Islands Business - Trade: PACIFIC SCORES BIG AGAINST EUROPE

Brussels scramble to Pacific threat as EPA countdown nears zero

Samisoni Pareti

Difficult task ahead: Trade Ministers welcome Vanuatu Prime Minister Ham Lini (right) to the meeting.

Was it really a case of Europe flexing its might upon the little islands of the Pacific, or was it basically a bad case of the islanders’ lack of understanding of the English language as the Europeans made it out to be?

However one answers the question, there is no doubt the Pacific members of the African, Caribbean and Pacific bloc came out winners in a fiery but brief skirmish with the Europeans in late July.

The victory came in the form of a clear and unambiguous commitment by the European Commission (EC) that the Economic Partnership Agreement (EPA) negotiations are not linked to on-going development aid assistance Europe offers to the region known as 10 EDF (Europe Development Fund). And the amount in the 10 EDF would not unnecessarily be reduced if no EPA was signed.

That win is sweeter when the confirmation came in a letter signed by the Commission’s Head of Delegation in the Pacific, Ambassador Roberto Ridolfi.

All the more so when one considers the speed at which the region was able to obtain the unequivocal position of the EC.

Just two days after the trade ministers of the Pacific member countries of ACP, who were meeting in Vanuatu on July 31, threatened to break off EPA negotiations, Ambassador Ridolfi’s letter was received.

Scoring points: “I regret to say that after two ministerial level meetings between the Pacific’s EPA spokesmen and Commissioners Peter Mandelson and Louis Michel, we are extremely disappointed that individual words are being taken out of context to score Pacific EPA negotiating points,” began Ridolfi’s letter which was addressed to Greg Urwin, secretary-general of the Pacific Islands Forum.

“There is in fact dismay in Brussels not only in respect to the contents in Minister Bule’s letter to Commissioner Michel of 1st August but also the press statement issued by PACP (Pacific ACP) Trade Ministers in Vanuatu,” Ridolfi added.

The head of the EC in the Pacific had to make reference to press statements of the Pacific trade ministers because no where in Minister’s Bule letter—trade minister of Vanuatu and chair of the trade ministers meeting—was a boycott of EPA talks mentioned.

The withdrawal threat was only made during a press conference organised after Minister Bule’s letter was faxed to Brussels.

“If the EU confirmed the conditionality they have stated in their email, then we will postpone talks on EPA for now,” Bule told journalists that day.

Brussels in addition must have read the veiled threat contained in Bule’s letter—written at the direction of his colleagues at the Vanuatu meeting.

His letter dated August 1 and addressed to the EC’s Commissioner for Development Louis Michel said: “Since we are still in the delicate negotiating process to finalise the EPA, if indeed this communication is tantamount to establishing a precondition on the development of the EDF regional indicative programmes (RIP), the ministers register their grave concern and deep disappointment and will not accept the EC imposing this type of linkage on RIP with respect to the EPA.”

Brussels was on a summer break on August 1 so the Pacific ministers were unsurprised when the response came from EC’s Pacific office in Fiji.

“Having been asked for clarification of phrases in the email which were apparently causing confusion, our position—i.e. that there was no such conditionality and that the RIP allocation would remain the same with or without an EPA—was made perfectly clear both by telephone and in writing to the Secretariat before the PACP Trade Ministers meeting,” wrote Ridolfi.

Acidic tone: “We are therefore extremely disappointed that this was both inaccurately conveyed to the ministers in Vanuatu and also subsequently misrepresented to the media.”

The cutting, even acidic tone of the European diplomat’s letter was not lost on the ministers, especially their most senior member, Misa Telefoni, who is deputy prime minister of Samoa.

“We are extremely grateful that we’ve achieved our goal, we’ve now received a response from the EU that there’s no conditionality between the EDF and EPA,” Telefoni told journalists covering the trade meeting in Port Vila.

“We are very grateful for that. I think we kept our dignity as far as the EU is concerned.

“They have come back that there’s no conditionality under any circumstances. We think that is extremely important.

“We do dispute however some of the things they say in their communication such as there was confusion on our part.

“We believe we were quite correct in the interpretation that we took in terms of the email they had sent.

“We dispute that part but putting that aside, I think it is important to note that at least they have confirmed we can now continue the negotiations as fair and equal partners, and with dignity in the spirit of the Cotonou Agreement.

“In terms of our own view, what in fact happened when they imposed conditionalities was that they were really saying that the negotiations had come to an end and they were beginning to dictate to us how to continue.”

Blatant lie: When this ISLANDS BUSINESS asked whether he and his colleagues could have misinterpreted the EC email in question, Misa could not hide his annoyance.

“You know some of us did go to school and knew a little English. But I don’t think anybody who reads the plain English used in that email would be of any doubt because the attachment which referred to the cuts was also part of that email. I want to make that very clear.

