Report

Global Europe and

Sustainable Development
– Implications for Climate Change and Agriculture
Jens Andersson
 Global Europe and Sustainable Development

2009:3
Author: Jens Andersson, jens@sivik.se
Project Manager: Krister Holm,
Naturskyddsföreningen
Layout: Anki Bergström,
Naturskyddsföreningen
Photo: David Herrmann, Shutterstock
Print: åtta.45, Stockholm
Order No: 9041
ISBN: 978 91 558 1731 2
Produced with economic support from Sida.
Sida has not participated
in the production of the publication and has not
evaluated the facts or
opinions that are expressed.

2
 Global Europe and Sustainable Development

Table of Contents

Preface from the Swedish Society for Nature Conservation 4

Summary 6
1 Background 8
1.1 Introduction 8
1.2 Purpose and Limitations 8
1.3 Assumptions and Methodology 8
1.4 Outline 10
1.5 Climate Change and Food Security 11
1.5.1 Climate change and the development challenge 11
1.5.2 Climate change and trade 11
1.5.3 Agriculture and food security 13
1.5.4 The road ahead: policy options for climate change and organic agriculture 15
1.6 Eu trade policy and climate change 18
1.6.1 Multilateral and regional trade negotiations 18
1.6.2 EU trade policy: Global Europe 18
1.6.3 Global Europe and sustainable development 20
2 Perspectives from parners 22
2.1 Africa 22
2.2 Asia 24
2.3 Latin America 25
3 Global europe, climate change and food security 28
3.1 Focus of the analysis 28
3.2 Scope and Status of Negotiations 29
3.3 Tariffs and non-tariff barriers 30
3.3.1 Background 30
3.3.2 Global Europe and removal of tariff and non-tariff barriers 32
3.3.3 Discussion 33
3.4 Services 33
3.4.1 Background 33
3.4.2 Global Europe and services 34
3.4.3 Discussion 35
3.5 Investment 36
3.5.1 Background 36
3.5.2 Global Europe and investment 37
3.5.3 Discussion 37
3.6 Access to Natural Resources 42
3.6.1 Background 38
3.6.2 Global Europe and natural resources 39
3.6.3 Discussion 42
3.7 Public Procurement 42
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 Global Europe and Sustainable Development

3.7.1 Background 42
3.7.2 Global Europe and public procurement 43
3.7.3 Discussion 45
3.8 Transfer of Technology and Intellectual Property Rights 45
3.8.1 Background 45
3.8.2 Global Europe and IPR 46
3.8.3 Discussion 47
3.9 Conclusions 48
4 Swedish Government Positions 51
4.1 Swedish Government Positions 51
4.2 Discussion and Recommendations 53
5 Literature 56
Acronyms and Abbreviations 60
Footnotes 61

