EPAs: New trade deals, old agendas

Published on Pambazuka, by Yash Tandon, Oct. 27, 2010.

In November the European Union expects East African countries to sign a ‘comprehensive’ trade agreement. But Yash Tandon warns that the deal is not in Africa’s favour.

Few people in East Africa know about the Economic Partnership Agreements (EPAs) being negotiated between the European Union (EU) on the one hand and the countries of Africa, Caribbean and the Pacific (ACP). It is primarily a trade agreement, but underlying it are a number of sensitive political and developmental issues. Fifty years after Africa gained its independence from colonial rule, the relationship between it and the former empire is still a hot issue. 

One of the compelling aspects of re-negotiating this relationship is the requirement of the World Trade Organisation (WTO), of which both the EU and most African countries are members, that the old ‘trade preferences’ must be dismantled. Under the ‘imperial system of preferences’ instituted by the Empire, its colonial outposts were given ‘preferential’ access to the European market …

… Here are some of the perils of EPAs:

1. EPAs demands 80 per cent tariff liberalisation from us in East Africa. This will open up our market to a flood of foreign imports that will kill whatever industries we have locally, and cause massive unemployment.

2. The EU has not made any real cuts on its food subsidies, and is not likely to in the future because of domestic political reasons. Hence, under EPAs its food corporations could bring subsidised food into our region, and threaten our food-based industries, and long-term food security.

3. EPAs allows only 17.4 per cent of value of imports from Europe as ‘sensitive’ products to us. This is not enough. We should have the flexibility to protect our production potential over the long term, and for this we need 30 to 40 per cent of our import lines designated as ‘sensitive’.

4. The Standstill Clause under the EPA (Art 13) disallows us to increase tariffs during 25 years of liberalisation. It will foreclose the use of tariffs to protect our industries in the future.

5. Article 15 of the EPA disallows new export taxes, or makes them difficult to apply. Europe wants our natural resources for its own industrialisation, and so it wants this provision. But we need these for our own future industrialisation, and export taxes are necessary for us to hold on to our strategic resources.

6. The MFN clause (Article 16) of the EPA demands that any concession we make to, for example China, India, Brazil, etc will have to be extended also to Europe. This will effectively undermine our efforts to build South-South relations.

7. The Rendezvous Clause (Article 37 of the EPA) is totally contrary to what we have fought for and secured within the WTO ambit. This concerns the so-called four ‘Singapore issues’ of investment, competition policy, transparency in government procurement, and trade facilitation, the first three of which were rejected for inclusion in the WTO Doha Round. Africa fought hard to get these issues thrown out of the WTO. Now the EU wants to bring them through the back door. In addition, the ‘Rendezvous Clause’ demands continuation of negotiations in other areas such as Trade in Services and Intellectual Property. These have the potential to undermine our local service sector, including real estate, communications, transport and even hospital and educational services.

These are highly technical and contentious issues. We should not open doors to these until we have carefully analysed their implications for our economies, especially future industrialisation, and their negative impact on our research and knowledge based institutions.

EPAs are damaging to our regional integration, damaging to African unity, and will undermine the struggles and the outcomes of what Africa has, under great difficulties, managed to achieve within the multilateral trading system of the WTO.

On 9 June 2010 the EU fully expected a FEPA (Framework EPA) to be signed by the EAC at a ministerial meeting in Dar es Salaam. But through skilful intervention by the East African Legislative Assembly (EALA) that passed a timely resolution asking for more time to consider the implications of FEPA, the top political leadership of EAC governments, and some activist civil society organisations, this was stopped.

Now the EU expects the EAC to sign a ‘comprehensive’ EPA (CEPA) in November 2010. The EU is clutching at the straws, and therefore is likely to increase pressure, especially on the financial carrot side. The EU will attempt to ‘sweeten’ CEPA by offering ‘development aid’ either through the European Development Fund or as ‘aid for trade’.

We must be wary of these sweeteners. They are sugar-coated pills to induce our countries to barter our future for a mess of pottage. Africa has had bad experiences in the past. We must not repeat past mistakes.

Sequentially, East Africa must integrate regionally first. It must move ahead with implementing the Common Market Protocol. This is priority number one. Then it must conclude the ‘Doha Development Agenda’ in the WTO. And then, finally, it must negotiate with the European Union an EPA that is compatible with our East African Community obligations and the commitments we make in the WTO. (full long text).

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