Africa's economic partnership agreements

Peter Mandelson, the EU Trade commissioner, was the target of spitting rage last week from MEPs who called him an aggressive bully who engaged in blackmail. The reason was his ideas how to revise EU-African trade. He says it will bring prosperity to Africa. His detractors fear it will make Africa poorer, and subject to greater European control.
For decades the Lomé and Cotonou agreements allowed African countries privileged non-reciprocal access to European markets, without having to open their own to the juggernaut of European commerce. Lomé and Cotonou were good deals, especially for African farm products. Brazil and other efficient agricultural producers chafed at the high tariffs that kept European farmers sheltered; African farmers, far less efficient, were able to ship their goods unhampered in.
But this is now set to change. Because of new WTO rules that disallow non reciprocal trading agreements between regional blocs, the arrangement is due to be replaced by what is effectively a free trade agreement dismantling African barriers that protect their fragile markets and turns Europe and Africa into what looks a free trade area where all producers compete on equal access terms. Mandelson says this is a chance for Africa to turn the page.
Nearly all duties on agricultural and industrial products from Europe would be eliminated under the deal, and African governments would allow European investors free access to invest in any sector of their economies. African consumers would get cheaper products and firms would have access to cheaper spare parts and machinery.. Good in theory - except the story is more complicated, just to take one particular area of tension: farm products, say Mandelson’s critics.
Under the much-criticised common agricultural policy, European farmers will maintain their massive amounts of direct price support; they are well organised and united, and possess the infrastructure to impose their goods on Africa. Africa, whose farmers get little money from their states, will be flooded with European food. According to Paul Goodison, a trade expert at the European Research Office, many African farmers will be put out of business, and Africa will be denied that food security which every rich country arranges for itself by keeping enough farmers on support to make themselves self sufficient at a famously high cost.
“European farmers are not competitive on the world market, and Africa offers them an outlet for their goods,” said Goodison. “But under the new agreements, it will be cheaper for a food processing plant in Senegal to buys its tomatoes from Europe than from a local farmer, struggling with poor technology, poor roads and access to markets. In South Africa, with which Europe has already concluded a trade agreement, there are processing entrepreneurs who turn into simple import agents because it’s more economic.”
The consequence, said Mamadou Chissikho, head of the west African peasant movement ROPPA, at a conference of left wing NGOs in Brussels which featured agriculture as a big issue, will be an exodus of peasants to the squalor of the cities – and increased pressure of immigration into Europe. “It has to be questioned whether the EU has a joined-up Africa strategy at all,” said Giles Merritt, Secretary-General of the Friends of Europe think-tank in Brussels.
And yet the commission and its supporters says the EU’s motives are good. “It is a mistake to paint the European commission as the bad guys,” said Fredrik Erixon, director of the European Centre for International Political Economy in Brussels.
Supporters of the EPA agreements say the EPAs (four, one for each region of Africa, on top of one each for the Caribbean and Pacific developing countries) will promote sustainable development, contribute to ending poverty and integrate Africa into the world economy. In repeated speeches, Mandelson points out that Africa’s share of world trade is falling, and that Africa needs both “trade and aid” to prosper. The European Commission’s DG Trade points out that after 30 years of trade under current bilateral agreements, sub-Saharan African states and the other members of the ACP (African, Caribbean and Pacific) group of developing countries exports just a few basic commodities, most of which fetch lower prices than they did thirty years ago.
The commission says old recipes have not promoted diversification or competitiveness. And that they are no longer compatible with WTO rules on non discrimination and have been successfully challenged.
The EPAs are meant to change the relationship between Europe and Africa, from one built on preferential tariffs – an eroding lifeline – to one that builds lasting and more efficient markets for Africa.
One commission official close to Mandelson said: “The preferential tariff regime is based on old colonial relationships but keeps Africa locked into selling a few basic commodities to its former colonisers. African producers will diversify and become more competitive when exposed to foreign competition.” The emphasis is on helping Africa, not benefiting Europe.

Further, to give African producers time to adjust, there will be a long phase out of tariffs on European products. “Mandelson has spoken of 15 – 25 years.” This is pushing the envelope with international opinion in order to favour Africa, as the WTO norm is ten years, said the commission official. There is also the possibility that agricultural products will retain their tariffs indefinitely if African countries so want it. WTO rules allow a discretionary 10 percent of trade in a free trade agreement to remain behind trade barriers. Since African agricultural imports from Europe make up 13 percent of its total EU imports, and Europe proposes to open its entire market to African producers, the aggregate will come under 10 percent of total EU-African trade. “They can keep all tariff if they agree agriculture is so important that this is the area they want to exempt.”

Last week, at a conference in Brussels, the deputy secretary general for DG Trade, Karl-Friedrich Falkenberg, expressed exasperation at the NGOs and African representatives in Brussels who spread the word of the negative consequences of EPA on agriculture.. Falkenberg told an audience of diplomats and officials that “NGOs have got it wrong on agriculture”.
Yet the commission has some convincing to do. Agriculture is anyhow not the only issue.
Goodison said that behind all the “bullshit” was a strongly pro-European business agenda. The commission was not interested in helping Africa per se, but, after the market access negotiations were sealed, wanted to sign a number of other agreements on the so called Singapore issues relating to investment protection, transparency in government procurement and competition policy. The EU has not managed to push these through the WTO, but if it signs these agreements with Africa, it can then go to the WTO and say here is a 104 nation bloc – the ACP countries plus the EU – who want these reforms, and they will mostly benefit the EU. Africa does not have the infrastructure to cope with this legislation.
What happens next will be decided behind closed doors in Brussels and in African capitals. Mandelson is busy jetting around the world, and meeting African negotiators in Brussels. For practical purposes a deal has to be sealed by the end of October, beginning of November, so that customs officials can be ready for the new regime come the end of the waiver on 31 December. But the amount of development assistance the EU will be granting on top its regular aid commitments to help losers adjust is far from clear. And the Lagos Guardian has reported inside sources that say the west Africans will not sign up to the agreements by then. Sir John Kaputin, secretary general of the ACP group of states, said: “We are not happy with the negotiations as they are.” As for East Africa, while local analysts say the Kenyan government sees “EPAs as the only way forward”; there are problems with configurations in regional trading blocs that may hold up a final deal.
Peter Mandelson told the European parliament’s trade committee in mid September – when MPs described his uncompromising attitudes - that negotiations were on the edge “and whether this is the edge of a cliff or of success the next few weeks will tell”. If Africa doesn’t sign the EPAs, the least developed countries, the LDCs, will fall back into the relatively generous Everything But Arms regime, with non reciprocal tariff free entry to Europe (same as before in fact), but the richer developing countries in Africa could be in trouble on December 31st.
Namibia for instance would see a sharp percent rise in tariffs, up to 140 percent, on its beef exports, according to Erixon. One commission insider said: “Cocoa and fish products from Ghana, horticulture from Kenya, bananas from Cote D’Ivoire and Cameroon. These are the products that will face export difficulties.” Mandelson has said he won’t compromise: it’s EPAs or nothing.
In the high stakes game, no one is laying all their cards on the table right now, but Goodison predicts that there will be some kind of interim agreement of market access that satisfies the WTO demands by 31 December, and would save the high value exports. In addition, the EU would seek to negotiate binding settlement mechanisms that would expand the EU’s agenda over Africa regarding investment protection, competition policy and other so called Singapore issues - in the years ahead.
However the agriculture issue is resolved, whether the Singapore issues will be in Africa’s interests is a matter of dispute.

ENDS