4
 Global Europe and Sustainable Development
Preface from the Swedish Society for Nature
Conservation
Mean temperature is rising throughout the world. A tem-
perature increase of even a few degrees would have dra-
matic consequences for the environment and for society
Climate effects hit the world’s poor hard. The already
vulnerable agricultural and food production systems in
developing countries are being damaged by climate change,
with increased drought in large areas and torrential rainfall
in other areas. Can EU trade policy support developing
countries in meeting these challenges?
This report examines the EU trade policy ‘Global Europe’
and the trade negotiations being conducted with a range of
less influential developing countries in Latin America,
Africa and Asia, where a large proportion of the world’s
poorest people live. The partner organisations of the Swedish
Society for Nature Conservation on various continents con-
tributed to this report. The opinions expressed in the report
are the authors’ own and not necessarily those of the Swedish
Society for Nature Conservation.
The report analyses how trade policy and the various
trade agreements can affect the possibilities for developing
countries to pursue a sustainable development policy and
thereby adapt themselves to global warming and strength-
en their agriculture. The report also examines Sweden’s
attitude and contribution to EU trade policy.
Global Europe deals with bilateral and regional trade
agreements and aims to reach more extensive agreements
than have been decided and discussed within the WTO.
Through Global Europe, the EU aims to make it easier for
European companies to sell goods and services globally, to
gain access to energy and other raw materials and to estab-
lish themselves, participate in state procurement and en-
hance protection for European trademarks in developing
countries. At the same time, there are clear statements in
EU trade policy that underline the importance of consid-
eration for developing countries, something that is even
more apparent within other areas, for example EU develop-
ment policy.
Climate negotiations and climate agreements are natu-
rally very important for developing countries. They deter-
mine the measures to decrease emissions of greenhouse
gases that developing countries must eventually adopt and
how climate-smart technology and adaptation in develop-
ing countries will be funded.
Equally critical for developing countries are the rights
and opportunities to choose their own development path.
Trade agreements have a direct impact on this. While trade
liberalisation can bring clear benefits for all the parties in-
volved, it can also limit the development opportunities of
developing countries if it is wrongly designed.
The Swedish Society for Nature Conservation believes it
is important for developing countries to be provided with
good opportunities to increase their resilience to climate
change in different ways and to develop sustainable agricul-
ture based on renewable local resources and ecosystem serv-
ices, which contributes towards increasing food security
and creating a more diversified local economy.
Many years of experience of international development
work, among other things, show that development policy
must often be owned and implemented nationally and lo-
cally in order to achieve results. At the same time, rich coun-
tries must provide development-friendly trade and agricul-
tural policies. Increased dependence on minerals, oil and
other raw materials and conventional agriculture with few
export crops is a risky option.
Unfortunately, it is clear that the EU is pressing hard in
all negotiations to introduce broad trade agreements that
clearly go beyond the agreements in WTO. Exemptions and
transition periods vary, but there is generally a lack of any
adequate systematic consideration of the development levels
of the other party. The EU demands sometimes contradict
the express wishes of the developing countries. The state-
ments found for example in Global Europe on greater con-
sideration for developing countries are only implemented
to a limited extent. It is also clear that trade policy in its
practical application, for example negotiations on new re-
gional agreements, are not harmonised with development
policy.
5
 Global Europe and Sustainable Development
There are a number of examples of how trade-related meas-
ures can decrease developing countries’ policy space and
the benefit they can derive from trade agreements:
• Strongly decreased import duties can have a negative im-
pact on the local economy, lead to increased dependence on
imports, decreased state income and increased concentra-
tion on export-orientated monoculture.
• Far-reaching liberalisation of trade in services, with the
primary aim of favouring companies within the EU, can
bring problems for the distribution of services such as en-
ergy and water.
• Limiting the opportunities to regulate direct investments
by European companies in developing countries can have a
negative impact on the local economy.
• Restrictions on the use of export duties can decrease the
potential to support local processing and sustainable man-
agement of natural resources.
Sweden has expressed strong support for Global Europe to
date. Against the background of this report, and to increase
the potential for EU trade policy to contribute to developing
countries strengthening their agriculture and being better
prepared for climate change, the Swedish Society for Nature
Conservation recommends that Sweden:
• Re-evaluates the demands on the less influential develop-
ing countries to always enter trade agreements that go be-
yond what has been agreed in WTO.
• Works for the EU to enter trade agreements that fulfil the
requirements on compliance and development perspective
formulated in Global Europe, EU Policy Coherence for
Development and Swedish Policy for Global Development.
• Takes the initiative for a dialogue on Global Europe and
the new Swedish framework instructions for trade negotia-
tions with Africa on Economic Partnership Agreements.
• Provides a good example and increases transparency as
regards negotiations, and works to ensure that the EU does
likewise.
6
• Develops policies on how development and environmental
policy targets can be systematically allowed to have a more
decisive influence on positions in trade negotiations with
developing countries.
• Drives to ensure that negotiations are always preceded by
thorough consequence analyses.
• Establishes concrete ways of funding and transferring the
technology needed by developing countries to counteract
and deal with climate change.
The climate crisis and the food crisis have their worst effects
on the poor in developing countries. A rich country such as
Sweden, which has a tradition of generously ranging itself
on the side of developing countries and working for compli-
ance with development targets, has great potential to posi-
tively affect developments. Increased trade can be an im-
portant tool for global development, but only on certain
conditions.
In future work, there is a need for much richer analysis
and discussion of the complex links between development,
climate change, food production and trade – and, in par-
ticular, a much stronger regard for the interests and welfare
of the poor.
Mikael Karlsson
President
Swedish Society for Nature Conservation
 Global Europe and Sustainable Development
Summary
The purpose of this report is to analyse the European Union’s
current trade policy strategy ‘Global Europe’ and to explore
to what degree it will contribute or not to the needs of de-
veloping countries to adapt to the effects of climate change,
mitigate greenhouse gas emissions and strengthen food
security by promoting organic agriculture. The focus is on
the negotiations between EU and the African, Caribbean
and Pacific (ACP) countries, Andean Community, Central
America and Association of South East Asian Nations
(ASEAN). Because of the complexity of the issues and meth-
odological and information constraints, the report is pri-
marily intended as an overview of the issues aimed to stim-
ulate further discussion and research.
The basic assumption of this report is that considerable
care should be taken before the policy space of developing
countries to promote economic development in general and
related to climate change and organic agriculture in par-
ticular is constrained. There are a number of reasons for this,
including the country specificity of the appropriate institu-
tional framework; the fact that “unorthodox” instruments
have been used all through recent history by today’s devel-
oped and emerging countries to pursue various social and
economic objectives; and the uncertainties caused by cli-
mate change and other types of environmental degradation.
In addition, regional negotiations between EU and the re-
gions involved here are problematic because of the unequal
distribution of power, economic might and capacity to ne-
gotiate. The World Trade Organization (WTO) comes out
favourably in comparison.
Fighting climate change is a challenge closely related to
sustainable development. Climate policies alone will not
solve the climate problem. The choice of development path
can be as important as specific measures to mitigate green-
house gas emissions and adapt to its impacts. Consequently,
climate policies need to be integrated into the national de-
velopment policy at all levels and in particular in relation to
energy, forestry, agriculture, water and waste management.
Supporting organic agriculture practices may be one venue
to increase food security and resilience to climate change
while avoiding the environmental costs of conventional
agriculture.
Development policies need to be locally owned and the
corresponding institutional framework crafted to suit local
circumstances. In that perspective, developing countries
should not be pushed to commit to far-reaching trade agree-
ments because it supposedly is good for their development.
They should do it as part of a broader development plan,
with full commitment by the countries in question. This is
important in the context of this report, because in order to
benefit from trade reform, a range of complementary do-
mestic measures that require political leadership and re-
sources are needed.
The links between climate policies and international
trade policy are yet to be fully explored. Nevertheless, EU
trade policies affect the climate policy of developing coun-
tries both in terms of the ability of countries to grow in a
sustainable manner and develop response capacity to cli-
mate change and by constraining their policy space as re-
gards certain instruments and specific sectors.
The Global Europe strategy was adopted in 2006 and is
the external part of the so-called Lisbon process that aims
to promote economic growth and job creation in Europe.
The strategy aims to open markets for EU industry and deal
with non-tariff barriers, with regional trade negotiations as
important instruments. EU aims for broad and deep WTO
‘plus’ negotiations even with the poorest regional groupings
of concern in this report.
This has caused worried responses among civil society
and other actors in these regions as amply exemplified by
the contributions from Africa, Asia and Latin America in
this report. From different perspectives they highlight a
number of problematic issues related to EU’s regional ap-
proach, such as the unequal distribution of power between
EU and partners, the negative impact on regional coopera-
tion among developing countries, and the inclusion of WTO
‘plus’ requirements, in particular in areas such as services,
investment and procurement. They argue that the end-result
is loss of sovereignty, revenue and domestic industry in the
7
 Global Europe and Sustainable Development
developing regions, while the benefits accrue to EU.
Chapter 3 reviews the impact of EU negotiations on the
possible use by developing countries of a number of instru-
ments pertaining to the various elements of the Global
Europe strategy: i.e. import tariffs and subsidies; liberalisa-
tion of the energy and water sectors (services); investment,
export taxes and quotas (natural resources), public procure-
ment and transfer of technology (intellectual property
rights).
The analysis clearly shows that EU is pushing for broad
WTO ‘plus’ agreements and deep commitments in all the
negotiations under study here. Exceptions and transition
periods vary, but there is no systematic regard to the devel-
opment levels of the negotiating counterparts. In this way
the policy space of the negotiating partners to pursue poli-
cies aimed at protecting their economies and promote eco-
nomic diversification is constrained and this could have an
impact on adaptation and mitigation related to climate
change and the possibilities to support organic agricul-
ture.
There is a considerable shortage of information as regards
the specific implications on the policy space available to
EU’s negotiating counterparts to fight climate change and
support organic agriculture. The sustainability impact anal-
yses conducted, if available, are insufficient and fraught with
limitations. Much more detailed analysis, based on past
experiences of trade reforms, is needed to construct a fac-
tual baseline. Considering the complexity of the issues and
8
the low institutional capacities in many of the countries in
question here strong monitoring mechanisms need to be set
up to ensure that implementation of the agreements do not
run counter to sustainable development objectives in gen-
eral and climate related goals in particular.
As an EU member Sweden is a staunch supporter of
Global Europe in general and broad regional negotiations
in particular, based on the argument that broad agreements
with appropriate flexibilities have the greatest development
potential. For example, Sweden is satisfied with the con-
cluded Caribbean agreement and the exceptions therein and
believes it could constitute a template for the African coun-
tries.
This report argues that the Swedish position should be
revised to reflect the problematic issues related to regional
negotiations and policy space highlighted in this report.
Instead Sweden should adopt a more differentiated and re-
sponsive approach based on demands, development levels
and the capacity to benefit from the agreements. At the very
least, Sweden should advocate that negotiations on the broad
agenda are dealt with in the WTO framework instead of in
regional agreements. In addition, it is suggested that Sweden
should favour a lenient interpretation of the final agree-
ments as regards implementation and provide political and
financial backing to strong and impartial monitoring mech-
anisms that oversee the agreements from a sustainable de-
velopment and climate change perspective.
 Global Europe and Sustainable Development
1. Background
1.1 Introduction
Three urgent crises are holding an increasingly globalised
world in its grasp. In developing countries the food and fuel
crises have increased costs of living and hunger, inciting
people to take to the street to protest. In developed countries,
the financial crisis has sent house and prices plummeting
and severely shaken confidence in the financial system.
In the midst of turmoil the long-term challenges pre-
sented by global climate change and other types of environ-
mental degradation may be given a lowered priority. There
is a risk that the willingness to reduce greenhouse gas emis-
sions and adapt to the consequences of a changing climate
may be negatively affected. At the same time it can be argued
that the policies needed to this effect are closely related to
the ones needed to reduce the vulnerability of nations and
people to various threats. Examples include reducing de-
pendency on fossil fuel and promoting sustainable food
production.
International trade policy and rules condition and constrain
the set of options (or policy space) open to national govern-
ments to promote sustainable development. Sometimes for
the good, by providing a stable environment for world trade
and the benefits it brings, sometimes for the bad, when de-
veloping countries are not allowed to use certain policies
aimed at economic diversification or become dependent on
cheap imports.
While the latest round of global trade negotiations within
the WTO is moving at snail’s pace, regional and bilateral
negotiations are not. A particular phenomena of the latter
set of negotiations is that developed countries require more
far reaching commitments from developing partners coun-
terparts, than has been achieved in the WTO context, aim-
ing to conclude so-called WTO ‘plus’ agreements. These
additional requirements risk constraining even further the
policy space of poor countries to determine their develop-
ment paths.
1.2 Purpose and limitations
This report is produced within the framework of the Swedish
Society for Nature Conservation’s (SSNC) international pro-
gram on environmental policy and its linkages to the prob-
lems of poverty, financed by the Swedish International
Development Cooperation Agency (Sida). The purpose of
the report is to analyse the European Union’s current trade
policy strategy ‘Global Europe’ and to explore to what degree
it will contribute or not to the needs of developing countries
to adapt to the effects of climate change, mitigate greenhouse
gas emissions and strengthen food security by promoting
sustainable agriculture based on local resources and eco-
system services. The focus is on the negotiations between
EU and the Andean Community, Central America, ACP
countries and ASEAN.
The report is based mainly on a survey of existing research
and analysis and is intended primarily as an overview of the
issues aimed to stimulate further discussion and research.
A key component of SSNC’s international work is to en-
gage with partners in developing countries. IBON
Foundation (the Philippines), AIPAD (Africa Institute for
Policy Analysis and Development, Zimbabwe) and REDES
(Red de Ecología Social, Uruguay) have provided vital input
to this report as regards the negotiations between EU and
countries in their respective regions.
When the term ‘developing countries’ is used in the text, it
refers mainly to small and medium-sized low and mid in-
come economies and least developed countries. This is a
large group of countries, which includes the countries in-
volved in the negotiations with EU under scrutiny in this
report. There are a number of formal country classifications
of developing countries that are being used in various con-
texts, such as OECD/DAC statistics, while in the WTO there
is no established definition. The aim here is to highlight the
concerns of countries that have considerably less negotiating
capacities and economic power than the EU, which holds
true for the majority (if not all) of the world’s developing
countries.
1.3 Assumptions and methodology
The basic assumption of this report is that considerable care
should be taken before the policy space of developing coun-
tries to promote economic development in general and re-
9
 Global Europe and Sustainable Development
lated to climate change and sustainable agriculture in par-
ticular is constrained.1 This is especially important in view
of the uncertainties ahead as regards the appropriate sus-
tainable development path of each country. Because of the
unequal distribution of power, negotiations between devel-
oped and developing groupings are particularly putting
developing countries at risk of being pressured by stronger
trading partners to surrender policy space. These assump-
tions are explored further in this section.
The international community has made a number of
commitments to improve the situation for developing coun-
tries. The commitment to the Millennium Development
Goals and the overall goal to halve poverty by 2015 is of par-
ticular importance. The developed countries, bar the US,
have also committed to fight climate change through the
United Nations Framework Convention on Climate Change
(UNFCCC) and the Kyoto Protocol.
Developed countries, and the EU in particular, are in-
creasingly recognising that their policies in various areas
may have an impact on developing countries and need to be
coherent so as to not counteract each other. The Swedish
Policy for Global Development is a case in point (see chapter
4). The step from policy to practice can be long and compro-
mises will inevitably have to be made, but a strong case can
be made that trade policies should contribute to the develop-
ment of the poorest countries, as is in fact, one of the over-
riding intentions behind the latest round of WTO negotia-
tions, the Doha Development Agenda.
Free trade is important from an economic efficiency per-
spective by allowing goods and services to be produced in
places that are best suited for it and then being exchanged.
From a narrow interpretation of this perspective, a number
of the policy instruments reviewed below aimed at promot-
ing economic diversification and protect the local economy,
such as export taxes and regulation of foreign direct invest-
ment (FDI), may seem to distort the functioning of the mar-
ket and reduce the welfare benefits of free trade. They are
prone to be captured by vested interests that seek protection
against domestic or foreign competition. This may hamper
10
economic development, by preserving inefficient industries;
competition is clearly a key driver of economic growth and
innovation. Commitments made in international trade ne-
gotiations may be a way to counter such vested interest and
‘lock-in’ trade reform.
There are a number of qualifications that need to be made
to this view. The most important one is that the market
needs to be embedded in a suitable institutional and regula-
tory framework to function properly or severe social, envi-
ronmental or other externalities may arise. There is in gen-
eral agreement as to the basic function of these institutions.
However, countries at different levels of development have
different needs and preconditions and it is becoming in-
creasingly recognised that the form this institutional frame-
work should take is more or less country specific.2 This does
not at all amount to letting trade flow freely. Today’s devel-
oped countries and the Asian tigers, consistently used and
use various protective measures to support their own devel-
opment.3 Economic efficiency is also dependent on internal-
ising environmental and social costs and consequently,
measures for doing so are recognised as valid by most inter-
national treaties, including in the sphere of trade agree-
ments.
Another basic assumption of this report is that develop-
ing countries have the right to choose their own develop-
ment path, as exemplified by the commitments in the Paris
Declaration on Aid Effectiveness: “Partner countries exer-
cise effective leadership over their development policies, and
strategies and co-ordinate development actions.” (Chapter
II) This is not only a right in itself, following from the prin-
ciple of sovereignty, but also arguably a necessary condition
for successful development.
Experience shows that development policies need to be
nationally or locally owned to be effective and that the cor-
responding institutional framework need to suit local cir-
cumstances. In that perspective, developing countries
should not be pushed to commit to far-reaching trade agree-
ments because it supposedly is good for their development.
They should do it as part of a broader development plan,
 Global Europe and Sustainable Development
with full commitment by the countries in question. This is
important in the context of this report, because in order to
benefit from trade reform, a range of complementary do-
mestic measures that require political leadership and re-
sources are needed, e.g in terms of building regulatory ca-
pacity, tax collection, improving the business climate and
develop programmes for social and environmental protec-
tion. In parallel, if the international community wishes to
address issues such as corruption, bad governance and
human rights abuse in developing countries, means other
than trade policy need to be considered, for example policy
coherency, political dialogue and development coopera-
tion.
To this should be added the issue of power, which is often
overlooked in economic theory and analysis. The world is
still a deeply unequal place, even though emerging econo-
mies have taken great positive leaps in the last few centuries.
OECD countries have 15% of the world population, but rep-
resent 70% of world GDP. The GNI per capita of the OECD
countries is approaching 40 000 USD, while it is 5 540 in
Latin America, 2 300 in China and 952 in Sub-Saharan
Africa.4
This unequal situation has proven to be problematic for
the negotiations on regional trade agreements. They often
involve very unequal distribution of power, economic might
and capacity to negotiate. They are conducted in a too in-
transparent manner often under time constraint. The com-
mitments are often both considerably broader and deeper
than in WTO and may be distortive since they involve only
the partners involved. In addition, there is often an impor-
tant lack of information and analysis available to the weak-
er party on the impact of particular commitments. In par-
ticular, the dynamic effects on the possibility of poor
countries to diversify their economies are uncertain.
Consequently, it seems urgent to discuss and vet the com-
mitments made under such conditions.
In comparison the WTO rules come out favourably.
WTO has been much criticised for imposing conditions on
developing countries and constraining their policy space.
However, certain problematic areas aside WTO actually
provides a general rule-based framework for international
trade set up to avoid abusive policies that may be detrimen-
tal to trading partners. As such it protects the weakest coun-
tries. The WTO agreements also allow for a number of ex-
ceptions for in particular least-developed countries.
Consequently, the primary focus of this report is the more
far-reaching WTO ‘plus’ regional agreements concluded
between developed and developing countries and exempli-
fied by EU, not the WTO rules as such.
Moreover, more sustainable development paths will need
to be pursued because of the immediate threats in terms of
climate change and other types of environmental degrada-
tion caused by the current carbon and resource intensive
development model. This path should involve adaptation
and mitigation measures related to climate change and the
promotion to sustainable alternatives to conventional agri-
culture. Developing countries have the possibility to learn
from past mistakes and should have freedom to choose the
necessary policy options to achieve sustainable develop-
ment. The role of trade policy in this equation is still insuf-
ficiently explored. It is hoped that this report will make a
contribution to moving ahead on these issues.
The issue under study in this report can thus be rephrased
as the policy space available to developing country to fight
climate change and support sustainable agriculture and the
potential impact of EU trade policies on this space. This does
not imply that the instruments included in this space auto-
matically are to recommend from a development perspec-
tive. Ideally, their use should be part of a coherent and long-
term strategy for economic diversification and be adapted
to changing circumstances. Certain global standards to
govern world trade are necessary but should be balanced
against the sovereign right and need of developing countries
to preserve policy space in an unequal world.
1.4 Outline
The report is divided into four main sections. The rest of the
introduction gives a background to the number of substan-
11
 Global Europe and Sustainable Development
tive issues involved and provide elements to the analytical
framework. The issues covered are essentially climate
change, sustainable agriculture, EU trade policy and their
interplay.
Chapter 2 summarises the contributions of the partner
organisations listed above. Chapter 3 analyses in order the
key components of Global Europe and the impact on the
policy options of developing countries. Chapter 4 reviews
Swedish positions related to Global Europe and makes pro-
posals for integrating developing country perspectives on
sustainable development, climate change and food security
into Swedish and EU trade policy.
1.5 Climate change and food security
1.5.1 Climate change and the development challenge
There is now strong agreement that climate change is
man-made: “Most of the observed increase in global average
temperatures since the mid-20th century is very likely due
to the observed increase in anthropogenic [greenhouse gas]
concentrations” in the words of UN’s Intergovernmental
Panel on Climate Change (IPCC).5 Greenhouse gas emis-
sions must peak in 2015 and decrease between 50 and
80% before 2050 to avoid a temperature increase above
two degrees according to IPCC. This is feasible from a
technological point of view and the economic costs are
modest compared to the costs that would be caused by
higher temperature increase.
It is clear that rich countries are behind most of the
change in climate and the poorest countries will be the hard-
est hit since they are the most exposed to natural vagaries
and often lack resources to adapt.6 This will make an already
unequal world even more unequal. 1.4 billion people or a
quarter of the world’s population lived in extreme poverty
in 2005 according to revised data from the World Bank.7 This
is before the impacts of the recent global food, fuel and fi-
nancial crises have been felt.
Climate change will undermine efforts to fight poverty
and reach the Millennium Development Goals. UNDP iden-
tifies five key transmission mechanisms to this effect: im-
pacts on agricultural production and food security (through
12
changes in rainfall, temperature and water availability),
increased water stress and water insecurity, rising sea levels
and exposure to climate disasters, transformed ecosystems
and loss of biodiversity and impacts on human health
through spreading of disease.8
Fighting climate change is an integral part of achieving
sustainable development. Climate policies alone will not
solve the climate problem. The choice of development path
is in many ways inherently linked to specific measures to
mitigate greenhouse gas emissions and adapt to its impacts.9
Developing countries do not have to follow in the footsteps
of the developed countries in terms of energy use.
Nevertheless, as developing countries are vulnerable to cli-
mate change and, at least the poorest ones, are not very
carbon dependent in per capita terms they tend to focus
more on adaptation than mitigation. However, in terms of
choice of development path, mitigation is highly relevant
since developing countries have substantial investments in
areas such as infrastructure and energy ahead. In addition,
policies aimed at mitigation and sustainable development
may be mutually reinforcing.10
In addition, there is a close connection (and sometimes
contradiction) between mitigation and adaptation. Both
types of efforts depend on the same set of available resourc-
es and capacities and both require international cooperation
and national action.11 Since most poor countries often lack
adequate capacity, technology and financial resources to
participate effectively in these efforts, they are dependent
on rich countries to provide support in terms of capacity
building, technological transfer and financial flows (in ad-
dition, to of course for the latter group to take the most
important steps in reducing greenhouse gas emissions).12
1.5.2 Climate change and trade
There are a number of potential links between climate
change and international trade. These have yet to be ex-
plored to the same extent as the trade and environment
nexus, but this is now changing. For example, during the
UN climate meeting in Bali in December 2007, an informal
meeting between trade ministers from major trading na-
 Global Europe and Sustainable Development
tions (but none from Africa) was organised.13
There are worries that efforts to reduce greenhouse gas
emissions may have detrimental effects on the competitive-
ness of energy intensive industries and that measures such
as “climate” tariffs on imports may be used to protect these
industries and prevent “carbon leakage”.14 In practise, the
effect on competitiveness of carbon policies seem to be mod-
erate, since other supporting policies often tend to have
compensatory effect and the use of protective trade meas-
ures is severely constrained under WTO rules.15 On the
contrary, there is evidence that carbon policies might even
be beneficial from a competitiveness point of view, since
they foster innovation and industrial adaptation to markets
under transformation.
Another issue is whether carbon emissions should be
counted in producing or consuming countries, which might
affect emission reduction responsibilities. Labelling schemes
that inform consumers of the carbon content of goods may
constitute a barrier to developing country exports, e.g. if
high weight is given to transport and if transport is a deci-
sive factor for the climate impact.
Regulation on the emissions of international transport
has been lagging behind since it does not fall under the ju-
risdiction of a particular country. Emission cut obligations
may increase prices of international transport, which could
have a negative impact on trade and service areas such as
tourism and disproportionally affect poor remote countries.
These are not issues directly covered by WTO.
Trade also affects the diffusion of energy technologies -
an issue that will be explored more extensively below in
relation to intellectual property rights. Overall the interface
between trade and energy is complex and also involves trade
in energy itself and policies such as energy subsidies, stand-
ards and labelling. Below, this issue will be touched upon in
relation to EU policies on natural resources.
Agriculture and forestry account for over 30% of global
greenhouse gas emissions and trade may affect these emis-
sions by changing the way land is being used. For example,
in agriculture, subsidy reforms may be aimed at supporting
agricultural techniques that enhances carbon sequestration
and increases resilience by making use of plant varieties
adapted to a changing climate. Another example is biofuels;
any certification of biofuels would have to comply with
WTO rules and the possibilities to trade in biofuels will
depend on negotiations on tariffs and subsidies in agricul-
tural and industrial products.16
The low competitiveness of the least-developed countries
makes them particularly vulnerable to climate change and
its trade implications. These countries have little domestic
production and are reliant on very few often primary export
products, such as minerals and agricultural products. The
key element of any climate adapting strategy for these coun-
tries is to develop more diversified and less vulnerable econ-
omies. Development policies have always been struggling
with these issues, but the need to adapt to climate change
makes them all the more acute. The domestic policies of
LDCs may need to be adjusted, in ways such as prioritizing
agricultural production for food security and industrial
production of manufactured goods for domestic consump-
tion over export-oriented production. LDC are already rel-
atively open economies, so further liberalising trade is
mostly not sufficient, instead these countries need to be
provided with broad policy space and flexibilities within the
international trading regime.17
Article 2 of the Kyoto Protocol obliges participating
countries to adopt climate policies and measures related to
adaptation and mitigation, such as energy efficiency and
promotion of sustainable forms of agriculture. A number
of these measures may affect trade, such as technical regula-
tions and standards, subsidies, carbon and energy taxes and
border adjustment measures and land-use activities, and
their use are therefore potentially affected by WTO rules.18
Perhaps this issue will not be that problematic, according
to the Swedish National Board of Trade (2004), which sees
no great conflicts between climate measures and WTO:
“Friendly coexistence should be possible between the UN
Framework Convention on Climate Change, its Kyoto
Protocol and WTO rules. In fact, there is ample scope for
13
 Global Europe and Sustainable Development
trade-related measures pursuant to the Protocol to be in ac-
cordance with WTO rules. This requires that the WTO rules
are considered while designing and implementing such meas-
ures.” (p. 6) For example, GATT Articles XX(b) and (g)
make it possible for WTO members to justify measures that
are either necessary to protect human, animal or plant life
or health, or if the measures relate to the conservation of
exhaustible natural resources, respectively.19
1.5.3 Agriculture and food security
Agriculture is very closely linked to climate change as has
already been indicated. Most poor people live in rural areas
and depend on farming for their survival, while many de-
veloping countries rely on agricultural exports for income.
At the same time agriculture is a sector that is particularly
vulnerable to changes in weather patterns and other effects
of climate change. Agricultural production is also an im-
portant source of greenhouse gas emissions and is closely
related to changes in land use, such as deforestation and land
erosion.20
The world agricultural system has become increasingly
globalised the last decades (se Box). Overall there has been
a prolonged period of rising agricultural production and
falling prices in the world market, fuelled mainly by gains
in productivity through irrigation, improved crop varieties,
and use of fertilizers. This transformation has been impor-
tant for feeding the world and has been driven by developing
countries, with the green revolution in Asia as an oft-cited
example. Globally, there is no food shortage on average.21
14
Trade in agriculture
World agricultural exports increased four-fold between
1985 and 2005 to around 450 billion USD, excluding in-
tra-EU trade. This corresponds to an annual increase of
6.7% and was driven by trade in horticultural and proc-
essed products, the latter of which now corresponds to
almost half of all agricultural exports. As a group the
high-income OECD countries are the largest exporters,
with middle-income countries such as Brazil gaining
world market shares. African exports have been losing
ground on the world-market over the last two decades.
There are two important characteristics of the world
agricultural markets that have a particular impact on
the food production of poor countries. First, the whole
agricultural chain from inputs (seeds, fertilizers, etc) to
retail (supermarkets etc) is dominated by major tran-
snational corporations, which are intertwined in various
partnerships and networks. These include input provid-
ers such as Cargill and Monsanto, processors such as
ConAgra, food brand companies such as Nestlé and
supermarkets such as Carrefour.
Second, as is well-known, developed countries apply
agricultural policies to support their own farmers. The
main instruments are border protection in the form of
tariffs and quotas, export subsidies to enhance com-
petitiveness in the world market and direct support
payments to producers. Despite much criticism, the
reform process and the WTO negotiations on the topic
are moving very slowly; agricultural support in OECD
countries (mainly EU, US, Japan and South Korea) is still
2.5 times that of international aid disbursements (250
million USD in agricultural support compared to around
100 million USD in international aid).
Source: OECD (2008), Morgan et al (2007), World Bank (2007) and OECD
Website accessed on 13 October 2008
 Global Europe and Sustainable Development
But the riches are badly distributed; more than 800 million
people still do not have food every day, in spite of the fact
that food is a human right according to the UN.22 Sub-
Saharan Sahara has largely been left out of agricultural
progress, because of bad policies and under-investment, and
agriculture has been largely absent in national development
plans and international development cooperation.23
The current global food crisis adds to the burden of poor
people. FAO estimates that an additional 75 million people
became subject to undernourishment in 2007 mainly be-
cause of soaring food prices, with further increases likely.
This has reversed a positive trend of falling hunger, with
Asia and Sub-Saharan Africa being the hardest hit, and will
make it even harder to halve hunger in the world by 2015,
which is one of the Millennium Development Goals.24
Looking ahead, climate change is not the only challenge
to agricultural production. Environmental degradation,
rising competition for land and water, higher energy prices,
and doubts about future adoption rates for new technologies
also constitute uncertainties for future food production. In
addition, it is estimated that global cereal production will
have to increase by nearly 50% and meat production by 85%
from 2000 to 2030 to meet projected demand, to which
should be added booming claims for crops that can be
turned into biofuel.25
How should the challenges outlined above be met? The
dominating model is to rely on a global division of labour,
in which countries specialise in certain types of food pro-
duction. Food becomes a commodity to be exported or im-
ported. Production is large-scale and based on convention-
al methods to increase productivity through monoculture,
external inputs and fossil fuels.
However, while having enabled increased harvests, the
environmental, health, cultural and social costs of conven-
tional agriculture are high and there is a growing critique
of its methods. Morgan et al. (2007) argues that food is not
a commodity like any other good and that “globalization of
the food sector is uniquely constrained by nature and culture;
food production requires the transformation of natural enti-
ties into edible form, while the act of eating itself is a pro-
foundly cultural exercise…” (p. 8)
Food sovereignty
The concept of food sovereignty is advocated by many NGOs.
Food sovereignty is the right of peoples to healthy and cultur-
ally appropriate food produced through ecologically sound
and sustainable methods, and their right to define their own
food and agriculture systems. Food sovereignty is a more
holistic concept than that of food security that tends to focus
on access to an adequate food supply.
Source: www.viacampesina.org, www.nyeleni2007.org and FAO (2003)
Instead, sustainable approaches, focusing on e.g. organic
agriculture, local resources and eco-system services receive
increasing attention world-wide, in particular to counter
climate change (see Box).26 Such alternatives have the po-
tential to greatly contribute to food security, in particular
in the world’s most vulnerable environments, while consid-
erably reducing the costs associated with conventional ag-
riculture.27 In addition, growing demand is creating an in-
creasingly large market for organic produce.
Organic agriculture can be broadly described as a “ho-
listic production management system that avoids use of
synthetic fertilizers, pesticides and genetically modified
organisms, minimizes pollution of air, soil and water, and
optimizes the health and productivity of interdependent
communities of plants, animals and people.” (FAO, 2007, p.
2) Certified organic agriculture is commercially practiced
worldwide in 120 countries, representing 0.7% of global
agricultural lands and a market of USD 40 billion in 2006.
Non-certified organic systems may represent at least an
equivalent share in subsistence agriculture of developing
countries (see Box).28
15
 Global Europe and Sustainable Development
Sustainable agriculture in Ethiopia
Sustainable agriculture and ecological land management
has been promoted in the Ethiopian region of Tigray by the
Institute for Sustainable Development in collaboration with
regional and local actors. The project used sustainable
practices such as composting, water and soil harvesting
and crop diversification to the benefit of poor farmers and
communities. These benefits include increased yields and
productivity of crops, improved hydrology through raised
water tables and permanent springs, improved soil fertil-
ity, rehabilitation of degraded lands and increased incomes.
The project is farmer-led and the successes are such that
the approach is spreading to other parts of the country and
getting attention at national level.
Source: Araya and Edwards (2006)
Organic and related agricultural methods are well suited for
poor smallholder farmers, as they rely on low levels of ex-
ternal inputs, locally available materials and a diverse ap-
proach to food production.29 This approach is advocated by
civil society, researchers, institutions, and even govern-
ments, but stronger public intervention is in general neces-
sary to create a fair playing field as the sector expands, in
order to protect small producers and strengthen the position
of developing countries’ actors on international markets.
Policy-makers are increasingly becoming aware of the im-
portance of organic agriculture, as is exemplified by the
conference on Ecological Agriculture: Towards Food
Security and Sustainable Rural Development in Africa or-
ganised by the African Union and FAO at African Union
headquarters in November this year.30
1.5.4 The road ahead: policy options for climate
change and organic agriculture
So what policy choices are there for developing countries
confronted with climate change? As emphasised in the
16
cal leadership; integrated approaches; and policy coherence.”
(Sathaye et al, 2007, p. 717)
methodology section above, each country has a unique
set of capacities and pre-conditions that make the design
of development and climate policies highly context-
specific. Climate benefits need to be weighed against
development benefits or drawbacks. This should be done
through a democratic process with the involvement of
key stakeholders in the public and private sectors and
civil society, like any other decisions:
“Ultimately, devising effective climate change mitigation
strategies depends on good governance practices, which is the
essence of sustainable development, for example, whole-of-
government decision-making; synergies among economic,
environmental and social policies; coalition-building; politi-
Consequently, climate policies need to be integrated into
the national development policy at all levels. Decisions in
areas such as fiscal policy, insurance practices, electricity
markets, trade and forest management, seemingly unre-
lated to climate policies, may have profound effects on mit-
igation and adaptation choices.31 A key issue is the capacity
of developing countries to design and implement appropri-
ate climate policies (response capacity). This capacity is
closely related to a country’s development path and in par-
ticular the income level. To put it bluntly, wealth increases
the ability to pay for adaptation and mitigation.
It follows that EU trade policies affect the climate policy
of developing countries at two levels: First, they influence
the overall ability of countries to grow in a sustainable man-
ner and develop response capacity in relation to climate
change. In this respect the quality of growth matters and a
key issue is if trade reform allows poorer countries to diver-
sify their economies to allow for broad-based growth, re-
duce dependence on a few economic activities or goods,
preserve natural resources and spread the wealth to all
groups of the population.
Second, as highlighted above poor countries commit to
constraining their policy space as regards certain instru-
ments and specific sectors in negotiations with EU. A number
of the specific instruments will be reviewed in chapter 3.
 Global Europe and Sustainable Development
At sector level there are a number of adaptation and mitiga-
tion options available to developing countries, in particular
in relation to energy, forestry, agriculture, water and waste
management (see Table). As apparent from the table, the
adaptation and mitigation options are in many instances
closely related. In some cases they yield benefits in terms of
sustainable development, while in others trade-offs will
have to be made.32
Specific policy actions to promote organic agriculture
include investment in training and skills development, sup-
port to smallholders, development of national and interna-
tional regulation and standards33, integration of organic
practices into national agricultural development plans and
poverty reduction strategies, targeted subsidies, fiscal meas-
ures and other policy instruments to influence producers’
decisions, removal of disincentives (e.g. subsidies for syn-
thetic agricultural inputs), protection of organic lands from
transboundary contamination (e.g. government procure-
ment of local organic produce to supply public institutions
canteens, such as schools and hospitals.34
In addition, the share of organic research in agriculture
is almost nil in most countries and current allocations in
developed countries do not exceed 1 percent of total research
budgets. Key areas for future research include areas such as
organic soil fertility, organic animal husbandry, breeding,
landscape management, farm economics and organic mar-
ket dynamics.35
17
 Global Europe and Sustainable Development

Table: Examples of mitigation and adaptation policies in developing countries

Mitigation

Energy efficiency improvements in all areas, including buildings,

Energy supply and use transportation, industry, and energy supply, and increased
reliance on domestic or imported low-carbon energy sources

