Published on Pambazuka News, by Chukwuma Charles Soludo, March 29, 2012.
Almost all the flexibilities in policy choice that Africa and other developing countries won under the WTO are lost under the EPAs.
Africa is in trouble. Its future is once again on the table, and it is Europe that holds the ace. Unlike the Berlin Conference of 1884 to 1885 which balkanized Africa among 13 European powers as guaranteed sources of raw materials and market, the current contraption under the Economic Partnership Agreements (EPAs) spearheaded from Brussels is the modern day equivalent of the Berlin Conference. At issue in both Berlin and Brussels is whether or not Africa can be allowed latitude to conduct trade, industrial and development policies for her own development or for the development of Europe.
A major difference is that the ‘agreement’ will now be signed by free people, under supposedly democratic regimes, and in contexts where the African people again have neither voice nor choice. Only about 10 out of 47 Sub-Saharan African countries (SSA) have either signed or initialled the EPAs. Trade ministers of the affected regions—the African, Caribbean and Pacific (ACP) countries as well as African trade ministers and the African Union—have largely rejected the EPAs. Despite all of these, and the reported public protests in twenty countries against the raw deal, it seems all but certain to be rammed through. In private whisperings, not many Africans or policymakers are happy with the deal but there is a certain sense of helplessness.
Since 2002, the EU has been negotiating the EPAs with the ACP countries as a fully reciprocal trade arrangement to replace the previous non-reciprocal, preferential trade access of ACP countries to EU markets under the various Lome Conventions and the Cotonou agreement. The argument, according to the EU, is that such preferential access violated Article XXIV of GATT, and that the WTO waiver that allowed such preferences expired in December 2007. Consequently, the ACP countries are divided into seven regions (with five in Africa) for the purposes of the negotiations … //
… But humanity has experience in delivering aid that works. We can replicate it for an effective and truly development-oriented EPA. The most effective aid in human history was the US aid to Europe after the Second World War— the Marshall Plan to rebuild the European infrastructure. The US felt a sense of obligation (given the historical ties with Europe) to provide a ‘big push’ to lift Europe up after devastation by the war. We are not sure if EU feels the same sense of obligation to Africa (given the history we all know too well). But just imagine for a second that EU feels a need to support Africa through a Marshall Plan kind of aid. Imagine that the EU were to stop its subsidy to agriculture and divert just three years’ subsidy fund to create African Fund for Transformation— call it the ‘Brussels Plan for Africa’—and this will come to about $225billion. Alternatively, instead of stopping the subsidy abruptly, EU could go for a phased process, diverting just 50% of the subsidy fund into the Africa Fund over the first six years before finally phasing the subsidy out. If this Fund (akin to a sovereign wealth fund) is invested and the annual income proceeds invested (estimated at about $20 billion per annum in perpetuity), you could over time build highways and train networks linking all of Africa, and increasing the irrigation of its arable agricultural land from the current less than 5% to more than 50%. Let EU bring its own contractors—since it cares much about procurement, but let’s get this done. That way Africa can feed itself, Europe, and the world cheaply; lift hundreds of millions out of poverty, and you can create an environment for a truly ‘virtuous circle’ of growth and transformation. With a truly integrated African market, a new dynamism for quantum leap will have been created, and no one will be surprised that the combined African economy might become the next China or India. This is when the kind of FDI inflows romanticised about in EPA documents can be expected to kick-in.
The point of the foregoing is that an alternative future between Africa and Europe is possible. Pervasive leadership failures have been at the heart of African underdevelopment in the last 50 years. Finally, there seem to be some flickers of light, and Africa is gradually pulling itself up by its own bootstraps. Africa has never had it better than in the last one decade, and compared to the lost decades it has begun to at least crawl. If EU cannot assist Africa to walk and run, the least it should do is not to hinder the nascent progress. Aggregate African economy is less than 2% of global GDP, and thus as a small open economy, it needs to integrate within and without: Africa needs the global market. But lessons of the last two decades have reconfirmed that there are right and wrong ways to integrate into the global market, especially for poor and fragile economies. While the world is yet to invent anything better than a market economy, it is also true that extreme market fundamentalism—that denies the existence of market failures and missing institutions—has brought more ruin than remedy. A more balanced approach has been the winning strategy for all countries that have developed in the last century. But EPA, as currently designed, is a poison chalice. Fragmenting Africa and ramming through deadly trade arrangements in a manner that undermines internal African integration, ties the hands of policymakers and circumscribes the policy space, and literally enslaves the African economy may be smart for Europe in the short-run but not wise in the long term.
If EPA is meant to develop Africa, it needs to be owned by Africans. Currently, even in countries that have ‘signed’ or ‘initialled’ the document, there is little or no public discussion by the private sector, parliaments, and civil societies. We hope if EPAs are to be domesticated, it will not be the kind of charade of ‘rent a crowd’ consultations that were designed to rubber stamp the poverty reduction strategy papers (PRSPs). We now know better and must therefore do better.
Africa and Europe need a “Development Summit”: we need to talk to each other frankly and directly. If the issue is ‘development’ of Africa, there are certainly superior alternative proposals for a more beneficial relationship between Europe and Africa …
(full long, long text and readers’ comments).
Could abolishing tax havens solve Africa’s financing needs? on Pakmbazuka News, by Charles Abugre, March 29, 2012;
A stage play in Mogadishu, on Al-Ahram weekly online, by Asmaa El-Husseini, 29 March – 4 April 2012.