EU Cardiff Meeting Discusses Millenium Round, CAP, South Africa Trade Agreement

Bridges Weekly Trade News Digest, Vol.2 no.23, 22 June 1998

Meeting in Cardiff, Wales last week, the EU Council of Ministers committed to concluding a free trade agreement with South Africa by the end of 1998. The EU and South Africa had wanted to use the occasion of last week's EU summit, at which S. African President Nelson Mandela was an honoured guest, to conclude a long-awaited trade deal between the two sides. After three years and 19 rounds of trade negotiations through which the EU and South Africa have been far apart on market access for industrial and agricultural products, new offers on the table from both sides suggest that an agreement could be reached by year's end.

Still at issue is the fact that Germany, France, Italy, Portugal and Spain remain opposed to allowing South African farm products such as citrus fruit and wine into the EU duty-free. Farm exports account for almost half of all S. African agricultural exports to the EU. The latest EU trade offer does include provisions to open up 95 percent of its market in 10 years, but the offer backloads the most meaningful S. African products to the end of the phase-in period. S. Africa is opposed to tariff-free access on a range of EU industrial products, although its latest offer includes market access for a broader range of goods, opening up 85 percent of its market. The EU is also pursuing the incorporation of antitrust and intellectual property rights into the agreement, but S. Africa is opposed.

Little was accomplished last week regarding the EU's so-called Agenda 2000 plan for revising its Common Agricultural Policy and other institutional reform. Most significant was Germany's call for a cut to its contribution to the US$100 billion EU annual budget—which is currently between 40 and 60 percent of total contributions. Also, Spain said it would fight to protect funding flows to the poorer EU states.

Germany and France both expressed deep dissatisfaction with the remoteness of EU institutions from the ordinary European. The EU minister's communiqué issued at the end of the summit addressed this concern: A sustained effort is needed by the Member States and all the institutions to bring the Union closer to people ... The European Council is therefore particularly concerned to see progress in policy areas which better meet the real concerns of people, notably through greater openness, and progress on environment and justice and home affairs. The issue will be taken up at a special EU summit in October.

Ministers did agree to continue its push for a so-called Millennium Round of comprehensive global trade talks. [The European Council of Ministers] underlines the importance of initiating a comprehensive new round of liberalising negotiations at the third WTO Ministerial Conference towards the end of 1999. The U.S. is opposed to a new full out round of trade talks, favouring instead a sector by sector approach which the U.S. believes will accomplish more and faster than comprehensive talks. The EU wants full-fledged talks so that concessions in one sector can be gained by making concessions in another. This is the traditional approach used last in the Uruguay Round—which took seven years to conclude. Most developing countries are opposed to a full-out new trade round until the effects of the Uruguay Round have been fully assessed.

Cardiff European Council: Presidency Conclusions, June 15-16, 1998; EU leaders concentrate on budget problems at summit, JOURNAL OF COMMERCE, June 16, 1998; EU vows to reach free-trade pact with South Africa by year's end, INTERNATIONAL TRADE REPORTER, June 17, 1998; EU deadline for S Africa pact, FINANCIAL TIMES, June 17, 1998.