APPENDIX 7
Memorandum submitted by Oxfam
EVERYTHING BUT ARMS AND SUGAR?
KEY MESSAGES
— Oxfam would like to see the European
Commission's proposal to provide tariff and quota free market
access for all products, except armaments, exported by the 48
least-developed countries (LLDCs), accepted by the EU Member States
and implemented as soon as possible.
— It is important that low-income vulnerable
groups in the EU and especially in the Caribbean are compensated
for any negative effects of the "Everything But Arms"
(EBA) initiative. The Caribbean countries in particular will need
assistance through transitional arrangements to diversify their
economies and improve their competitiveness. The Caribbean producers
can rely on the continuation of the EU sugar protocol, which provides
a quota for their sugar at EU producers' prices. But this will
now not be to the exclusion of equally-deserving, competitive
producers from the LLDCs.
— The powerful lobby against the proposal
to include sugar in the EBA initiative, launched by the National
Farmers' Union and parts of the multinational sugar industry,
labelling it a threat to UK sugar beet growers, is ill-advised
in its claims. The 48 least-developed countries account for just
0.4 per cent of World Trade, and only 0.003 per cent of EU imports.
Claims that imports from the least-developed countries, currently
amounting to 300-500,000 tonnes, will rise to 4.5 million tonnes
over five years are implausible.
— Oxfam believes that the current row
over EBA provides a classic example of northern governments failing
to practice what they preach. Many advocates of free trade, who
have consistently promoted the benefits of further liberalisation
to developing countries, have been quick to resort to protectionist
arguments when they believe that their own interests are under
threat. Northern protectionism currently costs developing countries
an estimated $700 billion a year, within this context the EBA
proposal is an extremely modest one.
— The 48 least-developed countries
are among the poorest in the world. They account for 32 of the
35 countries in the lowest category of the UNDP's Human Development
Index. At current growth rates, only four can be expected to graduate
from LLDC status, crossing the $900 GDP per capita threshold,
within 25 years. The economic and social development gains to
these least-developed countries from improved access to the EU
market will outweigh any losses absorbed by the EU and Caribbean
countries.
— The EBA initiative will be an important
political gesture that the EU and the UK Government could make
within the context of the need to re-build confidence in the ability
of the multilateral trade system and the WTO to reflect the needs
of all its members, and to promote a more equitable distribution
of the benefits of international trade.
INTRODUCTION
We welcome the UK Government's support for the
EC's proposal to improve access to the EU market for all products,
except armaments, exported from the world's 48 poorest countries,
dubbed the "Everything But Arms" (EBA) proposal. We
dispute the claims of the powerful lobby against the proposal
to include sugar, launched by the National Farmers' Union and
the multinational sugar industry, who have labelled it a threat
to UK sugar beet growers. Research commissioned by Oxfam from
the Institute of Development Studies shows that their claims are
massively over-stated. Talk is of current EU imports from the
LLDCs of 300-500,000 tonnes rising to 4.5 million tonnes over
five years. Yet the world-wide exports of all the countries that
will benefit are less than 100,000 tonnes (plus what they already
sell to the EU). An extra 4.5 million tonnes would require surplus
producers to increase output fourfold, which is implausible. We
hope that the UK Government will act speedily to refute the claims
of the sugar lobby and reassert its support for the EBA initiative.
Which countries, which products?
The research commissioned by Oxfam shows that
the immediate impact of EBA will be limited to eleven products.[4]
It is unrealistic to expect the absolute volume of exports of
most of these products to increase significantly over the next
few years. The 48 least-developed countries currently account
for just 0.003 per cent of EU imports and they lack the capacity
to scale-up rapidly the volume of their exports. However with
certain products, namely beef, maize, rice and sugar, there could
be a notable increase in exports to the EU as a result of diversion
from other markets with less favourable terms of trade. The evidence
from the research shows that trade diversion could only occur
on a significant scale for sugar, the source countries being Malawi,
Mozambique and Sudan. Of these three, the country most likely
to gain is Mozambique. Even this increase will be small in absolute
terms—its global sugar exports in 1997 were only 59,000
tonnes—although very important for Mozambique. Mozambique
is truly one of the poorest countries in the world, with 40 per
cent of people living below the poverty line, on less than $1
a day. One in every five children is dead by the age of five,
Mozambique ranks in the bottom eight of the most educationally-deprived
countries in the world, and it is still recovering from the impact
of devastating floods earlier this year. Improved access to the
EU market could potentially bring significant economic and social
benefits to Mozambique and other LLDCs, helping them to break
out of the cycle of poverty.
THE CARIBBEAN
QUESTION
There is concern that the EBA initiative may
have a damaging impact on the livelihoods of poor farmers in Caribbean
countries, the traditional suppliers of sugar to the EU, who have
benefited from EU preferential trade schemes, and access to high
internal EU sugar prices over many years. As a result of years
of preferential trade schemes, the Caribbean's sugar industries
have been sheltered from international competition. It is important
that Caribbean countries are assisted through transitional arrangements
to diversify their economies and improve their competitiveness,
rather than rely on the continuation of the EU sugar regime that
excludes equally-deserving, competitive producers like Mozambique
from the EU market. Furthermore, in accordance with rules laid
down by the Cotonou Agreement, it is imperative that the EC consults
with African, Caribbean and Pacific (ACP) states prior to the
inception of the EBA initiative. We believe that it is incumbent
on the EU to evaluate the impact of implementing the EBA proposal
on vulnerable producers in the Caribbean and within member states,
to assist them to adjust, and to compensate them for the losses
they may incur.
TRANSITIONAL ARRANGEMENTS
In recognition of the sensitivity of products
like sugar, rice and bananas the EC have established an extended
transition period during which the removal of restrictions will
take place. Restrictions will be lifted in annual bands over three
years, culminating in full elimination by 2004. It is likely that
even after the official transition period is over, LLDCs will
still not have developed the capacity to take full advantage of
EU trade liberalisation. In this sense, there may be a natural
transition period which extends beyond 2004.
ABUSE OF
THE SYSTEM
There are fears that non-LLDCs will be able
to manipulate the EBA initiative to their advantage through gaining
unrestricted access to EU markets by exporting their goods via
countries of least-developed status. In theory, this could result
in a massive increase in EU imports from countries all over the
world. In practice, strict EU rules of origin, that all products
coming into the EU must be clearly labelled with their source
country, would make this kind of venture extremely difficult,
if not impossible. In the unlikely event that such a situation
did arise, the safeguard clause of the initiative would come into
effect. This clause allows the Commission to withdraw the preferences
following "massive increases in imports . . . in relation
to . . . usual levels of production and export capacity [of LLDCs]."[5]
4 Frozen beef, cheddar, sweetcorn, bananas, maize,
long-grain rice (husked and wholly milled), raw cane sugar (2
items), white sugar and molasses. Back
5
Explanatory memorandum on the proposal to extend duty-free access
without any quantative restrictions to products originating in
the least-developed countries, pg 3. Available on the Commission
website at: www.europa.eu.int/eurlex/en/com/dat/2000/en<au0,1>
<xu500PC0561.html. Back
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