Trade: African countries fight EU for survival

Inter Press Service 22-5-07

TRADE:
African Countries Fight EU for Survival

David Cronin

BRUSSELS, May 22 (IPS) — Anti-poverty campaigners have likened trade negotiations between the European Union (EU) and several regions in Africa to a boxing match between a schoolboy novice and a heavyweight champion.

Such disparity appears particularly evident in the case of the EU’s talks with governments from Eastern and Southern Africa, with whom Brussels wishes to sign an Economic Partnership Agreement (EPA) by the end of this year.

In one corner, the 27-strong EU boasts half of the Group of Eight top industrialised nations (France, Italy, Britain and Germany). In the other, 13 of the 16 Eastern and Southern African countries taking part in the talks have been recognised by the United Nations as among the poorest.

Similarly, the level of integration on each side is in no way comparable.

Whereas Europhiles hail the EU as the most successful example of numerous countries pooling their sovereignty, the 16 Eastern and Southern African countries belong to five overlapping economic groups: the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community, the East African Community, the Southern African Customs Union and the Indian Ocean Community.

And although COMESA formally declared its support for the negotiations at a 2003 summit of its leaders, the 16 countries lack the legal status as a bloc and a dedicated bureaucracy.

Yet it’s not just the lack of political prowess that’s got Eastern and Southern Africa unsure how to proceed with negotiations. The EPAs are replacing the Cotonou Agreement between the EU and African, Caribbean and Pacific (ACP) countries that served as a combination of aid through trade. The agreement was signed in Cotonou in the West African country Benin in June 2000 between 79 ACP countries.

Peter Mandelson, the European commissioner for trade, recently denied that he is seeking to impose unfettered liberalisation on poor countries.

Writing in Kenyan newspaper The Standard, he refuted claims that the EPAs are of a reciprocal nature.

The EU, he said, will completely open its markets to goods from Africa from the first day the agreement is implemented but African countries will be allowed lengthy transition periods for removing their barriers to imports from Europe. "We don’t have offensive commercial interests in these negotiations," Mandelson said.

A new study by three organisations, Christian Aid, Traidcraft and Tearfund, suggests otherwise.

It cites estimates that African countries would ultimately have to eliminate tariffs on 80 percent of imports from the EU. This will deprive African countries of vital income, where on average they rely on import taxes for 25 percent of their revenues. Zambia, for example, could lose nearly 16 million dollars, the equivalent of its yearly budget for dealing with AIDS.

Temwa Gondwe from the Malawi Economic Justice Network said that an EPA could hamper his country’s potential for economic development. "We can see Malawi exporting commodities like tobacco, tea and coffee in raw format to the EU," he told IPS.

"What we really need is a process of value addition, so that we can export things as finished products. The conditions for signing an EPA do not guarantee that process will take place," he said.

Gondwe predicts the Malawian government could accept a sub-optimal deal out of fear that refusing to sign could lead to retaliation from the EU by withholding aid to the country.

"The government is between a rock and a hard place," he added. "If you look at the Malawian budget, it is very dependent on external sources of funding. It relies on donor funding to the extent that Malawi would not want to be seen to get on the wrong side of donors."

Fair trade campaigners in Kenya have argued that an EPA would spell disaster for its country’s farmers, who could struggle to compete with increased imports of highly subsidised European goods such as maize, wheat, dairy products, cereals, meat, rice, tomatoes and flour.

Esther Bett from the Kenyan organisation Resources Oriented Development Initiatives (RODI) said the agricultural sector in her country has not been given the support it needs to develop. "I’m a dairy farmer and what I’m earning now is the same as what my grandfather used to earn," she added. "The effect of the EPAs will be that the government will have less income and that support for farmers will go down.

"The rush to sign an agreement as it is now would be very harmful to us as a country. With farmers’ livelihoods being undermined, the burden will be felt most by women and children. Trade should benefit people, not harm them," she says.

She predicted that an EPA could have worse consequences for Kenya than the Structural Adjustment Programmes of economic reforms, which the International Monetary Fund and the World Bank oversaw during the 1980s and 1990s as a condition for providing finance to the country.

In Kenya, this programme required a liberalisation of the agricultural market and while imports of food increased, the domestic food production sector suffered a setback.

One of the most persistent criticisms facing the EU’s Common Agricultural Policy is that it hurts farmers in poor countries by swamping their markets with cheap European produce, with which they cannot possibly compete.

Theoretically, that criticism will become redundant in the next decade. The World Trade Organisation (WTO) has set 2013 as a target date for scrapping all forms of export subsidies.

But the Southern and Eastern African Trade Information and Negotiations Initiative (SEATINI), based in Zimbabwe, warns against complacency.

In a new report, SEATINI says that Eastern and Southern African countries are not exerting enough pressure on the EU to get rid of trade-distorting subsidies. Relying on the WTO to make these subsidies history would be "a strategic blunder", according to the study, as it does not impose any effective obligation on the EU and continues to leave producers in poor countries vulnerable.

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source: IPS