EPAs for Growth or Servitude?

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Are the EPAs a deal Africa can extricate itself from, or is it pretty much a done deal? New Era presents some perspectives from Brussels.

By Catherine Sasman

BRUSSELS

In December last year – just as Namibia was signing the Interim Economic Partnership Agreement (IEPA) with the European Union – the General Council of the International Trade Union Confederation (ITUC) reached a resolution that reflected circumspection on the side of labour.

The body’s concern to a large extent represents the concerns of other bodies, including civil society organisations in the African, Caribbean and Pacific (ACP) countries, and a growing clamour against the apparent “aggressive style” with which the EPAs have been presented to the developing countries by the European Commission.

The Economic Partnership Agreements, in short, ARE the new strategy for trade between the European Union and ACP countries that by all accounts, have to supplant the long-standing trade advantages available for developing countries under the Cotonou Convention that expired in December last year.

Many ACP countries were not in a position to finalise the negotiation process by the end of last year to bring the new EU-ACP trade regime into full conformity with the rules of the World Trade Organisation (WTO).

The objectives of the EPAs, said representatives of the European Commission – among them Ivano Cassella, the European Commission Coordinator for Southern Africa, as well as Giorgio Cocchi for Regional Cooperation Integration under the EPA negotiations – are meant to bring about the smooth and gradual integration of ACP countries into the global economy and support regional integration processes in these regions.

The IEPAs reached with some countries – including Namibia – focuses on trade in goods as a step forward to the completion of the full EPAs by the end of December this year.

The full EPAs can be signed at sub-regional level, as well as at a single country level.

The ITUC stated that this imminent deadline has led some ACP governments to sign the IEPAs, and warned that these may undermine existing regional economic integration and could be detrimental to their long-term industrial development, cause serious employment losses and deprive the ACP countries of tariff revenues “vitally needed for public services and investment”.

The trade union urged the EU and ACP governments to maintain their existing trade arrangements for the requisite time to conclude negotiations on a fully agreeable basis despite pressure from the WTO, in view of the developing or least developing country status of some ACP countries.

It further called on the EU to refocus its negotiating objectives towards obtaining real development, rather than on issues not required by WTO rules such as services.

“As the ITUC, we did not know how aggressive the EPA negotiations have been,” said Isabelle Hoferlin of ITUC, arguing that the Cotonou trade agreement did not bring development to developing countries, and adding that the far-reaching liberalisation as proposed by the EPAs would not be “good for development” as ACP countries would not be able to protect their fledgling industries.

She suggested that a thorough impact assessment study should be done to determine how the wide-ranging liberalisation would impact on developing markets.

“The trade offer is far too aggressive and not protecting ACP sectors,” she concluded.

Marc Maes of the ‘11.11.11’ social movement – another civil society organisation vociferous in its criticism against the EPAs and running a ‘Stop EPAs’ campaign – called on the EU to be “prudent” in their negotiations with developing countries and proposed a ‘developmental’ dimension to the EPAs, as opposed to the current ‘trade’ dimension of the agreements.

Some dissenting voices – although said to be marginal at this stage – have also emerged from the European Parliament, particularly from Glenys Kinnock, who is also a co-president of the ACP-EU Joint Parliamentary Assembly.

Kinnock, amongst others, characterised the EPAs as “hastily drawn up liberalisation schedules” that did not take into account the effects on future regional integration processes, particularly among nascent democracies and weak economies in the developing side of the negotiating table.

An argument mooted by Veronika Tywuschik, Research Assistant with the European Centre for Development Policy Management (ECDPM), was that these negotiations were inordinately sped up due to China’s and India’s increased presence and influence in Africa in particular. Moreover, she argued, this was also brought about by new trade relationships brought about by globalisation.

What would be important for the negotiations, suggested Tywuschik, is a common approach in the negotiations, where Africa is seen as one block, but maintained that the EU has “lost the window of opportunity to engage Africa on the ground”.