“With all due respect to the letter, while we accepted that the letter stated categorically there is no conditionality, we do not accept the statement in there that we misread their communication.

“That with all due respect is a blatant lie. It’s incorrect. We read the email in the way it was there and I think all of you good people of the press will agree with us when you read that email.”

At a social function later, Telefoni was heard to have said he was personally peeved when a senior trade official at the Vanuatu meeting offered that from the EC perspective, the Africans can never agree to say yes, the Caribbean will always say yes, and the Pacific can never say no.

What actually did the email say?

“I realise that you would have preferred receiving this before the NAOs (national authorising officers) meeting on Friday.

“But I am afraid the notice given last Tuesday (my first day back from leave) was simply too short in view of many other priorities,” wrote Francesco Affinito on Sunday, July 29 in the email he sent to the two deputy secretary-generals of the Pacific Islands Forum Secretariat (Feleti Teo and Peter Forau) and senior Forum Secretariat aide, Patricia Sachs-Cornish.

Affinito said he was sending the email which was copied to senior EC officials in the Pacific as “deputy head of the Pacific Unit (of the EC) at the request of my head of unit and with clearance from my acting director.”

The key bone of contention was the second paragraph of his electronic correspondence: “The key principle to bear in mind is that from the EU perspective, the conclusion of an EPA and EDF Programming are inseparable.

“They can be seen as two pillars of a single strategy aimed at sustainable development of the Pacific ACP.”

Equally controversial from the Pacific ACP viewpoint at least is the next paragraph: “10th EDF (regional) programming can only be finalised once EPA negotiations are concluded—successfully or unsuccessfully—since it must remain responsive to the outcome.”

Telefoni had referred to the email attachment which illustrated the impact of EPA negotiations on the 10th EDF.

“As RIP now stands, no EPA would mean re-programming approximately 48% of the RIP,” a note on the attachment said.

“A goods-only EPA would mean re-programming approximately 26% of the RIP,” the attachment added.

The heated but brief stand-off came as the two regions entered the last stretch of EPA negotiations.

The edge ACP exports currently enjoy in Europe will be lost if they are unable to conclude an agreement by the deadline of December 31, 2007.

If anything, the trade ministers of the Pacific came away from the Vanuatu meeting with the likely prospect that they might not have an EPA with Europe by the deadline.

Serious challenges: Forau had pre-empted this when he welcomed trade ministers on July 31.

“The joint PACP-EU article 37 (4) review exercise concluded that there remained serious challenges to concluding the negotiations in time if the EPA was to be truly development-friendly,” Forau told Pacific trade ministers.

“This was in part due to the technical and financial shortcomings at country and regional levels.

“The EC’s lack of providing timely responses to PACP’s non-papers and position papers is another factor, further hindering the progress of EPA negotiations.

“It is also important that PACPs must look to their own efforts to see whether there could be improvements effected to advance the EPA discussions.

“Can we do a bit more to encourage better responses from the EU? Is there time to consider new options or can we look within the existing mandates to identify possible changes in order to afford flexibility to our approach?”

Don’t give in to EU

Since PACER negotiations will be triggered by the islands’ economic partnership agreement with the European Union, the Pacific Regional Trade and Economic Cooperation—Joint Baseline and Gap Analysis report warns Pacific members of the ACP to strike a good EPA.

Concessions earned by the EU, the report pointed out, would be similarly demanded by Australia and New Zealand under PACER-Plus negotiations.

It is therefore “critical for the FICs (Forum Islands Countries) to understand the constraints and flexibilities accorded by the WTO agreements with respect to regional trade agreements”, said the report.

“The EU has generally taken the approach that regional trade agreements should encompass 90% of two-way trade,” the report said.

“However, a recent WTO Appellate Body report acknowledged “neither the GATT Contracting Parties nor the WTO Members have ever reached an agreement on the interpretation of the term ‘substantially’.

“The EU imposes a timetable for the elimination of tariffs under an RTA (regional trade agreement) no more than 20 years, and if possible just 10 years, invoking WTO obligations on a “reasonable” period of time for trade integration to occur.

“However, explicit provisions for flexibility for developing and least developed economies are under negotiation and the FICs may wish to extend the time period for the elimination of tariffs beyond what the EU proposes so that they can have adequate time to prepare for heightened import competition and build their own production capacity.

“Finally, we note that the EU may prefer to allow certain countries to opt out of EPA negotiations if they cannot accept the EU’s parameters for coverage and timing.

“The EU also may elect to take certain subject matter out of the EPA negotiations (such as fisheries or labour mobility), instead of treating the issue or issues in bilateral negotiations.”

Allowing participants to opt out of the negotiations or narrowing the scope of the negotiations is contrary to the WTO objective of “closer integration of economies” in a FTA (free trade agreement), as articulated in GATT Article XXIV”.