EU undermining African economic stability

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For years African and other developing countries have been urged to “trade their way out of poverty” by exporting more products internationally instead of relying on foreign aid. To do that, the European Union (EU) has for decades agreed to suspend or reduce tariffs on some poor-country exports entering Europe to help them sell more. On paper at least, these agreements give poor developing countries easier access to the European market than exporters from richer nations.

By Gumisai Mutume

Parts of the current pact, the Cotonou Agreement, expired at the end of 2007. Since 2002, the EU and African, Caribbean and Pacific (ACP) countries have been trying to negotiate its replacement by regional trade deals called Economic Partnership Agreements (EPAs). But progress has been difficult and slow. Last November, a handful of the 14 member states of the Southern African Development Community (SADC) broke with the region’s unified approach and signed individual new “interim” EPAs. A few countries left the SADC negotiating group entirely to join other regional economic groupings that are bargaining separately with the EU. The rest simply refused to sign.

The agreements themselves, and their impact on Africa’s efforts to strengthen regional economic cooperation, have faced sharp criticism. “The most enduring legacy of interim EPAs is likely to be the potentially fatal blow they have dealt to feeble regional economic integration efforts in Africa,” notes Mr. Peter Draper of the South African Institute of International Affairs (SAIIA) in Johannesburg. “With the exception of the East African Community, which signed as a bloc, every other regional grouping in the subcontinent fractured.”

UN Secretary-General Ban Ki-moon, in a report to a 22 September high-level meeting in the General Assembly on Africa’s development needs, was also critical of the interim EPAs. Because they have been negotiated with individual countries, “without paying particular attention to existing regional economic communities,” Mr. Ban argued, the interim EPAs “will slow down or unravel the regional integration agenda.”

Trade arrangements in question

Since 1975, the EU and ACP countries have maintained special trade and cooperation arrangements. Through them, the EU provided trade advantages, aid and technical help to ACP countries. But such preferences were deemed incompatible with the global trade rules that took effect in 1995 when the World Trade Organization (WTO) was established. The WTO demanded that the EU-ACP relationship be reshaped by December 2007, triggering the EPA negotiations.

From the outset, the EU chose not to negotiate with countries through their existing regional economic groupings, but instead created separate negotiating blocs. That, coupled with the refusal by some African countries to sign the interim EPAs, makes it difficult for countries to set common tariffs and other trade policies in regional and international commerce.

The fact that negotiating groups include both least-developed countries (LDCs) and others has exacerbated the problems, since the EU already offers duty-free access to a large range of goods from LDCs. Yet many non-LDC African countries also benefited from preferential trade terms under the Cotonou Agreement, benefits which they, but not the LDCs, lost at the end of 2007.

Pressure to sign

Partly because of widespread opposition to EPAs among African governments, civil society groups, unions and trade experts, the two sides failed to reach an agreement on schedule. Only 18 African countries initialed interim EPAs by the close of 2007, including eight African LDCs. Since LDCs already enjoyed guaranteed duty-free access to the EU they had no urgent reason to sign the interim agreements. Some critics claim there have been political and economic pressures to sign.

Malawian President Bingu wa Mutharika has gone as far as to accuse the EU of “imperialism,” saying it was punishing countries that resisted signing the EPAs by threatening to withhold aid – a claim firmly denied by Alessandro Mariani, the head of the EU delegation to Malawi.

‘Subversion’ and imbalances

African critics, however, are unbowed. “Regrettably, the impact of these EPA negotiations has tended to subvert our efforts towards regional integration,” said the then South African Deputy Foreign Minister Aziz Pahad. “Not only have SADC countries been parcelled into different EPAs,” he pointed out, but the talks have created “deep cleavages” within the Southern African region. South Africa, Angola and Namibia, he continued, have also raised concerns about the imbalances in trade arrangements included in the interim EPAs.

Among SADC’s 14 members, two of them, the Democratic Republic of Congo and Tanzania, left the EU-SADC talks to negotiate under different regional bargaining blocs. Among the rest, Swaziland, Mozambique, Botswana and Lesotho initialed interim EPAs. Angola, Namibia and South Africa refused outright to sign, arguing that the accords would hinder their long-term economic development objectives.

Interim EPAs cover only goods, market access into the EU and development cooperation. But there is an understanding that signers will eventually agree to open services like tourism to European companies and negotiate other trade-related issues, such as investment rules and access to government contracts. South Africa opted out of the negotiations mainly over EU demands that it open up or “liberalize” services like banking to European competition. South Africa also disagreed with an interim EPA clause that requires signers to extend to the EU any trade benefit they provide any other country in future trade agreements.

Some African countries and a number of non-governmental organizations are pressing the EU to renegotiate some elements of the interim EPAs. “The deals were finalized in haste,” notes the non-governmental group Oxfam, “without sufficient time to analyse the implications of the provisions being agreed.” The EU, however, is currently refusing to consider any renegotiation. A high-level meeting on EPAs convened by the Commonwealth Secretariat in early 2008 in Cape Town, South Africa, declared countries have a right to demand renegotiation to ensure the agreements’ “consistency with national and regional development plans and aspirations.” With global trade talks stalled and the world economy in crisis, Africa is eager to get the regional deal just right.

About the Author: Mr. Gumisai Mutume is a writer for Africa Renewal magazine.

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