Morgan Githinji, expert on multilateral trade matters with the ACP Secretariat in Brussels, also acknowledged China and India as reasons for the fast-tracking on the EPAs, and contended that because of this interest, richly-resources Africa can now act “like a bride” that must “look at the best [trading] suitor”.

But whether Africa will emerge as a choosy bride or a prostitute remains to be seen.

Some issues on the EPAs

During the last decade, both the European Union and Africa in their respective capacities have become more united, projecting a more united front and dialogues have become more pan-continental.

The current negotiations, suggested experts, should also be viewed in this light, as both continents have changed since the first EU-Africa Summit in Cairo in 2000.

The starting point for consultation involved four clusters: peace and security; governance, democracy and human rights; trade and regional integration; and key development issues.

As far as trade and regional integration issues are concerned, the EU has expressed its keenness to develop regional free-trade zones to stimulate regional trade and growth with the negotiation of the EPAs.

But from the outset the negotiations around the EPAs have been challenging, both in terms of process and substance.

For various reasons, EC (European Commission) and ACP negotiators have not been able to reach a common understanding and approach on the cornerstones of the new trading agreement.

The ECDPM suggested, however, that all parties remained committed to concluding the full EPAs at the end of the year, but that each negotiating grouping should adopt a common approach consistent with their regional integration processes, while promoting their development objectives.

It further suggested that there needs to be more transparency – something that has apparently been sorely missing from the negotiations so far – in the negotiations and their outcomes for public scrutiny.

The body further suggested a reduction in asymmetries in the negotiating capacities – between the EU and ACP and among the ACP – that have so far contributed to the incoherence of the IEPAs.

It further agreed with the ITUC that although the EPAs have only non-binding provisions for development cooperation, that the African states party to these negotiations might lose significantly on tariff revenues – in some cases very rapidly – thus stating that financial support should be forthcoming from EU countries to offset this.

“The total ‘theoretical revenue’ that will be lost during the first tranches of liberalisation is US$359 million per year,” calculated the ECDPM.

It said that such financial support would be needed to maintain the status quo, where support is given to domestic producers to adjust to increased competition from imports and new opportunities for exporters as a result of duty-free, quota-free access (DFQF) in addition.

“DFQF will bring some immediate and valuable gains from the redistribution of revenue that until the end of 2007 the EU accrued as import tax. But it still needs to be built on by enabling an increase in ACP supply to bring longer-term benefits,” the ECDPM said.

It further suggested as a “sensible” measure on the part of the EU to ensure adequate aid provision to help remove blockages to increased supply.

Europe has committed itself to provide ‘more trade for aid’, and ECDPM said this should be used to enhance the use of DFQF by removing obstacles to production and export, such as poor infrastructure and other physical or institutional deficiencies.

The body stated that the EU decided that EPA-related needs should be addressed through the ‘EU Aid for Trade Strategy’ in favour of all developing countries, recognising that the availability of aid for trade should not be made conditional on concluding an EPA.

However, there is no clarity on what resources would be available for each ACP country and by when as part of the ‘aid for trade’ strategy.

It suggested that ACP regions and countries should proactively ensure that the EU ‘aid for trade’ strategy is as important as providing an appropriate level of support. There is – in 2008 – said the organisation, a window of opportunity to use aid effectiveness processes to harmonise donors’ practices and align these with partner countries’ own delivery instruments.

The challenges would involve the EU to strike a careful balance between stimulating effective regional markets and respecting autonomous regional integration initiatives in Africa.

Broadly, it would also involve trade relations between European and African partners to go beyond market access issues to create a business environment conducive to investment while contributing to sustainable development and poverty alleviation.

If these negotiations cannot be concluded with some understanding on these issues, Europe’s trade with ACP – of two percent, according to Giorgio Cocchi – could be in the balance.

For Africa, the percentage is higher, but then again, can it play the bride?

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