until that point, development issues were only
indirectly connected to trade, mainly addressed through the Community’s “long-standing trade
competence and the construction of a complicated pyramid of preferences”.20 This weak link,
however, did not appropriately reflect the case that trade had “arguably (become) the most
important policy area influencing the developing countries.”21 Based on this previous system
of (little) coordination, the ‘3Cs’-concept seemed very ambitious and hopes for actual
improvements were rather limited. Hence, critical voices pointed to a number of structural
conditions that so far have impeded the linking of EU trade and development policies.22
(i) Firstly, the respective policies are formulated on different levels and implemented
by various actors: while trade policy is (with few exceptions) a communitarised area, i.e. the
community has exclusive competence over this field, development issues are shared between
the Union and its Member States.23 To make things even more complex, also on the
Community level responsibility in development issues is split and different DGs (directorates
general) aim at influencing development topics if they feel that their interests are touched
upon.24
17
Defined as “activities of two or more development partners that are intended to mobilise aid resources or to
harmonise their policies, programmes, procedures and practices so as to maximise the development effectiveness
of aid resources.” (Definitions of footnotes 15-17 are taken from: The 3C evaluation initiative: 3Cs defined,
Leiden 2008. Available online: http://www.three-cs.net/3Cs-Defined (29.6.2010).
18
Defined as intended to ensure that Community development policy “shall be complementary to the policies
pursued by the Member States.” (See footnote 15.)
19
Defined as “the non-occurrence of effects of policy that are contrary to the intended results or aims of policy.”
(See footnote 15.)
20
Orbie, Jan/Versluys, Helen.: The European Union’s international development policy: leading and benevolent?,
in: Orbie, Jan (edt.): Europe’s global role: external policies of the European Union, London 2008, p. 72.
21
Van Reisen, Mirjam.: EU ‘Global Player’: the North-South Policy of the European Union, Utrecht 1999,
p. 129.
22
Holland, Martin: The European Union and the Third World, Hampshire 2002.
23
Only very few commentators see the Community also as the driving force in the development area: Carbone,
Maurizio: The European Union and International Development: The politics of foreign aid, London, 2007.
24
As an example hereof, no less than seven DGs took part in the discussion of development issues after the
Maastricht-Treaty.
5
(ii) Secondly, although all European countries are members of the United Nations (UN) and
hence support the overarching Millennium Development Goals25 (MDGs), each member state
has its own priorities in development policy and focuses its trade and aid activities on different
regions or countries due to historical connections, engagements or perceived responsibilities.
Such diverse interests do not only impede the formulation of a joint development policy and a
community trade policy that pleases all MS equally, but they make it even more difficult to
merge all of these single policies into a single coherent one of trade and development.
(iii) Thirdly, the complex structure of the EU decision-making can still be quite timeconsuming, which leads to inefficiencies and makes negotiations less flexible and coordination and coherence efforts rather complicated.
The first two points will be analysed in greater detail in the respective chapters on trade
and development policy while the last point will be of particular relevance in the second part
of this paper, focusing on the EU-ACP negotiations on Economic Partnership Agreements.
Box 1: The Eight Millennium Development Goals (MDGs)
1. Eradicate extreme poverty and hunger
2. Achieve universal primary education
3. Promote gender equality and empower women
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria, and other diseases
7. Ensure environmental sustainability
8. Develop a global partnership for development
Source: United Nations: United Nations Development Declaration, Resolution by the General Assembly, New
York 2000.
Despite these challenges, especially since the year 2000 – and in line with the 1992 ‘3Cs’approach – efforts to create a coherent and thereby more effective development policy have
increased, as can be observed by a number of key policy documents. The EU’s 2000
Development Policy Statement and the 2005 European Consensus on Development both
support a common vision of a truly coherent development policy. The 2005 document in
particular names twelve concrete policy areas26 “where the challenge of attaining synergies
25
See Box 1.
Namely trade, environment, security, agriculture, fisheries, social dimensions of globalisation, employment and
decent work, migration, research and innovation, information society, transport and energy.
26
6
with development policy objectives is considered particularly relevant.”27 Section 3.1.2. of the
2005 Consensus specifically addresses the relevance of EPAs for development consistency
and will be analysed more deeply in the case study.28
Further written commitments for a harmonised and linked approach to development
and trade (both, on an EU and on a global scale) include the Paris Declaration on Aid
Effectiveness (2005), its follow-up, the Accra Agenda for Action29 (2008), the Aid for Trade
(AfT) initiative30 launched by the WTO ministerial meeting in Hong Kong (2005), as well as
the Code of Conduct on the Division of Labour in Development policy31 (2007), and as the
basis of many of these initiatives the eight UN MDGs which aim at creating a global
partnership for development (see especially MDG 8). While for a long time the focus of
development initiatives very much “depended on the ideological flavour of the day”32,
governments have finally committed themselves to the eradication of poverty in form of the
UN Millennium Declaration.33
As remarkable as these documents and their underlying rationale are, critics fear that
they will remain not much more but good intentions. And even more optimistic voices express
their concern that despite “large amounts of work having already been put into
operationalising these policy commitments (…) these are still recent and the targeted
consistent approach has arguably yet to emerge in practice.”34 However, in order to further
understand the prevailing impediments on a European level, it is vital to analyse in greater
detail how EU development and trade policy have been constructed so far, what drives their
respective agendas and where MS and the Community should try to tackle the issue most
effectively in order to achieve improvements in the trade-development nexus. This will be
done in the following.
27
Communication from the Commission to the Council, the European Parliament and the European Economic
and Social Committee of 12 April 2005 - Policy Coherence for Development - Accelerating progress towards
attaining the Millennium Development Goals, Brussels 2005.
28
See sec. 36, EU Consensus on Development.
29
OECD: The Paris Agenda for Aid Effectiveness and the Accra Agenda for Action 2005-2008, Paris 2008.
Available online: http://www.oecd.org/dataoecd/11/41/34428351.pdf (15.6.2010).
30
For the most current version of the initiative, see: WTO, Committee on Trade and Development: Aid-for-Trade
Programme 2010-2011, New York 2009.
Available online: http://www.wto.org/english/tratop_e/devel_e/a4t_e/aid4trade_e.htm (16.6.2010).
31
European Commission: EU Code of Conduct on Division of labour in Development Policy, Brussels 2007.
32
Makhan 2009, p. 17.
33
See Box 2.
34
Makhan 2009, p. 115.
7
Box 2: UN Millennium Declaration - Selected paragraphs
[...] III. Development and poverty eradication
11. We will spare no effort to free our fellow men, women and children from the abject and
dehumanizing conditions of extreme poverty, to which more than a billion of them are
currently subjected. We are committed to making the right to development a reality for
everyone and to freeing the entire human race from want.
12. We resolve therefore to create an environment – at the national and global levels alike –
which is conducive to development and to the elimination of poverty.
13. Success in meeting these objectives depends, inter alia, on good governance within each
country. It also depends on good governance at the international level and on transparency
in the financial, monetary and trading systems. We are committed to an open, equitable,
rule- based, predictable and non-discriminatory multilateral trading and financial system.
[…]
19. We resolve further:
To halve, by the year 2015, the proportion of the world’s people whose income is less than
one dollar a day and the proportion of people who suffer from hunger and, by the same
date, to halve the proportion of people who are unable to reach or to afford safe drinking
water. […]
Source: United Nations: United Nations Development Declaration, Resolution by the General Assembly, New
York 2000.
1. EU Development policy
Part Five, Title III, Chapter I (Development Cooperation) of the Treaty of Lisbon states:
“Union policy in the field of development cooperation shall be conducted within the
framework of the principles and objectives of the Union's external action. The Union's
development cooperation policy and that of the Member States complement and reinforce each
other.”35 The treaty further lays down the foundations of the present European Union’s
development cooperation as contained in the 2005 European Consensus on Development, as
well as the objectives of poverty reduction, sustainable economic and social development,
integration into the world economy, the consolidation of democracy and of the rule of law, and
respect for human rights. Hence, development policy today is not only limited to Member
States initiatives and since the Treaty of Maastricht, when development cooperation was
35
Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European
Community, in: Official Journal of the European Union (OJEU): 17.12.2007, No C 306.
8
formally incorporated into the European legal framework, the Commission has been entrusted
with both, the implementation of its own development policy and the coordination of Member
States activities in this area.36
Hence although both, the legal framework under which development cooperation shall
take place and the objectives are therefore clearly stated. Yet the visibility of EU development
policy remains limited. This fact becomes even more astonishing when taking into
consideration that the EU with its Member States constitutes the largest donor of development
aid worldwide37, providing more than half of the official development assistance (ODA).38
1.1. Characteristics and shortcomings
Among the reasons for the small degree of visibility and recognition might be the fact that
despite the existence of legal and institutional prerequisites “European countries and
institutions have failed to join forces and work together in ways that allow them to play to
their comparative strengths”39 so far. A good example hereof is the area of development
funding: although common financial institutions, specifically set up for development purposes
such as the EDF and the DCI40 exist, bilateral aid provided by the single EU Member States
has by far exceeded the resources channelled through these institutions. Until the 1990s, EDF
funds accounted for less than 10 per cent of total MS aid spending41 and even in 2009 the “EC
is entrusted with a smaller share than one-sixth of the EU Member States aid, this constraining
its level of influence and/or leverage in coordinating the whole set of policies compromising
EU development cooperation.”42 Explanations for these shortcomings in linking national
policies with regard to financing and other sectors are manifold:
Firstly, Member States vary with regard to their abilities, traditions and willingness to provide
development aid. While older MS such as France, the United Kingdom, or Germany often
36
Makhan 2009, p. 111.
For the most recent numbers on development aid (2009, forecast 2010), see: OECD: Development aid rose in
2009 and most donors will meet 2010 aid targets, Paris 2010.
38
For an official definition of ODA, see: http://www.oecd.org/dataoecd/26/14/26415658.PDF.
39
Wanlin, Aurore: What future for EU development policy?, London 2007.
40
Financing instrument for development cooperation - DCI (2007-2013) aims at improving the Community’s
previous development cooperation framework by merging various geographic and thematic instruments into one
single instrument. For further information, see:
http://europa.eu/legislation_summaries/development/general_development_framework/l14173_en.htm
(22.6.2010).
41
Holland 2002, p. 52.
42
Makhan 2009, p. 113.
37
9
have a long history of supporting less-developed countries and correspondingly can make use
of large budgets and expertise, some of the new MS are only just starting to put in place
development policies and therefore lack resources as well personal.43
Secondly, MS tend to focus on different parts of the world, depending on their
geographical closeness or cultural and historical ties to the receiving country.44 The location
phenomenon can be observed for example with regard to Greece which concentrates much of
its development efforts on neighbouring countries such as the Balkans, the Black Sea area or
the eastern Mediterranean. Historical relations, on the other hand, certainly play a role for
countries such as France or Belgium that feel a stronger commitment to their former colonies
of Algeria, Tunisia and Morocco or the Democratic Republic of Congo respectively.45 These
different priorities do not need to be dismissed per se and can even be seen as an asset when
valued as multifaceted expertise in countries and sectors. In order to provide for an efficient
and equal distribution of development aid, avoiding so-called ‘aid darlings’ and ‘aid
orphans’46, however, the various policies need to be supported by a sophisticated co-ordination
process that so far has not been sufficiently put into place.
