December 5, 2010

Raising concerns about EPAs

Benjamin Mkapa, former President of Tanzania and Chairperson of the South Centre, has written a letter to the political leaders of African countries, urging them to pay attention to the Economic Partnership Agreements as a priority issue and as a matter of great importance to Africa. In his letter to the Heads of States and governments, Mr. Mkapa says the EPAs in their current form as proposed by the EU will have serious implications for the countries of Africa:

• A centerpiece of the EPAs is the elimination of tariffs on the majority of African countries’ tariff lines and the inability to introduce new export taxes. It would be impossible for the countries to industrialise, to develop their agriculture or diversify their economies under these conditions. In fact, the closing down of Africa’s industries will take place, as EU’s manufactured products and food are provided duty-free entry into our markets.

• Services liberalisation across the entire range of sectors will block the growth of domestic services in telecommunications, computer, business, distribution, transport, financial, utilities, energy etc.

• The EPAs will have a devastating effect on regional integration efforts. Some countries have signed the EPAs. Others within the same regional grouping, due to legitimate concerns of deindustrialization, unemployment, revenue losses, have not.

• The potential for regional trade integration would be lost. Many EU products are more competitive and will take more share of the African market once tariffs have been lowered. This African market is the top destination for our manufactured exports. In contrast, most of Africa’s exports to EU are by way of fuels and primary commodities. Regional trade is hence Africa’s best opportunity for industrialisation.

According to Mr Mkapa, the better options for Africa are as follows:

• For Africa to first concentrate on building our own internal regional production capacities, and to solidify our regional integration before we open up our markets and integrate with the EU.

• Least Developed Countries (LDCs) should not have to liberalise. They do not liberalise under the WTO’s Doha Round as their vulnerabilities have been recognized. They already have duty-free access to the EU market under the Everything But Arms (EBA) scheme of the EU. EPAs therefore provide no additional advantage for them.

• The 14 Non-LDCs in Africa that are negotiating the EPAs should be provided duty-free LDC treatment (i.e. EBA treatment by the EU) as economically, they are not very different from the LDCs.

Mr. Mkapa said that there are already several precedents in the WTO where non-reciprocal preferences are being given by the US (through AGOA to Africa as a region) and by the EU (to Moldova, and to several Balkan countries).

The EU can reform its Generalised System of Preferences (GSP) scheme to accommodate the 14 non-LDC African countries so that they have an LDC-type preference scheme. For instance, non-LDCs can be provided with this treatment when they are in customs unions with LDCs, or are in the process of forming such customs unions. Alternatively, EU can also support Africa in seeking a waiver at the WTO for the provision of non-reciprocal market access on some tariff lines. Such an approach would allow African countries to promote their development objectives as well as enable Africa to promote its regional integration goals.

In the meantime, African political leaders and senior trade officials, too, showed increasing concern about the adverse effects of the Economic Partnership Agreements that the European Commission is asking them to sign. At two meetings in November (the AU African Trade Ministers meeting in Kigali, and the ACP Council of Ministers meeting in Brussels), the Ministers took a critical view of the adverse effects the EPAs would have on their economies. They requested the EU to take a very different approach than the EPA model it has been putting so far to the African countries. One Minister described the EPAs as placing African countries into the mouth of a lion, in a repeat of the colonial experience.

The Ministers adopted a Declaration on the EPAs which made clear their criticism of the EC's model of EPAs, and their “deep concern” about the pressure exerted by the EC on some countries and regions to sign the interim EPAs. Also, in a show of regional unity, the African Union Commission and the continent's regional economic communities covering Eastern, Central, Western and Southern Africa, published a position paper detailing the many problems the EPAs will cause to the region. They also proposed various ways for Africa to get out of its predicament, instead of signing the kind of EPAs that the EC has been insisting on. (SOUTH CENTRE/SADOCC)

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