Forestry Deforestation control, afforestation and fossil fuels substitution

Agriculture Crop land, water, grazing and livestock management

Waste management Landfill controls and gas recovery, biological treatment of waste and
wastewater, incineration and waste minimisation

Adaptation

Improved water management for drinking and agriculture,

Water resources including rainwater harvesting, water storage and diversification
of irrigation techniques

Crop diversification and improvement, improved livestock and

Agricualture and food safety fisheries breeding and farming techniques, development of local
food banks for people and livestock, and improved local food
preservation
Improved health care through community emergency preparedness
programmes, better health education, better access to primary
Human health health care including measures to fight malaria

Better land and land use management through erosion control

Terrestrial ecosystems (including and soil conservation measures, agroforestry, forest fire
forestry) management, alternative energy sources to wood and charcoal,
and better town planning

Coastal zones and Coastal zone management including coral monitoring and
restoration and improving coastal defences through
afforestation, reforestation,
Marine ecosystems Set-back areas and vegetation buffers
Source: Adapted from Sathaye (2007, table 12.4, pp. 727-728) and UNFCCC (2007, table V-5, p. 31)

18
 Global Europe and Sustainable Development
1.6 EU trade policy and climate change
1.6.1 Multilateral and regional trade negotiations
EU trade policy needs to be discussed in the context of glo-
bal multilateral and regional trade negotiations. At multi-
lateral level, the most recent WTO trade negotiation round,
the so-called Doha Development Agenda is moving very
slowly and in the summer of 2008 talks collapsed.36 In paral-
lel with multilateral efforts, countries have engaged in re-
gional economic integration. In recent years, this process
has accelerated for both political and economic reasons;
there are now nearly 400 so-called regional trade agree-
ments (RTA) scheduled to be implemented by 2010.37 In
particular, there is frustration with the slow progress of the
multilateral trade negotiations, not the least from the side
of the US that embraced regionalism in the 1980’s.38 The
North American Free Trade Agreement (NAFTA) between
the US, Canada and Mexico was created in 1994.
1.6.2 EU trade policy: Global Europe
The Global Europe strategy was adopted in 2006 and basi-
cally aims to promote European competitiveness. EU had
until recently mainly pursued its interests through multi-
lateral negotiations, but the regional approach of the US and
the emergence of new large trading nations, such as China,
India and Brazil, have incited the EU to adopt a more re-
gional approach to defend its interests. The Global Europe
strategy is part of the so-called Lisbon process, which orig-
inally aimed to make the EU the world’s most competitive
economy. In 2005, the process was reoriented to focus on
economic growth and job creation in Europe and Global
Europe is the contribution of trade policy to these objec-
tives.39
The Global Europe strategy emphasises the importance
of both good internal policies to uphold competitive mar-
kets, openness and social justice and external policies di-
rected at opening markets abroad:
“…rejection of protectionism at home must be accompanied
by activism in creating open markets and fair conditions for
trade abroad. This improves the global business environment
and helps spur economic reform in other countries. It rein-
forces the competitive position of EU industry in a globalised
economy and is necessary to sustain domestic political sup-
port for our own openness. There are two core elements in
pursuing this agenda: stronger engagement with major
emerging economies and regions; and a sharper focus on bar-
riers to trade behind the border.” (p. 6)
The main elements of the strategy are:
a) Tariffs and non-tariff barriers, such as unnecessarily
trade-restricting regulations and procedures.
b) Access to resources in the areas of energy (in particular),
metals and scrap, primary raw materials, including certain
agricultural materials, hides and skins.
c) Intellectual property, in particular as regards enforce-
ment of existing commitments in emerging economies, such
as China.
d) Services, which are the cornerstone of the EU economy.
e) Investment, to create a more predictable investment cli-
mate for EU business.
f) Public procurement, which is still sheltered from multi-
lateral regulations and constitute major trading opportuni-
ties for EU exports.
g) Competition, to ensure European firms do not suffer in
third countries from unreasonable subsidisation of local
companies or anti-competitive practices
The strategy underlines that EU remains committed to
WTO, but argues extensively for increased use of regional
trade agreements. Here an interesting distinction is being
made, which is sometimes overlooked; on the one hand
between negotiations with ACP countries, the Andean
Community and Central America, which are related to EU’s
development and neighbourhood objectives; and “new” free
trade negotiations with regions, such as Asia, of economic
interest to the EU and which are underserved by current
agreements.
19
 Global Europe and Sustainable Development
On the Economic Partnership Agreement (EPA) negotia-
tions with ACP, the Commission states: “…[a]symmetric
trade liberalisation and attention to sustainability consid-
erations rather than reciprocal trade opening are the objec-
tive here” (EC, 2006b, p. 11), in addition to providing trade-
related technical assistance. In practice though, the EU does
not seem to make a very clear distinction between agree-
ments with a development focus and agreements with a
narrow EU-oriented economic focus as will be discussed in
chapter 3.
Overall, the criteria for selecting potential free trade
areas are economic, in a EU-geographically narrow and
short-sighted interpretation, and include market potential
and the level of protection against EU export interests.
Priorities in this group are ASEAN, Korea and Mercosur,
followed by India, Russia and the Gulf Co-operation
Council. EU believes China requires a separate approach
because of its importance. Negotiations have recently been
launched with all these parties, except with Mercosur, which
started in 2000.40
In October 2008, the EU Trade Commissioner Peter
Mandelson stepped down and was replaced by Catherine
Ashton, previously the leader of the British House of Lords.
At the time of writing it is unclear if and how this will affect
EU’s trade policy.41
It is important to view Global Europe as only the recent
contribution to EU’s external regional trade policies. EU
had concluded a number of bilateral agreements with se-
lected third countries prior to the adoption of Global
Europe. These include a Customs Union with Turkey,
Stabilisation and Association Agreements with South-
Eastern Balkan, Association Agreements with countries in
the Southern and Eastern Mediterranean (e.g. Algeria and
Jordan), agreements with Chile and Mexico, and a Trade,
Development and Cooperation Agreement with South
Africa.42
The negotiations for EPAs have a history of its own. The
African, Caribbean and Pacific countries involved share a
colonial past with Europe and relations between the two
20
country groupings became regulated by the Lomé
Convention in 1975. It provided aid and preferential market
access to the EU market for ACP countries. In the 1990’s the
Lomé Convention was challenged in the WTO because it
was more generous to the ACP countries than the prefer-
ences EU offered to other developing countries under its
General System of Preferences (see Box).
EU’s system of trade preferences towards
developing countries
Like other developed economies, EU offers non-
reciprocal preferential access to the EU market to
developing countries through its General System of
Preferences (GSP). There are three separate
arrangements:
1. The standard GSP, which provides preferences to 176
developing countries and territories through duty-free
access or tariff reductions;
2. The GSP+, which offers additional preferences to
support vulnerable developing countries in their
ratification and implementation of relevant
international conventions in the fields of core human
rights and labour standards, sustainable development
and good governance;
3. The Everything But Arms arrangement, which
provides duty-free, quota-free access for the 50
Least-Developed Countries.
The total volume of imports to the EU market under the
three arrangements amounted to around 57 billion
EUR in 2007. The GSP of developed countries is
regulated in the WTO by the so-called Enabling Clause
that was adopted in 1979. It enables developed
members to give differential and favourable treatment
to developing countries.
Source: http://ec.europa.eu/trade/issues/global/gsp/
index_en.htm and www.wto.org
 Global Europe and Sustainable Development
The Cotonou Partnership Agreement, which replaced the
Lomé Convention in 2000, reflects the WTO ruling. In the
agreement, EU and ACP commit to negotiate and conclude
reciprocal trade agreements (EPAs) that comply with WTO
rules by the end of 2007. This requires the phasing out of
ACP trade preferences and progressive removal of trade
barriers between the ACP and EU. Most of the trade liber-
alisation will have to come from the ACP side, since almost
all imports to the EU from the ACP already enter freely.43
EPAs have to comply with the WTO rules that regulate
regional trade agreements; in particular, the requirements
of Article XXIV of the General Agreement on Tariffs and
Trade (GATT) on regional trade agreements. Article XXIV
sets clear guiding principles, in particular by stating that
substantially all the trade has to be liberalised in an RTA.
However, the actual application is problematic, both be-
cause of uncertainties related to the legally binding inter-
pretation of the provisions and because the rules are subject
to on-going negotiations. Particular uncertainties relate to
the share of trade that needs to be liberalised (90% of the
total volume according to EU) and the transition periods
allowed (10 years is the base-line, but longer periods exist).
As a consequence, it is possible to consider reciprocal EPAs
of different scope and depth that still are WTO compatible,
while other alternatives, not based on reciprocity, would
require changes in the WTO rules.44
After an initial period of discussions at all-ACP level,
negotiations between EU and various regional ACP constel-
lations were launched in 2003 and 2004. ACP countries that
are LDC’s do not need to conclude an EPA to enjoy duty-free
access under the Everything But Arms arrangement, while
non-LDCs would be confronted by less beneficial GSP pref-
erences in the absence of an EPA.
Information on the current status of negotiations for
EPAs and the other negotiations reviewed in this report can
be found in chapter 3.
1.6.3 Global Europe and sustainable development
Sustainable development is clearly not the overriding con-
cern of Global Europe. There are, however, a number of
complementary EU mechanisms that could be used to re-
focus the market-opening focus of the strategy.
First, there are other EU policies that focus on sustain-
able development, in particular the EU’s Sustainable
Development Strategy, to which there is a brief reference in
the beginning of Global Europe strategy.45 It states as regards
global poverty and sustainable development challenges’ that
the overall objective is to “…actively promote sustainable
development worldwide and ensure that the European
Union’s internal and external policies are consistent with
global sustainable development and its international com-
mitments.” (p. 20) In particular, EU will “… increase efforts
to make globalisation work for sustainable development by
stepping up efforts to see that international trade and invest-
ment are used as a tool to achieve genuine global sustainable
development.” (p. 21) EU is also rather advanced in terms of
policies to deal with climate change (see Box).
More generally, policy coherence for development is em-
bedded in the EU treaties. The EU is obligated to take into
account the development objectives in any policy that is
likely to affect developing countries according to articles 177
and 178 of the Treaty establishing the European Community.
However, the EU Commissioner for Development Louis
Michel recently admitted that the EU’s policies will not al-
ways be coherent with development objectives.46
Second, Global Europe mentions some issues related to
the process and content of future agreements. They should
cover sustainable development concerns by addressing en-
vironmental and social issues in addition to economic con-
siderations. Sustainability Impact Assessments (SIAs)
should be used to incorporate “…environmental and social
chapters and clauses covering in particular the necessity not
to relax existing standards to attract foreign investment, the
importance of enforcement, exception clauses related to the
protection of human health and the environment, capacity
building and technical assistance…” (EC, 2006b, p. 18)
21
 Global Europe and Sustainable Development

Third, EU has high ambitions as regards trade-related de-
velopment cooperation (‘Aid for Trade’). This type of sup-
port can contribute to enhancing the development effective-
ness of trade policy, by strengthening capacity and
institutions and financing necessary infrastructure, but also
distort domestic policy making in poor countries and be
used by donors for political ends. 47 There is a huge literature
on best practice and effectiveness of development coopera-
tion in general and Aid for Trade in particular.48 Suffice to
state in this context that aid cannot at all substitute fully for
fair trade agreements or good domestic policy making.

EU’s policies on climate change

In a global perspective EU is somewhat of a precursor in
terms of climate policies, not the least because of the poor
performance of other developed countries, in particular
the US, and other large emitters. EU is taking positive,
albeit insufficient, steps in fighting climate change, by e.g.
actively promoting the Kyoto agreement and committing
to cut greenhouse gas emissions by 8% from the 1990
levels by 2012. In addition, the EU Emission Trading System
is, despite its flaws and criticism, an innovative model for
emission reduction.
EU leaders have committed to cut its greenhouse gas
emissions by 30% of 1990 levels by 2020 provided other
developed countries commit to comparable reductions
under a global agreement and by at least 20% independ-
ently of what other countries decide to do. At the same time
experience shows that it is easier for EU countries to com-
mit to emission targets than to actually implement them.
On the trade side, the former EU trade commissioner
Mandelson argued that a solution to climate change needs
to incorporate the right of developing countries to grow.
As a consequence, ha saw a need to break the link between
economic growth and rising carbon emissions through new
power sources, more efficient energy use and new behav-
iour patterns. Trade policy should, according to the com-
missioner, contribute by spreading green technology and
by giving incentives to good environmental policy.

Source: Harris (2007), http://ec.europa.eu/environment/climat/home_en.htm accessed, http://www.euractiv.com/en/transport/france-pushes-leniency-car-co2-caps/

article-175945 a, http://ec.europa.eu/commission_barroso/mandelson/speeches_articles/sppm217_en.htm

22
 Global Europe and Sustainable Development

2. Perspectives from partners

The following three sections are summaries of a number of
papers produced by AIPAD (Southern Africa perspective),
IBON and REDES. They are presented to give a Southern
perspective and interpretation in this report and do not
necessarily reflect the opinions of the author of this report
or SSNC.
2.1 Africa
This section is a summary of the following documents pro-
duced by AIPAD: Masiiwa and Hazvina (2008), Hazvina
(2008) and Masiiwa (2008).
Greenhouse gas is mainly emitted in developed coun-
tries, but it is the poor in developing countries that are the
most affected. Climate change has shown itself in Southern
Africa through droughts and flooding, with negative effects
on food security and livelihoods. This is compounded by a
lack of local adaptive capacities and technology. In addition,
African countries are currently being squeezed between
competitive pressures to boost productivity caused by lib-
eralisation and the wish to avoid pursuing a greenhouse
intensive development path.
Information on trade and climate change in Africa is
scant, but AIPAD has identified some general issues. On the
negative side, these issues include:
• Increased emissions caused by trade liberalisation through
boosted production and transport.
• Loss of export markets because of high environmental
standards. In the short term, African countries need to par-
ticipate in developing environmental standards in export
markets. In the long terms, they need to invest in environ-
mentally clean technologies for both production and trans-
port. Support from developed countries and appropriate
IPR and investment policies are needed. The box lists some
measures suggested by AIPAD to improve transfer of “clean”
technologies in the TRIPS agreement.
Promoting clean technology transfer in the
TRIPS agreement
• Amend TRIPS so that developing countries can be
excluded from patentability of green technologies.
• Make developed countries pay for the licenses to pro-
duce such technologies in the South, where there is
interest by the developing country governments. The
drawback is that this could divert existing aid money
from other essential areas if the resources used are not
additional.
• Make developed country governments provide re-
search and development funds for climate-friendly
technology innovation so that the knowledge remains
in the public domain for easy access.

