ACP–EU Normative Concessions from Stabex to Private Sector Development: Why the European Union's Moralised Pursuit of a ‘Deep’ Trade Agenda is Nothing ‘New’ in ACP–EU Relations

Abstract

Recently much attention has been paid to the European Union's alleged ‘new trade politics’ expressed in terms of the novel centrality of moralised ‘development’ concessions in the Commission's pursuit of ‘deep’, ‘behind-the-border’ trade reform in developing countries. However, when these apparent novelties are considered in the historical perspective of EU relations with the African, Caribbean and Pacific (ACP) states, we can see that the fusion of ethics to economics within ‘deep’ trade agendas is nothing new in EU trade policy. Through the lens of contemporary EU assistance to ACP private sector development (PSD) under the ACP–EU Cotonou Partnership Agreement (2000–), the article illustrates that moralised ‘development’ concessions are indeed being utilised in the EU's vigorous promotion of far-reaching liberal reform in developing states. Nevertheless, when current PSD normative concessions are considered in the historical context of the ACP–EU Lomé Conventions’ (1975–2000) Stabex programme and its moralisation of ACP structural adjustment, we can see that European moralised discourses and concessions have long been tied to the pursuit of ‘deep’ market-opening in the developing world.

Key Words:

• ACP states
• Cotonou Partnership Agreement
• deep trade agenda
• EPAs
• liberalisation
• moralised concessions
• new trade politics
• normative concessions
• PSD (private sector development)
• Stabex
• structural adjustment

Acknowledgements

Special thanks to Rorden Wilkinson and Sarah Bracking for their support and encouragement. Sincere thanks to the anonymous reviewers for their helpful feedback. Any errors or flaws in this article are entirely my own.

Notes

¹ The terms ‘European Union’ and ‘Europe’ are used throughout in reference to the supranational trade and ‘development’ policies of the EU as governed by the European Council and European Commission rather than to the discrete trade frameworks and ‘development’ interventions of the individual member states at national level.

² While there is insufficient space to discuss this third aspect of the ‘new trade politics’ in more detail it is important to note that this additional novel aspect of the contemporary agenda is also problematic in the context of ACP–EU relations. Southern countries’ mobilisation for a New International Economic Order (NIEO) in the 1970s can be seen as a potentially more significant episode of contestation of the North's trade policies.

³ Fine (2001) offers examination of the donor community's ‘Washington Consensus’ policies. He also assesses donors’ alleged shift to ‘post-Washington Consensus’ models that claim to recognise the potential of market failures and the subsequent need to redress negative market externalities.

⁴ Storey (2006, p. 334) raises the question of whether EU norms are ‘simply a guise for the pursuit of European economic interests’. He argues that such potential reductionism may ‘imply a somewhat reductive, binary opposition – norms versus self-interest’ and, with reference to Cammack, indicates that Europe's promotion of ‘good governance’ including ‘market liberalisation’ may stem from a genuine belief in the ability of free market paradigms to deliver ‘development’. However as Storey states, ‘regardless of whether the motivation is explicitly mercenary or not, this [EU promoted] model of behaviour could be ill-suited to those others' [developing countries'] needs and priorities'. This alludes to the point that the normative element in EU policy must ultimately be assessed not by the ‘intent’ of individual EU actors but by the tangible outcomes for human well-being in developing countries. Moreover, as Cammack (2004, p. 190) states in relation to the World Bank, ‘while commitment to poverty reduction is real, within limits, it is conditional upon, and secondary to, a broader goal’, that is the pursuit of free market relations through ‘legitimating schemes’. Likewise, EU actors may desire attainment of moralised objectives yet these are often subsumed by, and often moulded to serve, the EU's principal drive to realise liberalised constructions of the global economy conducive to European commercial interests. This is despite the fact that the principal drive may undermine conditions for realisation of secondary ‘development’ goals.

⁵ See Josling (2003) on the ‘banana wars’ in which US and Latin American complainants challenged the ACP–EU Lomé-era system of preferences vis-à-vis ACP commodities.

⁶ See Africa Trade Network (2008) Declaration of 11Annual Review and Strategy Meeting of Africa Trade Network, Accra Ghana, 25–28 August.

⁷ The frugal resources allocated to EU direct PSD instruments is related to the European Commission's (2005, p. 6) declared preference to deliver ‘development’ aid via budget support to individual ACP governments rather than via direct funding institutions. The Commission claims that there will be spin-off benefits to the private sector from ACP budget support expressed in terms of a private sector ‘enabling environment’. Yet there appear to be good grounds upon which to doubt the positive impact of budget support upon indigenous, predominantly small and medium sized (SME) enterprises. In the case of Uganda, for instance, the EU has given priority funding to road-building in keeping with the ‘enabling environment’ rationale. However, contrary to high hopes regarding the pro-business impact of the Kampala northern bypass, this central project remained unfinished as of November 2008 despite an initial completion date of November 2006. A European construction firm, meanwhile, has held on to its generous contract despite the delay and allegations of poor construction quality (Weekly Observer, 10 September 2008). President Museveni has himself criticised donors' poor construction standards (The Monitor, 27 June 2008). Nevertheless, while the private sector gains of the ‘enabling environment’ remain unclear amidst the moral hazard of de facto tied aid and the involvement of European firms in lucrative ‘development’ contracts, the strategic benefits of budget support are less opaque. The European Commission (2005, p. 6) notes that ‘sectoral budget support … will not only make aid delivery more transparent, predictable and result-orientated but will also enhance the EU's collective political leverage’ (emphasis added). Page (2006, p. 26) corroborates the Commission's view and notes ACP states' more robust negotiating stance in multilateral WTO negotiations vis-à-vis their more passive role in bilateral ACP–EU EPA negotiations. She explains: ‘the main reason for the difference appears to be that the role of the EU as donor is constantly emphasised as part of the same negotiation. The ACP countries therefore find themselves asking for aid and negotiating with the EU on trade access at the same time’. This reveals the strategic heart of the moralised discourses of budget support and the ‘enabling environment’.

⁸ This has been supported by Nunn and Price (2004) who discuss the shift in ACP–EU relations from ACP ‘developmental’ models to neo-liberal paradigms.

⁹ Again, this bears relevance to Nunn and Price (2004) and their own discussion of ‘paradigm shifts’.

¹⁰ As of 2009 it was estimated that employment in Kenyan EPZ textiles firms had fallen ‘from as many as 47 textile manufacturing entities … [to] less than 25 remain[ing] today. Employment in the sector is also down from a high of 45,000 to about 12,000 today’ (The East African, 2009). This reflects the financial crisis as well as the end of the WTO Agreement on Textiles and Clothing (1995–2004) that had created an artificial break on textile exports from China and East Asian Newly Industrialised Countries (NICs) to the advantage of sub-Saharan Africa. African producers, however, still retain advantages under the US African Growth and Opportunity Act (AGOA).

¹¹ European conditionality in the Tanzanian context was no idle threat. Mailafiya (1997, p. 109) explains that Germany, Britain and the Netherlands attempted to block ‘an ECU 24.5 million Sectoral Import Programme for Tanzania on the grounds that the country had failed to reach an agreement with the IMF on the devaluation of its currency’. These funds were subsequently released when Tanzania reiterated its commitment to the IMF measure.

¹² See Paschal (2004) for discussion of the impact of liberalisation upon Tanzania's coffee smallholders including assessment of indebtedness given the withdrawal of government support to the industry.