Reluctant Africa feels trapped into signing EPAs
Africans are reluctant to sign new trade deals with Europe that would open the floodgates to cheaper, subsidised products - but some analysts say they can't afford to refuse.
The European Union (EU) and former European colonies are negotiating new trade and investment agreements to replace preferential deals the World Trade Organisation has ruled illegal and says must be scrapped by the end of the year.
Faced with the end of favourable market arrangements dating back decades, Africa is in a catch-22 situation. Experts say long-term growth is at risk if the continent spurns a global trend towards liberalisation, but its fragile industries are also threatened with closure if they do.
Economic Partnership Agreements (EPAs) will ensure continued tariff-free exports to Europe, but many Africans say the deals would, in turn, flood their markets with cut-price goods, killing domestic production. Already, some African nations have felt that pinch because of an influx of cheap Chinese goods.
The debate has whipped up so much opposition that anti-poverty campaigners are planning protests for Sept. 27, dubbing it the global "Stop EPAs Day."
Across the continent, the examples of potential threats are myriad and especially dangerous for countries that lack diversity in their exports.
If EPAs are not in place by Dec. 31, affected African firms will face European import tariffs of at least 8 percent. Other exports could face tariffs of between 5 percent and 25 percent.
Others are less optimistic. The west African trade bloc, ECOWAS, has said talks are likely to drag into 2008.
Campaigners accuse the EU of pressuring poor nations to sign without giving them room to discuss an alternative, even though many of them lack the expertise to push their interests. "It's a David and Goliath situation," said Laura Merrill, an Oxfam fair trade official in Nairobi.
She urges Africans to demand a stop-gap agreement to protect their industries until they are ready to sign the EPAs.
One temporary solution could be the General System of Preferences (GSP+) that allows countries to protect products on which their economies depend for an agreed period. About a dozen Latin American and Asian producers benefit from GSP+ deals that let them export to Europe without dismantling the bulk of their tariffs.
"Ghana is very qualified for that," said Tetteh Hormeku, head of programmes at Third World Network, a non-governmental organisation in Ghana. "We would be able to export and we wouldn't need to remove tariffs on 80 percent of products."
The standard GSP attracts a higher tariff compared to the preferential treatment that comes into expiry at the end of this year. Both GSP and GSP+, trade experts say, come with stiff requirements that have to be met by African, Caribbean and Pacific (ACP) countries in order to be eligible for these preferences. Currently no ACP country is eligible for the GSP+ option, which has lower tariffs, compared to GSP.
Though the EC has maintained that it would provide ACP countries with a standard GSP scheme, which attracts a higher tariff than the Cotonou ACP preference, trade experts are advocating for a GSP+ regime that would provide lower tariffs. They argue that ACP countries should be exempted from some of the requirements mandatory for the GSP+ ,as was the case with Latin American countries, who were given a transitional period to ratify and implement the requirements.
For instance, there are two sets of criteria for GSP+ eligibility: one on vulnerability and another on human-labour rights and environmental principles. They requires a country to have initially ratified and implemented at least 23 out of 27 relevant conventions by the end of 2008.
On the first requirement of vulnerability, trade experts say, all ACP countries appear to be eligible, but on the second one it is rather difficult to fulfill the requirement, given that the ratification and implementation should be met by 2008.
Technocrats argue that for ACP countries to be provided with an effective fallback, the GSP+ must be accorded temporarily to all non-LDC ACP states from January in order to avert disruption of trade. They say this would give all parties enough time to either finalise EPAs, or to ratify and implement the remaining conventions needed to establish permanent eligibility.
Nigeria, Ghana, Ivory Coast, Kenya and Mauritius are among the nations that do not fall under that category.
"We will never grow if our industries have open competition with those from Europe," said Isaiah Kipyegon, an official of the Norwegian Church Aid advocacy group. "EPAs are an oppressive tool seeking to liberalise trade in all that we live on in Africa."
Reuters/East African Business Week