Thirdly, co-ordination among MS with regard to a common development policy has
proven difficult in the past because aid policies until today are often seen as an instrument of
foreign policy that serve to improve a country’s international reputation and the chances of its
representatives getting senior jobs in international organizations, such as the UN or the Bretton
Woods institutions.47 As long as this level of competitions between donors is not overcome, no
efficient development cooperation can take place.
Finally, in the past, both Member States and the Community repeatedly have changed
their attitudes towards the two economic paradigms of trade liberalization on the one hand,
and internal market protection on the other,48 depending on the “ideological flavour of the
day.” This inconsistent approach, however, has led to “contradictory policies that are
incoherent with the objectives of EU development policy.”49
43
Wanlin 2007, p. 12.
Wright 2005, p. 76.
45
Wanlin 2007, p. 8.
46
For typical characteristics of ‘aid orphans’, i.e. a fragile states with poor governance that fail to provide basic
services to their people, see: Collins, Paul: The Bottom Billion, Oxford 2008.
47
Wanlin 2007, p. 13.
48
Holland 2002, p. 143.
49
Van Reisen 1999, p. 130.
44
10
1.2. Grounds for improvement
However, there are a couple of circumstances that give reason to hope for an optimistic turn in
the EU countries’ willingness to overcome the obstacles to policy coherence described above.
(i) Change might occur because Member States simply cannot afford to keep up their
uncoordinated behaviour anymore as “the complexity of the aid industry is rapidly increasing”
and they are facing competition from emerging economies like China, Brazil or India.
Although each additional donor of aid and trading partner for Third World countries should
generally be welcomed, it is important to take a closer look at how their respective
development strategies are designed. China, for example, has increasingly been criticised by
Western donors for pursuing - what is at least perceived as - a rather self-interested, resourceseeking policy that focuses on bringing its own skilled citizens to developing countries rather
than educating the local workforce which is considered essential for development.50 Such
policies are also accused of undermining Western attempts to link financial support and good
governance by promising a ‘no strings attached’ aid and trade policy.51
(ii) Furthermore, developed countries, especially in Europe, are faced with a growing
migration movement of people who want to escape poverty and general underdevelopment in
their home countries. Especially as one cannot fully dismiss an (at least shared) responsibility
of Western countries for the very emergence of these conditions due to their previous support
of autocratic and corrupt regimes (especially during the Cold War) and damaging effects of
European trade policy, Western governments will have to contribute to improving the
conditions through adequate policies fostering trade and development.52 This will be even
more the case if European countries want to stop the wave of illegal immigration they have
been faced with lately.53
50
For an extensive description of China’s development instruments in Africa and a critical analysis hereof, see:
Goldstein, Andrea et al. (OECD Development Centre): The Rise of China and India. What’s in it for Africa?,
Paris 2006.; Davies, Martyn: How China delivers development assistance to Africa, Beijing 2008.
51
For a critical analysis of the shortcomings of the Western “good governance” agenda itself (such as limited
focus on procedural and institutional interpretations of governance that delegitimize other possible priorities),
see: Abrahamsen, Rita: Disciplining Democracy: Development Discourse and Good Govenance in Africa,
London 2001.
52
Kohnert, Dirk: African Migration to Europe: Obscured Responsibilities and Common Misconceptions,
München 2007, p. 20.
53
Bade, Klaus J.: Legal and illegal immigration into Europe: experiences and challenges, in: European Review,
Vol. 12, No. 3, 2004, pp. 339-375.
11
(iii) Additionally, the increasingly global dimension of security and environmental protection
issues further account for the need to co-operate among developed and with un-developed
countries to find reliable solutions for peace and sustainability.54
(iv) Finally, chances for increased policy coherence are said to have augmented with
some structural and institutional changes deriving from the Lisbon Treaty. So far the number
of major actors on the European supranational level was rather large and coordination little. In
the Commission the Directorate Generals (DGs) for development, trade and external relations
together with EuropeAid and the European Community Humanitarian Office (ECHO) formed
the RELEX group, which again was only one of four cooperation groups in the Commission.
So far the DGs wrote proposals for new policies and EuropeAid and ECHO were responsible
for delivering the funds and the supervision of the implementation of the policies. However,
there was no one person in charge of coordinating these policies, formulating one coherent
approach and presenting it to third parties. This is likely to improve now through the new post
of High Representative for Foreign Affairs and Security Policy and other institutional
innovations. The impact of these and other changes will be further addressed in Part III of this
paper.
2. EU trade policy
Due to the EU’s immense role in the international trading system, its singular status as a truly
successful model of regional integration and economic growth and because of its long history
dating back to the 1950s, European trade policy is an extensively researched and highly
debated topic. This part of the thesis therefore does not aim at providing an extensive analysis
of European trade policy, including a detailed description of decision making processes, trade
policy instruments and display of trading figures.55
Rather, the focus will be on the two issues that are of particular interest for the tradedevelopment nexus: the allocation of competences and the system of preferences. The former
is essential as it is concerned with the internal prerequisites of policy formulation; the latter
54
European Think Thanks Group: New challenges, new beginnings: next steps in European development
cooperation, London 2010, pp. 31-54.
55
For further information on these aspects, see: Baldwin, Richard/Wyplosz, Charles: The Economics of
European Integration, 3rd ed., New York 2009; Brülhart, Marius/Alan, Matthews: EU External Trade Policy, in
El-Agraa, Ali M. (ed.): The European Union: Economics and Policies, 8th ed., Cambridge 2007, pp. 921-967.
12
mainly reflects the international environment and power structure the EU operates within.
Both levels have to be taken into account when asking how to “make trade work for
development.”56
2.1. Revolutionizing the allocation of competences
Ever since the creation of the European Community with the Treaty of Rome in 1957, when
the European supranational authority, the European Commission, was given exclusive
competence to formulate, negotiate and enforce all aspects of trade relations with regard to
trade in goods,57 a common trade policy has lied at the heart of European integration.
Trade and integration hereby had a special connection in two ways: In the fist decades
(from the 1950s to the middle of the 1990s) the common trade policy was mainly aimed at
deepening regional integration through the creation of a customs union, followed by a
common/single market and eventually an economic/monetary union. With the exception of
agreements with the neighbouring countries and former colonies (ACP), EU PTAs were aimed
at the completion of a truly integrated internal market and the achievements of the four
fundamental freedoms as set out in the Treaty of Rome.58 Especially since 1995/96 however,
when the EU introduced its Market Access Strategy, it has reinforced trade relationships with
third countries, i.e. widening integration, by bilateral and multilateral preferential trade
agreements with the rest of the world.59
56
European Commission: Making trade work for development. Aid for Trade: A selection of case studies form
around the world, Brussels 2008.
57
See: Art. 113 Treaty of Rome.
58
Free movement of goods, labour, capital and services.
59
See Box. 3. Agreements after 1995 differ from earlier agreements with regard to their geographical scope, level
of development of the partners as well as more sophisticated form of commercial integration. See: De Santis,
Roberta/Vicarelli, Claudio: The European Union trade strategy. An empirical evaluation of
preferential trade agreements’ effects on EU import flows, Lausanne 2006. Available online:
http://www.etsg.org/ETSG2006/papers/vicarelli.pdf (25.6.2010).
13
Box 3: EU PTAs: 1957-2005
1.) EU PTAs: 1957-1995
Agreement
EC (Treaty of Rome)
Further Accessions
EC — OCTs
EC — Iceland
EC — Norway
EC — Algeria
EC — Syria
EC — Bulgaria
EC — Bulgaria
EC — Romania
Date of entry into force
1958
1973, 1981, 1986, 1995
1971
1973
1973
1976
1977
1993
1995
1995
Type of Agreement
Customs union
FTA
FTA
FTA
FTA
FTA
FTA
Services agreement
Services agreement
2.) EU PTAs: 1995-2005
Agreement
EC — Turkey
EC — Faroe Islands
EC — Palestinian Authority
EC — Tunisia
EC — South Africa
EC — Morocco
EC — Israel
EC — Mexico
EC — FYROM
EC — Croatia
EC — Jordan
EC — Chile
EC — Lebanon
EU Enlargement
Date of entry into force
1996
1997
1997
1997
2000
2000
2000
2000
2001
2001
2002
2002
2003
2003
2004
EC — Egypt
EC — Chile
2004
2005
Type of Agreement
Customs union
FTA
FTA
FTA
FTA
FTA
FTA
FTA
Services Agreement
FTA
FTA
FTA
FTA
FTA
Accession to customs union
and services agreement
FTA
Services Agreement
Source: WTO 2006.
14
Although today the phenomenon of countries delegating their negotiating power to a different
level through a deepening as well as a widening intergration process seems like a rather
unequivocal version of the classical principal-agent model60, “the very idea that nation-states
could give up such a key area of their external affairs was, and continues to be,
revolutionary.”61 Hence re-emerging political and ideological battles about the scope of these
competences itself have occurred on numerous occasions.62
Armed with the relevant legal authority through the EEC Treaty, from “its very
creation, the European Community had spoken in international trade negotiations with a single
external voice”63, which made it a singular undertaking in regional integration processes
around the world and distinguished it from other preferential trading systems. However, the
transfer of competences to the supranational level is not only interesting per se but also has a
significant effect on development issues: One the one hand it makes the EU a very strong
party in negotiations, while on the other hand, the complex multi-level governance structure
can lead to inflexibility and inefficiency. The analysis of the EU-ACP in part II of this thesis
will provide an example of both of these phenomena.
This multi-level governance structure results from the fact that although trade is mostly
described as an exclusive competence issue, member states still can have various ways of
playing a decisive role in the policy making process’ different stages, i.e. the acquisition of an
initial mandate, ongoing representation, and ratification.
So far, i.e. prior to Lisbon, decision-making concerning trade in goods under Article
133 EC Treaty has functioned on the basis of qualified majority voting in the Council, i.e.
proposals are initiated by the Commission, which also is empowered to conduct negotiations
60
The Member States as principals delegate their authority to conclude trade agreement to the European
Community, who is the agent and acts on their behalf. For a more detailed analysis, see: Pollack, M: Delegation,
Agency and Agenda Setting in the European Community, in: International Organization, Vol. 51, No. 1, pp. 99134.; Nicolaidis, Kalypso: Minimizing Agency Costs in Two-level Games: The Controversies over Trade
Authority in the United States and the European Union, in: Mnookin, Robert/Susskind, Larry (eds.): Negotiation
on Behalf of Others, Thousand Oaks 1999.
61
Meunier, Sophie/Nikolaidis, Kalypso: Who speaks for Europe? The Delegation of Trade Authority in the EU,
in: Journal of Common Market Studies, Vol. 37, No. 3, 1999, p. 477-501, p. 478.
62
On the debate among MS regarding the transfer of sovereignty to the supranational level, see: Meunier,
Sophie/Nicolaidis, Kalypso: EU Trade Policy: the Exclusive versus Shared Competence Debate, in: GreenCowles, Maria/Smith, Michael (eds.): The State of the European Union, Vol. V, Oxford 2000, pp. 325-346
63
Ibid., p. 325.
