ID21 - Insights Issue 24

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		Issue #24
		Lomé: from model to misfit. But is a better deal on the cards?

		Ties that blind? Trade, aid, the EU and Lomé

		Two into WTO won't go: Green Paper options and the new trade order

		Poverty, people and the case for Lomé V

		Understanding EU aid better

		The EurAfrican Dimension: History's ghosts haunt Lomé's Last Supper

		Banana split: can ACP beat the clock?

December 1997 Insights Issue #24

Back to "Two into WTO won't go"

Problems with Free Trade Areas

Article XXIV is not designed for regional arrangements between developed and developing countries.
The Enabling Clause applies only between LDCs in regional trade arrangements.
Breaking the ACP into regions may make the application of uniform reciprocity more manageable, but it does not evade obstacles in Article XXIV or the Enabling Clause.
Lumping together LDCs and LLDCs for reciprocal trade ignores WTO rules calling for 'differential and more favourable treatment', especially of LLDCs.
An FTA must cover 'substantially all' trade with no major sector excluded. This requirement will be difficult to satisfy if the problems of market access under the Common Agricultural and Fisheries Policies are not addressed.
Such FTAs will undermine regional strategies for economic development and in places could start a slide towards de-industrialisation.
An alternative noted in the Green Paper builds in some degree of asymmetry, but in terms only of timing. This option still runs into the same problems with Article XXIV.

Building on ACP regionalism

The 'differentiated regionalism' option for conjuring Free Trade Areas between the EU and ACP region by region, comes in two versions. Both would cause problems for the proposed regional groupings and for the WTO, since neither Article XXIV nor the Enabling Clause is designed to back this kind of relationship. While FTAs between the EU and existing ACP regional groupings might in theory be plausible, in practice they would be unworkable as most ACP arrangements do not yet function adequately as FTAs. The second option, an FTA deal between the EU and single countries, seems to be intended only for major ACP trading countries such as Nigeria or South Africa. But South Africa is already a member of an operational Customs Union (SACU). For this reason SACU would have to enter into the arrangement, not South Africa alone. South Africa is also a signatory to the SADC Protocol on Trade, which aims to establish an FTA within eight years of the entry into force of the Protocol. An FTA between South Africa and the EU would have to take this latter development into consideration and adopt complex rules of origin to stop EU products entering the territories of other SADC member states duty free.

Rosalind Thomas
Policy Unit,
Development Bank of Southern Africa
Box 1234,
Halfway House 1685,
Johannesburg,
South Africa

T: +27 (0) 11 313 3594
F: +27 (0) 11 313 3533

E: rost@dbsa.org

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