New trade pacts threaten regional unity
Gumisai Mutume
Last November, a handful of the 14 member states of the Southern
African Development Community (SADC) chose to sign new trade deals with
the European Union (EU). Those that signed the interim Economic
Partnership Agreements (EPAs), as they are known, did so to pre-empt the
expiration of an earlier trade arrangement that had provided
preferential access for some African exports into European markets.
Trade agreements between African countries and
Europe are jeopardising regional economic initiatives and
complicating the integration process. |
A few countries left the SADC negotiating group entirely to join
other regional economic groupings that are also bargaining with the EU.
The rest simply refused to sign.
These divergent responses resulted from the overlapping and often
competing interests that emerged during the negotiations for the EPAs.
Since 2002, the EU and African, Caribbean and Pacific (ACP) countries
have been trying to reach an understanding on the new agreements. But
interim EPAs were put forth after they failed to agree on the full
package, and some ACP countries felt obliged to sign them.
“The most enduring legacy of interim EPAs is likely to be the
potentially fatal blow they have dealt to feeble regional economic
integration efforts in Africa,” notes Peter Draper of the South African
Institute of International Affairs (SAIIA) in Johannesburg. “With the
exception of the East African Community, which signed as a bloc, every
other regional grouping in the subcontinent fractured.”
Trade arrangements in question
UN Secretary-General Ban Ki-moon, in a report to a September 22
high-level meeting in the General Assembly on Africa’s development
needs, was also critical of the interim EPAs. Because they have been
negotiated with individual countries, “without paying particular
attention to existing regional economic communities,” Mr. Ban argued,
the interim EPA s “will slow down or unravel the regional integration
agenda in the continent.”
Since 1975, the EU and ACP countries have shared special development
cooperation arrangements under four Lomé Conventions and, since 2000,
the Cotonou Agreement (named after the African cities in which they were
signed). Through them, the EU provided trade preferences, aid and
technical assistance to ACP countries.
But such preferences in favour of African exports were deemed
incompatible with the new global trade liberalisation regimes that took
effect in 1995 when the World Trade Organization (WTO) was established.
The WTO demanded that the EU-ACP relationship be reshaped by December
2007, triggering the EPA negotiations (see Africa Renewal, July 2007).
From the outset, the EU chose not to negotiate with countries through
their existing regional economic groupings, but instead created special
negotiating blocs. That, coupled with the refusal by some countries to
sign the interim EPAs, makes it difficult for countries to harmonise
regional trade tariffs or schedule the eventual removal of duties on
products originating in Europe.
The fact that regional groups and negotiating blocs include both
least-developed countries (LDCs) and others has exacerbated the
problems, since the EU treats their imports differently. The EU offers
duty-free access to a large range of goods from LDCs on a non-reciprocal
basis (that is, the LDCs can impose tariffs on EU products, while the EU
does not reciprocate). Yet many non-LDC countries had also benefited
from preferential trade terms under the Cotonou Agreement, which were
withdrawn at the end of 2007.
Pressure to sign
Partly because of widespread opposition to EPAs among African
Governments, civil society organisations, unions and trade experts, the
two sides failed to reach an agreement on deadline. Only 18 African
countries initialled interim EPAs by the close of 2007. The signers
included eight African LDCs.
Since LDCs already enjoy duty-free access to the EU and therefore
derived no direct benefit from signing interim EPAs, their decision to
do so points to the complexities of evolving EU-Africa trade relations.
Some critics claim there have been political and economic pressures to
sign.
Malawian President Bingu wa Mutharika has gone as far as to accuse
the EU of ‘imperialism,’ saying it was punishing countries that resisted
signing the EPAs by threatening to withhold aid. Alessandro Mariani, the
head of the EU delegation to Malawi, denied there was any link between
the EPAs and European aid, in Malawi or any other ACP country.
The politics of the current phase of EPA negotiations “are just as
complex as (those of) the first,” argues Mr. Draper of the SAIIA in
South Africa. Different African countries within the same region, he
notes, now have different interests.
As a result, “some countries within regions are obliged to open their
domestic markets to EU exports whilst others aren’t.” With some of their
neighbours signing onto EPAs, those countries that have not may need to
maintain robust border controls to prevent smuggling of European goods.
Such controls could, in turn, further hamper intra-regional trade.
The Southern African Customs Union (SACU) faces particular
challenges. Because of an earlier and separate accord with the EU, South
Africa must follow stricter trade rules than do its SACU partners,
Botswana, Lesotho, Namibia and Swaziland. Those four countries have more
favourable access to European markets than South Africa does,
complicating efforts to maintain SACU as a customs union.
‘Subversion’ and imbalances
“Regrettably, the impact of these EPA negotiations has tended to
subvert our efforts towards regional integration,” said former South
African Deputy Foreign Minister Aziz Pahad. “Not only have SADC
countries been parcelled into different EPAs,” he pointed out, but the
talks have created ‘deep cleavages’ within SACU. South Africa, Angola
and Namibia, he continued, have raised concerns about the imbalances in
trade concessions included in the interim EPAs, as well as their
“negative implications for regional integration.”
SADC has 14 members: Angola, Botswana, the Democratic Republic of the
Congo (DRC), Lesotho, Malawi, Mauritius, Mozambique, Namibia,
Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe. But
in the EPA talks, two of them, the DRC and Tanzania, are negotiating
under different bargaining blocs. Among the rest, four (Swaziland,
Mozambique, Botswana and Lesotho) initialled interim EPAs. Angola,
Namibia and South Africa refused outright to sign, arguing that the
accords would hinder their long-term economic development objectives.
Interim EPAs cover only goods, market access into the EU and
development cooperation. But there is an understanding that signers
would eventually negotiate liberalisation of services and other
trade-related issues, such as investment and Government procurement.
South Africa opted out of the negotiations mainly over EU demands
that it liberalise services, including by opening up banking and tourism
to European companies. South Africa also disagreed with an interim EPA
clause that requires SADC signatories to extend to the EU any
concessions they provide any other country in future trade agreements.
Namibian Ambassador to Brussels Hanno Rumpf has noted another
problem. Under the interim EPAs, the EU is insisting that SADC
Governments stop using export taxes and levies to create incentives for
local companies to add value to goods.
Such Government measures were intended to promote greater exports of
manufactured products and thus lessen the SADC countries’ dependence on
exports of minerals and other raw materials.
Some African countries and a number of non-Governmental organisations
are pressing for a renegotiation of the most contentious features of
interim EPAs.
“It is important for countries that have initialled interim deals to
be given the chance to renegotiate problematic clauses,” notes the
non-Governmental group Oxfam.
“The deals were finalised in haste, without sufficient time to
analyse the potential implications of the provisions being agreed.” The
EU, however, is currently refusing to consider any renegotiation.
A high-level meeting on EPAs convened by the Commonwealth Secretariat
in early 2008 in Cape Town, South Africa, declared that additional donor
assistance “cannot compensate for poorly conceived and hastily drafted
provisions of EPAs.” Even if they have signed EPAs, the meeting
declared, countries have a right to demand renegotiation to ensure the
agreements’ “consistency with national and regional development plans
and aspirations.”
- Third World Network Features
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