15
in consultation with a special committee appointed for this purpose by the Council, the socalled Article 133 Committee.64
Box 4: Art. 133(1) TEC
The common commercial policy shall be based on uniform principles, particularly in regard
to changes in tariff rates, the conclusion of tariff and trade agreements, the achievement of
uniformity in measures of liberalisation, export policy and measures to protect trade such
as those to be taken in the event of dumping or subsidies
Box 5: Art. 300(1) TEC
1. Where this Treaty provides for the conclusion of agreements between the Community and
one or more States or international organisations, the Commission shall make
recommendations to the Council, which shall authorise the Commission to open the
necessary negotiations. The Commission shall conduct these negotiations in consultation
with special committees appointed by the Council to assist it in this task and within the
framework of such directives as the Council may issue to it.
In exercising the powers conferred upon it by this paragraph, the Council shall act by a
qualified majority, except in the cases where the first subparagraph of paragraph 2
provides that the Council shall act unanimously.
This Committee composed of high-level member states’ civil servants and chaired by the
country holding the EU presidency, however, is perceived to be the “real power and decisionmaking centre”65 for the EU’s trade policy. Here, the main discussions take place and,
following a tour de table of Member States’ views, amendments to the Commission’s
proposals can be made either by the Council, the Commission or the Member States.66 Hence,
the Committee “has a key role in ensuring that the Council accepts the final results of
negotiations, and therefore in the formation of unity.”67 However, there remains a risk that
during the negotiation process interpretations of the mandate by the Commission lead to
member states feeling that they are unsatisfactorily represented. This is a potential source of
64
See Art. 133, 300 TEU, Boxes 4-5.
Leal-Arcas 2008, p. 374.
66
Kernohan, David/Schneider, Andreas: Fiche on EU Trade Policy, in: CEPS: Policy Coherence for
Development in the EU Council. Strategies for the Way Forward, Brussels 2006, 51-61.
67
Leal-Arcas 2008, p. 375.
65
16
conflict, deriving from necessity “to weigh the need to ‘speak with one voice’ in multilateral
trade negotiations against the accountability of the Commission to the Council.”68
Although in the end, the final say remains with the Member States, which reassert their
power through veto rights and the ratification by the Council through QMV (or prior to the
Lisbon Treaty: unanimity), it is important to notice that the EU can only be respected as an
international actor if negotiations are not impeded by diverging interests and positions of
Member States.
Prior to the Lisbon Treaty the European Parliament (EP) did not have any formal
power for trade policy even though its assent was required when issues demanded the codecision procedure or where important budgetary implications exist, and it was informed
about the negotiations by the Commission. In some areas the EP has already played a
particularly active role however, e.g. in the context of the EPA negotiations, by “calling on
various occasions for more flexibility on part of the Commission and by providing a platform
for ACP countries to voice their concerns and raise awareness in the negotiations.”69 Chances
are high that increased power of the EP will therefore also have a significant impact on the
orientation of trade policy towards development issues as whoever “has the competence to
determine trade policy objectives will also have a considerable impact on related policy
areas”70.
Moreover, competence allocation is also important as it has not been stagnant over
time and the range of topics covered by the CCP has expanded. At the beginning of modern
European integration in 1957, international trade law had a clear focus on goods, which
explains why the EEC Treaty made explicit reference to trade in goods at that time. In its
opinion 1/7871 the Court stated that the CCP should be interpreted widely, leaving room for
debates on the extension of exclusive competence to topics such as services, trade related
aspect of intellectual property and investments. The Court brought only little clarification in
this regard through its Opinion 1/9472 as it restated that while trade in goods fell under the
exclusive competence of the Community, this was only partly the case for services and
68
Gillson, Ian/Grimm, Sven: EU trade partnerships with developing countries, in: ODI – EDC Briefing, No. 4,
London 2004, p. 2.
69
Makhan 2009, p. 143.
70
Holland 2002, p. 144.
71
Opinion 1/78 (International Agreement on Natural Rubber) [1979] ECR 2871.
72
Opinion 1/94 (WTO Agreement and GATS) [1994] ECR I-5267, para. 85.
17
intellectual property issues. This lead to some services being of EU, some of member state and
others of mixed competence. Especially these ‘mixed agreements’ are little desirable from a
development point of view as they require ratification on the EU as well as on the national
level, hence giving national parliaments which disagree with a certain part of the agreement
the ability to veto it in its entirety. Neither the Treaties of Amsterdam nor Nice were able to
satisfactorily solve this issue,73 and the result was a rather “unreadable unsystematic and
complex system of competence rules.”74 As will be explained in detail later, the Lisbon Treaty
brings relief in that regard as it clarifies and extends EU competences.
A shift of competences in the trade area towards further integration will therefore most
likely have “repercussions across – or linkages to – other policy areas”75 such as development
and thereby enhance the chances for a coherent EU approach.
2.2. The multidimensional preference system
While, as stated above, with regard to the allocation of competences, EU trade policy can to
some degree be described as ‘revolutionary’, its trade preference system can best be
characterized as ‘multidimensional’. As former Trade Commissioner Mandelson pointed out
in 2008: “Examples of the way that the EU pursues its pro-development policy objectives are
to be found at all levels: at the multilateral level through the WTO negotiations, at the regional
and bilateral level through the negotiation of trade agreements with other countries or regions
(…), and at the unilateral or autonomous level through the Generalised System of
Preferences.”76
Although the EU claims that “maintaining the WTO system, and ensuring that it
continues to adapt to a fast-changing world, is a central priority for Europe‘s trade policy”77, it
literally has “dozens of agreements governing trade with developing countries, which often
overlap”78 and have become a source of controversy in the WTO for they are seen to be
incoherent. This (additional) focus on regional integration is hardly surprising when keeping
73
In 1997, the Treaty of Amsterdam modified Article 133 to grant powers to the Community to negotiate
agreements on services and intellectual property, but only on the basis of unanimity. The Nice Treaty in 2001
further shifted the weight towards exclusive competence by extending majority voting to these areas.
74
Bungenberg, Marc: The Common Commercial Policy after Lisbon, Jerusalem 2008, p. 7. Available online:
www.micro5.mscc.huji.ac.il/~iasei/.../Lisbon_Papers/iasei_bungenberg.doc (27.6.2010).
75
Holland 2002, p. 144.
76
European Commission: Putting Trade Policy at the Service of Development, Brussels 2008, p. 5.
77
European Commission: What is Europe’s Trade Policy?, Brussels 2009, p. 3.
78
Stevens, Christopher: Creating a development friendly EU trade policy, Brighton 2005, p. 1.
18
in mind that regionalism is at the core of European identity itself 79 and that preferential trade
agreements have long been used by the Community as a “way of binding potential members,
neighbours and former colonies of its Member States more closely to it.”80
By the beginning of the new millennium, however, the European network of PTAs did
not only include the traditional group of ACP countries, but also the Mediterranean region,
Central Europe and the Western Balkans, as well as South Africa (1999), Mexico (2000) and
Chile (2002) and was often pictured as a pyramid of preferences. Here, the most favourable
treatment was granted to those countries that either belonged to the ACP group of states, or
that fell into the least developed category or had completed bilateral trade agreements with the
EU. The next included low and middle income countries that benefited only from noncontractual discretionary preferences offered by the Union under the terms of its Generalised
System of Preferences which had been initiated in 1971. At the bottom of the hierarchy were
countries which are members of the WTO but not of the GSP and therefore would solely
receive the ironically-named MFN treatment.81
Box 6: EU Preferential Treatment: Pyramid of Privileges
ACP
Agreemen
Generalised System of Preferences
(GSP)
Most-favoured Nation (MFN)
Source: Persson/Wilhelmsson 2007; Stevens 2005
The launch of the DOHA-Round and the Managed Globalism initiative of the EU, however,
turned out to become an "informal self-imposed moratorium (that) virtually brought the
79
Makhan 2009, p. 28.
Rollo, Jim: Global Europe: Old Mercantilist Wine in New Bottles?, in: Aussenwirtschaft, Vol. 61, Nr. IV,
2006, pp. 403-413, p. 403.
81
See Box 6.
80
19
pursuance of new agreements to a halt.”82 Henceforth, the EU became one of the main
advocates of the multilateral trading system, strongly working on enlarging the Doha Round to
countries like China and Russia and the broadening of the scope of trade issues, i.e. by
incorporating the Singapore Issues.83 The rationale was “the more members, the more
countries (are) subjected to the rules and therefore the less anarchy in the trading system.”84
However, this strong focus on the multilateral level soon came to an end despite the
awareness that many aims were best to be achieved through widespread international
cooperation, a standpoint especially supported by the former EC Commissioner for Trade and
today’s Director-General of the WTO, Pascal Lamy. Especially “the increasingly bleak
prospects for a successful outcome of the Doha Round”85, led many countries to actively
pursue a new policy towards trade liberalisation. Rather than further relying on
multilateralism, they now strove for the conclusion of preferential trade agreements at the
regional or bilateral level.86
Box 7: Evolution of Regional Trade Agreements in the world, 1948-2008
Source: WTO Secretariat 2009.
82
Makhan 2009, p. 28.
For further information on the Singapore issues of issues investment, competition policy, government
procurement and trade facilitation, see: Khor, Martin: The ‘Singapore Issues’ in the WTO: Implications and
Recent Developments, New York 2004.
84
Meunier 2007, p. 912.
85
Makhan 2009, p. 30.
86
See Box 7.
83
20
This trend even implied the United States of America which long had been the principal
advocate of the multilateral trading system since the establishment of the GATT.87
Under its new EC Trade Commissioner, Peter Mandelson, who took office in 2004, the
EU followed this trend and re-oriented its trade policy away from a solely multilateral focus
towards a “new generation of carefully selected and prioritised FTAs.”88 In the framework of
Global Europe: Competing in the world. A contribution to the EU’s growth and jobs strategy,
the EU engaged in the negotiation of new WTO-compatible FTAs, replacing the pyramid by a
complex web of trade agreements, using different instruments and incentive systems. One of
those, the EPAs with the ACP states, was soon advertised as the “flagship endeavour to make
(better) use of trade for development.”89 The design of these new, hopeful means as well as
whether they actually met their target will be analysed in the following case study.
87
Sally, Razeen: The End of the Road for the WTO? A snapshot of international trade policy after Cancun, in:
World Economics, Vol. 5, No. 1, 2004, pp. 1-14.
88
European Commission: Global Europe: Competing In The World. A Contribution to the EU's Growth and Jobs
Strategy, Communication from the Commission to the Council, the European Parliament, and the Committee of
the Regions, Brussels 2006.
89
Makhan 2009, p. 22.
21
II. Linking Trade and Development: Case study of the EU-ACP negotiations on EPAs
Although the “trade relationship between the EU and the ACP, (…) has generally been
conceived of as a development partnership”90, analyzing the most recent EU-ACP negotiations
is of particular relevance for development purposes as they introduced a new ‘formula’ very
different from previous approaches by strengthening the trade-development nexus in a so far
unknown way. “Indeed, the ACP and EU were among the first developed and developing
country partners to establish tight linkages between trade and development”91 and agreed to
them by contract.92
Box 8: Objectives of Cotonou Agreement, Art. 34
1. Economic and trade cooperation shall aim at fostering the smooth and gradual
integration of the ACP States into the world economy, with due regard for their political
choices and development priorities, thereby promoting their sustainable development and
contributing to poverty eradication in the ACP countries.
2. The ultimate objective of economic and trade cooperation is to enable the ACP States to
play a full part in international trade. In this context, particular regard shall be had to the
need for the ACP States to participate actively in multilateral trade negotiations. Given the
current level of development of the ACP countries, economic and trade cooperation shall be
directed at enabling the ACP States to manage the challenges of globalisation and to adapt
progressively to new conditions of international trade thereby facilitating their transition to
the liberalised global economy. (…)
Source: Partnership Agreement between the members of the African, Caribbean and Pacific Group of States of
the one part and the European Community and its Member States of the other part, Cotonou 2000.
