Thursday, September 4, 2008

Trade experts review EPA strategy

Suleiman Mustapha, The Stateman, 21/08/2008

Africa Trade Network will hold its 11th Annual Review and Strategy meeting from August 25-28th 2008 in Accra, Ghana. The meeting, hosted by TWN Africa, will focus on responding to the new challenges emerging for the ATN's on-going flagship campaign against the Economic Partnership Agreements.

ATN has been campaigning to 'Stop EPAs’ because they are Free Trade Agreements between the European Union, the world’s biggest trading bloc, and Europe’s former colonial territories in Africa, The Caribbean and the Pacific group of countries and sub-regions. ACP countries and regions are amongst the poorest and the least developed economies in the world.

An FTA, which puts companies, commodities, and capital of these two blocs on an equal footing and in equal competition in a common free trade area will speedily destroy ACP economic development and quickly institutionalize and lock-in the perpetual monopoly and control of these economies by the European Union.

EPAs are an extension and an intensification of the unbridled neo-liberal policies that Africa, and other developing regions have been force-fed for nearly 3 decades now, and whose main outcomes are the destruction of Africa’s productive sectors and human capital and the growing economic gap between poor and rich nations and regions.

Thus, in the looming global recession and the triple crises of Finance, Fuel and Food, it is Africa that is hardest hit - while riots spread across the continent, millions are threatened with imminent famine, and food production is dealt another death blow to make way for the artificially cheapened imports that are supposed to be the answer to the crisis.

The global powers and some of the African ruling classes who have created the crisis in the first place, now want to seize the insecurity and turmoil they have created to intensify and complete their grab of assets and monopoly of markets. EPAs are one of the most deadly weapons in this ‘New Scramble for Africa’.

Thus it was that in December 2007, the threat of the imminent disruption of Africa’s export trade to EU markets was not used as a moment to address the unfavourable terms of the continent’s integration into the global economy; rather, this threat was cynically exploited by the European Union (EU) to ram through so-called "interim” Economic Partnership “Agreements”, a “stepping stone” to giving preferential privileges to EU businesses in perpetuity.

This has major implications for Africa’s place in the world, her international economic relations and her prospects for economic development. The WTO has spectacularly failed to deliver any “development” for Africa and other developing countries.

In this so called Doha Development Round, it is rather the developing countries that face demands to make disproportionately steep cuts in both agricultural and industrial tariffs.

While the most powerful and dominant economies will be able to maintain their distorting and illegal domestic subsidies, developing countries need for flexibilities and strategic policy space e.g. in trade, production and livelihood defense measures such as ‘special products’ and ‘special safeguards’ are marginalized and denied.

Taken together with the EPA, the reality becomes even worse, even for the Least Developed Countries. Thus, what the Least Developed Countries or LDCs temporarily ‘escape’ within the WTO, where they are supposedly not required to reduce tariffs or not by as much as other developing countries, they will pay for even more dearly with steeper cuts – tariff elimination, not just reduction - in the EPAs. It is the EU, not the LDCs, that is getting a ‘round-for-free’.

EPAs are more draconian in the burdens that African economies must bear in agriculture and the degree to which it must give up the development and upgrade of their infant industries. EPAs are more niggardly in the flexibilities they may allow, e.g. meaningful flexibilities in SPs, SSM and overall Special and Differential Treatment. But they are far more generous in the scope of unequal benefits given to the stronger party – they go beyond giving the EU the advantage in ‘just’ Agricultural and Industrial tariffs.

More importantly, from the point of view of genuine development, the IEPAs are also a framework for expansion into full and comprehensive EPAs which include commitments that have been rejected and thrown out of the WTO, such as universal liberalization and de-regulation of Services and Investment rules.

Under the EPAs, even in the teeth of the terrible food crisis, and in addition to meaningless SP and SSM provisions, African countries will not be able to give national treatment to agricultural extension services to support their beleaguered farm sector.

Nor can they institute a policy-driven framework for the Financial Services sector to encourage and strategically direct policy-based finance to selected productive sectors, or regulate capital flight to ensure that there is adequate levels of domestically mobilized and retained capital for investment.

They cannot ‘positively discriminate’ by creating an Investment regime that integrates sectoral growth with economic and human development by prioritizing and ensuring parallel growth in local raw material use, employment creation or technology transfer and development.

In effect, an EPA will deepen continued dependence on ‘Aid’ and ‘Development Finance’ regimes, where IMF/World Bank and OECD ‘donor’ countries hold centre-stage. Current aid-for-trade schemes will intensify the continent’s dangerous reliance on a narrow basket of primary commodity exports.

