The USDA is critical of the impact of the EBA
MetadataShow full item record
CTA. 2003. The USDA is critical of the impact of the EBA. Agritrade, October 2003. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52655
A USDA analysis of the EBA initiative has found that the trade deficit of least...
A USDA analysis of the EBA initiative has found that the trade deficit of least developed countries with the EU has grown over the past five years and is larger than their trade deficit with the USA. The paper notes that the aim of the EBA initiative was to boost the trade of least developed countries in order to diversify their economies. In fact EU agricultural imports from LDCs have been decreasing over the past five years, with the LDC trade deficit with the EU reaching a new high in 2002. The paper points out that the EU is a net agricultural exporter to LDCs, with milk powder and wheat dominating. According to this report there is no evidence to suggest that imports to the EU have increased due to the EBA. The paper cites a World Bank study by Paul Bretton which suggest a number of reasons for the limited impact of the EBA initiative, notably: Rules of origin which are far stricter than those obtaining in the Cotonou Agreement; Restrictive requirements for meeting the 'sufficient processing' criteria; The costs and difficulties of providing the necessary paper work. Additional reasons put forward in the paper for the relative failure of the EBA include: Recognition of the possibility of the withdrawal of these preferences, since they are unilaterally established and are not bound at the WTO; Rapidly changing EU standards (an example was cited of Mozambican prawns which met all EU standards at the point of departure but which were in violation of revised EU standards upon arrival at the EU port). While it is recognised that the EU is not the only country where SPS standards can pose a problem to LDC exporters, it argues that EU standards are particularly burdensome, since they increasingly go beyond the CODEX system. LDCs are seen as facing particular problems with SPS measures, since they face difficulties not only in meeting EU standards cost effectively but also in verifying compliance with these standards where they are met. The report cites a World Bank study by John Wilson which noted that 'a 10% increase in EU food standards decreased African exports to the EU by 11%'. The USDA report notes that EBA exports are dominated by raw materials (unroasted coffee, undecaffeinated coffee beans, raw cotton, unmanufactured tobacco and raw cane sugar), with EU manufacturers gaining the marketing margins through processing for sale in domestic and international markets (including markets in the very LDCS which exported the raw materials). Comment: The deteriorating trade deficit of LDCs vis-à-vis the EU could be accounted for by the fluctuations in the US$/ € exchange rate. Since most LCD exports are denominated in US dollars the euro value of exports would have fallen by around 20% over the past two years as a result of currency movements. A dramatic annual increase in LDC exports to the EU would have been needed for this phenomenon not to have manifested itself in a nominal increase in the trade deficit of LDCs with the EU. This being said, the issues raised with regard to the implementation of the EBA do need to be addressed. This could be attempted through the ACP-EU dialogue framework (since most LDCs are ACP members) with non-ACP LDC participants being invited to attend the sessions at which LDC issues are discussed. Some LDCs have undoubtedly benefited from the EBA. Ethiopia for example has been able to open up sugar exports to the EU making sugar its fifth largest export to the EU in 2002.