The most recent negotiations have thus focused on aspects such as reciprocity,
comprehensiveness, capacity building and flexibility, and hereby stand in stark contrast to the
earlier approach that relied mainly on non-reciprocity, trade in goods only, the Bretton Woods
institutions as negotiation partners, and a ‘one-solution-fits-all-countries’-attitude. This new
approach, expressed through the initiation of negotiations for EPAs, proved to be necessary
when it became apparent that the previous instruments did not stimulate the expected increase
90
Makhan 2009, p. 31.
Martí, Darlan F./Rampa, Francesco: Aid for trade: twenty lessons from existing aid schemes – ECDPM
Discussion Paper No. 80, Maastricht 2007. Available online: http://www.ecdpm.org/dp80p. 14 (5.7.2010).
92
See: Box 8.
91
22
of exports and economic performance and only few countries had actually benefitted from the
Lomé preferential trade regime.
Hence, hopes were great for the new EPAs – and still are, as was expressed by the EC
delegation in front of the WTO Trade Policy Review Body in 2009: “Overall, EPAs will
ensure a transparent and more predictable framework for trade and investment and stimulate
regional integration as well as domestic adjustment and development processes.”93 European
Commissioner Karel de Gruch reaffirmed the special and long-term character of the
agreements when he recently declared at the opening speech of a Trade for Development
conference: “(…) EPAs are about more than just negotiations. They should be regarded as a
process, involving a long-term partnership never set in stone. “94
However, when the set negotiation deadline of December 2007 approached, only the
Caribbean had reached an agreement with the EU on a regional and comprehensive EPA. In
Africa and the Pacific most countries were solely able to agree on partial ‘stepping stone’ or
interim agreements with the EU. Here, with the exception of the East African Community
(EAC) that was able to agree on a regional interim agreement, full and regional agreements
have yet to be concluded.
Successful negotiations certainly depend on the will and capacity of all parties to
cooperate, and failure to reach an agreement can hardly be traced back to one side only.
Keeping in mind, however, that the EU initiated the negotiations with the intention to foster
development, and undoubtedly is the stronger party, it is especially interesting to analyse
whether the EU was indeed prepared to act as a partner for development and adequately
support the ACP countries. In the light of the high expectations on behalf of the EU but the so
far disappointing outcome, “the case of the EPA negotiations thus provides a relevant setting
for analysis and assessment of the EU’s capabilities in formulating and managing a relevant
and coherent trade policy for development.”95
93
WTO Trade Policy Review Body: Trade Policy Review. European Communities. Record of the Meeting, 68.4.2009.
94
Karel de Grucht, Opening speech at the “EU Trade Policy Towards Developing Countries" Conference,
16.2.2010. Available online:
http://trade.ec.europa.eu/doclib/docs/2010/march/tradoc_145890.en%20-%20ftw.pdf (20.6.2010).
95
Makhan 2009, p. 18.
23
Box 9: The ACP regions
Africa
•
Southern African Development Community (SADC)
o Angola, Botswana, Lesotho, Namibia, Mozambique, Swaziland and South Africa
o Main exports to the EU: diamonds, oil, fish, beef, sugar, tobacco
o Main imports from the EU: machinery, vehicles, chemicals
•
Eastern and Southern Africa (ESA)
o Comoros, Djibouti, Eritrea, Ethiopia, Madagascar, Malawi, Mauritius, Seychelles,
Sudan, Zambia and Zimbabwe
o Main exports to the EU: copper, raw cane sugar, textiles, tobacco, processed tuna,
o Main imports from the EU: machinery, vehicles, chemicals
•
East African Community (EAC)
o Burundi, Kenya, Rwanda, Uganda and Tanzania
o Main exports to the EU: plants, cut flowers, coffee, vegetables, fish, tobacco
o Main imports from the EU: machinery, chemicals, vehicles
•
West Africa
o All 15 members of ECOWAS and Mauritania
o Main exports to the EU: oil, cocoa, bananas, pineapples, wood
o Main imports from the EU: machinery, vehicles
o Most important region for trade – 40% of all EU-ACP trade
•
Central Africa
o All six members of the Economic Community of Central African States (CEMAC),
plus the Democratic Republic of Congo and São Tomé and Príncipe.
o Main exports to the EU: oil, wood products, diamonds, cocoa, bananas
o Main imports from the EU: machinery, vehicles, chemicals, iron and steel,
Pacific
•
Pacific Islands Forum (PIF)
o 14 island states (biggest are Papua New Guinea (PNG) and Fiji)
o Main exports to the EU: palm oil, sugar
o Main imports from the EU: machinery, transport equipment
Caribbean
•
Caribbean Forum of Caribbean States (CARIFORUM)
o EPA since January 2008 covering all Caribbean states (Haiti joined in December
2009)
o Main exports to the EU: fuel, chemicals, agricultural products (e.g. mangoes,
bananas, rice, rum, sugar)
o Main imports from the EU: machinery
Source: European Commission 2010.
24
1. EU-ACP relations: from Yaoundé to Lomé and Cotonou
The history of cooperation96 between the European Community and what is now called the
African, Caribbean and Pacific Group of States dates back to the origins of European
development policy in the Treaty of Rome, 1957, when the Member States decided to create
some level of common policy towards their colonies and overseas countries and territories
(OCTs).97 Two years later they established a common financial instrument for support, the
European Development Fund (EDF). After the first EDF ran out after a period of five years in
1964, the EEC and the then eighteen Associated African Malagasy States (AAMS) concluded
their first agreement in Yaoundé, Cameroon. Ever since, EDF cycles have generally followed
the partnership agreement/convention cycles.98
Box 10: European Development Fund Cycles and Agreements
First EDF: 1959-1964
Second EDF: 1964-1970 (Yaoundé I Convention)
Third EDF: 1970-1975 (Yaoundé II Convention)
Fourth EDF: 1975-1980 (Lomé I Convention)
Fifth EDF: 1980-1985 (Lomé II Convention)
Sixth EDF: 1985-1990 (Lomé III Convention)
Seventh EDF: 1990-1995 (Lomé IV Convention)
Eighth EDF: 1995-2000 (Lomé IV Convention and the revised Lomé IV)
Ninth EDF: 2000-2007 (Cotonou Agreement)
Tenth EDF: 2008-2013 (Revised Cotonou Agreement)
Source: European Commission 2010.
The early agreements of Yaoundé I and II mirrored both, the limited membership of European
states to the Community at that time, as well as the historical and traditional ties of these
countries. Therefore the geographical focus was on Sub-Saharan Africa, which only changed
with the accession of the United Kingdom to the Community in 1973. Hereby the geographic
scope of overseas trade and development relations broadened, now including some of the
Commonwealth nations. The 1975 Georgetown Agreement institutionalized this fact by
96
For a detailed description and historical overview of EU-ACP relations please see: Holland, Martin: The
European Union and the Third World, Hampshire 2002.
97
See: Treaty of Rome, 1957, Art. 131-136.
98
See Box 10.
25
creating the ACP Group of States.
For the subsequent 25 years EU-ACP relations were governed by the Lomé (I-IV)Conventions that were held up as a model for the future of North-South relations in general
and EU development policy in particular. This evaluation derived from the fact that the
conventions contained “many novel features which seemed to suggest that the EU was
prepared to buck the trend in international development and take on board some of the
arguments put forward by the Third World in its quest for a New International Economic
Order (NIEO).”99 This new approach was expressed, for example, in the non-reciprocity of
trade preferences for most exports from ACP countries, the Stabex100 and Sysmin101
mechanisms, as well as a promise of equality between partners, respect for sovereignty,
mutual interests and interdependence, and a pledge to the right of each state to determine its
own policies.102
Between 1996 and 2000, however, in the context of regional and global changes, both
on the EU and ACP level,103 significant reform occurred with regard to (not only) EU
development policy. Democratization processes and structural adjustment in ACP countries,
European enlargement and increased attention to Eastern European and Mediterranean
partners, as well major economic and political changes in the international environment
resulting from the Uruguay Round Agreement, led to the need to reform the existing
partnership agreements. Especially the finding that despite the high level of preferential
access, the ACP countries’ export performance in the EU market had been disappointing and
their market share of EU imports had even declined from 5.1% in 1970 to 1.5% in 2004104 led
to the EU’s proposal of negotiations for regional economic partnership agreements, replacing
the non-reciprocal access by FTAs.
Deficiencies identified in particular were the large number of instruments and funds
99
Arts/Dickson 2004, p. 2.
Stabex is a mechanism designed to give ACP countries some insurance against the problem of instability of
commodity products supply or prices by guaranteeing them a minimum income for approx. 40 agricultural
products. For a critical analysis of the mechanisms, see: Lister, Marjorie: The European Union and the South.
Relations with developing countries, New York 1997, pp. 125-131.
101
Sysmin loans are designed for countries heavily dependent on a particular mineral and suffering export losses.
102
European Commission: Development and relations with African, Caribbean and Pacific States, Brussels 2009.
Available online: http://ec.europa.eu/development/geographical/cotonou/lomegen/lomeitoiv_en.cfm (18.6.2010).
103
Holland 2002, p. 43.
104
Brülhart, Marius/Alan, Matthews: EU External Trade Policy, in El-Agraa, Ali M. (ed.): The European Union:
Economics and Policies, 8th edition, Cambridge 2007, pp. 921-967, p. 948.
100
26
(especially the European Parliament contributed to an increasing number of special budget
lines), poor coordination as well as transparency and accountability problems and a weak
management structure on the Commission level.105 These shortcomings led to the dissatisfying
evaluation that “overall the EC was an organisation with a focus upon administrative
procedures and disbursement rather than results, with little effective monitoring or evaluation
of EC aid.”106 Hence, reform had to occur in various realms,107 addressing, among others, the
questions of reciprocity, regionalization108 and differentiation109, capacity building, and
poverty reduction.110
In 2000, the Partnership Agreement between the members of the African, Caribbean
and Pacific Group of States of the one part and the European Community and its Member
States of the other part was signed in Cotonou, Bénin. It was concluded for a twenty-year
period from March 2000 to February 2020, entered into force in April 2003 and was revised in
2005. Despite a considerable number of changes, Cotonou hence continues the characteristical
history of institutionalism and policy development of EU-ACP relations, while Europe’s links
with other developing states ”continue to be comparatively rudimentary and ad hoc in
nature.”111 Furthermore Cotonou is based on both, a development dimension as well as a
political dialogue, which makes respect for human rights, democratic principles, the rule of
law legal obligations and good governance obligatory and a breach will result in a consultation
procedure and as a last resort in the reduction of development cooperation.
Among the more concrete innovations of the Cotonou Agreement were the (intention to) focus
on civil society and the private sector, stressing the role of non-state actors, and most
105
Among the disappointing statistical results presented in a Commission ‘Green Paper’ in 1997 were findings
such as: ACP countries' share of the EU market had declined from 6.7 per cent in 1976 to 3 per cent in 1998 with
60 per cent of total exports concentrated in only 10 products, with just a handful of nations registering economic
growth as a result of the trade protocols and preferences. Per capita GDP in sub-Saharan Africa grew by an
average of only 0.4 per cent per annum 1960-1992, compared with 2.3 per cent for developing countries as a
whole and only 6 per cent of African trade was with other countries of the continent.
