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Europe/Africa: Partnership for Whom?
AfricaFocus Bulletin
May 20, 2005 (050520)
(Reposted from sources cited below)
Editor's Note
"The likely results of these new Economic Partnership Agreements
(EPAs) are not hard to imagine. With their diverse range of
products and muscle in the marketplace, European producers can
outstrip ACP [African, Caribbean, and Pacific] rivals in their
domestic markets. ... [African countries] stand to lose existing
industries and the potential to develop new ones as products from
Europe flood their markets." - Christian Aid
This AfricaFocus Bulletin contains excerpts from "For Richer or
Poorer: Transforming Economic Partnerships between Europe and
Africa," a new report released by Christian Aid earlier this month.
The full report (available at
http://www.christianaid.org.uk/indepth/505epas) includes case
studies of the impact of forced trade liberalization on small
farmers and national industries in Senegal, Ghana, Mozambique, and
Malawi.
For more information see also the links page of the international STOP EPAs
coalition at http://stopepa.org/stopepa/links.php.
Another Bulletin sent out today has excerpts from an analysis of
the current status of World Trade Organization (WTO) negotiations,
describing how concerns of developing countries have been
systematically marginalized.
For previous AfricaFocus Bulletins dealing with trade policy
issues, see http://www.africafocus.org/tradexp.php
++++++++++++++++++++++end editor's note+++++++++++++++++++++++
For richer or poorer: Transforming economic partnership agreements
between Europe and Africa
April 2005
Christian Aid
http://www.christianaid.org.uk
http://www.christian-aid.ie
[Excerpts. Full report available at
http://www.christianaid.org.uk/indepth/505epas]
'Some NGOs have raised concerns about the Economic Partnership
Agreements that the EC is negotiating with the poorest countries...
Europe should not be, and is not, seeking to "take" anything from
these countries. Our aim is a new framework where neighbours work
together to benefit from freer trade, while we offer assistance to
integrate them into the world trading system. That is our global
21st-century challenge.' Peter Mandelson, EU Trade Commissioner,
the Guardian, 1 December 2004
'We are extremely wary of these EPAs because income is going to
fall dramatically in a country like Mali. If we sign EPAs and our
income drops by 20 or 30 per cent, it seems we are going around in
circles. We have a lot of misgivings... it may lead to revolution.'
Amadou Ali Niangadou, Malian MP, Joint Parliamentary Assembly,
Brussels, 5 February 2005
For the first time in history, Europe is negotiating free-trade
agreements with the countries it once colonised. In return for
continued access to European markets, 77 countries in Africa, the
Caribbean and Pacific region (ACP) are being asked to open up their
markets to products from Europe.
The likely results of these new Economic Partnership Agreements
(EPAs) are not hard to imagine. With their diverse range of
products and muscle in the marketplace, European producers can
outstrip ACP rivals in their domestic markets. European producers
have enjoyed decades of subsidies, support and protection from
their governments and have built strong, lean, competitive
industries.
ACP countries - especially those in Africa, whose problem is not
only that they can't sell enough but that they don't produce enough
- have not. They stand to lose existing industries and the
potential to develop new ones as products from Europe flood their
markets.
Through EPAs, Europe is threatening not merely to give with one
hand and take with the other. In spite of Commissioner Mandelson's
fine words, it is just taking. Since colonial times, ACP countries
have been locked into feeding the European market with raw
commodities, and are often locked out when they try to export
processed or value-added products. And for more than 20 years, ACP
countries have been forced to liberalise their markets to such an
extent that many now have economies that are more open than
Europe's.
They are already integrated - often harmfully - into the world
market. So any new trade agreement between ACP countries and Europe
must both help them to improve and diversify what they produce and
export, and allow them to protect themselves from imports in the
meantime. EPAs in their current form will do neither.
The European Union, on the other hand, stands to gain much by
forcing through EPAs. Above all, once the reforms are enacted,
Europe will have duty-free access to 77 new markets for the vast
majority of its products. Europe's determination to negotiate this
was laid bare at a recent meeting between EU and ACP trade
negotiators. The ACP representatives were told by a senior
Commission official to 'come back in a better mood', when they
proposed protecting 30 per cent of their products from tariff
elimination under EPAs.
This report calls for EPAs to be stopped in their current form.
It focuses in particular on what African countries want and need
from a new trade relationship with the EU, given that 2005 is the
year in which the UK government will be pushing its counterparts in
the G8 to take action for a strong and prosperous Africa. As EPAs
are the framework through which it will shape this relationship,
the UK government should take a much greater interest in these
negotiations. EPAs may end up achieving the opposite of what the UK
government desires in its new deal for Africa.
How EPAs fail on their own terms
'I intend to ensure that there are no unfair demands for
reciprocity in the EU's approach, and no enforced liberalisation
until targeted aid programmes have built up local capacities.'
Peter Mandelson, EU Trade Commissioner, the Independent, 27
December 2004 'I am more convinced that EPAs stand to knock us
back. EPAs stand to harm us... it will only benefit our European
partners. The ACP must sit up and look at this issue critically.'
