Friend or Foe - the EPAs unmasked

Liepollo Lebohang Pheko discusses the real impact of the Economic Partnership Agreements (EPA) on women and the failures of liberalization policies to examine and address the specific needs of women.

Trade liberalisation produces different results for men and women. The differential outcomes are associated with the most essential aspects of livelihoods and well-being, including food security, employment, income and access to affordable health services. Differentiated outcomes across countries and regions are based on the category of economic area and specific sector, measures, timing and sequencing of trade policies. They traverse various sectors and sub sectors of trade liberalisation: agriculture, services, clothing and textiles, and intellectual property.

Policy-makers and any groupings concerned with gender equality, poverty eradication and development-orientated economic growth must be cognisant of the massive constraints and challenges presented by the liberalisation of these sectors. In short any cultural, policy and structural constructs that ignore or exacerbate the oppression of women must be redrafted or replaced.

The Economic Partnership Agreements (EPAs) have not examined the cost of liberalisation on women in terms of physical resources, human resources and social capital needed to transfer resources, skills as control to effectively manage liberalisation. The liberalisation programme of EPAs need to be examined in a broader, gendered context that is mindful of the non neutrality of the market economy.

Geo-politics of EPAs

It is crucial to be mindful of the geo political agenda propelling the Economic Partnership Agreements. The agreement is being punted at a time when European markets are shrinking, production costs are making it difficult for companies to make a significant profit from Northern consumers and three successive WTO ministerial meetings have gone badly for corporate interests.

The African, Caribbean and the Pacific offer the opportunity for the European Union to find an unfettered market. Many observers thus argue that the intentions are related more to pro-North market driven interests than pro-South development ones.

This assertion is evidenced by the intensity of protectionism the EU is permitted while habitually dumping surplus produce on overseas markets. Though 90% of ACP countries’ tariffs must be removed to access EU markets, there is no mention of dismantling the Common Agricultural Policy or of stemming the anti competitive practices arising from dumping. The consensus among many progressives, NGOs and policy analysts in both the South and North is that there is great cause for concern.

EPA and women

In all this, women emerge as the double losers. THE EPAs focus on primary production and force countries to de-industrialise. As such:

• Women are locked into the lowest paid work with the least statutory protection and benefits. Even though employment may increase, the quality of that employment is poor;

• Labour rights are thus violated while factories are given tax holidays at the expense of providing real livelihoods and permanent employment to women workers;

• Women are subject to competing with poorly paid contract workers abroad as the move to ‘outsourcing’ continues as seen in the notorious Export Processing Zones [EPZs] operating in the South;

• The ability to organise and gather as unions or worker groups is minimised through threats, bullying and in extreme cases murder of vocal workers;

• Women’s reproductive rights are violated whether through forced abortions, dismissal when pregnancy is disclosed, or miscarriages through strenuous work and exposure to toxic chemicals;

• Earning an income externally to the household can lead to greater empowerment for women, both in the home and in the wider community. However, trade liberalisation can also lead to unemployment and the restructuring of labour markets – a situation that tends to affect poor and marginalised groups of women more than men. In fact, occupational and wage segregation is widening and bad working conditions are rife in many export industries. The need for flexible workers to respond to market fluctuations has led to a rise in the numbers of informal sector workers, of which a high percentage are women.

• Access to education, health care and other basic services is often truncated through trade liberalisation. As such there is often less to spend at household level so the role of social reproduction in terms of providing care, gathering fuel and food etc is brought upon the women and girls. Where choices are made about whether to send the boy or girl child to school, most communities and families favour the boy. The ‘care economy’ meanwhile remains unregulated and unsupported;

• The displacement of indigenous women farmers and artisans in favour of European tourism interests transforming the South into a huge exotic safari and often linked with increasing sex trade;

• The diminishing of women’s role as custodians of traditional knowledge and bio-diversity has been well documented and bears restating in the wake of the GMO assault and the threat to food sovereignty;

• Cheaper goods come onto national markets from overseas, affecting existing indigenous producers but also providing cheaper options for consumers, many of whom are women who manage diminishing household budgets.

Value Added Tax and Women

Value Added Tax [VAT] can be extremely unfavourable for women, not only as consumers but also relative to their reproductive role, since it is normally levied on goods for the household and labour-saving devices such as domestic appliances. This is in addition to the taxes paid on food at the point of purchase.