See: The Secretariat of the African Caribbean and Pacific Group of States: The Cotonou Agreement. Historical
Note by the European Commission, Brussels 2010.
Available online: http://www.acpsec.org/en/conventions/cotonou/cotonou_historical_note_e.htm (22.6.2010).
106
Daerden 2008, p. 4
107
For a detailed analysis of the reform areas, see part III. 2 of this thesis.
108
The principle of regionalization is to be seen as a departure from the strategy of the Lomé Convention, in
which a uniform economic strategy remained towards all ACP-countries despite World Bank and IMF economic
structural adjustments during the last decade of the twentieth century. See: Lister, M. 1997, p. 153.
109
Differentiation refers to different treatment according to the level of development.
110
Holland 2002, p. 200.
111
Ibid., p. 51.
27
importantly, the establishment of Economic Partnership Agreements (EPAs), i.e.
comprehensive free trade agreements between the EU and several ACP-regions, as a means to
reduce poverty and promote sustainable development.112 Their potential and actual impact on
development will be analysed in the following.
2. EPAs: An efficient tool to fight economic marginalisation?
By addressing what were seen as the major shortcomings of the then existing EU-ACP
relationship, EPAs were hoped not only to improve the effectiveness of EU development
policy with regard to these countries, and ensure that their regime was WTO-compliant, but to
increase the trade-development-nexus overall. Then EC Commissioner Peter Mandelson hence
asserted: “EPAs are the European Commission’s most basic expression of the desire to put
trade and development together.”113
In order to achieve this goal, EPAs were designed to provide a number of innovative
elements that were hoped to create beneficial effects not only individually but also as a
‘development package’.114 Among these elements were (i) the improvement of the quality and
value of preferential access to EU markets and the overcoming of the restrictive approach of a
preferential regime focused on tariffs and quotas only. Furthermore hopes for general
(development) improvements through EPAs were high as the negotiations were now designed
to provide (ii) comprehensiveness in scope, i.e. extend trade in goods only. Also, EPAs were
(iii) to demonstrate the negotiating partners’ flexibility and potential for differentiated
approaches and (iv) to increase capacity building of the ACP countries. Finally, hopes were
high that (v) EPAs would also promote regional integration.115
112
See: Art. 1 and Art. 34.1 Coutenou Agreement, Figure XI. On the basis of the WTO “Enabling Clause”
however, Cotonou also leaves room for unilateral initiatives of the EU : LDCs can export under the “Everything
But Arms” initiative while non-LDCs are granted access via the “new framework for trade that is equivalent to
their existing situations and in corformity with WTO rules (Art. 37.6).
113
Mandelson, Peter: Address to the European Socialist Party conference on Economic Partnership Agreements,
Brussels 2006.
114
Makhan 2009, p. 38.
115
See Box 10.
28
Box 11: The EU’s vision on development with respect to the EPAs
“The EU strongly supports a rapid, ambitious and pro-poor completion of the Doha
Development Round and EU-ACP Economic Partnership Agreements (EPAs).
Developing countries should decide and reform trade policy in line with their broader
national development plans. We will provide additional assistance to help poor countries
build the capacity to trade. Particular attention will be paid to the least advanced and most
vulnerable countries.
The EU will maintain its work for properly sequenced market opening, especially on
products of export interest for developing countries, underpinned by an open, fair,
equitable, rules-based multilateral trading system that takes into account the interests and
concerns of the weaker nations. The EU will address the issues of special and differentiated
treatment and preference erosion with a view to promote trade between developed countries
and developing countries, as well as among developing countries.
The EU will continue to promote the adoption by all developed countries of quota free and
tariff free access for LDCs before the end of the Doha round, or more generally. Within the
framework of the reformed Common Agriculture Policy (CAP), the EU will substantially
reduce the level of trade distortion related to its support measures to the agricultural
sector, and facilitate developing countries’ agricultural development.
In line with development needs, the EU supports the objectives of asymmetry and flexibility
for the implementation of the EPAs. The EU will continue to pay particular attention to the
development objectives of the countries with which the Community has or will agree
fisheries agreements.”
Source: Paragraph 36, The European Consensus on Development 2006.
Conceptually, EPAs are “a kind of regional integration agreement (RIA),”116 which – due to
its reciprocal character – has the advantage of preventing countries from government
intervention and deviation from agreed terms in order to profit from short-term benefits. An
RIA thus provides a strong incentive to overcome such temptations as the deviating country
will be punished by other members and might even be excluded.
With regard to trade, EPAs have similar implications as FTAs. Here, countries gain
from preferences because of the trade creation and consumption effects which derive from
116
Faber Gerrit: Economic Partnership Agreements and Regional Integratin among ACP countries, in: Babarinde,
Ulofemi/Faber, Geritt (eds.): The European Union and the Developing Countries. The Cotonou Agreement,
Leiden 2005, pp. 85-110, p. 87.
29
tariff reductions, allowing high-cost domestic production to be replaced by more efficiently
produced imports from the partner country. As long as these effects outweigh trade diversion
and trade deflection, a country gains form the FTA. Trade diversion occurs if trade shifts from
sources having a comparative advantage to sources having preferential access to markets.
Trade deflection results from the absence of a common trade policy with regard to trade
barriers. Heterogeneous tariffs cause products to enter the FTA through the country with the
lowest barriers, including those that are actually intended for a purchaser with higher barriers.
In practice, this results in a shift of tariff income, lowering the amount of government revenue
in the consuming country.117
Hence, FTAs and regional integration have a considerable potential to better engage
countries in global trade and fight economic marginalisation. However, “in order to reap these
gains, certain conditions have to be met, be it in terms of initial conditions or policies.”118
The following paragraphs take a closer look at these conditions and policies, and aim at
pointing out difficulties on the Community side in dealing with the specific characteristics that
shaped the negotiating partners’ backgrounds and positions as well as the EU’s ability to
overcome “intrinsic constraints and complexities.”119 As it would exceed the scope of this
paper to analyse all of the problems that occurred before and during negotiations in the five
areas identified above, the focus will be limited to two elements in particular. The first one
addresses the issue of capacity-building and provides a useful example of how shortcomings
in ACP countries were not addressed in an adequate and timely way. This part therefore
focuses on the weak character of EU responses.
The second area analyses problems of the EU in actively phrasing flexible and
acceptable positions with regard to the reform of RoO and quality of market access.
A third, and final evaluation will touch upon the issue of regional integration,
analyzing whether EPA actually foster or hinder this principle which is promoted as one of the
major concerns on the EU development and trade policy agenda and hence constitute an
efficient instrument to fight economic marginalisation.
117
Faber 2005, pp. 87-92.
Ibid., p. 92.
119
Makhan 2009, p. 21.
118
30
2.1. Capacity building
Already before negotiations could start, it was obvious that the ACP states were going to face
a major problem in successfully participating in the discussion process: they lacked the
capacities to define common positions. Reasons were manifold: in the past their policies were
often influenced or even shaped and formulated by external actors, mainly by the Bretton
Woods institutions. Hence, experience in defining and defending positions was low. Countries
lacked the practical knowledge and technical skills to overcome “problems pertaining to the
shortage of staff or to the lack of internal coordination between the various ministries sharing
responsibility on trade-related policies as well as difficulties in engaging in consensusbuilding activities with non-state actors.”120 Moreover, developing a common stance on
certain issues was impeded by the heterogeneity of the countries affected, e.g. with regard to
their trade interests and level of development and the lack of political will of state and nonstate actors in formulating a common strategy.121 Fear of restructuring and adjustments was
another reason that accounted for ACP countries arguing that they could “not ‘a priori’ accept
to provide reciprocity in EPAs with the EU”,122 another issue that was fiercly discussed but
will at this point not be analysed any further.
Even before entering into negotiations the parties were aware of the need for capacitybuilding activities. Therefore they included corresponding provisions in the Cotonou
Agreement123 and intended to realize those through financial and structural support for
capacity-building activities on behalf of the EU, e.g. by setting-up negotiation fora and
providing resources through the 9th EDF.124
Especially in the light of criticism brought forward later during negotiations, claiming
that the EU had failed to adequately meet the difficulties of the ACP by not sufficiently
supporting them in finding common positions, it is interesting to ask at this point whether it
was actually necessary and/or desired at all that the EU as one negotiation party engaged in the
intra-group discussions of the party, especially as the Community was clearly the stronger one.
120
Makhan 2009, p. 83.
Ibid., p. 6.
122
Faber 2005, pp. 85-110.
123
See Art. 37, Cotonou Agreement.
124
Among the several EPA support programs under the 9th EDF were a 24 million campaign for projects aimed at
improving the trade policy formulation and negotiation techniques of the ACP countries, a12 million program to
help ACP countries integrate into the multilateral trading system, focussing on the effective participation in
global trade negotiations, as well as on the implementation of the agreements and another 50 million program
approved to support all ACP countries’ capacities for the EPA negotiations. See Makhan 2009, p. 86.
121
31
In this case, however, apart from the ‘historic responsibility’ that might have be felt on both
sides, the matter of discussion was not simply the negotiation of trade preferences but an
improvement of overall development. This aim, one can argue, made this unusual behaviour
generally both, adequate and desirable. Moreover, no serious alternatives, e.g. the support of
other non-EU developed countries, were available (and would probably not have been
tolerated by the Union anyway). Finally, the EU had an interest in not taking advantage of the
situation as it certainly wanted to “avoid the embarrassment of being shown not to care about
the developing world”125 – a fact that protected ACP interests.
However, as was just pointed out, EU responses eventually faced heavy criticism.
Firstly, financial support was not provided timely enough126 which was mainly due to the
lengthy ratification process of all 15 EU Member States and of the relevant institutions,
Commission, Council and Parliament. Secondly, the disbursement of the funds was executed
on the basis of application by the recipient states. The procedure for obtaining these resources,
however, demanded a high level of organisation and strategic identification of needs from the
ACP countries. Fulfilment of the requirements was therefore a serious burden for many ACP
countries, given the overall weak governance and supervision structures, especially in
LDCs.127
Thirdly, criticism on EU measures also occurred in another area. Apart from providing
financial support, the EU also advised ACP countries on the institutional set-up necessary for
formulating negotiation positions. Here, the Union favoured a participatory approach of state
and non-state actors to ensure wide support. This was expressed through the set-up of socalled National Development and Trade Policy Forums (NDTPFs) which were supposed to
formulate national positions towards EPAs which then could be merged into regional positions
and be presented to the EU. Although the establishment of NDTPFs was indeed successful in
many countries, only in few cases they were able to effectively involve all stakeholders, meet
regularly and systematically and formulate a workable position. Although the Community
produced impact studies and assessments to monitor the success of the financial and structural
instruments, they also faced shortcomings as they were either produced too lately to actually
125
Wright 2005, p. 79.
The Cotonou Agreement and thereby the 9th EDF only entered into force in April 2003 while EPA
negotiations had already been ongoing since 2002.
127
Makhan 2009, p. 84.
