ACP PRESS STATEMENT (November 15, 2008)

http://www.acp.int/en/coa/bananaconcern.suriname08.html


The banana companies in African, Caribbean and Pacific (ACP) States maybe forced out of business following the European Union’s decision to negotiate a Free Trade agreement (FTA) with Central American countries in what the ACP Group describes as on “too generous” terms.
The ACP Group expressed shock that only a week after the EU signed the first Economic Partnership Agreement (EPA) with an ACP region (CARIFORUM), which supposes to secure, and expand preferential access for ACP bananas into the EU market, the EU has gone ahead to negotiate an FTA with the Central Americans in terms which pose serious threat to ACP preferences.


The EU’s market access offer for bananas in the Framework of the FTA under negotiation might include an initial reference import tariff for bananas, which will be lower than the current applied tariff. Also, there will be a rapid decrease over a relatively short period to a final import tariff landing zone, which is lower than the figure that was indicated by ACP countries as the minimum tariff for the necessary preference that would enable them to continue their export of bananas to the EU.


The ACP understands that the EU plans to lower the current levy on competing bananas from certain Central America States of 176 euros per tonne to 95 euros over ten years.


The Chairman of the ACP Banana Working Group, Ambassador Gerhard Hiwat of Suriname, said that the new offer to Central America would mean the end of the banana industry in all the banana producing countries of the ACP Group.


The chairman believes that EU’s action also contradicts the objectives of the EPAs it signed with the Caribbean and interim agreement initialed with some African Banana exporting countries, and seriously questions the ACP-EU partnership.


The Ambassador of the Dominican Republic, His Excellency Dr Fredrico Alberto Cuello Camilo, re-iterated that the EU is negotiating with Central America on “too generous” terms.


He said that if the negotiation between the two parties is successful it would put ACP exporters out of business, adding that it would also result in the dislocation of economies and loss of jobs in the ACP countries concerned and might even impact on neighboring countries.


The Ambassador stated that in his country alone 15,000 families depend on bananas for employment, and they have also employed a lot of Haitians.Dr Cuello Camilo said that most of the economies that rely on bananas would collapse if the EU pushes ahead with the planned agreement with Central America.


The Ambassador of Jamaica, Her Excellency Mrs. Marcia Gilbert-Roberts, said the reduction of tariff from 176 Euros to 95 Euros would make it impossible for her farmers to compete on the European market.



Delegates from African banana exporting nations like Côte d'Ivoire, Ghana and Cameroon did also express the same concerns. The Charge d’Affairs of the Eastern Caribbean States, Dr Arnold Thomas, said that banana has been a source of livelihood of the states he represents and now it has been threatened.


The ACP appeals to the EU to honour the partnership and cautions that it’s the EU’s actions towards the Central Americans, would not send a right signal to the regions that have yet to sign off to an EPA.

The free trade agreements (FTAs) result in more unrestricted capital flows and financial services

http://www.thecornerhouse.org.uk/pdf/document/facilitate.pdf

The FTAs negotiated by the US and EU with developing countries also include a chapter on services and (sometimes a separate chapter on) investment. In the case of the EU's FTA negotiations with ACP countries in the Economic Partnership Agreements (EPAs) this results in GATS 'plus plus' as can be seen in the EPA signed between the EU and the Caribbean group (i.e. Cariforum States):

• because of GATS art. V, developing countries have to make quite substantial liberalisation commitments,
• the EPA includes elements which are not yet decided in the GATS negotiations or even elements which have been rejected in GATS negotiations,
• liberalisation of investment in non-services sectors is being subjected to the to the same rules as services investment, which include a hybrid mix of different GATS rules.

During FTA negotiations, the financial services sector is a major target of EU to achieve liberalisation. This can also be seen by the many articles on liberalisation of financial services in the FTAs the EU has signed with Chile and Mexico. The Caribbean EPA contains far reaching, sometimes modified[1], elements of the GATS Annex on financial services and the GATS Understanding on Commitments in Financial Services (see above).

During current FTA negotiations, the EU tries to introduce obligations on authorities to implement standards which would guarantee stability for their financial services sectors - an attempt which the Caribbean negotiators refused. The international standards which the EU wants to include in FTAs are many of those which are described in chapter 1 and which were hardly negotiated by developing countries, are:

• the Basel Committee's "Core Principle for Effective Banking Supervision",
• the International Association of Insurance Supervisors' "Insurance Core Principles",
• the International Organisation of Securities Commissions' "Objectives and Principles of Securities Regulation",
• the OECD's "Agreement on exchange of information on tax matters",
• the G20 "Statement on Transparency and exchange of information for tax purposes" and
  the Financial Action Task Force's "Forty Recommendations on Money Laundering" and
  "Nine Special recommendations on Terrorist Financing".

The Parties also take note of the "Ten Key Principles for Information Exchange" promulgated by the Finance Ministers of the G7 Nations, and will take all steps necessary to try to apply them in their bilateral contacts

Worrying restrictions to control capital flows
A very worrying aspect of the FTAs such as the Caribbean EPA is that it restricts even further the authorities' capacity to control capital flows. The rules go beyond what is being agreed in the GATS which already prohibits restrictions on all payments for current transactions in sectors which have been liberalised under GATS. It also goes further than what the Cotonou agreed about capital movements. However the Caribbean EPA -which is based on the model for all FTAs the EU is currently negotiating- goes further to:

• prohibit restrictions on all payments for current transactions between residents of the signatory countries,
• prohibit restrictions on the free movement of capital relating to direct investments with regard to transactions on the capital account of balance of payments,
• to require that measures ensuring the integrity and stability of a Party's financial system shall not be more burdensome than necessary to achieve their aim, and shall not discriminate against financial service suppliers of the other Party in comparison to its own like financial service suppliers,
• to limit the ways safeguard measures with regard to capital movements can be taken: only "in exceptional circumstances" when payments and capital movements between the Parties cause or threaten to cause serious difficulties for the operation of monetary policy or exchange rate policy in one or more [signatory States]; and only those safeguard measures with regard to capital movements "that are strictly necessary may be taken" for a period not exceeding six months.

Such rules prohibit countries to have the necessary flexibility to prevent a financial crisis or to act during times of financial crisis to protect the financial and other needs of the society of the host country. There are some provisions to deal with balance of payments problems, but these are made conditional.[2]

[1] For instance the rule in the Caribbean EPA on introducing new financial services is somewhat more nuanced than the GATS and stipulates: Each Party shall permit a financial service supplier of the other Party to provide any new financial service of a type similar to those services that the Party permits its own financial service suppliers to provide under its domestic law in like circumstances. A Party may determine the juridical form Š a decision shall be made within a reasonable time the authorisation may only be refused for prudential reasons is required

[2] See the Caribbean - EU EPA: Part VI - General And Final Provisions