Slender Lifeline for LDCs

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If a new set of European Commission proposals go through, virtually all products from the least developed countries will enjoy unrestricted duty-free access to the EU. Estelle Drew has the details.

On September 20, the European Commission adopted a groundbreaking proposal providing unrestricted duty-free access to EU markets for all products from all least developing countries (LDCs), with the exception of arms and munitions. Thirty-nine out of the 48 LDCs on the UN list are African-Caribbean-Pacific (ACP) countries and Africa has the highest concentration of LDCs in the world.

This plan goes beyond previous European Community commitments, including the Cotonou agreements signed last June, which guaranteed free access to European markets for 'substantially all' products by 2005.

The failure of the World Trade Organisation (WTO) conference in Seattle in 1999 was a disappointment for most LDCs. One positive outcome was the joint agreement of the European Community and Japan to open their markets to most LDC products. While the Cotonou agreement has embodied a response to the challenges of globalisation, this latest Commission proposal is more ambitious in its goals.

Duty free scope extended

The Commissions' proposal aims to go further by extending duty-free access without quantitative restriction to all products except for arms and munitions. This new regime, which would form part of the Common Commercial Policy, will come into effect as soon as the Council (representing the member states of the European Union) adopts the proposal.

For three products (bananas, sugar and rice), implementation will rake effect in three progressive stages to be completed within three years. In addition, the new proposal covers many products not currently imported into the EU because of the high level of protection. The Community is by far the biggest importer of LDC products in the world, a position which it has held for some time. In 1998, LDCs exported goods were worth a total of some Euro 15,488m, and the EU imported around 56% of these, i.e. some Euro8,714m-worth. US imports in the same year were worth some Euro5,586m (36%), Japan Euro942m (6%), and Canada's Euro244m (2%). Moreover, 99% of the Communitys' trade with the LDCs carries zero import duty - either as part of the Lome Convention or the General System of Preferences (GSP).

On the basis of the imports to the Community in 1998, the Commission argues that the products to be covered by this new proposal - excluding arms - represent total imports of around Euro77m our of Euro8,l91bn. This would put the estimated loss of customs revenue at Euro7m.

European Trade Commissioner Pascal Lamy, in welcoming the adoption of this proposal by the Commission stated that: 'There has been plenty of talk about how market access for poor countries is critical if we are to tackle their growing marginalisation in the globalising economy. …