126
32
be able to trigger improvements or lacked the necessary follow-up.128
Thus, the overall evaluation of EU support in capacity building is rather disappointing:
“Despite generous and considerable efforts specifically targeted at enhancing the ACP
countries’ capacities (…) the EU system, (…) was not capable of reacting in appropriate time
for the challenges ahead, or in an adequate enough manner to measure up to these
challenges.”129
2.2. Reform of RoO and quality of market access
The multi-level system of EU decision-making turned out to be another major impediment for
the formulation of a coherent policy and negotiation position. As was explained earlier,
although trade policy is an area of exclusive competence, member states still influence it,
notably through the Article 133 Committee. Especially with regard to the reform of the Rules
of Origin (RoO) and the quality of preferential access to EU markets, “complex dynamics and
diverging interests within the EU have slowed and limited policy response”130, although the
RoO reform was already envisaged in the Cotonou Agreement.131
The Rules of Origin establish that a large number of ACP exports (especially
manufactured and semi-manufactured goods) can enter the EU market subject to no or reduced
customs and other non-tariff preferences, provided that their origin is certified as homeland
production. The Lomé set of RoOs was highly restrictive as integrating intermediate inputs,
necessary for a competitive end-product, was rather cumbersome and the administrative
paperwork necessary to demonstrate conformity with RoO, such as documentation and
accounting, was costly and complex.
Decreased quality of market access refers to the problem that due to the progressive
lowering of tariffs in the context of multilateral trade agreements, existing EU-ACP
preferences were loosing their relative advantage. This effect was further intensified by the
fact that the types of preferences granted with regard to tariffs and quantitive restrictions had
become increasingly outdated in the light of the growing role of other non-tariff and technical
128
UNECA (United Nations Economic Commission for Africa)/AU (African Union): Assessing regional
integration in Africa II: rationalising regional economic communities, Addis Ababa 2006. Available online:
www.uneca.org/aria2.
129
Makhan 2009, p. 85.
130
Ibid., p. 11.
131
See Art. 37.7, Cotonou Agreement.
33
barriers such as health, quality and safety standards.132
During negotiations, the ACP countries aimed at a common set of RoO that could be
applied to all EU-ACP EPAs in order to allow for the cumulation of products between ACP
regions, and wanted to reach an agreement with the EU in this regard as soon as possible.
Problems were twofold. One the one hand, the ACP group itself was unsuccessful in agreeing
on a number of crucial factors such as the priority of sectors or the methodology to adopt. The
EU, on the other hand, was reluctant to make any commitment in the first phase of the
negotiations and only presented its formal market access and RoO offers shortly before the
end of the negotiation deadline and the expiry of the WTO waiver in 2007.133
The EU’s conduct is surprising in two ways. Firstly, due to the already fairly liberal
access of ACP countries to the EU, it was clear that only a review of the RoO could make the
EPA package more attractive for them – an important fact the EU had to be aware of.
Secondly, already in October 2003 the EC had submitted a first proposal to the Article 133
Committee which had been rejected, however. The fact that it took more than three years for
the EC to come up with a second offer in April 2007, resulting in a long period of time during
which negotiations in some regions were plainly frozen,134 demonstrates the large impact
member states can have (through the Article 133 Committee) on shaping trade policy.
Another example of how the competence allocation can lead to inefficiencies with regard
to trade and development policy occurred with regard to the ACP requests to include legal
guarantees for additional development resources besides the EDF into the EPAs. The need for
such funding was widely acknowledged and the Commission made clear that “market access
without aid for trade is like putting a plate of food in front of a man while withholding the
knife and fork.”135 However member states (through the Council) refused to negotiate
development resources as part of EPAs, let alone provide any kind of guarantees in the legal
texts by not including the negotiation of development cooperation into the Commission’s
mandate.136
132
Makhan 2009, p. 47.
Ibid., p. 91.
134
Ibid., p. 143.
135
Mandelson, Peter et al.: Europe’s aid for trade pledge, in. Diario Noticias, 16.10.2007. Available online:
http://trade.ec.europa.eu/doclib/docs/2007/october/tradoc_136451.pdf (5.7.2010).
136
Bilal, San/Rampa, Francecso: Aid for Trade by the European Union: preliminary insight form the Economic
Partnership Agreements, in: Bartel, Sandra/Dann, Philipp: The Law of EU Development Cooperation, BadenBaden 2008, pp. 77-102, p. 79.
133
34
2.3. Regional integration
Furthermore, the EPA process was at times perceived to hinder and damage rather than foster
regional integration processes. Such criticism was in stark contrast to the Community’s
affirmation that promoting regional integration outside Europe is one of the cornerstone
principles of EU trade policy, especially under Cotonou. Hopes are that regional integration of
ACP countries will lead to lower risk for conflicts, the establishment of larger regional
markets that are more attractive for investors through economies of scale and scope, and an
overall increase in development due to spill-over effects and political leaders adopting a more
strategic approach to developing their economies.137
Yet there were a number of reasons of both political and economic nature, especially in
Africa, that proved to be major impediments to regional integration. Among those obstacles
were the fear of revenue losses through reduced trade tax income which is a significant source
of fiscal revenue for many countries,138 practical obstacles at land borders such as custom
procedures, delay and corruption139, structural issues such as weak transport and
communication infrastructure and a lack of skilled workforce. Hence, “the result of such
dynamics is that in some cases, the ‘block’ EPAs are supposed to build on is de facto absent:
unresolved inter-country rivalries (…) or lack of solidarity and competing aspirations for
leadership (…) often impede regional integration processes.”140 Critics argue that the EU did
not sufficiently factor in these problems into its policy and did not address them adequately,
e.g. by making South-South integration141 a necessary prerequisite for North-South integration
between the EU and ACP-countries. A two level integration strategy was finally embraced
when EPAs initiated parallel North-South and South-South integration, but so far “there are no
clear answers to be found in theoretical discussions” as to whether this approach “can be taken
as development-friendly, or rather development-unfriendly.”142
The main criticism with regard to regional integration, however, did not derive from
the fact that the EU seemed to not sufficiently take into account the existing impediments.
137
Wright, Stephen: Negotiating Economic Partnership Agreements. Contexts and Strategies, in: Babarinde,
Ulofemi/Faber, Geritt (eds.): The European Union and the Developing Countries. The Cotonou Agreement,
Leiden 2005, pp. 65-84.
138
Lesser, Caroline / Moisé-Leeman, Evdokia: Informal cross-border trade and trade facilitation reform in SubSaharan Africa, OECD Trade Policy Working Papers, No. 86, Paris 2009, p. 24.
139
Stevens, Christopher/Kennan, Jane: Preparing for Economic Partnership Agreements, Brighton 2005, p. 4.
140
Makhan 2009, p. 101.
141
South-south integration refers to integration between countries of similar, i.e. low, levels of development.
142
Makhan 2009, p. 68.
35
Rather, it was argued, did the EU actively hinder regional integration by offering alternative
solutions to EPAs, such as the EBA initiative143 which was unilaterally adopted by the Council
in February 2001. Such measures were possible as the Cotonou Agreement had introduced the
principle of differentiation in accordance with the WTO enabling clause, allowing for different
treatment, e.g. unilateral trade preferences to the benefit of all or groups of developing
countries identified on the basis of objective and non-discriminatory criteria, such as their
respective levels of development. Although an important instrument for the LDCs, the
“adoption of the instrument stood in contradiction with the policy objective of regional
integration envisioned by the EPAs”144 as it provided only one group of countries, the LDCs,
with a competing incentive to post Lomé-negotiations on preferential trade terms, thereby
risking to divide the countries along the EBA eligibility-line.
However, the dreaded effects were not as severe as expected. ACP countries, including
LDCs, chose to engage in the EPA negotiations nonetheless as they offered a more stable and
predictable version of preferential treatment than the unilaterally granted GSP, of which EBA
was also a part. Firstly, in contrast to EBA, EPAs provided ACP states with the potential to
influence the content and scope of the agreements through negotiations (despite the shortcomings discussed above. Secondly, reciprocal, WTO-compatible EPAs were more secure in
that they, unlike PTAs favouring one group only, faced little risk of being legally challenged,
which would imply ACP countries falling back to the standard GSP access to EU markets
shared by 176 other GSP beneficiaries of which many had greater productive and trading
capacities and less favourable overall terms. 145 Obviously, such a development could not be in
the ACP countries’ interest.
Although the EBA initiative in the end did not prohibit LDCs from entering into
negotiations about EPAs, this alternative incentive certainly contributed to the vagueness and
indecisiveness of some states and the slow speed characterizing large parts of the negotiations.
Other shortcomings hindering regional integration were the unequal performance of the
Commission delegations in various countries as well as the uncoordinated member states’
policies of preferences towards certain countries, which increased uncertainty among ACP-
143
Under EBA, LDCs are guaranteed non-reciprocal duty-free quota-free access to the EU markets for all
products with the exception of arms and transition periods for very few agricultural products.
144
Makhan 2009, p. 106.
145
Ibid., p. 107.
36
countries on whether a joint position would only strengthen other countries’ positions while
weakening their own. Hence, a ‘let’s rather keep the benefits we already have’-approach was
not uncommon.146
3. Lessons learned from the EPA negotiations
Although first EU-ACP EPA negotiations were launched in 2002, by the deadline of
December 2007, ambitions had proven to be too high, with only the EU and the Caribbean
reaching a comprehensive regional agreement (CARIFORUM). Other regions and countries
were only able to formulate WTO compatible interim agreements or other temporary
solutions, so-called ‘stepping stone’ agreements.
However, negotiations kept going on towards the conclusion of regional and
comprehensive economic partnership agreements. Today, six out of eight initialled EPAs have
been signed so far: the full EPA with CARIFORUM states (October 2008) and the interim
EPAs with Cote d'Ivoire (2008), Central Africa, the SADC EPA States, the Pacific States and
Eastern and Southern Africa States - ESA (all in 2009). The signature of the two outstanding
initialled EPAs (with Ghana and East African Community - EAC) is expected in near future,
however.
The fact that most of the EPAs were only concluded around two years after the expiry
of the initial 2007 deadline and eight years after the start of the negotiations illustrates that
despite the remarkable potential EPAs have for the development, a number of factors have
prohibited them from becoming the new and efficient tool that would improve the overall
situation for developing and developed countries alike. Among those shortcomings were the
limited capacities and little political will of many ACP countries to shape and implement the
relevant measures. Further impediments were the stark complexities of trade negotiations as
such, the multilevel nature of the EU system of governance with the particular problem of
inflexibility, and the incoherent approach, e.g. with regard to regional integration. Hence,
when analyzing which lessons are to be learned from the EPA negotiations, the following
factors must be addressed:
146
European Think Tanks Group: New Challenges, New Beginnings. New Steps in European Development
Cooperation, London 2010.
37
(i) Prior and during negotiations, the Union as the stronger actor failed to act upon the
shortcomings on the ACP side and provide the necessary support in overcoming obstacles that
were not simply due to a lack of political will. Therefore it will be essential for future
negotiations to analyse the specific problems within certain regions and countries and support
capacity-building at the earliest stage possible. This includes assistance in at least three ways:
Firstly, Member States will have to ensure adequate funding, e.g. through Aid for Trade.
Secondly, they will have to provide timely support in setting-up and supervising the relevant
institutions in the partner countries. Thirdly, MS need to harmonise their own practices,
procedures and requirements. As experience has shown however, it is essential that all of these
prerequisites are realized prior to entering into negotiations.
(ii) Another problem was that diverging interests between ACP countries and
regions were actually further emphasised rather than harmonised, e.g. through (what was at
least perceived as) competing incentives. It is therefore crucial to ensure that different policy
instruments are coherent. Furthermore, communication with the trading partners must be
enhanced, clearly explaining what are the gains and risks of each policy and pointing out to
which extend and in which ways the instruments will complement each other.