• More imports and less local production using environ-

mentally friendly labour intensive methods (e.g. in agricul-
ture) caused by tariff cuts.
• Increased exploitation and exports of resource-intensive
products. Instead African countries should develop energy
sources, including lobbying in the WTO for more favour-
able policies in the areas of TRIPs, investment, energy and
sanitary and phytosanitary measures (SPS) to enhance in-
vestments and technology transfer.
• Constrained policy space to pursue environmental poli-
cies, such as export taxes and environmental taxes on im-
ports currently banned by EPA and WTO respectively.
23
 Global Europe and Sustainable Development
The trade and climate nexus may also, according to AIPAD,
provide opportunities for African countries, if suitable sup-
port policies are put in place:
• Enhanced local value-added in African countries in sec-
tors such as food processing, textiles and clothing, chemi-
cals and light machinery to enhance employment and re-
duce greenhouse gas emissions from transports.
• Production of environmental goods and services, e.g. re-
lated to natural resources and renewable energy.
• Production of biofuels, in particular, even though the issue
is complex. Opportunities include improved energy secu-
rity and efficiency, new market opportunities, rural develop-
ment and reduced greenhouse gas emissions. Potential
problems are linked to land ownership, competition for
land, deforestation, monocropping, water pollution, food
security problems, poor labour conditions and unfair dis-
tribution of benefits along the value-chain. The net effect is
dependent on a number of factors, such as crop, cultivation
method, conversion technology and area.
• Exports of organic agricultural products based on tradi-
tional low-input and labour-intensive farming. Appropriate
infrastructure and institutions need to be put in place and
support assistance from developed countries should be
sought.
• Revenue generation from traditional environmental prod-
ucts and services such as handicraft and eco-tourism.
However, this sector is dominated by small firms or house-
holds, which have difficulties in reaching the international
market due to poor infrastructure, lack of capital and inac-
cessibility of export credits.
24
Overall, trade liberalisation can give access to clean tech-
nologies. But climate considerations need to be incorpo-
rated in trade liberalisation schemes that should not solely
be based on competition, but instead favour local value-
added. In EPAs climate change issues have been clearly mar-
ginalised.
As far as EPAs are concerned, AIPAD is of the opinion
that African countries were pressed by the EU to conclude
interim-EPAs under the threat of raised tariffs on the EU
market. Reciprocal trade relations between EU and ACP
countries offer an opportunity to overcome the traditional
donor-beneficiary relationship and create benefits in the
form of cheaper producer and consumer goods. However,
the AIPAD identifies a number of problematic areas related
to the negotiations, including:
• The breaking up of the existing African regional groupings
and the detrimental effects that will have on regional coop-
eration.
• The tendency for EU to open up other markets while pro-
tecting its own through subsidies.
• The very wide coverage of negotiations and stringency of
the conditions that go beyond WTO requirements, includ-
ing ‘new’ areas such as services, government procurement
and national treatment of companies.
• The demands by the EU in terms of market openings, such
as the ‘stand-still’ clause that compels ACP countries to
freeze their current tariffs, the absence of a dynamic infant
industry safeguard, the fast pace of liberalisation, the re-
moval of export taxes, and the Most-Favoured Nation
(MFN) clause, which means that if ACP offers better market
access in any other trade negotiations, these conditions
must also apply to the EU.
 Global Europe and Sustainable Development
• The threat to climate and food security caused by increased
movement of goods, favouring of commercial food produc-
tion and enhanced control by EU companies on natural
resources and land. Biofuel production has already led to
changes in land ownership as foreign companies race to buy
or lease large African land areas.
2.2 Asia
This section is a summary of the following documents pro-
duced by IBON: IBON (2008), Goodman and Wolfendon
(2008) and Quintos (2008).
Asia’s greenhouse emissions have grown in step with
economic growth and increasing exports. China is now the
leading greenhouse gas emitter in the world. This is due to
a development path based on carbon-intensive energy and
inefficient technologies, deforestation, plantation agricul-
ture, mining and dam projects. A non-negligible part of
these emissions are associated with outsourcing of low-cost
production by multinational corporations. Trade in envi-
ronmental goods and services is still limited, even though
there are some Asian export products in the area such as
solar water heaters and certified timber products.
IBON argues that WTO rules constrain the possibilities
of countries to pursue policies related to climate change, as
if trade liberalisation is paramount to fighting a changing
climate. These rules include disciplines on border measures
related to the carbon content of imports, standards on pro-
duction methods, government procurement favouring low
greenhouse gas emitting goods, favouring of local produc-
ers, discrimination of foreign producers and intellectual
property rights. GATT allows measures that protect hu-
mans or nature and promote development under certain
conditions, but in IBON’s opinion it is difficult for develop-
ing countries to invoke these exceptions in practice because
of opposition from developed countries.
WTO and regional trade rules now need to be subordi-
nated to climate policies. According to IBON this would
involve:
• Discarding the WTO TRIPS agreement, especially in rela-
tion to renewable energy and climate-friendly technologies
and the developed countries must bear the cost of transfer-
ring these technologies.
• End subsidies and other form of support to greenhouse gas
intensive industries in the developed countries. Instead ap-
propriate adaptation funds for developing countries should
be collected.
• Allowing developing countries the option of using subsi-
dies, government procurement rules, regulations for foreign
investments, and other forms of state support for nurturing
domestic renewable energy development, sustainable or-
ganic farming, and climate friendly technologies.
• Allowing developing countries to retain the flexibility to
use tariffs, quotas and other non-tariff measures including
taxes to discourage or, if necessary, ban the importation of
GHG-intensive or pollutive goods such as fertilizers and
agro-chemicals. The same flexibility must be available to
developing countries who wish to discourage or limit their
exports of oil, gas, timber and other natural resources in
order to conserve them or to reserve their use for local pop-
ulations most dependent on such resources.
• Allowing countries the flexibility to use labelling, manda-
tory energy-related standards or technical regulations as
instruments for reducing greenhouse gas emissions.
Global Europe does not integrate climate concerns, and is
in IBON’s opinion driven by profit-maximization on behalf
of the EU. A particular problem is the desire by the EU for
unimpeded access to energy and raw material resources
from the developing world. In the same vein, the demand
for stricter IPR enforcement is based on protecting the in-
terests of corporate Europe rather than enable transfer or
more energy-efficient and climate-friendly technologies.
25
 Global Europe and Sustainable Development
In parallel the EU adopts market-based approaches to re-
duce their own greenhouse gas emissions; the EU emissions
Trading Scheme (ETS). However, the emission cap is set too
high to drastically reduce emissions and the scheme has
turned into a lucrative business opportunity, involving
among other things trade of carbon credits between Europe
and the developing world. To IBON the system amounts to
privatisation of the global atmosphere and uses markets to
realise socially desired outcomes.
Overall, Global Europe aims to establish relations with
its target partners based on WTO ‘plus’ terms that are un-
equal and biased against developing countries. Particular
issues that IBON emphasises include:
• Reduction of tariffs and non-tariff barriers results in loss
of revenue and exposes local producers to unfair competi-
tion, in particular in agriculture because of EU subsidies.
In the same vein, restrictions on the use of export tariffs on
raw material deny the EU’s partner countries the sovereign
right to apply policies they need to develop.
• Liberalisation schedules that are faster than required by
WTO jeopardize the economies of developing countries
leaving them little space for meaningful economic develop-
ment.
• IPR clauses and environmental measures in FTAs would
provide monopoly to EU in advanced technology, such as
environmentally and energy saving technologies.
Studies show that even if ASEAN countries may gain from
a free-trade agreement with the EU, most of these gains are
associated with liberalisation in services. On the goods side,
ASEAN countries would become more specialised in pri-
mary production, while industrial production would de-
cline. EU would reap 70% of the benefits. ASEAN countries
could experience considerable economic losses of revenue
because of falling tariff revenue and repatriation of profits.
26
2.3 Latin America
This section is a summary of texts produced by REDES.
REDES argues that free trade agreements between Latin
America and Europe are not aimed at promoting coop-
eration to foster development in the South, but rather at
opening and securing markets for transnational corpo-
rations and foreign investments. This is clear from EU’s
Global Europe strategy that explicitly aims at further
liberalization of international trade to open markets for
the European companies in order to stimulate growth
and employment in Europe.
In addition, agreements between unequal partners lead
to suppression rather than promotion of sustainable devel-
opment and the EU association agreements are examples of
this. They incorporate issues not negotiated in the WTO and
demand extensive liberalization in areas such as goods,
services and government procurement. They destabilize
regional integration in the developing regions, as exempli-
fied by the splitting of the Andean block. At the same time
agricultural subsidies, rules of origin and non-tariff barriers
on the EU side remain.
Moreover, REDES underscores that trade and investment
gains are uncertain since a rise of imports risks affecting
balance of payment and debt in Southern countries. The
Mexican experience is a case in point; the Mexican trade
deficit with EU was almost 80 % higher in 2006 compared
to 2000 when Mexico signed an agreement with EU. In this
context it is particularly worrying that no sustainability
impact assessment has been done for Central America. In
comparison the WTO context is more favourable for devel-
oping countries than regional negotiations, because of more
equal power relations and the possibility to form alliances.
 Global Europe and Sustainable Development
REDES believes that several features of the on-going and
concluded negotiations between Europe and Latin America
(e.g. as regards CARICOM, Chile and Central America) will
lead to greater vulnerability of local communities in
Southern countries by having an impact on climate change
and food sovereignty. These features include:
• Tariffs reduction and limitations to the application or di-
rect banning of measures to protect domestic food produc-
tion through exports control, special safeguard mechanisms
and prices control as exemplified by the agreement with
Chile.
• National treatment of foreign investors, which means local
economies cannot be strengthened as multinational com-
panies must receive at least the same treatment as national
firms. In addition, the most-favoured nation condition
threatens regional integration as European investors must
receive a treatment that is no less favourable than the treat-
ment given to investors of any other country.
• Services liberalization that can lead to privatization and
commodification of services such as water and health, and
as a result less access for the poor and most vulnerable com-
munities.
• IPRs over seeds and medicines, which favour monopolis-
tic control by transnational corporations and may have
negative impact on access to essential medicines and the
right of farmers to develop, reproduce and exchange
seeds.
•National treatment to EU companies in government pro-
curement, which may restrict policy space for countries to
prioritize domestic firms to foster development.
The agreements will have an impact on climate change in a
number of ways according to REDES:
• Agriculture: Large scale, industrialized and export ori-
ented agriculture favoured, through the consolidation of
agribusiness and the expansion of monocultures, often in-
volving deforestation to open the agricultural frontier, thus
contributing to climate change.
• Foreign investment: Northern companies moving to the
South; no performance requirements as a result of invest-
ment and free trade agreements; less policy space for coun-
tries to control production systems and methods; greater
control of territories by transnational corporations through
activities that contribute to climate change such as mining,
oil exploration and exploitation, and agribusiness.
• Services: if energy services are liberalized, states lose pol-
icy space to determine a sustainable energy matrix. For
instance, energy generation projects in South American
countries are increasingly benefiting exports sectors and
transnational corporations, being designed in line with the
current unsustainable development model which contrib-
utes to climate change.
• Liberalization of government procurement: Southern
countries will not be allowed to foster the development of a
domestic clean technologies sector to promote a low carbon
economy, as countries will not be allowed to prioritize na-
tional technologies in public procurement.
• IPRs: make clean technologies more expensive and diffi-
cult to access. Also stop countries from fostering the devel-
opment of local/national companies for the production of
technologies.
Food sovereignty will be affected through many of the fea-
tures listed, in particular through the following impacts:
• Risks of massive inflow of subsidized imports (‘dumping’)
against which the production of traditional crops is not able
to compete.49
27
 Global Europe and Sustainable Development
• Increasing control of food and agricultural systems by
transnational corporations.
• Further development of large scale, industrialized and
export oriented agriculture, through the consolidation of
agribusiness and the expansion of monocultures. In
Uruguay, for example, this has also led to greater concentra-
tion of land, which is increasingly in the hands of foreign
companies.
• Greater control of territories by transnational corporations
through activities that undermine food sovereignty such as
mining, oil exploration and exploitation, and agribusiness, etc.
• Liberalization of government procurement: less policy
space for countries to prioritize domestic production to
foster food sovereignty through government procure-
ment.
• Loss of farmers’ control over seeds and favouring of mo-
nopolistic control by trans-national corporations through
TRIPS ‘plus’ provisions and other international agree-
ments.
One of the key aspects that interlink trade agreements with
climate change is the role and increasing power of transna-
tional corporations, which acquire privileges to operate in
developing countries as a result of the liberalizing agenda.
28
At the same time these corporations have a great deal of
responsibility in relation to climate change, since they are
the main source of carbon emissions, due to globalization
of their production systems (transferring production to the
south, where environmental and labour standards are lower,
instead of investing in cleaner production and emissions
reduction), and as a result of the unsustainable consumption
patterns they promote.
Under the trade and investment agreements transna-
tional corporations are allowed to control and exploit land
for mining, oil and gas purposes, which increases emissions
and lead to the loss of resilience as the ecosystems become
more vulnerable. This affects the peoples and communities
that depend on ecosystem services for their survival.
Biofuels are a case in point. Contrary to what is being
claimed by different development and credit organizations,
biofuels do not increase jobs nor contribute to better work-
ing conditions or development for Latin American coun-
tries. Instead biofuel production uses land and natural re-
sources in the South to subsidize overconsumption in the
North.
Transnational corporations also have control over clean
technologies and advocate strong IP rights to be able to
charge for the transfer and use of technology.50 As a conse-
quence, in the EU negotiations, stronger regulation through
TRIPS ‘plus’ provisions is combined with liberalization in
other areas to safeguard corporate interest.
 Global Europe and Sustainable Development

3. Global Europe, climate change and food security

3.1 Focus of the analysis
This chapter addresses the main objective of this report,
by analysing to what extent EU trade policies affect the
policy space available to developing countries to fight
climate change and support organic agriculture.
Following the discussion above on the link between sus-
tainable development and specific policies related to climate
change the various trade policy instruments under scrutiny
will be judged on the extent to which they affect; 1) the over-
all ability of countries to grow in a sustainable manner and,
in particular, diversify their economies to develop response
capacity related to climate change; and 2) the possibilities
to mitigate greenhouse gas emissions and adapt to climate
change, in particular in energy, forestry, agriculture and
water.
The analysis will deal with six of the seven (competition
excluded) main elements of Global Europe. In order to limit
the discussion, only selected instruments related to each
topic is addressed (see Table). These aspects have been se-
lected because of their high potential impact on climate
policy space.

Table: Selected instruments pertaining to Global Europe

Topic Selected instruments

Tariff and non-tariff barriers Import tariffs and subsidies

Services Liberalisation of the energy and water sectors

Investment Policies aimed at enhancing link between FDI and the host economy

Access to natural resources Export taxes and quotas

Public procurement Public procurement to pursue social objectives

Intellectual property rights Transfer of technology

As was hinted at in the introduction, the use of many of
these instruments is controversial and is considered inef-
fectual and potentially wasteful, but such a view is based on
narrow-minded thinking, disregarding effectiveness from
a social and long term economic welfare perspective.
Instruments such as these are being and have been used
through-out modern history by developed and emerging
economies to promote economic development, and to in-
ternalise externalities. The analysis below takes a balanced
view, reviewing the tools and sectors concerned, related
trends, WTO rules and how the instruments are dealt with
in the negotiations.

