CHALLENGES FACING AFRICA IN THE IMPLEMENTATION OF EPAs

AEFJN

econ
http://www.thaifta.com/

The European Union is currently pressing African governments to proceed with interim Economic Partnership Agreement (iEPAs). However, there is resistance from African countries because they consider there are still some contentious issues to be re-addressed like reciprocity, trade in services, tariffs and agricultural subsidies. The EU is interested in maintaining the unbalanced trade relationship in which Africa supplies raw material and natural resources, and the EU exports manufactured products to African Countries.[1]

Despite all these contentious negotiations, the EU is insisting on going ahead with iEPAs whilst African countries face many challenges before iEPAs can be implemented. If iEPAs are designed to promote integral development and to reduce poverty, then we wonder why the EU does not respect this rhythm or African economic policies.[2]

The EU is willing to maintain economic aid for trade to mitigate the negative consequences of iEPAs.[3] However, we consider that this kind of aid is going to destroy small industries, reward enterprises with a bad record of working conditions (like PHP Banana in Cameroon) as well as not respecting African countries’ economic policies. The EU aid for trade should focus on supporting small industry and not big exporting industries’ infrastructures and the mitigation of the negative effects of market liberalization. African industries have to strengthen their production capacity in order to create employment and increase economic stability.
The problems African countries are facing, before iEPA implementation, relate to structural problems that hinder economic development. African markets are controlled by a handful of foreign enterprises and iEPA implementation is going to profit these enterprises, not the small and medium African businesses. It is these businesses that the EU should help consolidate if it wants to foster African economies. In this sense, the progressive liberalization of the Africa-Europe market forgets the objectives of the Economic Agreement (improvement of African economies and reduction of poverty) and can be thought of as an instrument to increase the European presence in African markets and not the opposite.[4]

Therefore, before the implementation of iEPAs, African governments should determine how to improve the quality of African products and manufactured goods, as well as how to diminish their dependence of raw material coming from other countries, if they are going to compete with European products. Least developed countries (LDC) often are not able to comply with the phytosanitary measures imposed by the EU. This means that if African products do not comply with the quality measures imposed by the EU, they will have limited access to the EU market. The iEPA implies that the liberalization of the markets will improve the quality of products but the reality is that African enterprises are at a disadvantage compared with the European ones. To solve that, African enterprise should have access to credit and finance to improve production processes and infrastructures. Open markets do not guarantee better quality products or better prices. On the contrary, African industries need to invest in themselves to improve the quality of their products and goods before they can compete with European products, in both Europe and Africa.

Finally, the implementation of iEPAs would require a regional integration that will profit African countries and not only European interests. The EU considers that regional integration will bring political stability and facilitate the economic growth of African regions.[5] However, the kind of regional integration proposed by the EU is only a way to reduce costs and facilitate the entrance into the African markets of European companies. Moreover, according to different studies, the European model of regional integration will undermine diversification of products and increase defensiveness between countries within a region because of membership of overlapping regional economic communities.[6]  Regional integration should be addressed to balance the economic growth in African countries, to facilitate the regional intra-market of goods, to strengthen African economies and to implement coordinated common policies. Only strong African economies are able to compete with developed economies. Otherwise, Europe will be imposing a new neo-colonialism.

Jose Luis Gutierrez Aranda

AEFJN Policy Officer

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[1] Alternatives to the EU’s EPAs in Southern Africa, Thimoty Kondo, Comhlamh, 2012.

[2] DG Trade, European Commission. http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/regions/africa-caribbean-pacific/index_en.htm

[3] ACP countries voices speak up for Trade and Development, European Commission, 2011. http://trade.ec.europa.eu/doclib/docs/2011/october/tradoc_148327.pdf

[4] Asking hard questions about the EU-ACP EPAs, Grain 2007. www.bilaterals.org/spip.php?article15255.

[5] Promoting regional poles of prosperity and stability, European Commission, http://ec.europa.eu/europeaid/what/economic-support/regional-integration/index_en.htm

[6] Building or Shattering African Regional Integration? Econews Africa, Traidcraft and Seatini. www.stopepa.de/img/traidcraft_etal_building_or_shattering.pdf