(iii) Furthermore, the EU had based its EPAs on regional clusters or blocks that in
reality did not – or only in very weak terms – exist. This was probably partly due to a wrong
perception of the already existent level of integration in many regions, maybe resulting from
the attempt to translate European conditions into, for example, an African context. To avoid
such misperceptions it will be indispensable in the future to investigate in detail whether
regional integration issues have at all been on the list of priorities or whether countries so far
have rather focused on overcoming internal struggles. Provided that the EU is willing to take
on a new, less comprehensive view on regional integration, the Community can actively
support these regions in identifying areas where integration is feasible, based on its own
experience.
(iv) Although foreign assistance is necessary and desirable to some extend, it is
essential that the EU leaves developing countries more room in determining their own trade
(and development) agenda. Many of the problems discussed under the capacity-building
section actually derived from the fact that in the past ACP countries had little ownership of
their trade and aid policies and therefore lacked expertise, staff and experience when they
38
were to formulate positions in negotiations. Hence, in order to strengthen these crucial
prerequisites for policy formulation and implementation in the future, developing countries
must learn to independently identify what their strengths and competitive advantages are.
Chances are that this will lead to some activities the EU as a major supporter of trade
liberalization might not approve of, e.g. the often-claimed protection of infant industries or
sensitive sectors.147 However, questions are whether the learning-process of making own
experiences with (the drawbacks of) protectionist activities might actually turn out to be more
helpful for developing countries than being subject to foreign trade policies they do not own
and therefore sometimes show little motivation to implement.
(v) Finally, during the EPA negotiations, the EU has – on several occasions – not
been able to formulate positions timely and flexibly enough. Therefore the Union has to work
on its governance structure to facilitate negotiations, and increase the speed and quality of
proposals. Flexible responses to developing countries’ needs and concerns are essential and
have been lacking in the past. Institutional reform is therefore a necessary step to increase the
development-potential of trade policy.
147
For a detailed discussion under which circumstances infant industry protection can indeed have welfareincreasing effects, see: Melitz, Marc: When and How Should Infant Industries Be Protected?, Michigan 1999.
Available online: http://www.fordschool.umich.edu/rsie/workingpapers/Papers451-475/r451.pdf (29.6.2010).
39
III. An Agenda for Action
Throughout this paper the case has been made that improving the link between trade and
development is essential not only for the developing countries’ progress, but also for the
European Union’s role as a credible, visible and effective global player. However, there are a
number of other, more practical reasons on the part of the Union why it should increase its
efforts for policy coherence, one of them being efficiency. An improved connection of trade
and development policies means benefiting form economies of scale for funding instruments
and from the combination of expertise, i.e. knowledge and staff. Furthermore, it allows the EU
it make use of the unique ability to effectively promulgate its values such as human rights,
freedom, democracy and rule of law, as it is both a significant economic power and a political
actor engaged in foreign policy.
A number of measures to improve the trade-development-nexus have already been
taken lately. The most relevant and binding ones have occurred in the context of the Lisbon
Treaty and will be analysed in a first step. The second part will then focus on further ideas of
how trade-development cooperation can be strengthened.
1. De lege lata: The Treaty of Lisbon
The Treaty of Lisbon which entered into force on 1 December 2009 is intended to reform the
Union in several ways: It aims at increasing the EU’s overall efficiency and making it more
democratic internally and its policies more coherent globally.148 The general aim is to “ensure
smooth and efficient functioning of the enlarged EU in the globalised and fast-changing
world.”149 Many of the changes contained in the Treaty of Lisbon therefore are not only of
great importance for the Union’s inner functioning but also “reflect the latest phase in the
gradual transformation of the EU (…) to a global player.”150 The objectives of the EU with
regard to the wider world are defined in Art 3(5) TEU and encompass the promotion of values,
the commitment to the eradication of poverty and protection of human rights.151
148
Pollet-Fort, Anne: Implications of the Lisbon Treaty on EU External Trade Policy, in: EU Centre Singapore
Background Brief No.2, 2010, p. 2.
149
Kaczorowska, Alina: European Union Law, London 2009, p. 43.
150
Koeb, Eleonora: A more political EU external action. Implications of the Treaty of Lisbon for the EU's
relations with developing countries, in: European Centre for Development Policy Management InBrief, No. 21,
2008, pp. 1-16, p. 1.
151
See Box 12.
40
Box 12: Art. 3(5) TEU
In its relations with the wider world, the Union shall uphold and promote its values and
interests and contribute to the protection of its citizens. It shall contribute to peace,
security, the sustainable development of the Earth, solidarity and mutual respect among
peoples, free and fair trade, eradication of poverty and the protection of human rights, in
particular the rights of the child, as well as to the strict observance and the development of
international law, including respect for the principles of the United Nations Charter.
Already before the institutional innovations of the Lisbon Treaty were put into place,
important policy frameworks were introduced to make EU development policy more coherent
with other policies such as trade, fisheries or agriculture, and more effective through the
harmonisation of MS policies. Examples are the already mentioned Development Policy
Statement, the European Consensus on Development and the Code of Conduct on the Division
of Labour in Development policy. The new structures introduced through the Lisbon Treaty
differ from these earlier initiatives in that they constitute a more reliable setting than simply an
agenda or action plan that can be changed more easily when certain goals or commitments
become inconvenient. In the context of the financial and economic crises, for example, some
countries have already reduced or postponed the development pledges they have made for this
year.152 Rather than leaving trade aid and development cooperation subject to the volatility of
public opinion,153 the Lisbon Treaty embeds the objectives in a legal framework that grants
them far greater chances of longevity.
As a matter of course, this part of the thesis cannot and does not intend to explain
en detail all changes with regard to the EU’s external relations, let alone provide an overview
of all reforms envisaged in the Treaty. Rather, the focus will be on the concrete changes
affecting the design, implementation and connection of development and trade policy. These
occur mainly in two areas.154
Firstly, the Treaty extends and clarifies EU competences. Secondly, it provides
improvements of the institutional set-up and hereby promotes the inclusion of various policies
(such as external trade and investment policy, foreign and security, environment and
development policies and humanitarian assistance) in the now more unified EU foreign policy.
152
OECD 2010.
Paxton, Pamela/Knack, Stephen: Individual and Country-Level Factors Affecting Support for Foreign Aid, in:
The World Bank Policy Research Working Paper, No. 4714, Washington D.C. 2008.
154
Woolcock, Steve: EU Trade and Investment Policymaking After the Lisbon Treaty, in: Intereconomics, Vol.
45, No. 1, 2010, pp. 22-25.
153
41
1.1. Extension and clarification of EU competence
As was already mentioned earlier, Art 207 TFEU brings services, TRIPs and foreign direct
investment (FDI) into exclusive EU competence. Especially the extension of exclusive
competence to FDIs is of great importance as it allows the EU to negotiate comprehensive
agreements on trade and investments. So far investment was an area of mixed competence: the
EC conducted investment negotiations focused on liberalisation, on a bilateral or multilateral
level, while MS negotiated Bilateral Investment Treaties (BITs) which aimed at protecting
their companies' investments abroad. Chances are that due to the transfer of competences,
eventually a model EU investment agreement for future FTAs will replace the prevailing
BITs. These will, according to the treaty, soon have to be adapted to EU law and most likely
be ‘grandfathered’155 for the time being. These changes and clarifications in the allocation of
competences “are expected to contribute to a streamlining of the trade policy.”156 This will
lead to a reduction of the number and need of mixed agreements and create comprehensive
economic agreements. With regard to the development dimension of trade policy, increased
EU competence and especially fewer mixed agreements are generally appreciated as they
reduce the number of actors and especially the national governments say in negotiations which
often leads to a slow-downs and increased complexity.
1.2. Structural improvements
When it comes to the institutional set-up of the EU’s foreign policy, the Treaty of Lisbon is
significant in two ways157: on the one hand, it clarifies the responsibilities of the existing
institutions. On the other hand, it aims at improving external relations performance and
visibility through the creation of new ones.
(i) As a first step, however, it abolishes the European Community and grants legal
personality to the EU,158 which so far has been a mere political concept, hereby simplifying
international representation.159 This implies that the former Commission’s delegations become
155
I.e. an exemption might be granted allowing the existing BITs to be kept in place until the adoption of EU
investment agreements.
156
Pollet-Fort, Anne: Implications of the Lisbon Treaty on EU External Trade Policy, in: EU Centre Singapore
Background Brief No.2, 2010, p. 3.
157
Santopinto, Federico: Réforme des traités: Une ‘coopération structurée permanente’ pour mieux armer l’UE,
Brussels 2007, p. 7.
158
See Art. 47 TFEU.
159
Leal-Arcas, Rafael: Theory and Practice of EC External Trade and Policy, London 2008, pp. 91-96.
42
EU delegations with increased representative and actual power. The increased ability of the
EU to ‘speak with one voice’ is not only essential during negotiations and for its perception as
a political power. It may also serve as a role model for successful regional integration, which
as the EPA negotiations have shown, is considered to be a crucial in promoting development.
(ii) With regard to the reform of the existing institutions, it is particularly important
to take a closer look at the role of the European Parliament concerning trade and development
issues.160 In general the EP becomes more influential through extended use of the co-decision
procedure, making approval of EU legislation by the Parliament obligatory. Before, many
issues could only be indirectly influenced by the EP as the consultation procedure granted the
Council a lot of leeway in accepting or ignoring the opinion expressed by the Parliament.
Furthermore, the Commission now has to report regularly to the EP Special Committee on the
progress of trade negotiations, although the EP itself may not authorize the EU to engage in
those, a responsibility that remains exclusively with the Council.
Due to the increased role of the EP in trade negotiations though, chances are that
more lead time for preparation is required as more actors on the EU level are involved.
However, when looking at the Parliament’s broad approach to trade issues in the past,
including social, environmental, human rights and development considerations, hopes are that
these areas will generally be addressed more extensively and will result in greater policy
coherence.161
(iii) The deletion of Art. 179(3) EC, which established that EDF funds are outside
the general EU budget and hence hardly subject to the influence of the Parliament, is another
step in this direction of greater coherence. Although the deletion does not entail a legal
obligation to integrate the EDF into the budget, and development cooperation in general
remains a matter of shared competence, it “clearly strengthens the political case for a
budgetisation of the EDF”162 and an increased say of the Parliament in development issues.
(iv) Another formal aspects As Art. 3(5), 21( 1) TEU demonstrate, all elements of
the EU’s external action - from CFSP to trade policy for example - are from now on submitted
160
National parliaments overall role will increase as they shall verify whether EU legislation is dealt with at the
right level, i.e. controlling the compliance of the subsidiarity principle. This task will only have little effect on
trade issues, however.
161
http://www.delphl.ec.europa.eu/docs/100126%20ECCP%20Lisbon.pdf
162
Martenczuk, Bernd: EU cooperation with developing and other third countries and the Treaty of Lisbon, in:
Bartelt, Sandra/Dann, Philipp: The Law of EU Development Cooperation, Baden-Baden 2008, pp. 36-51, p. 51.
43
to the same principles and objectives, and most of the external relations provisions of the
existing treaties are now regrouped in a single Title V. This stands in stark contrast to the preLisbon situation when the EC Treaty had Title IX Common Commercial Policy, Title XX
Development cooperation, Title XXI Economic, financial and technical cooperation with third
countries, international agreements, restrictive measures, international relations and
instruments among the general and final provisions (Part Six).
