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Last Updated: Friday, 7 December 2007, 12:11 GMT
Q&A: EU-ACP trade deal
It is crunch time as African, Caribbean and Pacific nations approach a deadline to negotiate a new trade deal with the EU. The new deal, and the worries of the EU former colonies, will be discussed at an EU-Africa summit this weekend.

Imports of bananas from ACP countries are currently free of duty

What is the EU-ACP Economic Partnership Agreement?

Since the former European colonies in Africa, the Caribbean and the Pacific (ACP) were granted independence in the 1950s and 1960s, they have had special trade and aid deals with the European Union (EU).

These were designed to preserve many of the close relationships they previously enjoyed - such as access to European markets for their agricultural products - and provide aid to help the transition to independence.

Over the years, the EU has tried to change the character of these deals, moving on from a post-colonial relationship to what it calls an "economic partnership" with some of the world's poorest countries.

Why is there an urgent deadline to negotiate?

The World Trade Organization (WTO) has ruled that the special trade preferences enjoyed by the ACP countries, on such items as exports of bananas, break world trade rules - after some countries, notably Ecuador, protested.

In 2000, the WTO gave the EU and the ACP countries seven years to find a new trade deal - and that exemption expires on 31 December 2007.

The EU wants to use the deadline to fundamentally renegotiate the character of its trade relationships with the ACP countries, demanding that they open their markets to EU goods and services in return for retaining access to EU markets.

However, only 14 ACP countries, out of the 78 former colonies, have agreed deals so far.

What are the concerns of ACP countries?

The ACP countries are worried that liberalising their economies too fast could hurt their domestic manufacturers and "infant" service industries who would be overwhelmed by the more sophisticated EU companies.

They also argue that the EU is trying to win by the back door concessions that were rejected in the Doha round of world trade negotiations - including a deal on investment, which was rejected by developing countries.

Already the EU has made concessions on whether the service sector, as opposed to manufacturing, will have to be fully liberalised.

And they say that they are prepared to give a long transition period, of five or 10 years, before countries fully have to comply with the new rules.

What does the EU hope to get out of the deal?

The EU is hoping that the deal will help build momentum for world trade liberalisation now that the Doha round of trade talks have stalled.

They are also hoping that it will boost exports by European countries, which will be hit by the economic slowdown in the US.

And the EU also wants to encourage investment in infrastructure and raw materials, particularly in Africa, that are important for its own industries, such as oil, copper, cocoa, and coffee.

What is likely to happen?

The EU holds enormous power in relation to its former colonies.

It is much richer than they are, and access to EU markets is crucial for many of the poorer nations' products.

So the betting is that, in the end, they will have to fall in line and agree the new trade deal.

It is significant that it is the biggest ACP countries, like South Africa and Nigeria, that have some economic power of their own, who are the ones holding out the longest against the deal.

However, the heavy-handed EU approach could lead to bitterness in future trade negotiations when these resume.

EU rebuffs trade deal accusations
31 Oct 07 |  Business

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