May 16, 2008

Aid will not be conditional upon signing of EPAs, says European Commission

The European Commission has assured Malawi that the country will continue receiving cooperation aid even if it does not sign an economic partnership agreement (EPA) with the European Union. Malawi's president Bingu wa Mutharika had before accused the European Union (EU) of "imperialism", saying it was punishing countries who resisted the EPAs by threatening to withhold aid from the European Development Fund.

Malawi is not one of the 18 African states that signed the interim EPAs which the EU was attempting to rush through in 2007. Mutharika said at a press conference in April that he would not allow Malawi to sign the EPA because it had the potential to be harmful to the country.

Heavy pressure against the EPA has emanated from different sectors. Ten of the country's most influential non-governmental organisations (NGOs) have protested against the signing of the EPA because of the adverse effects that would be caused by sudden and extensive liberalisation.

In contrast, the EU's head of delegation to Malawi, Alessandro Mariani, said that the EU believed that the EPAs would serve the interests of Malawi. He was speaking at the European Day commemoration celebrations on May 9 in the country's capital Lilongwe. Mariani also assured Malawi that the EU would go ahead to finance the country with up to 451 million euros, even if the country does not append its signature to the EPAs. "Please allow me to reconfirm that there is no link between access to grants allocated to Malawi under the European Development Fund and signing the EPAs," said Mariani.

He was reiterating an EC press statement issued on April 18 that declared that aid from the European Development Fund (EDF) will not be tied to the EPAs. "This is valid for Malawi as well as for all the ACP (African, Caribbean and Pacific) countries which benefit of the development assistance provided through the EDF. (Trade) commissioner (Peter) Mandelson stated that the level of resources made available to ACP countries will remain as has been agreed," said the statement.

The EC admitted that the programming of EDF regional resources will take into account EPA implementation needs but that "there has at no time been any attempt by the EU to reduce EDF resources for those ACP countries that do not to sign an EPA". The statement further indicated that Malawi was among the very first group of ACP countries that signed the latest EDF arrangement at the EU-Africa summit in Lisbon in December last year, and that no link was ever made with accession to the EPA. It also confirmed that "the overall objective of European co-operation aid is to assist developing countries in their fight against poverty and in the implementation of their own development strategy to achieve this objective."

The EC also reminded Malawi that while it has decided not to initial the EPA, it benefited from the "Everything but Arms" (EBA) trade arrangement under the EU's generalised system of preferences, like all the other least developed countries (LDCs) in the world. The statement said that under the EBA all LDCs have duty and quota free market access to the EU market, subject to a transitional period for sugar and rice only. "Malawi sugar exports to the EU will continue to be able to enter the EU market duty free and will be quota free from 2009 onwards," said the EC. The statements went on to quote Mandelson that "it is the right of every country to determine whether an agreement is in its interest".

Andrew Kumbatira, who heads up Malawi Economic Justice Network, the country's most prominent NGO advocating for economic justice, still accuses the EU of failing to make a commitment to funding which will assist countries like Malawi to adapt to a liberalised regime. "All countries should be at par in the EPAs but the EU is already a great giant in this. We should trade as equals and the EU should help us to get to their level. There is need to resolve issues of supply side constraints and we need funding for us to deal with those but the EU is very silent about such issues," Kumbatira told IPS.

Speaking during the European Day celebrations, Minister of Trade and Industry Ted Kalebe said Malawi was hoping that the ongoing discussions on EPAs would come to a meaningful conclusion by the end of 2008. (IPS)

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