29
 Global Europe and Sustainable Development
3.2 Scope and status of negotiations
As was mentioned in the introduction, the analysis is lim-
ited to the negotiations between EU and ACP (EPAs),
ASEAN, the Andean Community and Central America. In
all these negotiations EU is aiming to include the full range
of issues highlighted in Global Europe and to conclude
agreements that go far beyond WTO both in terms of cover-
age and depth. In essence EU wants agreements to “…pro-
vide for the progressive and reciprocal liberalisation of trade
in goods and services, and the establishment of rules on a
broad number of trade-related issues…”51
The areas covered include trade in goods (tariffs), non-
tariff measures (non-tariff barriers, technical barriers to
trade and sanitary and phytosanitary standards), trade de-
fence instruments (anti-dumping and countervailing meas-
ures), trade in services, intellectual property rights, invest-
ment, public procurement, competition, and trade
facilitation. The four last areas are the so-called Singapore
issues that EU and other developed countries have wanted
to include in the WTO negotiations, but from which only
trade facilitation was retained due to opposition from de-
veloping countries.
The EU mandates also include general provisions related
to sustainable development: “Given that sustainable devel-
opment is one of the overarching objectives of the Parties, the
provisions relating to trade will aim to ensure and facilitate
respect on agreed environmental and social standards, and
at maximising any positive and minimising negative envi-
ronmental and social impacts.”
In particular, this includes enhanced cooperation on
trade-related aspects of sustainable development and “[c]
onsideration will also be given to measures to facilitate and
promote trade in environmental goods, services and tech-
nology.” Monitoring of the implementation of these com-
mitments as well as instruments of encouragement and
trade-related development cooperation activities will be
foreseen in the agreements.
Sustainability Impact Assessments have been finalised
for the EPAs and are on-going for ASEAN, the SIA of which
is to be completed in June 2009.52 According to the EU man-
30
dates of both Andean Community and Central America
SIAs are supposed to be produced for these negotiations, but
they have been severely delayed (due to procurement diffi-
culties according to the Commission) and the extent to
which they will be able to inform negotiations can be doubted.
Bilal and Rampa (2006) criticises the ACP SIAs. First of
all, many of them have not been made publicly available,
allegedly because EU did not like their methodology and
results. In addition, the studies have focused on trade flows,
government revenue and, in some cases, welfare effects, but
have ignored productive sectors. As a consequence, the
studies cannot catch the dynamic effects on competitive-
ness, employment or economic growth, which constitute
the most important impact of EPAs. Reasons for these short-
comings include methodological and data constraints. This
uncertainty as to the long term effects on the economic
structure of EU’s negotiating counterparts considerably
clouds any firm prediction of the benefits of the agreement
for these countries.
The status of the negotiations under scrutiny in this re-
port is summarised in the Box. Negotiations with the
Caribbean ACP countries are concluded and there are in-
terim agreements with most of the other ACP countries,
with a view to continue negotiations. Negotiations with
Central America are moving forward, while negotiations
with the Andean Community and ASEAN have stalled.
 Global Europe and Sustainable Development
Status of EU negotiations
ACP (Africa, Caribbean, Pacific)
Caribbean: a full regional EPA was initialled on 16 December
2007 and signed on 15 October 2008.
Pacific: Only Papua New Guinea and Fiji concluded interim
agreements on 29 November 2007.
East and Southern Africa (ESA): the East African Community
(EAC) members (Burundi , Kenya , Rwanda , Tanzania and Uganda)
initialled an interim agreement on 27 November 2007. The re-
maining ESA countries have opted for a framework agreement
with a common text but separate market access schedules.
SADC EPA region: An interim agreement has been initialled by
Botswana, Lesotho , Swaziland and Mozambique on 23
November 2007 and by Namibia on 11 December 2007 . South
Africa is not taking part.
Central Africa: no regional interim agreement exists. The non-
LDC Cameroon initialled an interim agreement with the EU on
17 December 2007.
West Africa: aiming for a full EPA. Côte d’Ivoire and Ghana ini-
tialled interim agreements with the EU on 7 December and 13
December 2007 respectively. Nigeria has instead asked to be
included in the GSP+ scheme. This was rejected by the EU and
Nigeria is subject to higher GSP tariffs.
3.3 Tariffs and non-tariff bariers
3.3.1 Background
In chapter 2, SSNC partner organisations worry that
EU’s demands for liberalisation will lead to loss of gov-
ernment revenue, hamper local economic development
as local industries cannot compete with EU companies
and take away the possibility to subsidise local eco-
nomic activity in general and climate-friendly technol-
ogy and agriculture in particular.
The economic and social value of tariffs and subsidies
is at the centre of animated debate as indicated above.
From a narrow point of view, such measures redistribute
ASEAN (Association of South East Asian Nations)
Negotiations were initialled on a Free Trade Agreement in May
2007. Negotiations have moved very slowly during 2008 and EU
is considering pushing for agreements with individual coun-
tries.
Andean Community
Negotiations on an Association Agreement were initialled in
September 2007. In July 2008 EU suspended negotiations be-
cause of difficulties on the Andean side to find a common posi-
tion. Peru and Colombia are considering bilateral negotiations.
No SIA has been conducted.
Central America
Negotiations on an Association Agreement were launched in
October 2007 and continue during 2008. No SIA has been con-
ducted.
Sources: www.bilaterals.org, www.acp-eu-trade.org, http://ec.europa.eu/exter-
nal_relations
resources to the protected industries in an intransparent
way, creates inefficiencies and favour protectionism through
lobby interest.53 In addition, many subsidies are actually
harmful to the environment and the climate, such as subsi-
dies supporting fossil fuel and nuclear power, conventional
agriculture and over-fishing.54
This line of reasoning pays little attention to the impact
of liberalisation on the local economic structure.55 From a
development perspective tariff protection can be a necessary
tool to develop domestic production and competitiveness,
as exemplified by the East Asian tigers.56 Subsidies may be
31
 Global Europe and Sustainable Development
necessary to promote energy efficiency and cut GHG emis-
sions, e.g. through the use of or research and development
in renewable energy sources in production and climate-
friendly production technologies.57 Subsidies for renewables
are also needed as long as fossil fuels are subsidised by not
internalising environmental costs.
Consequently, a combination of responsible state policies
and market forces is needed, designed to fit the country
context.58 Protective measures need to be part of a country’s
policy options aiming at economic diversification. Because
of the risks involved these should be used prudently and
selectively in the context of a long-term industrial strategy,
with appropriate accompanying measures. Tariffs are par-
ticularly important to developing countries since they have
no cost implications (as subsidies do) and the use of other
supportive instruments have been constrained in the inter-
national trading system (see below).59
Overall, developing countries have reduced their tariff
levels considerably the last two decades and in particular
since the creation of the WTO in 1995; more in developing
countries than in developed countries.60 Still, developing
countries have as a group retained a degree of freedom to
increase tariffs by allowing the tariff rates bound in the
WTO context to exceed the applied rates.61 Reducing this
flexibility is being negotiated in the WTO, during the so-
called non-agricultural market access (NAMA) negotiations.
The agricultural sector in developing countries is par-
ticularly vulnerable to changes in trade policy. The sector is
important in terms of livelihood and food expenditures
constitute a relatively large share of the incomes of the poor.
In addition, developing countries are often dependent on
agricultural exports.62 Commercial agriculture also relies
heavily on imported inputs, why the cost and accessibility
of these inputs will influence production methods and the
possibility of adopting sustainable farming methods.
Liberalisation in agriculture has been modest compared
to goods, even since the WTO Agreement of Agriculture
came into effect in 1995. In the developed countries high
tariffs and huge subsidies still abound, while developing
country tariffs are often bound at high levels. At the same
32
time developing countries have made considerable efforts
to liberalise their agricultural markets, e.g. by abolishing
price controls, subsidies and state controls, as part of struc-
tural adjustment programmes. These reforms have tended
to undermine food security for poor farmers and favour
certain export sectors and transnational companies. Further
diversification of exports has generally not occurred.63
There are particular regulations on subsidies in the WTO
that reduces the policy space of developing countries to
pursue industrial policies. Two types of subsidies are to-
tally banned under the WTO Agreement on Subsidies and
Countervailing Measures: subsidies contingent on the use
of domestic raw materials and subsidies contingent upon
export performance (with exception for the poorest coun-
tries under certain conditions). All other types of subsidies
are permitted up to a certain level, including subsidies often
used in developed countries such as regional support and
support to R&D and subsidies often used in developing
countries such as support for the diversification of produc-
tion or support to introduce new technology.64
It should, however, be noted that all permitted subsidies
are actionable in WTO, i.e. questionable by other countries
if they can prove that the subsidy has caused injury to their
domestic or export markets. In that case, countervailing
measures may be taken, e.g. in the form of tariffs.65 The
Swedish National Board of Trade argues that such action
may not be taken against climate subsidies on the condition
that they are applied even-handedly and objectively, that
their potential adverse effects are paid attention to, and that
subsidies are restricted to compensation for the climate-
friendliness of their production.66
In the current Doha round of negotiations, developed
country agricultural subsidies and NAMA in developing
countries have been at the centre of attention. The latest
break-down in talks that occurred in July 2008 was blamed
on disagreement over how easily developing countries
should be allowed to raise tariffs beyond current legal limits
to protect farmers from import surges under a ‘special safe-
guard mechanism’ (SSM).67
 Global Europe and Sustainable Development
Ahead of the Bali climate meeting the EU and the US also
launched a proposal of liberalisation of environmental
goods and services, based on World Bank research and in
line with the original mandate of the Doha Round.
Nevertheless, the proposal was criticised by major develop-
ing countries and NGOs for being driven by commercial
interests.68
3.3.2 Global Europe and removal of tariff and
non-tariff barriers
EU argues that it is more open than its emerging compet-
itors, such as China and India and that non-tariff barriers
in export markets are gaining importance as tariffs fall.
Regulatory barriers to trade and investment are a major
challenge for several key sectors, including services and
food. EU believes that regulations to protect human
health or the environment are justified, but have to be
done in a way which is transparent, non discriminatory,
justified and proportionate to the ultimate objective.69
Tariffs and non-tariff barriers are at the core of the EPA
negotiations. As mentioned above, in order to be WTO com-
patible any agreements must liberalise "substantially all the
trade" in goods between participating countries "in a rea-
sonable length of time". What this means for developing
countries is subject to interpretation, but a minimum of 80%
coverage of all trade and a liberalisation period of 15 years
seems to be a generally accepted starting point.70
This will mainly enhance EU exports to the ACP, since
the EU market is already mostly open to ACP exports.71 The
ACP SIA recommends that in order to “…mitigate potential
negative impacts of reciprocity and encourage positive im-
pacts, negotiators should classify some products as ‘sensi-
tive’ and ensure that there is a safeguard provision taking
into account the goal of promoting sustainable develop-
ment” (p. 62) as regards liberalisation of ACP markets.72 And
in its response the Commission basically agrees. 73
The EPA agreements all contain provisions on tariff re-
ductions and non-tariff barriers. All EPA regions will reach
80% of liberalisation within a transition period of 15 years,
but the actual liberalisation schedules vary between the
regions.74 For example, CARIFORUM will liberalise 87% of
imports over 25 years.75
The product groups exempted from liberalisation by ACP
countries seems to have been chosen based on static consid-
erations – protection of fiscal revenue and commercially
sensitive products – rather than dynamic considerations
aimed at economic diversification. Exceptions predominate
in the agricultural sector and in some non-agricultural sec-
tors for infant industry reasons.76
The agreements also contain safeguard clauses that allow
for the temporary introduction of border measures for rea-
sons such as infantry protection and food security. The use
of safeguards is, however, restricted in a number of ways:
e.g. by imposing limits on the time-span, tariff levels and
type of industry that can be included in protection meas-
ures. In addition, ACP countries have so far not made use
of the safeguard measures in place in the WTO context.77
ACP countries will be confronted by significant imple-
mentation and adjustment challenges when they open up
their markets for goods to the EU under the EPAs. First,
their will be a significant loss of fiscal revenue, since ACP
country budget’s rely to a large extent on income from im-
port tariffs. Second, policy space is restricted far beyond
WTO commitments, which limits the possibilities for poli-
cies aimed at economic diversification and agricultural pro-
tection. Third, regional integration could be hampered if
EPAs are concluded with individual countries.78
In addition, it is unlikely that the markets openings of-
fered by the EU in the EPA negotiations will increase ACP
exports in any substantial way. The resulting markets access
corresponds to the one already enjoyed by ACP under the
Cotonou agreement. The complicated rules of origin that
limited the possibilities of ACP to take advantage of the
preferential access to EU markets remain.79 In addition,
substantial improvements in ACP competitiveness would
be needed, which is unlikely to happen in the near term.80
Indeed a sector breakdown of the projected changes in trade
between EU and ACP under EPAs show that growth of ACP
exports is limited to livestock, vegetable products and tex-
tiles, while imports of manufactured goods will increase.81
33
 Global Europe and Sustainable Development
As regards subsidies, they are allowed in all the texts as long
as they conform to WTO rules.82 However, as was indicated
above it can be argued that tariffs are more accessible forms
of industrial policy in ACP countries that do not have the
capacity or resources to directly subsidise production or
enterprises.83
In the cases of Central America, Andean Community
and ASEAN EU aims at dismantling import duties on sub-
stantially all trade on both sides within 10 years, according
to the EU mandates. Specific provisions are possible for
sensitive products, but should be kept to a minimum and be
subject to reviews. There will be a bilateral agricultural safe-
guard clause under which duties may be restored if there is
a rise in imports that causes serious injury to a domestic
industry. Any non-tariff barriers to trade will be banned, as
long as they are not justified by the general exceptions of the
GATT.
Reports from the negotiations with Central America
state that EU requires at least 90% opening from the Central
American region, while the latter has been offering slightly
less.84
The ASEAN SIA indicates that the ASEAN labour inten-
sive manufacturing sector stands the most to gain from a
free-trade area with EU. Sectors that risk creating the most
negative environmental impact include palm oil produc-
tion, leather goods, textiles, electronics, fisheries, forestry,
agriculture, and tourism.85
3.3.3 Discussion
Clearly, any developing country group that wishes to con-
clude a free-trade area with the EU will have to agree to
substantial market openings. WTO rules and EU ambition
will see to that. At the same time the EPA negotiations show
that EU is prepared to accept that some protection prevails
in the form of products excepted from liberalisation, safe-
guard clauses and subsidies to national production.
Nevertheless, the EU demands are cause of worry. The
ASEAN SIA shows that a free-trade area with the EU may
preserve or even worsen dependence on primary and la-
bour-intensive production. The effects on the ACP countries
34
will probably be a surge in imports from the EU, since they
already have access to EU markets, while the impact on ACP
competitiveness is very much in doubt, in particular since
the economies of these countries have not responded fa-
vourably to previous boosts of liberalisation.
The situation looks even more uncertain when consider-
ing that there is a dearth of information on the dynamic
effects of liberalisation and that ACP commitments have
been based on rather static considerations. What will be the
long-term impact of liberalisation on the possibilities for
ACP countries to diversify their economies? And what will
that mean for the response capacity related to climate change
of these countries?
When determining the impact on climate policies and
organic agriculture it seems clear that tariff policies of
Global Europe could limit the possibilities for policies aimed
at economic diversification and agricultural protection.
How much and to what extent is difficult to conclude with-
in the scope of this study, partly because of lack of analysis.
3.4 Services
3.4.1 Background
As indicated above some services are closely linked to cli-
mate change, such as electricity provision, water distribu-
tion, transport and waste collection. Certain service sectors
also have direct environmental impact, such as tourism.
This section will focus on the impact of Global Europe on
national policies to determine e.g. the energy matrix and
water distribution.
Services constitute an important and growing part of the
global economy. The sectors represent two thirds of the GDP
of OECD economies, over half of GDP in middle-income
economies and slightly over 40% of GDP in least developed
countries. It is difficult to measure the volume of trade in
services, but it accounts for around 20 to 25 % of trade in
goods.86
Many service areas are highly regulated and it has been
regarded legitimate to favour domestic providers in most
countries. Developing countries tend to be more restrictive
 Global Europe and Sustainable Development
than developed countries and overt or covert barriers to
entry are more prevalent than in the area of goods.87
However, since the 1980s many countries have under-
taken reforms to increase competition in the service sector.
Deregulation and privatisation were significant parts of the
World Bank and IMF sponsored structural adjustment pro-
grammes.88 Consequently, private participation has grown
significantly in areas such as water, sanitation and electric-
ity in particular in Latin America and East Asia. In general,
private investment and privatisation have been much more
prevalent in electricity, with public ownership being the
norm in the other two sectors.89
Service provision in the poorest developing countries is
often inefficient and under-financed. Essential infrastruc-
ture is lacking and subsidies lead to over-use and ineffi-
ciency, even though the poor may benefit. For example,
about 2 of every 10 people in the developing world were
without access to safe water in 2000 and only around a quar-
ter of the population in Sub-Saharan Sahara had access to
electricity the same year. Liberalisation aims among other
things to increase efficiency and cost coverage.90
The ACP SIA, for example, notes that ACP economies
can benefit from making commitments in service areas such
as telecommunications, transportation, environmental
services and financial services. Environmental services re-
lated to water and waste are particularly important to coun-
ter negative side-effects caused by tourism development.91
With deregulation, transnational corporations have
emerged in the service industry. EU companies have been
particularly successful in this area, partly propelled by in-
creased competition in the home market. In electricity three
European transnationals dominate by far: E.On (Germany),
RWE (Germany) and Electricité de France (France). In
water, a small number of large companies dominate FDI in
water services, with Suez Environnement and Veolia
Environnement (both France) being the largest and RWE
(Germany) emerging recently.92
Whether liberalisation of services actually leads to ben-
efits that outweigh the costs is a matter of much debate and
it is impossible to do justice to it in this limited space. It
seems clear, however, that liberalization experiences in de-
veloping countries have been mixed and outcomes have
often failed to live up to expectations. Private capital has a
role, because of the large investment needs, but reforms need
to be crafted carefully to fit the local context and ensure
among other things that a regulatory framework is in place
and social legitimacy is ensured.93
The US worked to include trade in services in interna-
tional trade negotiations. The EU and developing countries
preferred no or soft obligations, a view which in the end
prevailed. This is reflected in the GATS agreement of the
WTO. The agreement is difficult to interpret and there are
uncertainties as to what it means in practice in terms of
liberalisation partly because of its dual nature. In essence,
GATS contains general provisions on controversial issues
such as subsidies and national regulations, while at the same
time countries can chose which sectors they wish to liber-
alise.95 Negotiations on services within the WTO have been
slow and relatively few offers to liberalise specific sectors
have been made by developing countries.96
3.4.2 Global Europe and services
Europe is highly competitive in service provision as noted
above, why it is not surprising that the EU has offensive in-
terests in the service area. The Global Europe strategy states:
“Gradually liberalising global trade in services is an impor-
tant factor in future economic growth including in the devel-
oping world. The EU will need to negotiate to liberalise trade
in services with key trading partners, especially where market
access is poor or our partners have made few WTO commit-
ments.” (EU, 2006a, p. 8)
EU is pushing hard to include trade in services in EPA
negotiations and this is foreseen in all interim EPAs except
for the Pacific. However, several ACP countries have been
reluctant to take on firm commitments on services and these
are not required in order to comply with WTO rules.97
Overall ACP countries are net importers of services, with
the exception of the Caribbean (tourism, finance and IT)
and selected sectors in South Africa (tourism) and Mauritius
(tourism and finance).98
35
 Global Europe and Sustainable Development
Because of both EU and Caribbean interests, the Caribbean
EPA includes extensive service liberalisation, with the more
developed CARIFORUM countries promising to liberalise
75% of their services trade with the EU and the LDCs 65%.
EU commits to liberalise 94% of its service market. Sectors
covered by CARIFORUM commitments include environ-
mental services (including sewage and waste collection),
transport and services incidental to energy distribution.
Further negotiations on services are foreseen in the agree-
ment.99
There are provisions to protect universal service obliga-
tions in the agreement, provided they are administered in
a transparent, non-discriminatory and competitively neu-
tral manner and are not more burdensome than necessary
for the kind of universal service defined. (See Art. 91 of Title
II of the CARIFOURM EPA). What this means in practice
is unclear.100
It should also be noted that regional cooperation in the
service area is already on-going in the other ACP regions,
such as in the EAC and COMESA contexts.101 In addition,
the ACP countries have both offensive interests and needs
in terms of investment in services. In the case of EAC, the
EU markets for movement of natural persons and tourism
are of great interest, while establishment by EU companies
in the areas such as financial services, energy and transpor-
tation would be welcomed.103
However, merely achieving liberalisation is not enough.
EPAs would need to support the on-going regional integra-
tion processes. Effective regulatory authorities should be in
place before liberalisation of the sub-sectors and measure
must be taken to ensure that the poor do not lose out in order
to avoid the negative effects of privatisation.103
The EU:s negotiating mandates for ASEAN, Andean
Community and Central America all state that “[t] he
Agreement shall provide for the progressive and reciprocal
liberalisation of establishment and of trade in services with
the aim to ensure a high level of market access opportuni-
ties.” A certain measure of flexibility will be permitted, tak-
ing into account the different levels of development of the
negotiating countries.
36
Indeed, equilibrium models produced in the context of the
ASEAN SIA shows that the greatest expected benefits from
an EU ASEAN agreement is expected to come from liber-
alisation in services trade. These benefits will mainly accrue
to the EU. Currently, Singapore and Thailand are the only
countries with a surplus in services trade with the EU.104
3.4.3 Discussion
Services markets are becoming increasingly globalised and
foreign firms can bring much needed skills and capital to
crippling service provisions in developing countries.
However, the extent to which these benefits can be reaped
depend very much on specific circumstances and in par-
ticular the institutional and regulatory environment, which
is weak in developing countries. Basic services, such as elec-
tricity and water are especially sensitive to these conditions.
Special policies and contractual commitments are needed
to ensure that service provision reach vulnerable communi-
ties.
The way GATS is constructed leaves considerable lever-
age to countries to decide on the service liberalisation. This
policy space is now being challenged by EU. Liberalisation
of services in poor countries is problematic enough without
pressure from the EU for further reforms. It would seem
more appropriate if EU kept to areas of specific concern to
the negotiating counterparts and supported their efforts
through development assistance to strengthen regulatory
frameworks and institutional capacity, contribute to the
large investment needs and ensure that services reach the
poor.
The extent to which EU’s interest has an impact on the
energy mix and water management in negotiating counter-
parts cannot be determined in this report. Information is
limited, which in itself is an area of concern. Service nego-
tiations are on-going or will be included in all the negotia-
tions under scrutiny here. Energy services are included in
the CARIFORUM EPA, public services are not, at least on
paper.
 Global Europe and Sustainable Development
3.5 Investment
3.5.1 Background
In chapter 2 SSNC partners view regulation of foreign direct
investment as a way for developing countries to nurture
domestic renewable energy development, sustainable or-
ganic farming, and climate friendly technologies. FDI does
indeed have a key role in providing financing and technolo-
gies related to sustainable development and climate change.
This section looks at Global Europe in relation to instru-
ments available to increase the link between FDI and the
host economy to increase these benefits. Investment is close-
ly related to GATS and its concern with markets for service
providers.
Foreign direct investment is an inherent feature of glo-
balisation and has risen rapidly since the early 1990’s.105
Developing countries receive around a quarter of global
FDI, with half going to East and South-East Asia. The levels
vary starkly between countries; for example, in spite of
strong global growth of FDI in 2007 in all regions, the vol-
ume going to LDCs increased modestly.106 In terms of sec-
tors services (including investment in electricity and water
distribution) is clearly the largest FDI sector, but investment
in primary products (mining and petroleum) is growing
most rapidly driven by global demand and rising prices.
The impact of FDI on the host country depends very
much on the context. FDI and transnational companies can
bring much needed jobs, capital, technology and knowledge.
For example, in order to achieve their goals in terms of eco-
nomic growth and poverty reduction, the World Bank has
estimated that developing countries should be spending
double of what they are currently spending on infrastruc-
ture.107
At the same time FDI may have substantial negative ef-
fects, including human-rights violations, environmental
degradation, and generate very few benefits for the host
countries.108 For example, FDI in mining tend create few
links to the host economy in terms of employment and op-
portunities for local companies.109 A notorious example of
FDI with adverse environmental consequences is the
Metalclad case under NAFTA. Metalclad is an American
company that bought a landfill site to dispose of hazardous
waste, but was unable to secure the necessary permits from
the local government. The company sued the Mexican gov-
ernment and won.110
Several factors determine FDI flows, such as the size and
growth of the local market, the prevalence of conflict, cor-
ruption and rule of law, the quality of infrastructure and
skilled labour and business friendly regulation. In that con-
text countries employ various specific policies to attract FDI,
such as the creation of Economic Processing Zones and fis-
cal and financial incentives, in addition to various measures
aimed at enhancing the benefits to the local economy (per-
formance requirements) such as local content requirements,
joint ventures, restrictions on repatriation of profits and
restrictions on land ownership.111
Performance requirements restrict the activities of inves-
tors and may as a consequence actually deter FDI, but the
benefits to the local economy may diminish in their absence.
Trade-related performance requirements, such as local con-
tent requirements are prohibited under the WTO agreement
on Trade-related Investment Measures. In addition, the
WTO agreement on Subsidies and Countervailing Measures
(SCM) could be invoked to limit investment subsidies.
GATS includes provisions on FDI and market access prin-
ciples for sectors where commitments are made.112
These provisions aside, there is no global investment
framework. Developed countries have attempted to include
investment in trade negotiations, as one of the four Singapore
issues, but this was rejected by developing countries. Instead,
a plethora of bilateral investment treaties, so called BITs,
has been concluded, which primarily focus on investor pro-
tection. In addition, there are also investment provisions in
various regional integration arrangements, such as in the
case of NAFTA.113
The BITs rarely contain environmental provisions, but
may have an impact on environmental policy. In a number
of disputes, investors have used investment treaties to chal-
lenge government policies in areas such as waste manage-
ment, land-use planning or the regulation of pollutants. One
of the arguments used is that such regulations may amount
37
 Global Europe and Sustainable Development
to expropriation, with the investor having the right to com-
pensation. 114
3.5.2 Global Europe and investment
Global Europe aims at strengthening the presence of EU
companies in third countries through permanent establish-
ment. To achieve this, a predictable, transparent, non-dis-
criminatory and secure business climate is needed.115
The CARIFORUM EPA contains a chapter on investment
and the interim-EPAs provide for continued negotiations
on investments. It is expected that the CARIFORUM EPA
will serve as a model for the other negotiations. Its invest-
ment provisions cover only physical presence and not other
types of FDI, such as portfolio investments, nor extensive
investor protection measures.
A number of key sectors will be opened up on the
Caribbean side. Commitments with few restrictions are
made in agriculture, forestry, fishing, mining, manufactur-
ing and in production, transmission and distribution on
own account of electricity, gas, steam and hot water. In these
sectors, EU companies will enjoy national treatment and
various policy instruments aimed at FDI, such as require-
ments for joint ventures are banned.116
The development aspects of the CARIFORUM text can
be interpreted in various ways depending on the point of
view. On the one hand, the policy space of the Caribbean
governments to regulate FDI is indeed constrained both in
the present and in the future.117 On the other hand, the
Caribbean economies are dependent on FDI and had of-
fensive interests on issue in the negotiations with EU. The
resulting agreement does place limitations on the extent of
liberalisation, by among other things allowing for the selec-
tion and scheduling of the sectors covered. In addition, no
mechanism is foreseen which can be used by investors to
challange goverment policies. 118
38
The EU mandates for ASEAN, Andean Community and
Central America state in all three cases that an agreement
should contain “…a framework for establishment, which will
be based on principles of transparency, non-discrimination,
market access, stability and on general principles of protec-
tion.” Due account should be taken of the sensitive nature
of certain specific sectors. In addition, there are general
provisions related to FDI, the environment and social is-
sues:“… the Parties shall not encourage foreign direct in-
vestment by lowering domestic environmental, labour or
occupational health and safety legislation and standards, or
by relaxing core labour standards or laws aimed at protect-
ing and promoting cultural diversity.”
3.5.3 Discussion
Foreign investment is of fundamental importance to devel-
oping countries in terms of jobs, technologies and financial
resources. In spite of this, developing countries have re-
sisted multilateral negotiations on investment and instead
concluded a multitude of bilateral investment treaties.
The limited evidence of the CARIFORUM EPA shows
that the EU is indeed pushing for more liberal rules to es-
tablish physical presence, while it appears that there is more
room for development concerns than in NAFTA. So, even
though another ‘Metalclad’ case will not occur, the policy
space to regulate FDI of the Caribbean countries is circum-
cised beyond WTO commitments. Caribbean countries will
have less possibility to regulate FDI and to impose require-
ments aimed at increasing the benefits to the host econo-
mies.
The net effect on FDI flows and the links to the host econ-
omy remains to be seen and will also depend on a set of
domestic factors including government policy. The impact
on the future use and promotion of renewable energy, cli-
mate-friendly technologies and sustainable organic farming
need to be monitored carefully.
 Global Europe and Sustainable Development

3.6 Access to natural resources
3.6.1 Background
Global Europe has particularly strong wordings as regards
the issue of securing natural resources to the EU industry.
This seems to run counter to any efforts to promote eco-
nomic diversification in the developing countries and to act
to cement the international division of labour based on ex-
ports of primary goods from poor countries and transfor-
mation in developed countries.
The main issue in this section will be to study as to whether
EU trade policies constrain the possibilities of developing
countries to protect their natural resources by limiting ex-
ports of related commodities. The focus is mainly on export
taxes and quotas, but restrictions on land ownership will be
mentioned.
One of the most defining characteristics of world trade
in recent years has been the dramatic increase in global
commodity prices. Between 2002 and 2007 commodity
prices doubled on average, compared to only a third for
manufactured products (see diagram below). The price hikes
are explained primarily by increasing demand from emerg-
ing developing countries such as China and India, which
are basically following conventional economic growth
paths, based on intensive use of energy and raw materials
for industrialization, urbanization and infrastructure.119

Price changes for selected commodities, 2002-2007, %

All food
Coffee
Maize
Rice
Tropical logs
Minerals, ores and metals
Crude petroleum
Manufacturers
0 50 100 150 200 250 300
Per cent

Source: UNCTAD (2008a)

