Pacific trade officials have returned from the latest round of negotiations for a new Economic Partnership Agreement (EPA) with the European Union (talks were held in Brussels last month) with all signs indicating the EU is placing its business interests ahead of development in the Pacific… again!

In Brussels it emerged that the EU will only revisit areas of concern for Pacific negotiators – including a ban on export taxes, and poor ‘infant industry safeguards’ – once the Pacific agrees to open its service markets to European corporations and removes some of the ways Pacific governments regulate foreign investment.

This approach from the EU ignores the fact that Pacific trade ministers have written formally to the European Commission expressing the desire to suspend negotiations on services and investment – partly because the EU failed to offer the flexibility needed for Pacific Islanders to be genuine service providers in the EU market. New commitments on services and investment could lead to a host of problems in the Pacific – including a reduced ability to govern foreign investment in the public interest and an undermining of universal access to services. Implementing these commitments would also be very costly for Pacific governments.

Robert Silo, head of the Solomon Islands delegation to Brussels said (in an interview with the Solomon Star, October 1, 2008) that the European Commission’s insistence on banning export taxes and reducing the Pacific’s ability to protect infant industries, are commitments his country cannot, and will not, live with. Mr Silo said the Solomon Islands must be allowed to protect their infant industries as almost all European countries did when they were at a similar level of economic development. He stressed that giving up the right to protect infant industries (even if commitments kick-in 20 years from now) is too high a price to pay and one that the Solomon Islands cannot afford to pay.

There are indications that the EU may use a divide and rule strategy to get negotiations started on services and investment – targeting the one Pacific Island country that has previously shown interest in these areas, Papua New Guinea. However, it would be a very sad day for PNG (and for the region) if it decides to go it alone in negotiating services and investment.

The question now is, how much more will the Pacific have to give up, to satisfy the EU’s desire for greater access to resources and markets for European businesses?

Given the facts before us, it’s time for the Pacific to face up to the harsh reality that this agreement was never about our development but about how Europe can access new markets and can continue to secure raw materials from its former colonies in Africa, Caribbean and the Pacific. With Europe importing up to 80 percent of the raw materials used to manufacture goods, it is no coincidence that just a few days after our trade officials met in Brussels, European lawmakers identified taxes and other measures imposed by developing country governments as an obstacle they should strive to remove. At the Trade and Raw Materials Conference (September 30, 2008), European officials met with industrial lobbyists to draw up a strategy to address export restrictions that the Commission has identified worldwide. This includes taxes on exports which some governments levy (including PNG and Fiji) to encourage processing of raw materials by local companies.

In his statement to the meeting, Peter Mandelson, the (then) European Commissioner for Trade, said that the Commission is seeking to have clauses that will ban export restrictions included in all the free trade agreements it negotiates. Such provisions have already been placed in accords with Chile and Mexico, while the EU is hoping to clinch similar deals with India and South Korea. The EC’s agenda could not be clearer.

Experience suggests that Pacific developing countries need to consider trade relations with industrialised countries very carefully. Contrary to claims by the European Commission and those that support free trade, few countries have achieved successful development under free trade. Extensive infant industry protections were central to economic development in Britain, and the USA. Nearly all other industrialised countries also used tariffs, export subsidies and other measures of trade protection during important moments in their economic development (though not to as great an extent as in Britain and the USA).

The trade policies employed by many of the world’s most successful economies run counter to the free-trade orthodoxy that is so much in vogue today, and is so heavily promoted (although not practised) by the EU and other industrialised countries. Today Pacific governments are being asked to do away with some of the most critical policy options for our region’s development – in the name of ‘free trade’. This attitude of ‘do as we say, not as we do‘ urgently needs to be challenged.

It is now up to our trade officials and political leaders to defend our development prospects and aspirations. This month Pacific ACP Trade Ministers and officials will meet in Fiji to discuss the ongoing EPA negotiations. The stand taken by Robert Silo is the type of stand other leaders across the region need to take now – as the Pacific enters an unprecedented stage in negotiations. Historical (and current) evidence shows that there are multiple routes to successful development. Now is the time for Pacific leaders to draw a line in the sand and defend the right to use a mixture of policy tools to promote development – including the right to impose export taxes and nurture infant industries. Pacific ACP Trade Ministers (including PNG) should also uphold the decision to suspend negotiations on services and investment.

If necessary, Pacific leaders should go one step further and send the strongest possible signal to the EU that the region can and will walk away from the EPA negotiations to defend its development prospects – and let the EU know once and for all that the price they are asking is too high a price to pay……


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