Wednesday, March 18, 2009

EPA talks challenge govts to action

Khumalo, Nkululeko ( 2009-03-13 

The controversial negotiations between the European Union (EU) and regional blocs in Africa are challenging governments to rethink their strategies in promoting economic integration across the continent. The impact the agreements will have is dependent on whether governments put their efforts into consolidating existing regional communities or allowing grand plans for integration to become surrogates for action.

According to Nkululeko Khumalo, a senior trade policy researcher at the South African Institute for International Affairs, Africa has never been short of ambitious economic and political integration schemes, yet with few exceptions these plans have remained unrealised. Numerous questions have been raised and a plethora of theories presented to explain this “unsatisfactory state of affairs”. Although a number of new initiatives have been implemented, they have largely faltered.

A high-level conference organised by the South African Institute of International Affairs and the European Centre for Development Policy Management was held recently at which issues pertaining to the impact of negotiations for Economic Partnership Agreements (EPAs) between the European Union (EU) and regional groupings in Africa, the Caribbean and Pacific (ACP) on regional integration in east and southern Africa was discussed.

It became evident at the conference that the problems in Africa are “no longer just the failure to deepen integration but rather how to solve fragmentation, which ironically arises from countries having overlapping memberships in many regional integration bodies with similar plans”, Khumalo writes.

Regional economic communities (RECs) in Africa are entangled in a complex web of competing commitments as a result of multiple and overlapping memberships, which together with the different trade rules results in high costs for intra-Africa trade while undermining trade facilitation efforts that should be at the core of the integration agenda.

“This problem has been exacerbated by EPA negotiations with the EU”, says Khumalo. “Though EPAs are meant, inter alia, to promote regional integration, their immediate impact has been the further fragmentation of existing regional economic bodies across Africa – except for the East African Community [EAC] where the inverse seems to be true.”

The numerous grievances about the negative impacts of EPAs on efforts to deepen regional integration in Africa are well known and have received much attention in many forums across the continent and abroad.

However, as noted by a number of credible analysts, “what is perhaps more important in charting the way out of the current quagmire is the fact that EPAs have, to a significant extent, forced a serious discussion about the efficacy of the current integration path, characterised as it is by multiple and overlapping memberships”.

Discussions over the EPA negotiations have also provided an opportunity for African countries to reflect on the kind of integration they really want. “For instance, in negotiations on a number of key issues, African countries wanting to trade with one another are still finding it difficult not to discriminate against one another’s suppliers – yet they are now supposed to liberalise and open up their markets to EU suppliers”, Khumalo points out.

“In the Southern African Development Community (SADC), it is taking such a long time to negotiate intra-regional services trade liberalisation that it is unlikely that any real movement will happen any time soon. Even if a draft protocol on services now under discussion is ratified in the near future, it will most likely take years to implement and there is nothing that ensures uniform implementation across the region. Perhaps the EPAs will provide the much needed impetus for such regional processes”, she says.

The African Union (AU) has in response to the current fragmentation embarked on a drive to rationalise and harmonise Africa’s RECs and their policies and activities, although it is not yet clear what difference the AU efforts are making. “[W]hat is evident”, says Khumalo, “is that the appetite for more RECs is gone and the way forward is seen to be largely in the consolidation of some viable existing ones”.

“One of the most encouraging things to emerge from the recent conference is the detectable shift in preference from the linear economic integration model – in which states move from free trade agreements (FTAs) to customs unions, common market and so forth – towards simple FTAs dealing with the nuts and bolts of easing trade across regional borders.”

Yet concerns have been raised about the necessity of having both a SADC and a Common Market for Eastern and Southern Africa (COMESA) customs union.

The most recent initiative aimed at resolving the challenges of overlapping memberships is the so-called Tripartite Alliance involving COMESA, SADC and the EAC. “Though the alliance recently received major political support from heads of states and government, and has many important trade facilitation objectives, it still purportedly aims to establish a customs union in the long term”, Khumalo says.

A number of African scholars and policymakers believe that the original idea of having only a free trade agreement is the most viable way forward, because although simply declaring a customs union may provide a sense of achievement, “the union might turn out to be largely hollow in substance”.

“[I]t is clear that the EPAs have led to an important rethink of the regional integration approach being pursued in Africa”, Khumalo concludes. “Whether their impact will be positive or negative will largely depend on African countries’ responses to them – that is, whether governments learn from the mess they have created, and which EPAs have compounded, and concentrate their efforts on consolidating existing regional communities instead of allowing grand plans to become surrogates for action.”