39
 Global Europe and Sustainable Development
Changes in dietary habits in these countries have fuelled the
demand for livestock and animal feed, while demand for
biofuel feedstock contributed to putting upward pressure
on food prices. Limited investment in production while
prices were falling during the 1990s, difficulties in finding
additional supplies of exhaustible natural resources and
speculation in commodity prices are reasons for slow supply
response and amplification of price movements.120
For structural reasons world commodity prices are like-
ly to remain high, even though cyclical downturns can be
expected as for example during the recent global economic
crisis.121 Regardless of which, the commodity boom has ac-
centuated the global competition for natural resources. This
ranges from land acquisition by foreign companies and
countries to increased investment in energy extraction and
mining. Much attention has been drawn to the increasing
activity of China in Africa to access African resources. 122
International competition for land is quickly mounting,
as countries and companies race to secure land for biofuel
and food production for financial and food security reasons.
Asian, Middle East, American and European (including
Swedish) actors in particular are acquiring land in often
transitional or poor countries in Central Asia, Sub-Saharan
Africa and South-East Asia. The international financial in-
stitutions are allegedly paving the way by advocating chang-
es in land policies to allow foreign ownership.123 FAO has
warned that the race for land risks creating a neo-colonial
system.124
It is also important to note that the commodity boom has
an impact on the distribution of income within and between
countries. In particular, recent price development has ben-
efited exporters of energy and mining commodities, while
net food importing countries have lost out. 82 countries are
defined as low-income food importers by FAO. 48 of these
(located mainly in Sub-Saharan Africa, Central America,
the Caribbean, South Asia and East Asia) do not export
minerals or energy and has experienced significant losses
in terms of trade since 2001.125
Natural resource endowment is obviously a key determi-
nant of the development path taken by a country. Natural
40
resources can be both a boon and a bust for development.
They can constitute important sources of export revenue
and economic diversification. Badly managed, the same
resources are prone to predatory exploitation, not the least
by foreign companies, corruption, inefficiencies and may
lock a country into dependency on primary products
The environmental side-effects of exploitation may be
dire as oil and mineral extraction adds to greenhouse gases
and changes in land use through deforestation, agricul-
tural monoculture (as seems highly likely to be the result of
the recent race for land) and other processes affect biodiver-
sity and destroy soils. Consequently, policies aimed at en-
vironmental protection and resource management are
needed. The effectiveness of these policies depends on insti-
tutional capacity, which is weak in developing countries.
A particular instrument used to manage exports of nat-
ural resources is export taxes. Such taxes may be levied to
stabilize prices, favour domestic transformation and value-
added, change income distribution and raise fiscal revenue.
They are permitted by the WTO and are used by around one
third of WTO members, mainly by developing countries.
The main categories subject to export taxes are agricultural,
forestry, fishery, mineral, metal, leather, hide and skin prod-
ucts.126
The use of export taxes is often questioned, since it is
claimed they distort prices and cause inefficiencies. Many
regional trade agreements have prohibited export taxes on
the basis that they distort trade, e.g. within NAFTA and
CARICOM.127 They are also being challenged in the WTO
context, as exemplified by the complaints of EU, Japan and
US on Chinese measures to limit exports in coke, certain
non-ferrous metals and steel industry products.128 Sweden
is playing its part, by strongly opposing the recent decision
by the Russian government to impose export tariffs on tim-
ber.
3.6.2 Global Europe and natural resources
European industries are highly dependent on imports of
natural resources and raw material from third countries;
for example, EU imports half of its energy needs and three
 Global Europe and Sustainable Development
fourths of its iron, copper, lead and bauxite. Export taxes
pose a threat to EU competitiveness by restricting access to
natural resources.129 Consequently, Global Europe states
that: “[t]ackling restrictions on access to resources such as
energy, metals and scrap, primary raw materials including
certain agricultural materials, hides and skins must be a high
priority. [...] Unless justified for security or environmental
reasons, restrictions on access to resources should be re-
moved.” (EC, 2006, p. 7)
EU will go about this task “…by writing commitments on
free trade in raw materials into all our bilateral trade agree-
ments, where they are clear and enforceable … [and] … using
WTO accession negotiations to secure the same commitments
to bind or prohibit export duties and to begin to build global
some global jurisprudence on these commitments in the
WTO.” 130
In parallel with this relative aggressiveness on export taxes,
EU does participate in efforts to combat ill-use of natural
resources: e.g. through voluntary measures against illegal
logging.
The CARIFORUM EPA and the I-EPAs all contain provi-
sions on export taxes and quantitative restrictions as shown
in the table. In general, no new export taxes shall be intro-
duced, but, in consent with the EU and dependent on the
agreement, exceptions are allowed based on infant industry
protection, environmental protection or maintenance of
currency value. Quantitative export restrictions are prohib-
ited except in the case of EAC to inter alia counter food
shortages.
The CARIFORUM agreement is the most restrictive, fol-
lowed by ESA and PACP.
41
 Global Europe and Sustainable Development

Export taxes Quantitative export restrictions

Least restrictive No new export duties shall be in-
troduced / existing export duties
increased. Temporary introduction/
increase allowed subject to mutual
consent in case of:
EAC: infant industry protection or to
maintain currency value stability
SADC: exceptional circumstances
(infant industry protection)
EAC: Prohibition of any export restric-
tions (notwithstanding antidumping/
countervailing measures)
Temporary export restrictions to pre-
vent critical shortages of foodstuff/
infant industry protection
Export prohibitions necessary to the
application of standards for the clas-
sification/marketing of commodities.

CEMAC: Temporary introduction/

increase allowed in case of
environmental protection or to
maintain currency value stability.

Ghana: infant industry/environ-

mental protection or to maintain
currency value stability.

Côte d’Ivoire: infant industry/ en-

vironmental protection or to main-
tain currency value stability.

Moderately restrictive ESA: no new/higher export duties
PACP: temporary allowed in excep-
tional circumstances (infant indus-
try protection) subject to mutual
agreement. All other export duties
need to be abolished.
ESA, SADC, Ghana, Côte d’Ivoire, PACP:
Prohibition of any export restriction
(notwithstanding antidumping/coun-
tervailing measures).

Most restrictive CARIFORUM: no new duties, existing CARIFORUM: Prohibition notwith-

duties to be abolished within 3 years standing antidumping/countervailing
measures and safeguards.

Source: Based on Stevens et al (2008)

42
 Global Europe and Sustainable Development
The link to the investment provisions of the EPAs explored
in the previous section is clear. In the CARIFORUM EPA
key natural resource sectors such as mining, agriculture and
forestry are liberalised and exposed to foreign participation.
In addition, there are specifications on land ownership that
European companies have to comply with in the various
sectors. This may make it difficult for Caribbean govern-
ments to impose restrictions on land purchase and use in
liberalised sectors.132
According to the EU mandates for Central America and
Andean Community and ASEAN “all customs duties, taxes
or charges on exports and quantitative restrictions on exports
to the other party which are not justified by the general excep-
tions set out below shall be abolished.” Exactly what those
exceptions are is not clear. A clause on anti-dumping and
countervailing measures is to be included.
3.6.3 Discussion
The use of export restrictions is one of the trade policy tools
available to developing countries under WTO rules to reach
national economic and development objectives, such as eco-
nomic diversification and environmental protection.
Granted, there are several limitations to its effectiveness as
outlined above. For example, faced by shortage of cereals,
Tanzania imposed an export ban on agricultural commod-
ities in February 2008, which is uniquely permitted by the
EAC I-EPA. Reportedly, the measure had no effect because
no cereals were exported, making it a political gesture.133
EU aims to restrict the use of these measures, even in the
poorest countries by more or less prohibiting quantitative
export restrictions and severely constrain the active use of
export taxes. There may of course be legitimate concerns to
avoid disruption of trade flows in an increasingly inter-
connected world based on international division of la-
bour.
However, it is difficult to escape the impression that the
EU strategy mainly aims to preserve current industrial
structures and a global division of labour originating from
colonial times. The EU uses its economic and political clout
to preserve its competitiveness and value added in sectors
that use imported raw materials for which there are compet-
ing demands.
The issue of supporting economic diversification in de-
veloping countries and permitting them to climb the value-
chain and increase local value-added is forgotten, which run
counter to the specific goals of EU development coopera-
tion. The environmental consequences may also be consid-
erable if natural resources are overexploited and agriculture
focuses on monoculture of export crops.
In addition, considering the developing level of the coun-
tries in question in this report and their limited impact on
the world market, one can wonder what the threat to the EU
really is and if it is large enough to necessitate that potential
development tools are taken away from these countries.
UNCTAD argues that “…most of the concerns about secu-
rity of supply are vague and they are not based on scenarios
of compelling credibility.” Instead EU should focus on sup-
porting sustainable development in the exporting countries,
e.g. by enhancing security of supply through infrastructure
improvements and by strengthening negotiating and regu-
latory capacity.
3.7 Public procurement
3.7.1Background
Above IBON argues that the possibilities to use government
procurement to support low-carbon technologies and local
producers are constrained by international trade rules. This
section discusses how Global Europe, WTO rules and other
regulations affect procurement policies in developing coun-
tries.
The market covered by public procurement is very large.135
It corresponds to on average 7-8% of the GDP of individual
countries or around 30% of the world trade in goods, with
OECD countries accounting for 90%.136 Data on the corre-
sponding figures in developing countries in general and
ACP countries in particular is scarce. Reportedly Malaysia
spends 20% of GDP on public procurement and Kenya 8%.
It is estimated that procurement open to competition in
ACP countries range from 5 to 10% of GDP.137
43
 Global Europe and Sustainable Development
The large amounts at stake show how important it is that
procurement is conducted in an efficient manner. Indeed,
governments in both developed and developing countries
are reforming their procurement systems to ensure trans-
parency and value for money and fight corruption. This
includes opening up procurement to foreign competition.
While evidence shows that the economic gains of procure-
ment reforms may be considerable in developed countries,
it is mainly because of increased competition between na-
tional suppliers. The effects on cross-border trade have been
small. For smaller developing countries, with less domestic
competition, the trade effects may be larger; increased com-
petition in procurement may amount to opening up to for-
eign (e.g. EU) suppliers.138
This is one of the main reasons why developing countries
have been very reluctant to include public procurement in
WTO negotiations; for fear that it would only amount to
exposing their own firms to foreign competition. Another
concern is a potential reduced ability to use procurement to
pursue societal policy objectives, such as favouring local
SMEs or women. In addition, it may be costly to implement
new procurement rules. Many of the countries of concern
in this report are in the process of reforming their procure-
ment systems and may be reluctant to commit to making
further adjustments.139
Public procurement, one of the so-called Singapore is-
sues, was dropped from the WTO agenda after the WTO
Ministerial in Cancun 2003. However, there is a plurilat-
eral Agreement on Government Procurement (GPA) from
1994 that covers almost all major developed procurement
markets except Australia and New Zeeland. No developing
countries have signed the agreement. However, the GPA
model has been included in recent bilateral free trade agree-
ments negotiated by the EU, US and other countries.140
Government decisions on procurement can have sig-
nificant impact on sustainable development goals.
Consequently, there is a multitude of efforts to promote
sustainable or “green” procurement on-going around the
globe. EU is well advanced in the area141, but several develop-
ing countries ranging from China to Mozambique and
44
Malawi have launched related initiatives. Climate change
mitigation is an important feature of these programmes; the
main focus is on energy efficiency, but they also include
components related to lower carbon vehicles, transport,
renewable energy sources, sustainable urban planning and
building design. It seems likely that greenhouse gas savings
will drive the use of sustainable procurement in the fu-
ture.142
The international regulatory framework does not seem
to fundamentally constrain the use of green criteria in gov-
ernment procurement. Indeed, the Agreement on
Government Procurement “…quite clearly enables environ-
mental and social standards that form a part of sustainable
procurement to be implemented within the policies of the
member states.” (Perera, 2007, p. 19) The key conditions are
that the standards and criteria used are non-discriminato-
ry and transparent.
3.7.2 Global Europe and public procurement
EU argues that almost all of EU’s major trading partners
operate restrictive procurement practices, as opposed to the
relatively open EU market. EU will encourage these coun-
tries to negotiate market openings with the EU, in particu-
lar emerging economies. If they do not comply EU will con-
sider closing parts of its own market to these countries.
However, the policy clearly states that such retaliatory meas-
ures will not be considered for the poorest developing coun-
tries.143
The CARIFUROM EPA is the only text that contains
substantial provisions on procurement. For the other re-
gions, negotiations will be pursued, while in the case of
Ghana and PACP procurement is not mentioned in the in-
terim-EPAs (see Table). Procurement is not mentioned in
the ACP SIA, but external analysis has been made of the
issue.
 Global Europe and Sustainable Development

Region Provisions

Cariforum Positive-list approach (Annex I): several exemptions from non-discrimination

(like limited-tendering); linked to technical assistance. Implementation period:
2-3 years and 5 years for eight lesser developed CF states and for others if suf-
ficient capacities have not been built. Review of chapter every 3 years.

CEMAC Negotiations on a ‘series of contingent liabilities on government procurement’

including non-discriminatory procedures for a list of products and thresholds
shall be agreed.

SADC-minus The EC Party agrees to cooperate with a view to strengthening regional capac-
ity in these areas. Negotiations will only be envisaged once adequate regional
capacity has been built.’

Côte d’Ivoire, To be negotiated

ESA, EAC

Ghana, PACP Not mentioned

Source: Stevens (2008)