The theory of fiscal austerity has fundamental repercussions for expenditure on services such as health and education, which are critical particularly for women in their socially assigned task as ‘carers’. Fiscal austerity may also constrict governments’ capacity to establish social protection measures and safety nets to counteract the harmful consequences of liberalisation.

Production structures and employment

In real terms, the effects and shocks of trade are experienced by individual women, by individual men, by households, by families and by communities whenever fluctuations in price (related to availability of goods) and changes in output (the goods and services people work to produce, how they produce them and under what conditions) occur. A typical claim made by advocates of EPA policies, including some gender advocates, is that increased trade and investment liberalisation can improve economic growth, which in turn can increase women’s participation in the labour market. However, we need to examine the nature and terms of this participation.

Case Study on Production Structures - Leather sector South Africa

Rapid liberalisation of tariffs in the South African footwear and leather sub-sectors (from 41.2 per cent in 1995 to 28.9 per cent in 1999) has resulted in retrenchments and drastic changes in production processes in local factories.

Additionally, there is a correlation between company restructuring in the footwear industry and the expansion of the informal sector. Not only is this the only apparent option for the increasing number of retrenched workers, but also for factories through subcontracting to the informal sector in order to cut labour costs. South Africa’s informal sector has increased from 1,136,000 workers in 1997 to 1,907,000 in 1999. There are approximately 193,000 African women compared to 28,000 white women working in the informal sector. What this illustrates is that it is the social groups with the least power and resources who are over represented in the ‘informal’ sector (Statistics South Africa 1999 cited in ILRIG 2001: 82-83).

Investment measures

There are typically four ways in which a government can protect the national investment measures environment:

1. By prescribing and enforcing minimum local content requirements (in terms of value, volume or proportion);
2. By setting trade balancing requirements (limits on purchase or use of an imported product up to the maximum value or volume related to local production);
3. By placing restrictions on repatriation of dividends;
4. Be placing ceilings on the equity holding of foreign investors.

Several African, Caribbean, South American and Asian countries have adjusted their mercantile and investment laws to comply with bilateral investment agreements aimed at encouraging foreign direct investment (FDI). Usually the result has been to remove regulations which govern minimum local content, trade balancing, access to foreign exchange and repatriation of dividends.

Several South American and Asian countries implemented import substitution policies in the 1960s and 1970s to encourage local production of consumer goods and to maintain a balance of payments through barriers on certain imports. Under WTO agreements these would now be illegal. The gender dimensions of this are that women tend to work more in industries in which capital flight is common and that are more susceptible to foreign competition. These industries are profoundly distressed by economic downturns, which have repercussions on the job protection of the largely female workforce.

Case Study on the Investment Environment – Tomato Sector, Senegal

Some years ago, the Senegalese government reduced tariffs on food imports to comply with a trade liberalisation package. This coincided with the launch of tomato paste business by a group of Senegalese women. They had taken out micro-credit loans. Having shifted from producing subsistence crops to solely growing tomatoes tariffs dropped and cheap foreign tomatoes flooded the Senegalese market. In what seems the typical story of the South when confronted with Northern imports, co-operatives were unable to compete. The result was that they could not honour the payment of micro credit loans. This illustrates the hostility of the market towards women and less resourced business people. It also shows the importance of Southern government regulation and protectionism of women and their families. It is critical to prevent families from entering economic situations that are more invidious than before as a result of placing them in competitive environments without adequate support.

Small and medium enterprises and women entrepreneurs

Enterprise development and market access are commonly promoted as policies that enable developing countries to engage in international trade. Overall, liberalisation under the WTO rules has not significantly increased women’s access to credit, nor has it enhanced opportunities to generate domestic savings for entrepreneurial activities. Structural gender inequalities linked to property rights and ownership women have fewer assets that can serve as collateral.

Instead of introducing a framework to enable women’s access to credit and venture capital, profit-motivated liberalisation policies have propagated the discrimination against marginalised and dispossessed women by mainstream financial markets by aiming at urban areas and more lucrative economic sectors. This excludes poor women who are concentrated in the informal sector and operate mostly in small and medium enterprises. The Most Favoured Nation principal merely enforces this.

Women largely go to unregulated sources of venture capital. These are composed of specialised moneylenders, pawnbrokers, savings and credit associations, and characterised by the lack of regulation and high interest rates.