Kwame Osei-Prempeh, Ghanaian MP, Joint Parliamentary Assembly,
Brussels, 5 February 2005
The all-powerful Trade Directorate, which sits at the heart of the
European Commission, argues that EPAs are necessary precisely
because the way in which ACP countries currently gain access to
Europe's markets contravenes World Trade Organisation (WTO) rules.
This is true, but when the new round of WTO trade talks was
launched in Doha, Qatar, in November 2001, ACP countries negotiated
a 'waiver' with the EU to allow their preferential market access to
continue. This waiver is due to expire two years after the end of
the Doha round, which means that a way of ensuring continued
preferential market access for ACP countries must be found. But in
the view of Christian Aid, the organisations with which we work and
many other groups that represent the interests of poor people in
African countries, EPAs are not the solution.
Despite the claims of the EU, EPAs are neither development friendly
nor, ironically, legally watertight under the WTO's rules. And
Commissioner Mandelson's attempt to sugar the pill of enforced
liberalisation by offering 'assurances' that ACP governments will
be allowed up to 25 years to open their markets is further
undermining the legality of EPAs.
The WTO rule that governs regional trade agreements - Article 24
of the General Agreement on Tariffs and Trade - is aimed at
fostering free-trade between countries at a similar level of
development. It stipulates that they must liberalise 'substantially
all trade' over a limited period of time, usually ten years.' In
other words, the EU and its Trade Commissioner cannot deliver on
their guarantee of giving ACP countries a long timescale in which
to liberalise with any legal certainty.
African countries want to negotiate a new trade and aid agreement
with the EU, since Europe is still their most important trading
partner. They want an agreement that allows them:
- to choose if, when and how they open up their markets to the EU
- the ability to shape the terms of their access to the EU market
- the legal certainty that this market access won't be open to a
challenge at the WTO.
Instead, they are being forced into negotiating EPAs by a European
Union that appears determined to offer them no alternative means of
holding on to their existing access to Europe's markets.
A perilous strategy
'We fear that our economies will not be able to withstand the
pressures associated with liberalisation, as prescribed by the
World Trade Organisation. This therefore challenges us all as
partners to ensure that the outcome of the ongoing EPA negotiations
does not leave ACP countries more vulnerable to the vagaries of
globalisation and liberalisation, thus further marginalising their
economies.' President Festus Mogae of Botswana, May 2004
For more than 20 years, trade liberalisation in developing
countries has proved disastrous for poor people. Christian Aid
argues that governments in ACP countries now need to be allowed to
take a breather. Not only should the push for further
liberalisation of their products cease, but because tariffs are
already lower on average than those in rich countries, developing
countries should be permitted to raise them where necessary.3 ACP
countries must be able to protect their infant industries.
New studies commissioned for this report look at the already
disastrous impact of trade liberalisation on poor producers and at
the likely effects of a further lowering of tariffs in three
African countries.
In Ghana and Senegal, two countries currently involved in EPA
negotiations with Europe as part of the Economic Community of West
African States (ECOWAS), the enforced lowering of import tariffs on
products such as tomato paste and chicken parts and meat has been
followed by a deluge of products, sold at cut-throat prices, from
Europe. These often undercut locally produced goods, causing
factories that add value to local produce to close down. This in
turn leads to great hardship in poor, rural communities where
people's livelihoods rely on selling surplus food.
In Mozambique liberalisation resulting from EPAs would open up a
thriving milling industry to more cheaply produced wheat-flour from
Europe, undercutting locally milled flour. This would not only mean
jobs losses in the milling industry but would have a knock-on
effect among the small but growing number of Mozambican farmers who
produce wheat.
These studies show that not only is liberalisation often a harmful
policy for poor people, but that locking countries into a
pre-determined pattern of liberalisation through EPAs will prevent
them developing new industries in the future. This 'capping' of
development will not serve to reduce poverty and will leave
developing countries dependent on the same narrow range of primary
commodities. This is not how now-industrialised countries
developed.
Another study looks at the impact that major cuts in EU sugar
prices will have on economic development and poverty in Malawi, one
of the poorest countries in the world.
Malawi's sugar industry employs tens of thousands of people
directly and many more in associated industries. A large share of
its income comes from the guaranteed high prices it receives from
the sugar it exports to the EU market.
But planned changes to Europe's Common Agricultural Policy (CAP)
will see EU sugar prices fall by more than a third, costing the
Malawian government and sugar industry at least 4 million euros.
And while sugar-beet farmers in Europe will receive direct aid
covering 60 per cent of their revenue loss,4 Malawian farmers and
workers are unlikely to receive such compensation.5 This sounds
like a clear warning of the sort of deal poor countries can expect
if EPAs, in their current form, are allowed to go ahead.
It is clear that compensation from the EU for losses in ACP
countries as the value of preferences is reduced or they are eroded
will not be forthcoming. Christian Aid calls on the EU to make
funds available to help cushion the inevitable blow that will fall
hardest on the poorest, such as Malawian sugar farmers and workers
and their families.
