Africa and Association

By our Common Market Correspondent

C OMEWHERE in that cat's-cradle that is the

calendar of the Common Market a small thread of meetings can be found running through the forthcoming weeks. Though these meetingt are not as dramatic as the British obstacle racj, they are quite as urgent and almost as far-reach- ing in their results. They are the negotiations between the Six members of the EEC and their overseas Associates, most of them African. Their urgency derives from the fact that the present convention of Association runs out at the end of 1962. They are important because they are likely to be a highly significant turn in the development cf relations between the developed and the under- developed countries of the world. Their implica- tions for the Commonwealth are enormous.

It is worth reminding oneself that when the Association convention was first formed at the time of the signing of the Rome Treaty none of the present Associated countries was indepen- dent. So it is not surprising the original Associa- tion agreement was a good deal less liberal than it looked. It set up what was in effect a system of one-way free trade. It gave the individual terri- tories the right to increasingly free entry for their manufactures and their commodities into Europe while granting them powers to restrict imports from Europe in order to protect their own infant industries.

Until independence however (and in practice until now) the system has not worked much differently from the way it did under the old French paternalism. That is to say, resident French experts decided whether or not to restrict imports from Europe (which, on the whole and naturally enough, they did not); French experts decided on trade relations with third countries (which remained at the same proportionately low level); the French Government continued to give price support to African commodities; an French government and private capital continued to provide about five times as much aid as the Development Fund.

The price of these benefits was a seepage of income back to France, and a tendency by the French to direct capital to industries such as commodity agriculture which would not com- pete on the metropolitan markets with home industries. (Even the Development Fund has spent nearly all its allotted funds on health, edu- cation, welfare, and a few infra-structural pro- jects like wells, roads and port facilities.)

It was this economic system which was so strongly attacked by the African Prime Ministers at the Commonwealth Conference last month— and though they overstated their case even in terms of the old Association agreement it was not entirely without justice. Most economists now seem agreed that the underdeveloped countries can only improve their trading positions--and hence their economies—first by diversifying their economies, if necessary at the expense of indus- tries (particularly older, protectionist ones) in Europe, and secondly by securing stable prices for their basic commodities: cocoa, coffee, palm products and the like. The Association has in its

first five years made the merest scratch on the first problem. On the second it has been able to

do nothing simply because it is a regional group- ing. There is no really satisfactory way of stabilis- ing commodity prices except by controlling and possibly limiting production ruthlessly—and this can only be done on a world scale.

The new Convention agreement which will cover the next five years, is far less likely to merit

these criticisms—not so much because the Six have tried to- meet them but because the pressure

against strict protectionist organisations of this sort has become overwhelming. The Convention is likely to follow more or less the lines of a scheme put forward by the Commission. This recognises the fact that the foreign 'territories' are now independent sovereign States (though many of the- French experts are still at their posts). It sets up a council of Association on which each African State has a veto and insists formally that the Associates agree as a matter of principle not to treat Community products less well than those of third countries. In return the Community proposes to speed up its tariff cuts towards the Associates and has agreed to put up an extra $230 million more than it did during the last five years for diversification of industry and for price stabilisation schemes.

But there are vital differences between the new arrangement and the old. First, under the new order French commodity price supports will gradually disappear. Even more significant, the common external tariff of the Community on most tropical products will be reduced by between 15 and 20 per cent (the duty on coffee and cocoa will come down by 40 per cent). This is far from the complete elimination of duties on tropical products for which the United States Government, with its South American pre- occupations and its doctrinaire detestation of preference systems, is pressing. But it is a step in that direction. It may even signal the end of the Association altogether. The plain fact is that the Dutch and the Germans (particularly the Ger- mans) have important interests in South America and East Africa and are embarrassed by the discrimination against these countries which Association implies. For the moment (i.e. five years) they are prepared to buy the reduction in the external tariff with higher aid—though even this argument dragged on throughout the spring and summer with the usual feverish display of self-interest all round and a prolonged haggle over an extra $30 million split six ways over five years. After 1968 Germany will be very dis- inclined to pay as much for a basically French interest. Even France, now that the Algerian bridgehead is lost, is beginning to show rather less enthusiasm for the presence francaise in Africa than she did. This does not mean that Africa will be left to its own devices but merely that all parties concerned will be more inclined to look for global solutions with more use made of OECD. This trend is reinforced by the general realisation that where tropical commodities are concerned the tariff is of relatively small impor- lance, so long as the preference it gives can be more than wiped out by the violent price fluctua- tions which still bedevil the market.

Seen in the light of these trends the refusal of Nigeria, Ghana and Tanganyika to accept Asso- ciation on mainly political grounds looks less tragic than it would otherwise have been. Sir Abubakar Tafawa Balewa, the Nigerian Prime Minister, has said roundly that there is no use joining the Association in any case, since it is doomed. He might be right in the long run. If so, the dependent and independent Commonwealth countries which accept Association will have a short ride. But there are dangers for the imme- diate future. The chief is that the Six may be tempted simply to turn their backs on those countries which have refused Association. One of the main advantages of Nigeria, Ghana and Tanganyika being Associates would be that a production area which included both them and the present Community would be so vast that the whole preference system would be manifestly absurd. It is minorities that need protection. As it is, protection for the present Associates makes economic sense, and the Commonwealth's abrupt refusal may perpetuate it. One might argue that this would not matter if we could simply protocols pro-

main- tain the status quo. But unfortunately this is pre- ciply what we are not going to be allowed to do if we wish to join the Community. It is true that the Rome Treaty contains special tecting the right of Morocco and others to their existing access in 'metropolitan markets. This is specifically the 'solution Mr. Kawawa, the Tan- ganyika Prime- Minister, demanded in London last month. But there is not the slightest hope that the Six will agree to this. They naturally wish to open up the British market for their own Asso- ciates if they are to give the Commonwealth countries a chance of increasing their 'exports to Europe.

The problem, as Mr. Heath pointed out earlier this week in Brussels, is to ensure that there IS no serious damage to the Commonwealth countries and at the same time not to harm the interests of the present Associates.

A number of suggestions have been made. The most obvious is that favoured by Nigeria, w hich is that the enlarged Community should simply make bilateral terms with her. The trouble is that under the GATT any such arrangement would have to be non-discriminatory and it is special treatment in some form that Nigeria wants. A wider scheme, giving the trade advantage of Association without political institutions or aid, would certainly anger the Americans and might also come up against the GATT, even if it could be got past the present Associates and the institu- tionally-minded French.

,The best hope for a solution here, as indeed in this whole area of negotiation, lies in the grow- ing preoccupation of the Community with its `4age' as an 'outward-looking,' reasonable group. The accusations of selfishness that are sometimes thrown up in America and are con- stantly bandied about during the controversy over Britain's entry have begun to sink in. The Billfish negotiators remark with a rather annoY- ing complacency, but with some justification, that if they have done nothing else they have begun to educate the Community.