The European Union is hoping to enter a new free trade arrangement, known as the Economic Partnership Agreements, EPA’s, with African, Caribbean and Pacific countries, ACPs, by January 2008. But the Africa Trade Network, ATN, a group of 50 civil society groups in 30 African countries, is cautioning African governments against the new deal.
From Accra, Ghana, Voice of America English to Africa reporter Joana Mantey tells us the EU and the African, Caribbean and Pacific countries have been negotiating the new trade agreement for five years. The goal is to establish new arrangements that will eventually remove barriers on almost all trade between the two groups.
A press release by the EU delegation in Ghana said new solutions compatible with World Trade Organization rules on non-discrimination are needed to regulate trade because the old recipes have not promoted diversification, competitiveness and growth.
Tetteh Hormeku is the program officer of Third World Network, a group that coordinates the activities of the ATN.
He explained that the EU is expecting further negotiations in areas such as investment, trade facilitation, government procurement, data protection and services.
Homerku said ACP countries will find it difficult to compete on the same level with EU countries:
“The problem is that because European economies are much more advanced than African economies and because the European Union is able to give subsidies to its producers and products, if we liberalize, they will just destroy our domestic products and producers so that it will [lead] to de-industrialization in Africa and the collapse of our economies.”
The intent of the EPA’s as outlined in the agreement is to promote “sustainable development and contribute to poverty eradication in ACP countries.” But the emphasis on liberalization has created an impression among critics that the negotiation is about European expanded access to ACP markets, rather than about development in ACP countries.
Hormeku agrees with the critics that the arrangements will bring few benefits to Africa. He said although goods from ACP countries would be allowed entry into European markets, the results would be costly. For example, he said for a country like Ghana, which has 40 per cent trade with the European Union, the removal of tariffs on European goods coming into Ghana could amount to a 20 per cent loss of revenue.
Also, he says the removal of tariffs would mean African farmers would have to compete with European ones, who receive subsidies from their governments. He doubts the African farmer could win the competition, and there could well be a “dumping” of Western goods on the market:
“If we remove the tariffs (on European goods coming in to Ghana), producers in our country will be faced with cheap European products. For instance [Ghana’s] chicken farmers have been devastated because subsidized chicken and poultry from Europe enters into our market.”
Homerku said all of the sectors of the economies of developing countries would be adversely affected. The end result would be a loss of livelihood and a vicious cycle of poverty for Africans. He said heavy dependence on EU aid by these countries is likely to pressurize most into complying with the new trade arrangement.
Homerku said at the moment, some countries are being enticed with promises of increased aid on the condition that they meet the end-of-the-year deadline. This, despite a number of requests by ACP countries that the negotiations be put on hold for three more years to allow for adequate preparation.
Homeku further says it is important that all elements of a trade relationship be consistent with Africa’s development needs.
Filiberto Ceriani Sebregondi is head of the EU Delegation of the European Commission in Ghana. He said the EPA’s should be seen more as development instruments rather than as another trade regime:
“It is a broader form of agreement that will be geared towards expanding trade and economic growth in ACP countries. The aim is to create regional markets that are larger in size and more transparent in the way they function and more predictable in the rules that apply to investment.”
EU press statements say that most ACP countries trade more with Europe than they do with each other. However, more duties are paid on exports to developing countries than to EU countries. Therefore, the EU supports new agreements that would eliminate barriers between neighboring countries and create real integration that would favor trade and boost growth. It would also create bigger markets more attractive to investors and would facilitate trade with landlocked countries.
Sebregondi also refuted charges that the Economic Partnership Agreements would lead to the dumping of European goods on African markets:
“Europe and Africa don’t compete on the same goods. The two markets rather compliment than compete each other. Secondly, the opening [of ACP markets] will be over a period of 10 to 25 years by which [time] African countries would have prepared their economies to compete with EU products which in any case will bring about some benefits.”
However, Sebregondi said the EU would make a move to protect some sensitive products, such as tomato paste, from ACP countries.