Tuesday, May 4, 2010

EPAs a threat to Africa’s economies

The Herald

By Tichaona Zindoga
Although coming in a flattering package of billions of euros and participation in the so-called global economy, the Economic Partnership Agreements (EPAs) being dangled to African and Caribbean countries fail in many critical areas, effectively making them something the latter could take at their own peril.

The EU has already started approaching Sadc countries in their individual capacity in a latest move to divide the bloc and undermine its unity.

Among the countries already approached are Botswana, South Africa, Lesotho, Swaziland and Mozambique while Zimbabwe was deliberately left out.

The EPAs are Europe’s idea to merge development policy and trade policy into a comprehensive framework, although the former objective has increasingly been shown not to be the main thrust of the initiative.

It has been noted that the content of the agreements is determined solely by trade interests, with EPAs headlined by opening up of new markets and never serious on the development side.

Describing this as the "real deal" of EPAs, one journal notes that the actual reason why EPAs are being established is for the trade arrangements between the EU and the ACP to meet the WTO criteria for free trade.

The conspicuous absence of development chiefs in the negotiations for EPAs has hinted at the fundamental development-free agenda of the agreements.

Since the beginning of this decade, the EU has been offering these deals to African countries.

The EU has demanded reciprocity and liberalisation of the other’s markets.

This also includes the opening up of service sectors.

On the back of the fundamental truth that European markets are big and established and diversified, these demands are simply untenable for African economies.

European companies have a huge competitive advantage over their African counterparts and allowing them to have unrestrained access to resources and services will succeed in but marking African economies out of the game.

First, African markets need protection to cushion them from unfair and pervasive penetration such as the EU can only succeed in giving.

The EU itself has for long not been an exponent of equality and as such its demand for reciprocity can only be construed as a way to further inequality.

This is a view shared by Southern Africa People’s Solidarity Network, a civic group formed for economic, environmental, social and political justice.

Dakarayi Matanga, the group’s secretary-general, is on record as saying "reciprocity" in trade terms means "winner takes all" adding: "The countries that dominated global trade in the past will continue to do so."

Matanga notes that Africa deserves an opportunity to protect its markets as without protection no country can be able to develop.

Africa can liberalise abruptly, as EU demands, at its own peril.

One of the primary things countries could do is protection of domestic economies to ensure growth and strength in the face of outside engagement.

EPAs stand to sever government revenue through the loss of tariffs apart from undermining the countries’ right to pursue autonomous trade and economic policies, which is needed for the development of the economy.

The demand to lift subsidies on certain products and economic activities has also led to analysts frowning on EPAs.

Secondly, regional integration ensures not only fair competition among countries of a similar economic orientation but also ensure unity and development of a common position with trade negotiations with external trading partners.

Individual countries dealing with such parties as EU only stand to lose out in the end while regional groupings such as Comesa will systematically be weakened.

In fact, disintegration is what EPAs stand to bring to regional economies and countries.

One journal, Fair Politics, concludes as much.

Recalling that EPAs had envisioned regional integration, it notes that how exactly to go about reaching this regional integration was unclear from the start.

"Many of the countries conveniently shoved together in regional groups are hardly comparable in terms of economic development: some are relatively advanced, some belong to the world’s poorest, some produce rice, mangoes and bananas for export purposes, others depend on subsistence farming," it said.

"Only in a very late stage, in August 2008, a paper was published describing the EU’s vision on regional integration. In the meantime, the interim EPAs that had been concluded between the EU and several individual ACP countries, have achieved the opposite: regional disintegration. Only one regional area, the Caribbean bloc, has managed to conclude a full, regional EPA."

The countries that agreed to sign an individual interim EPA, it said, were usually the richest countries of their region.

For these countries, the EPAs are relatively attractive, because of their economic position and relatively advanced economies, they will be in a better position to adapt to the new situation once borders open up for European produce.

"The second main objective, after achieving regional integration, of EPAs is the smooth and gradual integration of the ACP states into the world economy," the journal states.

"This wider integration is also deemed necessary for the economic development of the countries. However, to what extent this integration into the world economy will stimulate or slow down the economic, social and human development of these countries remains unclear. Currently, only the Caribbean region, as a region, has signed a full EPA and not with great enthusiasm."

EPAs have been feared to perpetuate African economies as exporters of low-value unprocessed goods while remained a consumer of expensive finished imports.

Another turn-off of EPAs has been the unfair negotiating power of EU over its African counterparts.

It has been observed that although officially the negotiations are fair and equal, the EU has a much stronger position than the latter.

The poorer countries highly depend on trade relations with the EU, while European countries depend to a very limited extent on imports from developing countries.

EU has been bearing down on countries to sign by threatening to abandon preferential trade conditions, or even to cut development aid.

Some kind of blackmail has been also reported in which there was the implicit threat that, without reciprocity, ACP countries would find themselves trading with the EU on significantly less advantageous terms.

"This lack of a level playing field results in a very weak negotiation position for developing countries. The European Commission seems to believe that development will be achieved by trade in itself, and is pushing the ACP countries to agree on this," observed Fair Politics.

The Southern and Eastern African Trade Information and Negotiations Institute has also understood this concept and explains that the EU’s position is wrong and unacceptable.

"While the developed world sees trade as an end in itself, for us trade is a means to an end. This end is development," says Rangarirai Machemedze, the organisation’s deputy director.

He says that many African countries are saddled with poor infrastructure, limited production capacity and lack of investment in research and development.

With this, Africa cannot be able to effectively compete with EU on the basis of supposed equality.

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