But not only the structural set-up of the external relations in the Treaty signals that an
attempts to better link policies and increase coherence. There seems to be an overall “growing
realisation in Brussels and Member States capitals that development policy is central to EU
external action and ranks alongside other areas such as security and trade” and hopes are that
“the more external policies are harmonised, the more prominence development will have.”163
1.3. Institutional innovations
The Treaty of Lisbon provides a number of institutional innovations to increase policy
coherence and effectiveness with regard to external affairs. Among those are the post of new
High Representative for Foreign Affairs and Security Policy (as de facto Foreign Minister and
Vice-President of the European Commission), European External Action Service (EEAS) and
the 2.5 years-termed EU Council President. Certainly the creation of these institutions alone
does not provide any hindsight on whether and how they will cooperate and critics fear
competition, especially among the EUHR, the President of the European Council and the
President of the Commission.
With regard to linking trade and development, however, the position of High
Representative of the Union for Foreign and Security Policy (HR for FASA) can be of great
importance as. After all, it was not only established to coordinate and promote the common
foreign policy of the EU - especially the Common Foreign and Security Policy (CFSP) and
Common Security and Defence Policy (CSDP) - but also to “ensure consistency with other
external policies, especially development, enlargement and trade.”164 The High Representative
will be appointed by the Council by QMV and subsequently his/her appointment must be
approved of by the president of the Commission. Despite this double legitimacy, the Treaty
163
Furness, Mark/Makhan, Davina: The Barroso II Commission: one small step to European development
policy”, in: German Development Institute – Current Column, March 1, Bonn 2010. 2010.
164
Ibid., p. 2.
44
emphasizes that foreign policy is not transferred to the Commission or the EP and untimately
remains in the hands of the Member States in case they cannot agree on a common position.
“However, if there is a agreement between the Member States to present a common form on a
particular issue, the voice of the HR for FASA (being the voice of 27 countries) will carry
enormous weight.”165 This effect is further intensified by the fact that the HR has at its service
the EEAS, as diplomatic corps and pool of expertise in foreign affairs.
Whether the trade-development-nexus really will be strengthened will also depend
on the personalities and relations of those holding office, and it is worthwhile to take a closer
look at their qualifications and experience on the one hand and their attitude towards each
other on the other. In this regard the current staff of the Barroso II Commission seems quite
promising, as High Representative Baroness Catherine Ashton dealt in her former capacity as
EU Trade Commissioner extensively with the EPA negotiations. The new Trade
Commissioner Karel de Grucht also has experience with development questions as he not only
was interim Development Commissioner in 2009 but also is a former member of the EP’s
ACP-EU Joint Parliament Assembly and has already underlined the role of the European
Parliament in trade policy on various occasions. This approach is further supported by the
Commissioner for Enlargement Stefan Füle who already “promised the Parliament that he
would work to foster development based on economic and political reform in neighbouring
countries.”166
Although the various reforms described above “have the potential to significantly
improve the EU’s policy and actions towards development countries”167, there remains a threat
of increased incoherence “through a proliferation of overlapping activities by a multiplicity of
actors.” Generally, however, the changes are perceived in a positive way and are expected to
increase the trade-development relation.
165
Kaczorowska 2009, p. 54.
Furness/Makhan 2010, p. 2.
167
Koelb 2008, p. 1.
166
45
2. De lege ferenda: Potential measures to promote policy consistency
To change policies in a community of 27 countries, in the context of an institutional structure
that has evolved over decades and a global environment that poses new challenges on a
constant basis, is certainly not an easy endeavour. If the issues to be discussed touch upon the
sensitive areas of trade and development, the undertaking gets even more challenging.
Keeping in mind the particular relevance of these policies, however, justifies the effort of
analyzing how they can be improved with regard to each other.
The Treaty of Lisbon has already addressed a number of issues that were
repeatedly discussed in this regard. However, these changes will hardly be enough to make up
for all deficiencies that still exist and there is always room for improvement. This part of the
thesis will therefore try to propose further measures that can be taken in order to make trade
policy work for development. They derive from the literature as well as conclusions drawn
from the case study on the ACP countries.
2.1. Consolidating EU and Member States’ activities
A primary request is that the EU combines its powers and moves away from the still
prevailing Member States driven approach in the development area. As was pointed out in the
first part of the thesis, linking trade and development policy is a particularly complicated task,
because there simply is not one trade and one development policy, but several versions of each
that need to be combined. From a policy coherence point of view, Member States still have too
much say in the formulation of the CCP and coordinate too little with respect to their
respective development policies.
(i) As chances are low that Member States will voluntarily hold back their interests to
the advantage of others, reducing the number of actors and stakeholders is therefore a crucial
element in overcoming this problem. The foundation has already been laid down through the
position HR for FASA. Now Members States have to be wise enough to allow for sufficient
leeway in decision-making and acting on the supranational level. National politicians have to
realise the necessity to not compete with European representatives for international
recognition.
(ii) Keeping in mind the dispersed character of the various development policies, one
means to improve the performance in this area would be to make MS specialise and focus
46
their efforts on fewer core countries or choosing a couple of main sectors they would like to
engage in.168 An example of such a strategy has already been the case of Austria, which
established itself, and was chosen by its fellow EU countries, as a lead donor for water and
sanitation because of its particular expertise in these areas.169 Harmonisation of policies has
further already proven successful in some African countries, such as Malawi, “where Sweden
put Norway in charge of its entire country programme.”170
(iii) Furthermore changes should occur with regard to funding instruments. One option
would be a significant shift of budget from the MS towards the Commission which could then
make use of “the breadth of its global network”171 and expertise and distribute the resources
accordingly.
(iv) Chances are however, that most MS would not approve of such a ‘centralisation’
of national policies. Therefore national governments need to find another way – one that
enables the Commission to play a more useful role, but respects the current division of
competences between EU and national levels. Hence, consistency of European development
efforts does not necessarily need to imply a shift of funds form bilateral programs to the
supranational level, but simply demands “a larger role for EU institutions in bringing together
community-wide development strategies, setting standards, and creating enforcement
mechanisms to ensure that standards are more than empty rhetoric.”172
2.2. Engaging developing countries
One-sided changes on the EU and MS level however, will not be enough. Rather, it is crucial
to actively engage developing countries in both, trade and development activities, and
formulate EU policies that keep in mind their needs and abilities. Two important areas where
developing countries’ requests should definitely be taken into account if the EU wants its
efforts to be taken serious, both from developing countries and the rest of the world, are the
policies of fishery agriculture policies. Especially the latter, reflecting “more than three
168
Grimm, Sven: EU Development Cooperation: Rebuilding a tanker at sea, in: FES Briefing Paper, No. 6, 2006,
p. 5. Available online: http://library.fes.de/pdf-files/iez/global/50421.pdf (13.7.2010).
169
Makhan 2009, p. 112.
170
Wanlin 2007, p. 13.
171
Ibid., p. 14.
172
Lundsgaarde, Erik/Makhan, Davina: Time for European Unity in Development, in: German Development
Institute – The Current Column, Bonn 2010, p. 2.
47
decades of intra-EU political compromises and incremental trade-offs”173, has been under
heavy criticism for not paying attention to the actual needs of developing countries.174
(i) Generally, the EU should move away from a donor-recipient approach towards a
genuine relationship of partners. This would imply trusting in developing countries’
capabilities to know best a) where they have a competitive advantage and b) how to deploy
resources accordingly. Concretely, aid agencies would no longer be in charge of selecting
projects and manage funds, but leave these tasks to the governments themselves. Aiming at
enhancing ownership in partner countries would therefore entail favouring budget support
over aid initiatives.175 Certainly control and oversight would be indispensible to ensure
resources would be used effectively and not be abused by particular groups or powerful
individuals.
(ii) The EU could further provide developing countries with their expertise in building
public-private partnerships, reliable institutions and engagement of civil society groups
(especially with regard to social and environmentally-sustainable development). These areas
were also addressed in the Cotonou Agreement but so far have shown only very little output.
(ii) Finally, and in continuation to the already existing, but half-hearted efforts (as
illustrated in the results of the EPA negotiations), the EU should further support regional
integration and South-South partnerships by providing expertise and financial resources.176 In
this regard the Union should remember its own history of integration that was so crucial for
the area’s development. Just as the EU followed its own path and speed, however, the Union
must now – with regard to other countries – ensure it respects the local political and historical
conditions and does not create artificial entities to pursue its own interests. The task of
identifying regional partners should remain with the respective countries – just as the EU itself
chose when to accept whom and under which conditions into its Community.
173
Holland 2002, p. 144.
Nelson, Michael/Halderman, Michael: The EU, CAP & Developing Countries, Chicago 2004.
175
Schmidt, Petra: Budgethilfe in der Entwicklungszusammenarbeit der EU, in: Deutsches Institut für
Entwicklungspolitik Studies No. 10, Bonn 2005.
176
European Think Thanks Group 2010, p. 21.
174
48
Conclusion
This paper has aimed at analysing how the EU’s policies of trade and development interact
and which improvements can be made in order to make the former become more
development-friendly. The recent economic and financial crises have illustrated the important
truth that global problems need to be dealt with by collective action. By the same token,
linking the trade policy of the world’s largest trading bloc to development aims is a task that
requires cooperative and co-ordinated behaviour of a magnitude of actors.
The analysis of the EU’s trade and development policies and the case study on the
ACP-EPA negotiations have shown that shortcomings can be attributed to several levels: (i)
inefficiencies in the EU multi-level governance system, (ii) failure to cooperate among
Member States and (iii) structural and political deficits in developing countries. On the one
hand, this observation paints a rather dark picture as none of these groups seems to be working
satisfactorily. On the other hand, however, it provides many angles and areas where
improvements can be made.
The analysis in this paper has shown that on the supranational level co-ordination must
be enhanced so the EU can speak and act as a single power when required and provide timely
and adequate responses to developing countries needs. On the national level, Member States
need to realize that their interests can also (or even better) be achieved through coordination
and that European integration also implies letting go previous forms of sovereignty and
changing them for shared, but overall increased political and economic power. Developing
countries, finally, have to learn that they need to formulate and implement positions and
policies of their own and defend them in negotiations rather than expecting European policies
to be tailored to their needs.
On all three levels, steps have already been taken into the right direction. The EPA
negotiations and several trade and development initiatives have shown improvements in the
areas of quality of market-access, comprehensiveness, reciprocity, capacity-building and – to a
lesser degree – also with regard to regional integration. Furthermore, common development
objectives were agreed upon and turned into legally binding commitments. Finally, important
institutional changes through the Treaty of Lisbon set the prerequisites for a more coherent
and united policy of trade and development and a vast list of recommendations for future
improvements exist. What is still needed though is the understanding of the importance to
49
make these changes work in order to strengthen the inner legitimacy of the EU itself, to
contribute to the assertion of the EU’s identity in the international arena, and to support
developing countries on their way to growth. Maybe the outlook that increased effectiveness
of collective EU action can make an important contribution to these three areas at once will
eventually be convincing.
This year’s United Nations summit in September will provide a new chance to globally
implement these recommendations and realise the Millennium Development Goal of using
trade as a tool for development. Based in its experiences with shortcomings – but also due to
the progress it has already made, the European Union has the potential to make important
contributions.
50
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