It is clear from these studies that not only is liberalisation
already often a harmful policy for poor people, but that using EPAs
to lock countries into a pre-determined pattern of liberalisation
will deny them opportunities to develop new industries in future.
This will scupper their efforts to reduce poverty and transform
their economies, and will deny them the opportunity to use
protection selectively as they develop, in the same way European
countries have been able to do.
Regional development under threat
'The trade opening or "market access" part of these agreements are
not at their forefront: it comes at the end after regional
integration has kick-started growth.' Peter Mandelson, EU Trade
Commissioner, speech to the Civil Society Dialogue Group, 20
January 2004
EPAs are threatening existing but fragile regional groupings of
African countries. They are already undermining the protection of
important industries as groups of countries scramble to align their
tariffs in readiness for negotiations with the EU.
African countries have long considered regional integration an
important development strategy. It is both a means to overcome the
limitations of small markets and an opportunity to pool resources
for infrastructure and major production projects. But rather than
let African regions decide on the appropriate design and pace of
integration, the EU is forcing the issue. Commissioner Mandelson
said recently that regional integration was one of the 'most
attractive aspects of EPAs' and that the 'EU model has much to
offer in that respect'. This externally driven agenda holds several
dangers.
The creation of regional markets and the promotion of new regional
production to serve them is a key element of African efforts to
become more internationally competitive. But regional integration
in Africa will certainly not have 'kick-started' growth by the time
the EU expects African countries to start opening up their markets
to EU imports.
Clearly, regional markets, which first have to overcome very
complex political, economic and administrative problems, should be
firmly in place and have given rise to new patterns of production
before African countries consider opening up to competition from
the EU. This is not possible within the European Commission's
current timetable. As a result, there is a grave danger that EPAs
will force governments to abandon trade policies that will be
essential to make the most of new regional opportunities. This will
make a nonsense of regional integration.
Government trade negotiators and regional secretariats are already
overstretched. An acceleration of the process of economic union,
putting further strain on the delicate negotiations over single
regional markets, is likely to result in poorly designed regional
integration schemes.
If African countries fail to open up their markets to their
neighbours before opening up to EU imports, this will cut off any
opportunity to develop industries in goods that can be traded
regionally. The EU's model of regional integration in Africa could
result in trade and its benefits being diverted to the EU, rather
than encouraging increased trade and growth within African regions.
EPAs may well divide as much as unite neighbours in Africa. For
instance, least developed countries have little incentive to sign
'free trade' EPAs, because they will continue to benefit from
special access to Europe's markets under the Everything But Arms
initiative even after the ACP waiver has expired. Each of the four
regional groups in Africa with which the EU is negotiating comprise
least developed and developing countries. The onus will be on the
countries within each group to deal with their differences, which
could lead to further disagreements.
Rewriting EPAs
'If EPAs carry through, African countries will have to kiss goodbye
to their industrialisation efforts.' Tetteh Hormeku, Africa Trade
Network
Christian Aid is part of an international campaign to stop EPAs in
their current form. We believe that since Europe's former colonies
did not ask to open up their markets to EU imports and since
hundreds of campaigning and non-governmental organisations in
Africa have said that EPAs in their current form should be stopped,
the EU must now listen and act. This report calls on Peter
Mandelson to remove the reciprocal market-opening element from the
EU's negotiating mandate and leave ACP countries to decide for
themselves whether to liberalise.
The resulting one-sided or 'non-reciprocal' trade arrangement could
be made WTO-legal if European member states were prepared to
instruct the Commission to argue for changes to WTO law. The rules
governing regional and preferential trade agreements between
developed and developing countries need rewriting. Europe has
already promised to support measures to make 'special and
differential treatment' for developing countries more effective in
the ongoing Doha round of talks. Such changes could be sealed at
the WTO ministerial meeting in Hong Kong in December 2005.
On the other hand, if Commissioner Mandelson arrives in Hong Kong
with EPAs in his briefcase, the EC could again be heading for a
confrontation with developing countries of the kind that led to the
collapse of talks in Cancun, Mexico, in 2003.
Christian Aid is calling on the EU to give ACP countries four
guarantees:
- Continued and improved access to EU markets with legal
certainty.
- The right to decide whether, how and when to liberalise their
own markets.
- Finance to help them enhance regional integration, and develop
their ability to trade and cope with the costs of adjustment caused
by trade reforms.
- Compensation for the loss of revenue caused by preference
erosion.
The UK government must use its pivotal role on the international
stage during 2005 to influence the outcome of the EPAs debate.
Britain's declared position favours trade that works for poor
people and, in its white paper of 2004, the Department of Trade and
Industry states that poor countries should not be required to 'pay
the price' for access to the markets of rich countries. Christian
Aid challenges the UK government to support this rhetoric with
action. It should clearly state that EPAs are not currently
compatible with its vision for trade with developing countries.
Also, as the UK chairs the G8 and holds the presidency of the EU
simultaneously, it should galvanise like-minded European countries
to stop EPAs in their current form.
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
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