45
 Global Europe and Sustainable Development
The ACP countries have been reluctant to negotiate procure-
ment, but EU has argued that it will improve their purchas-
ing standards. The CARIFORUM agreement contains bind-
ing framework rules on procurement procedures (to ensure
‘transparency’ in WTO language), but no binding commit-
ments to liberalise procurement and extend national treat-
ment to EU companies. This means that on paper,
CARIFORUM can choose when and how to liberalise. In
practice, ACP countries are afraid that this is first step to-
wards liberalisation and the CARIFORUM text states that
the Joint CARIFORUM – EC Council may take decisions
on liberalisation. Inclusion of a specific development excep-
tion, sequencing of regional and EPA liberalisation and
promises of technical assessment could ease ACP fears to
include procurement in the agreement.144
Dawar and Ewenett (2008) argue that there is a lack of
evidence as to the effectiveness of using procurement poli-
cies to promote domestic companies. Instead, ACP coun-
tries should use the EPA negotiations to promote improve-
ments in their procurement practices by raising “…the cost
of lobbying for favouritism and non-transparency” (p. 25).
EU wants to achieve both liberalisation and transpar-
ency according to the mandate for Central America and
Andean Community. In particular: “The Parties shall agree
on measures aimed at the progressive liberalisation of their
respective procurement markets at all levels of public au-
thorities and public entities in the water, energy and transport
sectors.” Negotiations on these issues are ongoing.
The EU ASEAN mandate is along the same lines as for
the Latin American regions, but less far reaching: “The
Agreement will envisage the progressive liberalisation of pro-
curement markets at national, regional and, where appropri-
ate, local levels, as well as in the field of public utilities, in
particular in priority sectors. The objective is to achieve grad-
ual market access on the basis of the principles of non-dis-
crimination and national treatment. Market access commit-
ments will take into account the different levels of development
of ASEAN countries.” However, some of the ASEAN coun-
tries (notably Malaysia, Lao PDR and Burma) do not want
46
to include government procurement in negotiations with
EU.
3.7.3 Discussion
Government procurement is not covered by WTO rules and
developing countries have resisted its inclusions. EU is now
working hard to achieve far-reaching market openings in
the area in the regional negotiations. This will undermine
the possibilities of these countries to use government pro-
curement to support the local economy and pursue policy
objectives in areas such as low-carbon technologies and lo-
cally produced foodstuff.
Any direct benefits from liberalisation will probably be-
fall on European companies, because of lack of competitive
alternatives. There will also be an increasing burden on the
regulatory capacity of the negotiating counterparts – capac-
ity which is already strained by lack of resources and on-
going reforms.
At this point EU does not seem to impose any major con-
straints to the use of public procurement to favour local
production apart from transparency provisions. However,
negotiations will continue on the issue and may be used by
EU as leverage to extract further commitments in the
area.
3.8 Transfer of technology and IPR
3.8.1 Background
It is recognised that much of the reduction in greenhouse
gases required to mitigate climate change can be achieved
by deploying technologies already existing or available in
the near term according to IPCC.146 However, to make this
happen, appropriate and effective incentives need to be put
in place for development, acquisition, deployment and dif-
fusion of technologies and related barriers need to be ad-
dressed.
How this should be done is one of the most contentious
issues related to fighting climate change in developing coun-
tries. As highlighted by the partner organisations above,
there is a particular worry that strong protection on intel-
lectual property right will hamper the possibilities to trans-
 Global Europe and Sustainable Development
fer “clean” technologies to developing countries.
This is just one aspect of the criticism directed towards
the push to strengthen intellectual property rights world-
wide advocated by OECD countries, through the WTO
TRIPS agreement and regional negotiations. Overall, sensi-
tive issues to developing countries include: the costs of im-
plementation, rent transfers to developed countries, protec-
tion of traditional knowledge and access to medicine.
Consequently developing countries have in general opposed
commitments to strengthen IPR protection.147
Countries have committed to facilitate transfer of tech-
nologies both within the framework of the climate negotia-
tions and WTO. In the climate negotiations, this is exempli-
fied by Article 4.1 (c) of the UNFCCC and Article 10 of the
Kyoto Protocol. In addition, the importance of technology
transfer is recognised in Decision 4/CP.13 of the Bali Action
Plan, which lays out a roadmap for implementation of the
climate convention. Technology transfer financing also
seems set to become a major bargaining chip in the climate
negotiations; a group of developing countries (G77 and
China) have recently proposed that developed nations divert
as much as one percent of their GNP to support technology
transfer. Unsurprisingly developed countries were unim-
pressed by the proposal.148
In the trade context, transfer of technologies is covered
by article 66.2 of the WTO TRIPS agreement that requires
developed countries’ governments to provide incentives for
their companies to transfer technology to least-developed
countries. Regional and bilateral agreements between de-
veloped and developing countries also usually include pro-
visions for technology transfer.
This transfer can be done through a variety of venues:
foreign direct investment, international joint ventures be-
tween firms, licences, temporary relocation of employees
and international development cooperation. There is no
established definition of the environmental goods and serv-
ices that could be described as clean technologies. A tenta-
tive list of technologies of immediate concern for developing
countries would include:
• End-user efficiency and conservation, comprising in-
creased fuel economy, more efficient automobile use and
reduction of electricity use
• Power generation efficiency, in particular in gas and coal
• Carbon capture and storage
• Renewable energy sources (wind, solar, biofuels)150
It is also important to note that transfer of technology is not
limited to hardware, but needs to include access to related
technical and commercial information. In addition, domes-
tic capacities to absorb, handle, innovate and commercialise
the received knowledge needs to be in place.151
3.8.2 Global Europe and IPR
Global Europe states that “the EU should seek to strengthen
IPR provisions in future bilateral agreements and the enforce-
ment of existing commitments in order to reduce IPR viola-
tions and the production and export of fake goods.” (EC,
2006a, p. 13) One of the objectives is to reach a full imple-
mentation of TRIPS by each WTO Member, with due con-
sideration to the necessary transition periods.152 There is a
particular focus on large markets such as China, ASEAN
and Mercosur.
First it should be noted that inclusion of intellectual prop-
erty in EPA negotiations is not required for compliance with
the WTO. In addition, initially IPR was not an essential
element of the negotiations, but the EU strategy on this issue
seems to have changed, based on the argument that weak
IPR constitutes a barrier to trade.153 Somewhat surprisingly,
the SIA produced ahead of the EPA negotiations does not
seem to cover IPR. 154
The EU now insists on negotiations on intellectual prop-
erty based on the IPR provisions of the Cotonou agreement.
However, the articles in question (article 46) only recog-
nises the need to ensure an adequate and effective level of
IPR protection and does not commit ACP countries to ne-
gotiate or strengthen intellectual property rights.
Except for the Cariforum final EPA, none of the other
interim EPAs have substantive provisions on intellectual
property because of resistance from ACP countries. The
Cameroon, Ghana and Côte d’Ivoire EPAs contain provi-
47
 Global Europe and Sustainable Development
sions for continued negotiations on intellectual property
rules, but include significant flexibilities as for the actual
level of commitments.
The Cariforum EPA contains binding TRIPS ‘plus’ provi-
sions in areas such as copyrights and enforcement, while
recognising that Caribbean countries can take measures to
protect public health and nutrition and that the develop-
ment needs of Cariforum states should be taken into ac-
count. On technology transfer the text is even less manda-
tory than that contained in existing multilateral provisions
on technology transfer, even though it covers all Caribbean
states, not only LDCs as in the multilateral context.
In conclusion, a strong case can be made that the IPR
provisions of the Cariforum EPA reflect EU’s interests, rath-
er than being aimed at sustainable development for ACP
countries. The text on technology transfer is weak. It should
also be noted that the EU has proposed texts with similar IP
provisions to both ECOWAS and SADC, but they have not
been accepted by the latter.155
According to the EU mandate intellectual property rights
is to be included in negotiations with ASEAN, while con-
sideration will also be given to measures to facilitate and
promote trade in environmental goods, services and tech-
nology. It seems unlikely that ASEAN will accept this.156 It
should also be noted that intellectual property is proposed
as a horizontal theme for the ASEAN SIA.157
The EU mandates for Andean Community and Central
America stipulate very similar provisions on IPR and tech-
nology transfer as those for ASEAN. Andean countries seem
to agree to including IPR, providing genetic and biological
resources and traditional knowledge are protected, even
though Bolivia opposes any inclusion of biodiversity in the
agreement.158
The Central American countries have offensive interests
in the areas of protection of biodiversity, genetic resources,
traditional knowledge and geographic indicators. In par-
ticular, they seek assurance that no IPR provisions will pro-
hibit measures to protect biodiversity. In addition, they want
to establish effective and concrete structures for transfer of
technology.159
48
3.8.3 Discussion
So what is the real impact of stronger IPR provisions on
transfer of “clean” technology? And what is the impact of
EU trade policies? Actually nobody knows for sure.
IPRs constitute both an incentive and a barrier to tech-
nology transfer. Protection on IP is an inherent part of a
market economy. The basic idea is to provide a time limited
monopoly right, in exchange for dissemination of the ideas,
thus providing incentives for innovation. The choice of IP
policy is clearly part of a country’s domestic policy domain.
The appropriate level of protection should ideally depend
on a country’s level of development.160
This changed with the TRIPS agreement. It goes much
deeper than traditional trade issues and sets minimum
standards for national IP protection. Its existence is a suc-
cess for US business interests, which are the ones that most
strongly pushed for its inclusion in the Uruguay Round. The
net costs of the agreement accrues essentially to developing
countries, since they face high cost to implement the agree-
ment (establishing IP laws, institutions etc) and will be
transferring the costs of IP rights to patent holders in the
developed countries.161 So it is understandable that the agree-
ment is highly problematic from a development perspec-
tive.
There are, however, important flexibilities and exceptions
in the TRIPS agreement, which could be used to promote
transfer of technology. These include the scope or bounda-
ries of patents, certain exceptions to patent rights, compul-
sory licences, and measures against excessive patent holder
market power. In addition, Article 66.1 recognizes the spe-
cial needs and requirements of least-developed countries
and allows them a special transition period for the imple-
mentation of the TRIPS Agreement. This transition period
is currently set to expire on 1 July 2013, allowing LCDs tech-
nology transfer channels such as imitation and reverse en-
gineering.162 Clearly the low absorption capacity of these
countries constrains the use of these channels.
Research shows that actual implementation of the TRIPS
agreement varies substantially between developing coun-
tries. Countries that have implemented IP reforms that go
 Global Europe and Sustainable Development
further than TRIPS include fourteen LDCs, e.g. Mali and
Cambodia, and Peru, while Brazil makes use of flexibilities.
There is no clear correlation between GDP per capita and IP
standards. Instead the choices of individual countries are
the result of interplay between domestic politics and exter-
nal pressure from international donors, investors and trad-
ing partners.163
Another aspect to consider is the extent to which the
clean technologies in question are in the public domain or
not (i.e. patented). In the renewable energy (wind, solar and
biofuel) sectors, at least, the basic technological solutions
are off-patent since long. Usually, only certain improve-
ments or features are patented. Both India and China are
active in wind and solar energy, while Brazil is a leader in
biofuel technology.164 This relative openness in terms of IP
may well change as innovation in the field accelerates.
Thus far, the TRIPS agreement. In regional agreements
developed countries tend to insist that developing countries
comply with IP provisions that go further than the TRIPS
agreement.165 As is shown above, EU is clearly pushing this
agenda also towards the poorest and most vulnerable coun-
tries in the EPA negotiations. It is difficult to see how this
could be in the interest of these negotiating partners apart
from appeasing EU and getting market access in ex-
change.
If EU demands mandatory IP provisions from partners,
the provisions on technology transfer are generally not
binding. In fact, it is a well-known fact that developed coun-
tries are showing great difficulties or unwillingness to live
up to commitments for technology transfer to developing
countries, even though other factors may hamper such ef-
forts.166 For example, in the most recent Swedish notification
on measures that support technology transfer, only one
specific programme is listed, the so-called Start South
Programme – apart from a general text on Swedish develop-
ment assistance.
Instead, the developed countries seem to adopt market
based approaches; EU and the US have jointly proposed
liberalisation of environmental goods and services in the
run-up to the Bali climate meeting as a way to promote dis-
semination of green technologies.167
In conclusion, the concrete effect on technology transfer
of a strict IPR regime is uncertain, as it depends on many
domestic factors and the external environment. It seems
that the TRIPS agreement as such, with all its flexibilities,
is not a main barrier to technology transfer. More worrying
are the effects of the TRIP ‘plus’ requirements imposed by
the EU (and the US), especially on the poorest countries,
and what the implications are for access to “clean” tech-
nologies.
The shrinking policy space that this entails and applica-
tion of the precautionary principle, in view that there is
clearly a lack of impact analysis on this issue, make it reason-
able to demand that the EU does not push for IPs to be ne-
gotiated in bilateral agreements, at least with countries cov-
ered by EU’s development policy or with market sizes below
a certain level.
It also seems reasonable to demand that the EU starts
delivering more ardently on the commitments to transfer
of technology already made, in particular in the climate
area. This regards both concrete mechanisms and financing
and analysing in depth the interrelation between IP and the
transfer of climate-related technologies.168
3.9 Conclusions
The analysis has shown that EU is pushing for broad WTO
‘plus’ agreements and deep commitments in all the nego-
tiations under study here. Exceptions and transition periods
vary, but there is no systematic regard, at least not in prac-
tice, to the development levels of the negotiating counter-
parts and sometimes EU’s demands seem to run counter to
their explicit wishes.
In this way EU clearly constrains the policy space of the
negotiating partners to pursue policies aimed at protecting
their economies and promote economic diversification and
which could have a positive impact on adaptation and mit-
igation related to climate change and the possibilities to
support sustainable agriculture. Specific examples in-
clude:
49
 Global Europe and Sustainable Development
• Extensive reduction of border tariffs, which may lead to
increased import dependency, reduced fiscal revenue and
favouring of monoculture agriculture;
• Service liberalisation, which may mainly benefit EU com-
panies and affect the possibilities to provide basic services;
• The ban on instruments to regulate FDI, which may ham-
per links with the host economy;
• The limits on export restrictions, which may reduce the
possibilities to promote local value-added and sustainable
management of natural resources; and
• Vague commitments to technology transfer, which have
uncertain benefits.
In addition, the direct trade benefits to the developing coun-
tries of the agreements are uncertain and depend on the
realisation of a number of complementary domestic meas-
ures, such as strengthened regulatory frameworks, im-
proved tax collection and improvements in the business
climate. Complicated rules of origin and incoherencies on
the EU side, such as huge agricultural subsidies may further
reduce the potential benefits.
Instead, and in particular in the absence of complemen-
tary measures, there could be significant negative conse-
quences on developing economies; as exemplified by the
World Bank regarding service liberalisation under EPA:s:
“Because of their characteristics, serious problems can
result from the liberalization of some service sectors without
a satisfactory regulatory framework. Sectors in which large
fixed investments are necessary for the efficient provision of
services are often imperfectly competitive even with free entry.
Market failures caused by monopoly power, asymmetric in-
formation, or externalities in the provision of services create
the need for appropriate regulation. In addition, some serv-
ices, such as finance and telecommunication, require some
regulation to prevent destabilizing or anticompetitive prac-
tices. Thus, to reap the full benefits of liberalizing imports of
services and foreign direct investment in these service sectors,
establishment of an appropriate regulatory framework will
be indispensable.” (World Bank, 2008b, p. xvi)
50
There are great risks that these complementary measures
will not be in place in the countries in question here, because
of low initial capacity, lack of resources and weak leadership.
It can also be assumed that domestic ownership has not been
promoted by the relative aggressiveness of EU during the
negotiations. Development cooperation can help to alleviate
constraints, but not totally replace country commitment.
In addition, there are other worrying factors that have
not been studied in detail in this paper, in particular as re-
gards the impact on regional integration for EU partners.
In Africa, regional groupings have been split, in Latin
America there is disagreement within the Andean block and
in Asia, EU is considering pushing ahead with the more
willing countries. This does not seem to amount to EU sup-
porting regional cooperation in developing regions.
As regards the specific implications on the policy space
available to developing country to fight climate change and
support sustainable agriculture, there is a considerable
dearth of information. The SIAs, if available, are insufficient
and fraught with limitations as highlighted above. Much
more detailed analysis, based on past experiences of trade
reforms, is needed to construct a factual baseline. In view
of the complexity of the issues and the low institutional ca-
pacities in many of the countries in question here strong
monitoring mechanisms need to be set up to ensure that
implementation of the agreements do not run counter to
sustainable development objectives in general and climate
related goals in particular (see Box).
The final impact on the economies of EU’s negotiating
partners depends very much on country circumstances and
complementary policies. Regardless of which, the policy
space of the countries that eventually conclude agreements
with EU is likely to be severely constrained, even for LDCs.
It is difficult to understand why EU sees the need to pressure
countries of limited economic interest to diminish this
space. In particular since the mitigating and adaptation ef-
forts related to climate change may require a development
path that is different from the carbon-intensive one that has
been the norm so far. To this should be added the need to
 Global Europe and Sustainable Development
develop resilience to other environmental threats and world
market crises such as the ones recently experienced in food,
finance and fuel.
It seems reasonable to argue that EU should differentiate
much more between countries and regions of varying de-
velopment level and adapt its demands accordingly in terms
of the scope of negotiations and the depth of the commit-
Monitoring Economic Partnership Agreements
Monitoring of EPAs need to focus on the capacity to imple-
ment EPAs, the EPA provisions, outcomes of EPA and the
enabling environment. A number of different stakeholders
(such as regional organisations, governments, civil society,
private industry and its organisations and farmers and their
organisations) are concerned by EPAs and a broad represen-
tation of these stakeholders needs to be involved in monitoring.
ments. For countries below a certain economic level, EU
would probably favour development more by focusing on
policy coherence for development and development coop-
eration, building institutional capacity and advancing con-
crete mechanisms to transfer technologies as part of an
overall development plan, which includes adaptation and
mitigations measures related to climate change.
To be relevant monitoring need to be embedded in the EPA
texts: a Joint EPA Council and its regional subcommittees
could be given all the EPA implementation functions, includ-
ing monitoring. The creation of a regional observatory body
in charge of the monitoring of the EPA and various specific
types of institutions designed to capture the interests of a
specific set of actors (e.g. civil society, private sector), have
also been proposed. Development cooperation will need to
be used to fund the monitoring activities.
Source: Brüntrup et al. (2008)
51
 Global Europe and Sustainable Development
4. Swedish government positions
4.1 Swedish government positions
Since trade policy is a community responsibility, EU is the
main venue for Swedish trade policy. Sweden’s trade policy
determines the Swedish stance vis-à-vis Global Europe in
general and the regional negotiations in particular. However,
other policy areas influence trade policy, such as develop-
ment and agriculture, and the final outcome is a balance
between various interests.
Sweden has made a strong commitment to policy coher-
ence for development in the form of its Global Policy for
Development, to regulate this balance.169 Its goal is to con-
tribute to equitable and sustainable development and this
goal should apply to all policy areas, including trade, agri-
culture, environment and economic policy. Two perspec-
tives should permeate all parts of the policy: a rights per-
spective based on international human rights conventions;
and the perspectives of the poor.170
The overall Swedish policy on trade is formulated in the
Government's Declaration on Trade that was presented in
2008 for the first time in ten years.171 It is a firm commitment
to global free trade, which is not surprising in view of the
historical and present trade dependence of the Swedish
economy.
The declaration recognises the trade policy and climate
link, advocating free trade in environmental goods and
services and international standards that can help spread
climate-friendly products. A particular Swedish concern is
free trade in ethanol. Sweden was also one of the initiators
of the trade minister meeting during the Bali climate meet-
ing in 2007. Recognising that there is a lack of analysis on
the trade and climate interface, Sweden supports research
in organisations such as IISD and ICTSD to explore the issue
further. Concrete results are expected during the second
half of 2009 and may clarify if there are other areas in which
Sweden should be engaged as regards trade and climate.
Sweden wants the EU to become the world’s most open
economy and supports Global Europe. While not explicitly
mentioning the regional approach of Global Europe, Sweden
clearly sides with it:
52
“Bilateral and regional free trade agreements can never re-
place multilateral agreements, but they can nonetheless act
as an important complement. Their added value lies in the
possibility to achieve more far-reaching trade liberalisation;
to take serious action to tackle trade barriers that are built
into various national regulatory frameworks; and to deal
with the concrete problems confronting our companies in
these markets. Sweden is therefore a clear voice in the EU,
advocating as ambitious, comprehensive and advantageous
free trade agreements as possible, while taking into account
the development levels of partner countries.” (p. 8)
The ASEAN negotiations are only noted en passant in the
Declaration, while on the negotiations with the Andean
Community and Central America it is noted that it is “…
crucial that the agreements reached contribute to the develop-
ment of the Latin American countries.” The Swedish govern-
ment claims to play an active role in promoting free trade
in the Association Agreements with the two Latin American
groupings and has great hope on the agreement between EU
and the Caribbean in terms of increased trade.172
On the EPAs the declaration argues on the one hand that
Sweden has played a role in making them development
friendly, while on the other hand it is argued that: “the great-
est development potential of the Economic Partnership
Agreements lies in areas such as competition, services, invest-
ments and trade facilitation.”
The recent Swedish Government Communication on
Africa, echoes this duality: “The EPA process is to be moved
forward by means of broad, development-enhancing agree-
ments that encompass market access, investment rules, re-
gional integration, services and other trade policy issues.
An area in which Sweden is strongly committed is support
for regional integration and cooperation in Africa, with the
EPA as the central development instrument.” (Swedish
Government, 2008b, p. 30)
According to the Ministry for Foreign Affairs, the posi-
tion of the Swedish government is that agreements limited
to trade in goods are not enough to support the development
of developing countries. For example, competition rules are
needed to protect consumers, investment rules to provide a
 Global Europe and Sustainable Development
predictable environment for the private sector and IP rules
to attract investment. The Ministry for Foreign Affairs
points out that there are explicit agreements between EU
and the other regions on broad agreements. Sweden has
underscored the importance of a respectful dialogue be-
tween EU and the negotiating regions, but, without loosing
sight of the final goal, which are broad agreements.
Sweden is satisfied with the CARIFORUM agreement
and the exceptions therein and believes it could constitute
a template for the African countries. Sweden believes that
the long transition periods (20-25 years) of the EPAs and
their general safeguard provisions give the ACP countries
plenty of space to exclude goods from liberalisation.
Sweden has also favoured asymmetric agreements with
minimum levels for the ACP to provide a framework for
further negotiations depending on the development levels
of the countries involved. It is the responsibility of the ACP
government to identify their needs in terms of support, to
which Sweden is prepared to respond. Sweden has also ad-
vocated complete markets openings on the EU side and
abolition of EU’s export subsidies.
More detailed information on Swedish positions as re-
gards the negotiations in question is limited to a position
paper on EPAs from 2003173 and responses to questions from
Parliamentarians and civil society. The internal working
documents of the Ministry for Foreign Affairs that outline
the Swedish positions on specific issues during various stag-
es of the negotiations do unfortunately not seem to be pub-
licly available.
The EPA position paper is currently at the final stages of
revision and the Ministry hopes that it could be made pub-
lic in beginning of 2009. Unfortunately civil society does
not seem to have been consulted. In this context, it is of in-
terest to review the 2003 paper, since it seems to take a ‘soft-
er’ approach to the EPAs than the latest Declaration on
Trade (see Box).
It is also worth mentioning that Sweden participates in a
group of EU member states called ‘Friends of the EPAs’,
including inter alia UK, Denmark, Belgium and France.
According the Ministry for Foreign Affairs the participating
countries are not always in agreement, but the collaboration
is based on a basic concern for the development aspects of
EPAs. The group entertains an active dialogue with the
Commission to get access to information and “make things
happen”.
EPAs and the other negotiations are also of relevance to
Swedish development cooperation. In the Ministry guide-
lines to Sida from 2007, Sida is instructed to identify the
needs of the ACP countries in relation to EPA and channel
both bilateral and regional support to enhance the possi-
bilities of the ACP countries to benefit from the agree-
ments.174 Focus should be on the regions, in which Sweden
already have significant bilateral activities, i.e. West, East
and Southern Africa.
In addition, trade and other related policy areas are dealt
with in the Swedish country assistance strategies that pri-
marily regulate Swedish development cooperation in vari-
ous countries. This is a novelty and part of an effort to take
a more holistic and coherent approach to Sweden’s relations
with the main development partners. Being new issues, the
discussions in the strategies are brief and unsystematic.
EPAs are mentioned in several of the African strategies, but
rarely in direct relation to the proposed development coop-
eration activities
53
 Global Europe and Sustainable Development
Swedish position paper on EPAs from 2003
It emphasises that EPA negotiations should reflect the de-
velopment perspective of the Cotonou agreement, in par-
ticular as regards the ACP LDCs. In addition, it argues that
alternatives should be considered, if the EPA negotiations
are proved unsuccessful. Overall, the paper gives some
weight to the wishes and needs of the ACP countries.
For example, in agriculture, the paper states that Sweden
should see to that ACP tariff reductions are decided based
on how they benefit the countries’ regional development
and not on what products EU has difficulties to sell without
export subsidies. Exceptions for strategic ACP products
based on a special safeguard mechanism may also be of
value. On the Singapore issues, Sweden calls for a modest
level of ambition and no Swedish interests are identified as
regards competition and investment.
On the more offensive side, Sweden advocates flexibility
4.2 Discussion and recommendations
Sweden seems to have toughened its stance since the 2003
EPA position paper as regards the coverage and depth of
negotiations between EU and developing countries. While
Sweden is advocating minimum levels and flexibilities for
developing countries that may contribute to preserving their
policy space, it is framed in a determination that broad
agreements are necessary to achieve development objec-
tives. The reasons for this perseverance of the Swedish gov-
ernment are unclear, in particular since it is difficult to im-
agine that Sweden would be able to extract any national
major commercial gain from broad agreements.
Instead, there are two major reasons that could be imag-
ined. First, the insistence on broad agreements could be part
of an overall belief that higher benefits always follow with
more liberalised trade, in particular since, as is often as-
serted by Swedish policy makers, Sweden has always been
very trade dependent and successfully so. Second, the broad
54
based on development level in terms of longer transition
periods rather than exceptions and exceptions should relate
to products rather than sectors. Moreover, Sweden has in-
terests in service sectors such as telecom, the financial sec-
tor and transport, even though ACP commitments must be
based on the interests and preconditions of individual ACP
countries. Sweden also favours TRIPS - but not TRIPS ‘plus’
- provisions in the EPA negotiations.
Sweden would also accept an agreement on government
procurement, but that actual implementation should be
based on development levels and institutional maturity and
be combined with various support measures. Overall, if the
issue falls off WTO (as it has), considerable constraint in the
EPA negotiations is advocated.
Source: Swedish Ministry for Foreign Affairs (2003)
agreement rhetoric may be part of a tradition by developed
countries to tell developing countries what is good for
them.
Both reasons are flawed and it would be disappointing if
they motivated the positions of the Swedish government
that usually prides itself to side with developing countries.
As has been highlighted repeatedly throughout this report;
even though there are good reasons for free trade and cer-
tain institutional functions, there are a number of factors
that call into question that far-reaching regional trade ne-
gotiations and agreements are the best way to promote those
goals. Low capacity, lack of complementary reforms and
differences in economic power between EU and the other
regions are among those factors.
Because of these issues, support to dialogue and flexibil-
ities, while insisting on broad agreements do not amount to
promoting the interests of developing countries well enough.
Instead, Sweden participates actively in putting pressure on
 Global Europe and Sustainable Development
weak governments to agree to constrain their policy space
that could be used to diversify their economies and reduce
vulnerability to climate change. At the very least, Sweden
should advocate that these issues first hand should be dealt
with in the WTO framework instead of in regional agree-
ments, as seems to be the spirit of the 2003 position paper
on EPAs. That would be a more transparent and coherent
approach.
To this background the following recommendations are
made to the Swedish government:
• Sweden should reconsider its demands for broad far-reach-
ing agreements with all types of developing countries.
Instead the will and the needs of the countries themselves
should be the starting-point for a more differentiated and
responsive approach based on development levels and the
capacity to benefit from the agreements. WTO ‘plus’ nego-
tiations should not be pursued unless explicitly demanded
by the negotiating partners. This also holds for the EPA ne-
gotiation, WTO compatibility will be reached with ‘goods
only’ agreements and there is no pressure from other WTO
members for negotiations on other topics.
• The Swedish government should take the initiative to a
public discussion on Global Europe and its own positions
to guide Sweden’s future trade policy. Sustainable develop-
ment concerns, including climate change and food security
should inform the discussion. This discussion could be ini-
tiated within the coherence framework of the EU and the
Swedish Policy for Global Development.
• In particular, the Swedish government should have public
consultative discussions with civil society, parliamentarians
and others ahead of finalising the revised position paper on
EPAs.
• Sweden should continue to support research and analysis
in the climate and trade interface to identify key intercon-
nected policy issues. In this context, Sweden should work to
address not only so called win-win issues that simultane-
ously promote free trade and address climate change, but
also issues for which free trade may run counter to climate
change goals, e.g. as regards extraction of natural resources,
building resilient and diversified economies in developing
countries and food security.
• Sweden should initiate and support a thorough analysis of
the remaining negotiations and concluded agreements dis-
cussed in this report from a climate and food security per-
spective to identify potential conflicts with the commit-
ments made. Overall, Sweden should advocate that the EU
Commission conduct negotiations in as a transparent man-
ner as possible and adhere to EU principles related to sus-
tainable development and coherence as stated in Global
Europe.
• Sweden should advocate a lenient interpretation of the final
agreements as regards implementation and application of
the provisions, in particular allowing for policies support-
ing economic diversification, adaptation and mitigation
related to climate change, national control over resources
and food security. Sustainable development should be the
overarching goal.
• Sweden should provide political and financial support to
strong and impartial monitoring mechanisms that oversee
the agreements from a sustainable development perspective.
• Sweden should build on a promising start and develop an
analytical framework and policy guidance for the more
systematic inclusion of trade policy in Swedish country as-
sistance strategies. The growth strategy for Swedish devel-
opment assistance and the future trade strategy may be
helpful in this respect. It is important that any analysis ex-
plores the full impact of EU trade and related policies on the
countries in question.
• Sweden should ensure that concrete mechanisms for the
transfer of “clean” technologies are set up and financed, both
nationally, in the EU context and internationally.
55
 Global Europe and Sustainable Development

The world is confronted by a multitude of crises that will add

to the burden of the most vulnerable countries and com-
munities. As a rich country with a proud tradition for siding
with the poor and high coherence ambitions, Sweden is well
positioned to address the urgent issues at hand. An impor-
tant step is to promote an open discussion and analysis of
the difficult links between development, climate change and
trade policy. On that basis Sweden should promote global
agreements that really put the interests of the poor in the
first instance, by recognising and enabling adequate policy
space for developing countries and by liberalising trade
when that is mutually beneficial and not when it risks coun-
teracting sustainable development, including climate
change mitigation and adaptation and promotion of food
security.

