US targets Lome IV

the US leads an international delegation pressing for Europe to scrap the trade and assistance agreement with its former colonies

Under increasing pressure from trade lobbyists within and outside the European Union, Caribbean Governments are bracing for a reduction in their preferential trading status long before the current Lome' IV Convention expires in the year 2000.

"The Lome' IV Convention between the African, Caribbean and Pacific countries (ACP) and Europe will be a lot different from any agreement the two parties may reach in the future, says a Caribbean Community (Caricom) participant to the Cariforum Ministerial Summit at the Trinidad Hilton which ended in early December. Other participants are also of this view.

With the sweep of new political and commercial changes within Europe, the African, Caribbean and Latin American Governments are seeing the writing on the wall and they are responding to the situation by preparing for the worst - long before it happens.

"Many have chosen to undertake adjustment programs for their economies as well as join regional trade groupings, rather than wait for their fate with the EU to be delivered to them," said one official.

Lome IV is a comprehensive trade, investment and economic assistance agreement between the European Union and the ACP. The historical link with Europe has been long, and most of the ACP states were colonies of several European countries just two or three decades ago. Some ACP states are still colonies today. Cariforum includes the 15 members of the Caribbean states within the ACP.

Growing Concern

There has been growing concern about the future of the Lome Agreement, particularly after the collapse of the Cold War in the late 1980's.

To a large extent, says a participant from Barbados, the Convention is one sided in favour of the ACP, as the concessions were offered to support these smaller economies after they gained independence.

As a result, participants to the Cariforum Conference acknowledged that some concessions will have to be made on the part of the ACP for the agreement to be renewed when it ends in February 2000.

"We are not just hoping to re-negotiate another agreement when this one expires, we are hoping to use the time to prepare our economies for the increased competition when the market access agreement ends," says Caricom Secretary General, Edwin Carrington.

"We have to find new ways to develop our relationship with the EU, while also seeking to foster new ties within our own region," he adds.

Several countries in Latin America, North America and the Far East have also been protesting the special trading arrangements and access offered to the ACP by Lome' IV.

The most recent assault on the Convention was levelled by the United States. Last October, the US lodged a protest at the World Trade Organization against plans by the European Commission to change the existing banana import rules, which it says harm U.S. companies.

"They go nowhere towards settling the bilateral dispute," a U.S. official said, adding that the changes did not consider the complaint previously made to the World Trade Organisation.

The official said a report presented by EU Farm Commissioner Franz Fischler, did not address the main issue of a higher tariff quota for bananas from Latin American plantations where U.S. companies have major investments.

US Impact

Imports from Latin America are restricted by a tariff quota of 2.29 million tonnes a year, whereas more expensive supplies from former colonies in Africa and the Caribbean enter duty free.

The report only suggested redistributing import licenses to cater for the entry of three new EU member states - Sweden, Finland and Austria which import Latin American bananas.

A proposal to increase the quota to accommodate the demands of the Americans was also rejected. A report by the Commission warned against increasing the quota as this may risk creating a surplus in the EU, adding that "...the world banana market is already depressed due to massive oversupply."

The U.S. first referred the EU's banana import regime to the World Trade Organisation (WTO) on September 27, 1995 and provided an outline of the effect it was having on US companies and investments in South America.

The complaint, which was supported by Guatemala, Honduras and Mexico, followed a complaint by Chiquita Brands International, a US-based company exporting bananas from Latin America.

Since no settlement was reached within 60 days of the complaint, an announcement is expected from the WTO as to the setting up of a disputes panel to deal with the issue.

European Defence

The European Commission has said it will defend its banana import regime, which was approved and included in the new World Trade Agreement signed in Marrakesh, Morocco, in April 1994.

Even so, most Caribbean countries are not putting all their eggs in the European Union's basket.

As a solution to decreasing market access to Europe and other larger trading blocs, Trinidad and Tobago's newly elected Prime Minister Basdeo Panday called for better networking within the region.

"This will make it possible to maximise resources and attract more investment from within the region rather than from foreign sources," he said.

"Within the next decade, the emergence of the World Trade Organization will erode the tariff preferences we now enjoy in the European Community, but we have enough breathing space to make our exports more competitive.

The geo-political forces that are working to pull Eastern Europe and the Mediterranean together are similar to the ones bringing Latin and South America together," he says, "but efforts must also be made to maintain ties to Europe.

"During the next few years, Caribbean leaders will probably need to devote more time to demonstrating to our European friends that their ties with the Caribbean are mutually beneficial and that European Community/ Caribbean co-operation is cost effective."

Winds of Change

"Trinidad and Tobago's thrust will be to accelerate the search for solutions whenever we can, for we are deeply conscious of our region's vulnerability to the fast moving winds of change. These winds usually carry a heavy price, particularly for our smaller islands and the more fragile economies," he adds.

"Clearly, the relationship between Europe and the Caribbean is destined to change. And, the fact that the European Union has endorsed an intensification of the relationship, should mean that a genuine opportunity now exists for finding mechanisms which could strengthen this co-operation.

"Because the relationship will change doesn't mean it has to get weaker," says Panday. Since the European Union's decision to intensify its trading relationship with the lands around the Caribbean Sea in October 1994, Latin American and Caribbean countries have also moved to cultivate regional relationships."

This includes the development of MERCOSUR, a trade grouping which includes Brazil, Argentina, Uruguay and Paraguay. There have also been negotiations for special political and economic agreements between Mexico and Chile - the two latest additions to NAFTA. Additionally, moves have been made for more dialogue and trade between Latin America, Caricom and Cuba.

Due to what he termed "vast changes" in the international economic environment since the Lome' IV Convention, Panday suggests that future talks with the EC should include co-operation on scientific research and academic exchange programmes, agricultural development and the services sector.