15 Feb 2013

EU challenged to renew its duty to a fairer world order

Written by  Mark Paterson and Kudrat Virk

EU challenged to renew its duty to a fairer world order / Mark Paterson and Kudrat Virk / Business Day
15 February 2013

At a distant remove from the fanfare that often accompany high-level global summits, a widely unreported meeting affecting 17% of the world's population was recently held in Equatorial Guinea's capital, Malabo. Diplomats and leaders from the African, Caribbean and Pacific (ACP) group of countries, as well as senior figures from the European Union (EU) and the United Nations (UN), met in December to discuss the uncertain future of Europe's widest-ranging model for north-south co-operation: the partnership between the 27 countries of the EU and the 79 countries of the ACP.

This relationship, which was forged in 1975 between the European Economic Community, now the EU, and 46 mostly former European colonies, has sought to promote sustainable development in Africa, the Caribbean, and the Pacific, and to integrate the 79 ACP countries into the world economy. However, changing global economic and political realities, including the shift in economic power from the West to rising powers such as China, Brazil and India and the retrenchment of western capital since the global financial crisis of 2008-09, have cast doubt on the future of this relationship.

The EU has embarked on an institutional refit, which includes reviewing all its international partnership deals. Consequently, uncertainty has mounted over what kind of deal, if any, will replace the Cotonou Agreement of 2000 on trade, aid and political co-operation that presently governs the ACP-EU relationship but expires in 2020.

Earlier, in 2007, a new strategy for Africa prepared by EU officials in Brussels was approved at an Africa-EU summit in Lisbon. However, it was perceived as having been drawn up unilaterally and presented as a fait accompli to African states.

Particular concern has since centred on the continuing negotiations within the EU on its budget, including the future of the European Development Fund, through which aid has been channelled to ACP states for decades — €22bn has been allocated for the five years from 2008 to this year.

ACP diplomats at the Malabo meeting urged that the fund should remain outside the regular EU budget framework to guarantee the continuing predictability of these aid flows. Strong objections were also raised to plans to apply the EU's principle of "differentiation". This would see middle-income ACP countries excluded from receiving aid, despite their infrastructural deficits and widespread inequality and poverty.

Leaders from the 63 ACP member states represented at Malabo balanced implicit criticism of the EU's new development policy with an urgent call for greater co-operation and solidarity within the ACP to improve its effectiveness in engaging with Brussels. Broadly, the summit urged a fairer and economically more equitable world order.

However, diplomats at a meeting last October held by the Centre for Conflict Resolution in Cape Town, which was attended by departing ACP secretary-general Mohammed Ibn Chambas, also acknowledged that the collective bargaining power of the group has been weakened by lengthy negotiations on the Economic Partnership Agreements that began after 2000.

Critics have argued that the free-trade prescriptions of the Economic Partnership Agreements, though sold by the EU as supporting development, instead open important markets for Europe's goods and services and promote its competitiveness, while improving its access to energy sources and raw materials in ACP states. Although the EU accounts for about 40% of Africa's trade, the continent remains marginal for European imports and exports; and, what is more, primary products constitute the majority of ACP exports — a pattern of trade that diminishes in value for exporting countries in the long term.

Participants in the seminar stressed the win-win nature of a close relationship between Europe and ACP countries. In particular, they highlighted the importance of the diplomatic support offered by the ACP, which promotes the interests of a total population of 930-million people, to the EU, which is often considered an economic giant but a political hobbit. ACP backing can provide significant political leverage in multilateral forums such as the UN General Assembly. In addition, the EU-ACP partnership, which recognises the interdependence of security and economic development, strengthens a relationship predicated on the promotion of peace and the consolidation of democratic governance — to sustain economic growth and as ends in themselves.

Yet, as the third five-year review of the Cotonou Agreement approaches in 2015, this relationship is coming under increasing pressure. South Africa's ambassador to the EU, Mxolisi Nkosi, noted recently the big cuts that are being made in the national budgets of many European countries and the effect of these on aid flows — the EU reportedly contributes more than half of development assistance worldwide. Nkosi emphasised the importance of the ACP in promoting the survival of vulnerable, small island nations and poor land-locked states and gave warning that, without the ACP, these countries "face the grim prospect of fading into obscurity". Solidarity represents a fundamental virtue for the ACP, with stronger states offering protection to their more marginalised peers and provides a persuasive raison d'être for what is otherwise an amorphous grouping.

The Cape Town seminar noted that the rise of China, Brazil and India and their voracious appetite for raw materials has led to increased investment and trade with ACP countries, challenging the primacy of US and European economic ties to the developing world. The ACP needs to formulate an effective strategy on access to, and the development of, its raw materials by both old and new trading partners. Differences between the economic strategies of the members of the Brics (Brazil, Russia, India, China and South Africa) bloc — particularly between China's statist focus on extractive industries and infrastructure and India's more commercially driven, private-sector-led approach — could be leveraged by the ACP to enhance the developmental content of new trade deals.

South Africa has an important role to play in supporting the ACP. Although South Africa is not a party to the trade chapters of the Cotonou Agreement, having earlier signed a standalone Trade, Development, and Co-operation Agreement with the EU in 1999, lessons from SA's complex and extensive trade deal with the EU could inform the Economic Partnership Agreement negotiations that continue elsewhere in Africa. Further, the rise of new economic powers in the East and the "global south" has underscored the growing importance of south-south and triangular co-operation in promoting development and trade relationships based on comparative advantages. The ACP should leverage South Africa's inclusion in Brics to connect to emerging trade and financial flows.

The Malabo meeting emphasised the "historic juncture" faced by the ACP and concluded that "the demands for fundamental renewal and transformation are no longer mere options but unavoidable imperatives for strategic change". The group's soul-searching is plain to see in the text of the summit's official communiqué. However, Europe must also rise to the challenge and fulfil its historic obligation to help chart a path out of poverty for the world's dispossessed.

Paterson is a senior project officer and Virk a senior researcher at the Centre for Conflict Resolution.

Policy brief from the CCR meeting »



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