Currency devaluation

Currency devaluations have particularly insidious effects on people living on the economic margins especially women. Typically, women and girls absorb the direct consequence of price increases attributable to classic societal expectations that prescribe women as custodians of domestic well-being. This encompasses:

• Extra workloads in waged and unwaged work to outpace appreciating prices;
• Survival mechanisms to source affordable alternatives (replacing home produced food for shop bought);
• Transferring consumption rations to family members who earn the most.

The African Women Leaders in Agriculture and Environment (AWLAE) have published a case study of the devaluation of the CFA franc in Mali. The findings assert that since the devaluation, “women are participating in greater numbers in agricultural production as the number of households threatened by food insecurity increases.” Women invest more labour into crop cultivation as an incoming generating venture. This resulted in decreased child care at domestic level. In addition AWLAE’s research also exposed the irony that women’s status improved due to their ‘indispensable’ financial contributions to the household. In contrast men tended to abandon their social, community and household responsibilities as financial pressures mounted as an inverse coping strategy.

Capital controls on direct investment

Capital controls (owning physical property) or portfolio investment (investing in the stock and bond market) are pivotal in preventing speculative investment and encourage enhanced financial stability. Speculative investment often results in major economic disturbance, and swift, substantial changes in money moving into or out of a country for rapid profit. Investment controls restrict external money flows enabling countries to pursue social investment priorities such as employment creation and technology transfer. Free market proponents argue that liberal capital movement is more efficient while restrictions discourage investment. The primary concern of the free market investment environment is that investors may opt to go to countries with fewer controls.

Case study on capital controls - Asia Crisis

A major catalyst of the Asian financial crisis was the swift capital flight from Thailand, Indonesia, and Korea, following a drastic increase in speculation. (FDI doubled in South Korea, Indonesia, Malaysia, Thailand and the Philippines between 1994-1996.) Most of these had inadequate [if any] capital controls having liberalised financial markets without sufficient regulations. This inadequately protected environment enabled investors and well-off individuals to effortlessly remove money from banks, the stock market and certain businesses to more lucrative off shore markets. Inexorably financial volatility resulting from capital flight plummeted foreign exchange rates, triggered scores of bankruptcies and momentarily shattered Asian economies.

This period was characterised by escalating joblessness and prices for essential commodities. The numbers of people in extreme poverty soared in tandem with the increasingly desperate economic conditions. For example from 1997-1998, unemployment in Indonesia tripled, according to the International Labour Organisation. One immediate coping mechanism was to despatch women and girls to augment household incomes. Indonesian government figures state that there was an increase of 2.4million self-employed people and 1.3 million in unpaid workers (including family businesses like farms). It is not clear how many of new workers were female. What is well documented is that females are disproportionately over-represented in the informal sector and among unpaid family workers. Statistical data is not yet able to quantify the spectacular rise in migrant labour and prostitution among Indonesian women.

Conclusion

The EPAs will undeniably affect individuals, families and communities through their impact on prices, employment, capital flows, investment conditions and production structures. Most critics of the EPAs agree that these structural changes will have differentiated consequences on women and men, the wealthiest and the least wealthy due to their incongruent locations in the economic system. These diverse positions arise partly from various national contexts and are strengthened by nuanced social and cultural factors such as gender, ethnicity, class or race. Furthermore, the New Issues so far resisted at WTO level could make a pernicious come back through the EPAs.

In all this the power and social relations between the South and the North, between women and men, between girls and boys, between differently abled citizens, between the economically dispossessed and the wealthy, between people with different educational attainments and a plethora of other societal textures will be exacerbated. The experiences of Economic Structural Adjustment Programmes and the current struggles against the World Trade Organisation provide ample evidence of this.

The Economic Partnership Agreements have implications for job security, livelihoods, well-being and human rights. The dangers of liberalisation for women are well crystallised by the construct of social inclusion. This inherently respects and acknowledges a sense of human community in which all community interests must be considered in order for the whole to progress.

These bring human rights to life and remind us that any policy, practise or law that further removes the displaced, further excludes the marginalised and further impoverishes the most vulnerable- most of whom are women- must be redrafted, rethought and realigned to promote gender equity and authentic social transformation.

• Liepollo Lebohang Pheko Is a member of the Secretariat for the Gender & Trade Network in Africa based in Johannesburg. This paper was presented at the European Commission, Brussels, and is republished here with the kind permission of the author.

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