In the EPAs, aid-for-trade also comes with new and unprecedented stringent conditions that will starve other sectors of investment and credit. Worst of all, they require tax exemption on European goods and MNCs operating in Africa BUT increased taxation on the poorest of the poor sheltering precariously in the burgeoning informal sector.

None of this is inevitable nor, as yet, irreversible. This is notwithstanding the fact that with the ‘interim agreements’ reached in December 2007, the EPAs have a dangerous and powerful momentum. Undoubtedly, the EPAs constitute the most immediate and urgent threat to Africa.

Ironically, Africa’s options today are different and relatively more favorable compared to when the Cotonou Agreement was completed in 2000 and when EPA negotiations began in 2002.

However limited, unbalanced and unequal the benefits for Africa have been, the commodities boom is a reality that gives African economies more leeway and a stronger strategic bargaining position.

Commodity market trends also mirror major shifts in world economic power, most notably the rise of new developing countries like Brazil, India, China, and even to a lesser degree, South Africa, which offer new opportunities for diversifying Africa’s international economic relations away from the narrow and debilitating reliance on the EU and its markets.

Therefore, this is the worst possible time to throw away all these potential openings by locking Africa into an intensified neo-colonial relationship with the EU through the EPAs.

Moreover, the current global crises not only signal the failure of the type of trade liberalization that has been imposed on Africa; it is also provoking a major re-think of trade and development which fundamentally questions the free trade model that is at the heart of the EPAs. The same debates go to the heart of the current international finance, aid and development regimes.

All these factors give renewed legitimacy to the popular resistance of organized civil society campaign to Stop EPAs. There’s general acknowledgement that the Stop EPA campaign was central to preventing the complete victory of the EU’s agenda to secure comprehensive Free Trade Agreements with Africa and the Caribbean and Pacific by December 2007.

Undoubtedly, the Stop EPA campaign also influenced the stronger positions expressed by some African governments about the EPAs as a whole, and about the so-called ‘Interim EPAs’ (IEPAs) that some countries and sub-regions initialed at the end of last year. Under such deep-seated and growing disaffection, EU President Barosso was forced to concede the review and re-negotiation of the IEPAs, which demand is central to the AU wide decisions on going-forward with the EPA negotiations.

In this context, it is extremely self-limiting for some, particularly NGOs most closely associated with and involved in the official EPA negotiations process to take the IEPAs as decisive evidence that comprehensive free trade EPAs are now a fait accompli, and that the strategic priority now has to be uncritical support for and collaboration with African officials and negotiators to ‘get more development-friendly EPAs’ i.e. to mitigate the EUs most extreme demands in the EPAs.

Thus, for example, the application reciprocal free trade rules that give the EU 60%-70% duty free quota free access to African markets is ‘more development-friendly’ than applying the same non-reciprocity to 80%-plus of trade (the average in the IEPAs). But what is the meaning and relevance of such a narrow position for the hundreds of millions of Africa’s producers who will lose out in every sector of production and exchange if the EPAs come to pass?

Nonetheless, there is a legitimate concern that underlies this narrow pragmatism, and it is whether or not the Stop EPA campaign has a realistic chance of achieving its objective. It is true that the campaign has serious limitations.

Despite its successes in contributing to thwarting the EUs objective for completing comprehensive EPAs by December 2007, the campaign failed to generate a momentum and an agenda that is sufficiently independent of the negotiation process, making it vulnerable to the inconsistencies, stops and starts that are inevitable in such a negotiation.

We are yet to approach the stage where broad layers of trade unionists or fisher folk associate threats to jobs and working conditions with the threat of the EPAs; nor do a critical mass of women’s organizations actively see successful resistance to EPAs as a potential qualitative turning point in the fight against inequality within and beyond Africa. These are now among the fundamental strategic issues that the movement against the EPAs must address.

The 11th ATN Annual Review and Strategy meeting therefore aims to explore these issues and examine options by locating the current conjuncture of the EPAs in a more comprehensive context of the global economy and from a perspective of shared analysis of the real developmental options for Africa today and the strategic imperative to clarify the precise character of our opposition to EPAs and interventions in the EPA processes.

Equally, such clarification will facilitate linkages and mobilization of strategic constituencies and help sustain the up scaling of the Stop EPA campaign and its broad range of advocacy and campaign interventions outside and inside the official negotiations.