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Development

4. Trade Policies

The second arm of the EU’s strategy to produce sustainable development in poor countries is boosting growth by opening its markets to exports from such countries and by encouraging them to trade more with each other. Over the past 30 years, the EU has reduced or removed tariffs and eliminated quotas on most of its imports from developing countries.

For the 49 least-developed countries the Union has removed tariffs on many exports – with the sole exception of arms – under a programme launched in 2001. Known as the Everything But Arms Regulation (EBA), it grants duty and quota free access to all imports of products from these countries except to arms and munitions.

Despite criticism that the EBA programme is difficult to access and excessively bureaucratic, a UNU-WIDER study in 2003 showed that there have been moderate welfare and trade gains for poor countries from the EBA initiative. The largest gains are recorded for sub-Saharan Africa and the EU sugar market is the single most important source of change.

The special trading relationship between the Union and its 78 partners in the ACP group has been a model for how rich countries can open their markets to poor ones. Some observers say these trading relationships need to adapt to globalisation and respect world trade rules.

For these reasons, the Union has designed a new series of Economic Partnership Agreements. These agreements are designed to create a free trade area (FTA) between the EU and ACP countries. They are a response to continuing criticism that preferential trade agreements offered by the EU are incompatible with WTO rules.

The EPAs are a key element of the Cotonou Agreement and were due to be in place by the start of 2008. But there have been delays, as most ACP countries are uncertain about signing up to free trade deals with no safety nets and little compensation or protection.

Developing countries argue that there remain formidable barriers to free trade with the EU, such as strict food health and safety and chemical composition standards as well as rules over the denomination of origin of imported products.

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