In this article on Africa’s relationship with the European Partnership Agreements, ACET Board Member, Eveline Herfkens, argues that Africa must agree its own common external tariffs and launch its own free trade area before signing reciprocal agreements with Europe.
To achieve this, African producers need generous access to our rich consumer markets. The EU provides such access – through its “Everything but Arms” (EBA) programme, without forcing the countries concerned to open up their markets to EU imports. But this programme is limited to just the group of Least Developed Countries (LDCs), excluding a lot of also quite poor countries in SSA.
For the other countries, the EU embarked upon so-called European Partnership Agreements (EPAs) with different groupings in the region. The European Commission claims that these EPAs are needed so as to maintain consistency with World Trade Organization (WTO) rules and that they promote growth in Africa. Many in SSA perceive them as tools to (further) open African markets for European exports at their expense.
EPAs require reciprocity. In exchange for preferential access to European markets, SSA has to give the same access to European exporters. The agreements frequently provide African producers with transition periods before full reciprocity is implemented. However, given the state of development of most of SSA, more opening up to the EU is a challenge for many industries and countries in the region, even with long transition periods.
In addition, providing such a leg up for European exporters at the expense of other trading partners creates
EPAs include commitments by SSA countries on policies that extend beyond trade in goods, like intellectual property rights. The commitments requested from SSA in these areas typically go beyond the commitments they have been willing to make in the WTO. These so called ‘WTO-Plus’ obligations could result in policies that are inconsistent with SSA country development priorities. It is ironic that the EU on the one hand tries to justify the establishment of EPAs on the basis of their consistency with the WTO and then seeks SSA commitments that exceed those that SSA countries are prepared to make in the WTO.
Perhaps most damaging, EPAs are disruptive of Africa’s own regional integration efforts. The different sub-regional African groupings overlap and all of them include LDCs that already have unrestricted market access through the EBA scheme. This creates problems for those groupings to have common external tariffs. And some provisions of EPAs could have an adverse effect on regional integration.
Regional integration is an urgent matter for the countries in SSA to create larger markets for regional products and to diversify their economies: their domestic markets are simply too tiny to enable local industry to achieve economies of scale.
In most regions, like in Europe, continents’ trade among themselves is substantial. Not so in Africa: it has by far the lowest level of intra-regional trade: lower than Latin America or Asia and of course much lower than Europe. Less than 13% of the total trade of SSA trade is with other countries in the region. But what SSA countries trade with each other tends to be more concentrated on processed and manufactured products – with substantially more added value than the exports of raw commodities to Europe.
Thus increased intra-regional trade would also help develop regional production chains. Presently global value chains (GVCs) virtually by-pass the region. These GVCs have become a dominant feature of world trade and engagement in these chains helps to generate employment creation and economic growth.
SSA acknowledges the need to give priority to intra-regional trade, and Africans are upping their game with negotiations started to establish a Continental Free Trade Area (CFTA) and the launch of the Tripartite FTA between COMESA, the EAC and SADC.
But these negotiations are extraordinarily complicated, given the many preferential agreements, with multiple and overlapping membership, which presently exist in Africa.
Africa’s already overburdened trade negotiation capacity urgently needs to focus on deeper integration within the African market.
Africa needs breathing space to focus on completion of its own common market. The region should not sign reciprocal agreements with other regions before it has agreed on its own common external tariffs.
Thus, I propose a moratorium on all trade negotiations with third parties that would require reciprocity – until such time as the CFTA has been negotiated, signed and implemented. African countries should not further open their markets to the EU or anyone else before they open their markets to their neighbours in Africa. This is not the time to implement provisions of EPAs that might impair future continental integration.
And how large are the benefits in terms of European market access that SSA would be granted anyway? The state of play radically changed recently with Brexit.
For Africa, Brexit did not just imply they lost their most important ally against the European agriculture subsidies that harm their farmers. Brexit also seriously reduces the relevance of SSA’s relationship with the EU. It reduces this literally by 15% of the European Development Fund, by a much larger percentage of overall EU ODA to SSA, and by more than 20% as an export market. And what’s next? Frexit or Nexit? How can Africa sign up to onerous concessions as long as it is not clear what the ultimate size of the actual market is they gain access to?
This situation justifies a moratorium on further negotiation and implementation of EPAs. Recently Tanzania and Uganda again postponed signing the EPA with their region, the East African Economic Community.
In fact, EPA reluctance has been strong across the region, even after the EU compelled some countries into signing these agreements by threatening the loss of preferences and aid, and indeed already revoked duty-free privileges for Nigeria, Gabon, and the Democratic Republic of Congo. After more than a decade, only one Parliament (Cameroon) has ratified an EPA.
With a looming deadline next month, African countries are stone walling continued pressure from the EU—as they should. Action along these lines would be very much in the spirit of the Marshall Plan.
Under the terms of that plan, the US gave aid to Europe on the condition that European countries would liberalize trade with each other, thus giving priority to Europe’s regional integration, while at the same time allowing full asymmetric access for European exporters to the US market.
How times have changed. Now Europe is demanding from SSA that in order to continue its aid, it wants preferential access to SSA markets!
A moratorium on EPAs should be combined with generous access for African products to the European market.
If Europe wants to be helpful to Africa’s economic transformation, and help lift millions of people out of poverty, it should stop seeking to establish EPAs and provide the same access to its markets for all SSA low and lower middle countries that it provides to the least developed group.
Eveline Herfkens is the Founder and former Executive Coordinator of the UN Millennium Campaign. She is a former Minister for Development of the Netherlands and has been Ambassador to the UN and the WTO in Geneva, an Executive Director of the World Bank and Member of the Dutch Parliament. She is currently a Senior Fellow at SAIS, Johns Hopkins University.