By Gumisai Mutume, United Nations Africa Renewal
Africa’s leaders are concerned about possible harmful effects from the ‘free trade’ negotiations now going on between Europe and its former colonies in Africa, the Caribbean and Pacific (ACP). African governments, regional economic groups and civil society have asked for significant changes. “If these economic partnership agreements (EPAs) are signed as they are, it will be death for farmers,” declared Jules Zongo, President of Burkina Faso’s Regional Chamber of Agriculture. He was speaking at a protest march of some 2,000 farmers in Ouagadougou in December. Several months earlier, civil society organizations rallied in Senegal to demand that their government not sign the agreements unless changes were made.
African leaders have taken note of such calls. When West African heads of state met for the January summit of the Economic Community of West African States (ECOWAS), Burkina’s President Blaise Compaoré stated that the “legitimate concerns” of farmers and other producers must be considered in any trade talks with the European Union (EU).
The EU’s current proposals call on ACP countries to free up 80–90 per cent of their trade with the EU if they are to continue to enjoy duty-free access to European markets. ACP experts believe that this will oblige them to remove trade protections too quickly, and to such an extent, that industry will be harmed. Minister of Trade Obert Mpofu from Zimbabwe is clear that any new trade agreements should reinforce not undermine “the development of our economies, employment generation, wealth creation for our people and, ultimately, poverty reduction.”
EU Trade Commissioner Peter Mendelson offers an alternative view. The EPAs will be helpful to Africa, he says, because they will change the EU-Africa relationship from one of dependency on preferential treatment to one that promotes business competitiveness. However, Nigerian Minister of Commerce Aliyu Modibo Umar notes that simply liberalizing trade without ensuring safeguards will “further widen the gap between the two [blocs] and probably destroy the little development that some ACP countries have managed to achieve over the past years.”
Mr. Godfrey Kanyenze of Zimbabwe’s Labour and Economic Development Institute argues that lifting tariffs on European goods would also deprive many governments of “valuable income they earn from tariff duties,” which could lead to lower spending on education, health care, poverty reduction and social security. In Germany, the Hamburg-based Institute of International Economics estimates that losses of import duties could range from $2.2 mn in Guinea-Bissau to $487.8 mn for Nigeria while Cape Verde could expect to see a drop in revenue of 80 per cent.
Such “doomsday” predictions should be treated with caution, Mr. Mendelson says. “They assume immediate and complete liberalization, and they ignore the economic benefits of reform.” The EU and ACP, he argues, can negotiate the timing and phasing of tariff reductions to guard against any sharp drop in government income. While some “transitional protection” may be necessary, he says, tariffs should be removed in order to encourage local industries to become more competitive.
But opposition to the EPAs is mounting in Africa. Critics cite Africa’s experiences with previous efforts to liberalise trade. In 1986, Côte d’Ivoire cut trade tariffs by 40 per cent which led to widespread job cuts and layoffs in the chemical, textile, footwear and automobile assembly industries. Senegal lost one-third of its manufacturing jobs between 1985 and 1990, after reducing tariffs from 165 per cent to 90 per cent. “If we open up our countries, given the current state of our enterprises, it will not be an opportunity, but a disaster, a field of ruins,” argues Mr. Iddi Ango, president of the West African Economic and Monetary Union Chamber of Commerce.
Some European analysts acknowledge the validity of the ACP’s criticisms but they point out that the EU now faced a dilemma: how to reconcile the special status of ACP countries, as former colonies, with its obligations under the WTO’s rules. Any agreement, they suggest, should be reciprocal only as much as is necessary to meet WTO requirements. This could involve requiring ACP countries to liberalise just 50–60 per cent of their EU trade over a long period – of 20 years or more – during which the EU would continue to grant full access to its markets for all ACP exports. This, they feel, would give ACP countries room to safeguard their domestic markets and industries. The UN Economic Commission for Africa in Addis Ababa has proposed something similar: EPAs should be used over the first 12 years for ACP countries to make their industries more competitive with other African counterparts before opening their economies to EU competition. Even then, tariff reductions should be phased in gradually to allow countries time to adjust to the difficulties of operating in a global market place.
Between1975 and 1994, the EU and the ACP signed a series of five-year trade and development agreements, known as the Lomé Conventions in which the EU gave preference to ACP exports, without requiring similar treatment for EU products imported by ACP countries. However, at the conclusion of the Uruguay Round of global trade negotiations in 1994, new rules were adopted which required regional trade agreements to eliminate duties and other restrictive regulations on “substantially all the trade.” The WTO, which was created in 1995, agreed that as a special exception the EU could continue to give preference to ACP exporters until December 2007. In 2000, with the WTO deadline in mind, the EU and the ACP signed the Cotonou Agreement on aid, trade and political cooperation, which aimed to “facilitate the economic and political integration of the ACP countries into a liberalized world market.” Talks on a successor – the Economic Partnership Agreements began in 2002. They, or similar trade arrangements, should be in place by 2008 in order to comply with WTO rules.