56
 Global Europe and Sustainable Development

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with the EU, Policy Management Report 11, ECDPM
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the Fight against Poverty, Policy Research Working Paper 4703, The World Bank
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Caribbean And Pacific Group of Countries, Discussion Paper, April
CIEL (2008), Intellectual Property in European Union Economic Partnership Agreements with the African, Caribbean and
Pacific Countries: What way Forward after the Cariforum EPA and the interim EPAs?, April
Council of the European Union (2006), Renewed EU Sustainable Development Strategy, June
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Competition Law-Related Provisions, Working Paper, GTZ
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ECORYS et al (2008), Trade Sustainability Impact Assessment for the FTA between the EU and ASEAN Phase 1 - Global
Analysis Report, Ref: TRADE07/C1/C01 – Lot 2, Draft for Consultation
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Growth and Jobs Strategy, Commission Staff Working Document
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Agreements, 16 November
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FAO (2008b), Briefing paper: Hunger on the rise, 17 September

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cms/s/0/22ccaa98-b5d9-11dd-ab71-0000779fd18c.html, accessed on 19 November
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Trade related Issues in EPAs EPA negotiations on Trade in Services: Analysis of the CARIFORUM-EU EPA, Working Paper,
GTZ
Goodman, Hames and Adam Wolfendon (2008), Trade and climate change: EU-Asia trade agreements, IBON
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international politics, in Harris, Paul G. (2007), Europe and Global Climate Change Politics, Foreign Policy and Regional
Cooperation, Edward Elgar Publishing Limited
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IBON (2008), A Review of Trade Policies Addressing Climate Change
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Southern Africa, AIPAD
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 Global Europe and Sustainable Development

Caribbean, and Pacific countries, Oxfam Briefing Paper

Page, Shiela (2007), Policy space: Are WTO rules preventing development?, ODI Briefing Paper 14
Perera, Oshani, et a. (2007), State of Play in Sustainable Public Procurement, IISD, November
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60
 Global Europe and Sustainable Development

Acronyms and Abbreviations

ACP African, Caribbean and Pacific NAFTA North American Free Trade Agreement
AIPAD Africa Institute for Policy Analysis and NAMA Non Agricultural Market Access
Development OECD Organisation for Economic Cooperation
ASEAN Association of South East Asian Nations and Development
BITs Bilateral Investment Treaties OECD/DAC Development Assistance Committee
CAP Common Agricultural Policy PACP Pacific ACP
CARICOM Caribbean Community REDES Red de Ecología Social
CARIFORUM Caribbean Forum of African, Caribbean SADC Southern African Development
and Pacific (ACP) States Community
CEMAC Communaute Economique et Monetaire SIA Sustainability Impact Assessment
de l'Afrique Centrale SPS Sanitary and Phytosanitary Measures
COMESA Common Market for Eastern and SSM Special Safeguard Mechanism
Southern Africa TBT Technical Barriers to Trade
EAC East African Community TRIPS Trade Related Intellectual Property Rights
EPAs Economic Partnership Agreements UNCTAD United Nations Conference on Trade and
ESA East and Southern Africa Development
ETS Emissions Trading Scheme UNDP United Nations Development Programme
EU European Union UNFCCC United Nations Framework Convention
FAO Food and Agriculture Organisation on Climate Change
FDI Foreign Direct Investment WTO World Trade Organization
FTA Free Trade Agreements
GATS General Agreement on Trade in Services
GATT General Agreement on Tariffs and Trade
GDP Gross Domestic Product
GHG Greenhouse Gas
GNI Gross National Income
ICTSD International Centre for Trade and
Sustainable Development
I-EPA Interim EPA
IISD International Institute for Sustainable
Development
IMF Interantional Monetary Fund
IP Intellectual Property
IPR Intellectual Property Rights
IPCC Intergovernmental Panel on Climate
Change
LDC Least Developed Countries
MDG Millennium Development Goal
MEA Multilateral Environmental Agreements
MFN Most Favoured Nation
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 Global Europe and Sustainable Development

Footnotes

1 Policy space can be defined as “the scope for domestic policies, especially in the areas of trade, 37 http://www.wto.org/english/tratop_e/region_e/region_e.htm accessed on 6 October 2008
investment and industrial development which might be framed by international disciplines, 38 Hoekman and Kostecki (2001)
commitments and global market considerations” (Page, 2007) As was hinted in the introduction, 39 http://europa.eu/scadplus/glossary/lisbon_strategy_en.htm accessed on 6 October 2008 and EC
it seems clear that this policy space is diminishing rapidly for today’s poor countries, for example (2006a)
through the conditions imposed by World Bank and IMF and growing regulation of global trade. 40 EC (2008a)
2 Rodrick (2007) 41 ICTSD (2008d).
3 Chang (2003) and (2005). 42EC (2008b)
4 2007 data from World Development Indicators database, http://go.worldbank.org/1SF48T40L0 43 Bilal and Rampa (2006)
5 IPCC, 2007, p. 39 44Idem
6 In particular: Africa, because of low adaptive capacity and projected climate change impacts; small 45 Council of the European Union (2006)
islands, where there is high exposure of population and infrastructure to projected climate change 46 http://www.eucoherence.org/renderer.do/clearState/false/menuId/313375/returnPage/227304/
impacts; and Asian and African megadeltas, due to large populations and high exposure to sea level itemId/512306/instanceId/313389/pageId/313375/ accessed on 20 November 2008
rise, storm surges and river flooding. (IPCC, 2007, p. 52) 47 It is interesting to note that the recent draft EU strategy on support to regional integration for
7 The number of poor has been declining according to the Bank, from 1.9 billion poor, or one half of development in ACP countries has some very strong wording on concluding “comprehensive” EPAs.
the global population in 1970. This progress has been very uneven across regions; in East Asia the (EC, 2008c)
poverty rate fell from 80% to 20%, while in Sub-Saharan Africa it remained at around 50%, with 48 See e.g. Andersson (2007)
signs of progress since the mid 1990s. (Chen and Ravallion, 2008) 49 It should be recalled that import taxes and quotas have been the main tool used by developing
8 UNDP (2007) countries to defend their food production systems from dumping, as most of them do not have the
9 Climate mitigation basically refers to reducing greenhouse gas emissions, while climate adap- option to subsidize domestic agriculture with the national budgets.
tation refers to adjustments to deal with the negative consequences and take advantage of the 50 Article 3 on Technology Transfer of the Intellectual Property Rights Chapter of one of the draft
opportunities caused by a changing climate. Development path refers essentially to the economic, negotiating texts of the EU-Central America Agreement, talks about paying special attention to
technological and other choices underlying the present and future producer and consumer patterns the necessary conditions to build an adequate and permissive environment in the host country for
of a country. technology transfer, and that the parties must guarantee that the legitimate interests of the owners
10 For example, promotion of renewable power sources such as ethanol for other reasons than of intellectual property rights are protected.
curbing greenhouse gases has led to important savings in greenhouse gas emissions (Sathaye et al, 51 The EU mandates for the negotiations with Central America, Andean Community and ASEAN are
2007). not public, but available on the internet. See http://www.bilaterals.org/article.php3?id_article=8336
11 Idem for Central America, http://www.bilaterals.org/article.php3?id_article=8334 for the Andean Commu-
12 A number of such support mechanisms have been set up, in addition to regular development aid nity and http://www.tni.org/docs/200702091533297605.pdf for ASEAN all accessed on 20 November
activities. Important as they may be, these mechanisms are not the focus of this paper, but are refer- 2008.
red to in the section on transfer of technology below. 52 See http://ec.europa.eu/trade/issues/global/sia/studies.htm, http://www.sia-acp.org/acp/uk/index.
13 ICTSD (2007b) php and http://tsia.ecorys.com/asean/
14 ICTSD (2008a) 53 Hoekman and Kostecki (2001)
15 World Bank (2008a) 54 UNEP (2005)
16 ICTSD (2008a) 55 UNCTAD (2006)
17 ICTSD (2008b) 56 Chang (2003)
18 Swedish National Board of Trade (2004) 57 Swedish National Board of Trade (2004)
19 The Board identifies three main problematic areas as regards WTO and UNFCCC: technical regu- 58 Rodrick (2007)
lations and standards based on processing methods; “climate” tariffs on imports; and the interplay 59 UNCTAD (2006)
between the dispute settlement systems of the Kyoto Protocol and the WTO. 60 De Vylder (2007). The World Bank has been very much instrumental in promoting trade liberalisa-
20 World Bank (2007) tion in developing countries, with mixed results. An internal evaluation of Bank lending in the trade
21 Idem area concludes that Bank supported liberalisation has not created a dynamic local export industry
22 While, for example, 1.2 billion people are obese (SSNCC, 2007). in particular in Africa. Instead, some countries have actually lost market shares because of lack of a
23 World Bank (2007) diversified economy and imports have gone up (IEG, 2006).
24 FAO (2008b). The current price rises on the world market make food imports much more 61 UNCTAD (2006)
expensive, in particular for developing countries. Food imports expenditures for the most vulnerable 62 De Vylder (2007)
countries - least-developed countries and low-income food-deficit countries - could be four times 63 Idem
higher in 2008 compared to 2000, according to FAO (2008a). 64 Idem
25 Idem 65 Idem
26 Idem and SSNC (2007). 66 Swedish National Board of Trade (2004)
27 FAO (2007). It should be recognised that organic agriculture is a not a panacea and has limitations 67 ICTSD (2008c)
in relation to modern lifestyles. There is a hot debate on whether sustainable approaches really is 68 http://ictsd.net/i/news/bridgesweekly/7778/ accessed on 9 October 2008
good for the environment and will be productive enough to meet global food requirements (see e.g. 69 EC (2006b)
FORMAS, 2008, for an easily accessible Swedish example). In a review of a number of case studies, 70 Schröder (2008)
UNCTAD (2008c) reports increases in productivity from organic agriculture in Africa. 71 Bilal and Rampa (2006)
28 FAO (2007) 72 PWC (2007)
29 UNCTAD (2008c). 73 EC (2007)
30 http://www.africa-union.org/root/au/index/index.htm accessed on 14 November 2008 74 Schröder (2008)
31 Sathaye et al ( 2007) 75 South Centre (2008b)
32 Idem 76 Idem
33 There are currently two international standards for organic agriculture; FAO/WHO Codex Alimen- 77 Idem
tarius Commission Guidelines for the Production, Processing, Labelling and Marketing of Organically 78 Idem
Produced Food and the IFOAM (International Federation of Organic Agriculture Movements) Basic 79 World Bank (2008b)
Standards. 400 public and private bodies are working with certification of organic produce. See http:// 80 Stevens et al. (2008)
www.fao.org/newsroom/en/news/2008/1000933/index.html acc13 Accessed on 13 October 2009 81 Fontagne et al (2008)
34 FAO (2007). It should be noted that organic practices are sometimes actively hindered by policies 82 Stevens et al. (2008)
advocating the use of high-input farming techniques (UNCTAD, 2008c), as for example fertilizer sub- 83 South Centre (2008a)
sidies in Malawi (see http://www.irinnews.org/report.aspx?ReportID=76591 accessed on 30 October). 84 ICTSD (2008e)
35 FAO (2007) 85 ECORYS et al (2008)
36 This was not the first time and negotiations continue during the autumn of 2008. 86 De Vylder (2007). Trade in services is conducted essentially through four so-called ‘modes’:

62
 Global Europe and Sustainable Development

cross-border, movement of the consumer to the supplying country, FDI and temporary movement of 140 Woolcock (2008)
natural persons (linked to migration). 141 See http://ec.europa.eu/environment/gpp/index_en.htm
87 Idem 142 Perera et al. (2007)
88 Hoekman and Kostecki (2001) 143 EC (2006b)
89 World Bank (2004) 144 Woolcock (2008)
90 World Bank (2004) 145 Transnational Institute (2007)
91 PWC (2007). Consequently the document recommends that “[n]egotiators should increase com- 146 IPCC (2007)
mitments in all categories of services to improve certainty and transparency, encourage trade, and 147 Hoekman and Kostecki (2001)
support sustainable development.” (p. 13) 148 ICTSD (2008f).
92 UNCTAD (2004) 149 World Bank (2008a)
93 Williams and Ghanadan (2006) 150 Idem
94 Hoekman and Kostecki (2001) 151 ICTSD (2008b)
95 De Vylder (2007) 152 http://ec.europa.eu/trade/issues/sectoral/intell_property/index_en.htm accessed on 16 October
96 ICTSD (2008c) 2008
97 Stevens et al (2008) 153 CIEL (2007)
98 South Centre (2008a) 154 PWC (2007)
99 Francis and Ullrich (2008) 155 CIEL (2008)
100 South Centre (2008a) 156 http://www.bilaterals.org/article.php3?id_article=13017 accessed on 16 October 2008
101 Not to forget WTO negotiations on the topic. 157 ECORYS et al (2008)
102 Mangeni (2008) 158 http://www.bilaterals.org/article.php3?id_article=12723 accessed on 16 October 2008
103 Idem 159 Ministerio de Comercio Exterior de Costa Rica (2008), Informe de Resultados IV Ronda de
104 ECORYS et al (2008) Negociación entre Centroamérica y la Unión Europea, http://www.aacue.go.cr/informacion/rondas/
105 There was, however, an important slow-down during the economic downturn in the beginning CA-UE/default.htm
of the new millennium and the recent financial turmoil is likely to have a dampening effect on FDI 160 Hoekman and Kostecki (2001)
(UNCTAD, 2008). 161Idem
106 UNCTAD (2008) 162 ICTSD (2008b)
107 Idem 163 http://www.ip-watch.org/weblog/index.php?p=865 accessed on 16 October 2008.
108 Oxfam (2008) 164 Barton (2007)
109 UNCTAD (2007b) 165 UNCTAD (2007)
110http://en.wikipedia.org/wiki/Metalclad accessed on 18 November 2008 166 See the Work of Suerie Moon referenced at http://www.ip-watch.org/weblog/index.php?p=1134
111 Morrissey (2008) accessed on 5 November
112 Idem 167 ICTSD (2007a)
113 Idem 168 ICTSD (2008b)
114 UNEP (2005). The Metalclad case, cited above is one of the most notorious cases of a company 169 Swedish Government (2003)
suing a government, which is permitted under the NAFTA agreement. 170 The whole-of-government approach of the policy is unique from an international perspective.
115 EC (2006b) Concrete implementation has been slow, because of weak political leadership and operationalisation.
116 Van Harten (2008) Efforts are underway to address this.
117 Idem 171 Swedish Government (2008a)
118 Westcott (2008) 172 Speech by Secretary of State Gunnar Wieslander on 28 April 2008: http://www.sweden.gov.se/
119 UNCTAD (2008a). sb/d/9622/a/104211 accessed on 21 October 2008
120 Idem 173 Swedish Ministry for Foreign Affairs (2003).
121 Idem 174 Swedish Government (2007)
122 Idem
123 GRAIN (2008)
124 Financial Times (2008).The biggest deal so far seems to have been the leasing of 1.3 million hec-
tares of farmland - about half the size of Belgium - in Madagascar for 99 years by Daewoo Logistics
of South Korea. Reportedly the company plans to grow corn and palm oil for shipping to South
Korea. The terms of the deal have not been disclosed.
125 UNCTAD (2008a).
126 Piermartini (2004)
127 Idem
128 http://ictsd.net/i/news/biores/9138/ accessed on 23 October
129 EC (2006b)
130 Speech by former trade commissioner Peter Mandelson at the Trade and Raw Materials
Conference Brussels, 29 September 2008, http://ec.europa.eu/trade/issues/sectoral/industry/raw/
conference2008_en.htm, accessed on 23 October 2008. It should be noted that this conference
mainly included EU industry speakers and no speaker from a developing country. The Commission is
producing a Communication on Raw Materials with a special section on restrictions to trade in raw
materials to be finalised in November 2008.
131 http://ictsd.net/i/news/bridgesweekly/31630/ accessed on 23 October 2008
132 Oxfam (2008)
133 Stevens (2008)
134 Östensson (2008)
135 Governments essentially buy goods and supplies (e.g. paper and food), services and works such
as building construction and infrastructure development (Perera et al., 2007).
136 Woolcock (2008)
137 Falvey et al. (2008)
138 Woolcock (2008)
139 Falvey et al. (2008)

63
This study aims to analyse the European Union’s current trade policy strategy, ’Global Europe’. The study explores to what
degree the strategy will or will not contribute to the needs of developing countries to adapt to climate change and develop
sustainable agriculture.

This study has been conducted by the Swedish Society for Nature Conservation with vital input from some of our partners.
IBON Foundation (the Philippines), AIPAD (Africa Institute for Policy Analysis and Development, Zimbabwe) and REDES
(Red de Ecología Social, Uruguay) have contributed with background reports about the negotiations between EU and
countries in their respective regions.

The study has provided a basis for the Swedish Society for Nature Conservation to make recommendations to the Swedish
government on how to contribute to a more sustainable and coherent trade policy of the European Union.

Naturskyddsföreningen. Box 4625, SE-116 91 Stockholm.

Phone + 46 8 702 65 00. info@naturskyddsforeningen.se
www.naturskyddsforeningen.se

The Swedish Society for Nature Conservation is an environ­

mental organisation with power to bring about change. We
spread knowledge, map environmental threats, create solu-
tions, and influence politicians and public authorities, at both
national and international levels. Moreover, we are behind one
of the world’s most challenging ecolabellings,
“Bra Miljöval”(Good Environmental Choice). Climate, the
oceans, forests, environmental toxins, and agriculture
are our main areas of involvement.
www.naturskyddsforeningen.se