Predictions for the economic partnership agreements negotiations: EU=1, ACP=0
Richard Kamidza is not optimistic about the outcome of EPAs, arguing that they will ultimately undermine Africa’s economies. Kamidza explains that negotiations are taking place in the context of a skewed relationship between Africa and Europe that already hinders development prospects. This means that the EU is unlikely to face strong opposition to its desire to fast track EPA negotiations.
Introduction
The first round of the Cotonou Agreement ended without the legally binding document that is necessary for future references. Indeed, the European Union (EU) emerged the victor, a development that is haunting the ongoing economic partnership agreement (EPA) negotiations between the African, Caribbean and Pacific (ACP) states and the EU. As the EPA negotiations fast approach the EU-imposed deadline, the predictions are that the score will be EU 1, ACP 0, because the process firmly allows the EU to protect its interests against those of a begging trading partner.
Europe as a ‘partner’
As a partner, Europe is fortifying its vertical links with Africa, which also benefits its bilateral and multilateral trade negotiations. Unfortunately, vertical integration with Europe is unlikely to facilitate the industrial development of African economies, because the EPA process does not take into account the differences in development between Europe and Africa, and within Africa itself. For instance, 34 of the 48 countries currently negotiating an EPA with EU are least developing countries (LDCs). They should have continued to benefit from the Lomé Convention’s Everything But Arms (EBA) initiative but under the EPA process they will have to do without such special treatment.
The current thrust of the EPA negotiations suggests that their main concern is solving Europe’s overproduction and profitability crisis by opening up more markets for its products and services in Africa. EPAs are essentially 'free trade areas' between partners that are both economically and politically unequal. They come supported by 'one size fits all' neoliberal policies, a development that provides a further example of the combined effort of global forces (the EU, International Monetary Fund, World Bank) to thwart the development of poor countries. Trade relations that were non-reciprocal are now being made reciprocal thereby removing the developmental component that characterised the previous Lomé Conventions. Indeed, EPAs seek to replace past special preferences, a development that also suits Europe’s political interests well, particularly now that the 25-member body is increasingly sensitive to the demands of the new member-states, which are reluctant to be guided by past colonial relationships.
The EU as a major trading ‘partner’
The EU is well positioned to ensure that its negotiating options and financial, institutional and technical resources all serve its interests in both bilateral and multilateral trade negotiations. Indeed, the European Commission (EC) has a layer of technical experts whose sole duty it is to prepare these negotiations. It is likely to exploit its superior bilateral bargaining power to push for EPA outcomes that maximise the EU’s political and economic interests at the WTO negotiations. The EU’s push for EPAs is inextricably linked to the WTO’s political processes, where decisions are based on a one-country, one-vote consensus. So, EPAs provide the ideal political framework for the EU to neutralise the potential for opposition to its agenda in the WTO from a large constituency of the G90 grouping – the multilateral body of which the ACP countries constitute the larger proportion.
In addition, the EPA process will assist the EU politically by fostering a community of interest between it and the ACP in future WTO negotiations. The EU is also fast-tracking the negotiations in order to meet the end of the current waiver date of the WTO, which is December 2008. The above clearly shows the promotion of Europe’s interests at the expense of Africa’s long-term sustainable development as well as the failure of the dominant partner to muster the political will to defend future pro-Africa positions at the WTO.
While Africa is concerned about developmental issues and resources, Europe is busy prioritising issues within the six clusters (development, agriculture, services, trade-related issues, fisheries and market access) that countries are to negotiate with the EC. Europe is also working out how to bring back the rejected Singapore issues of competition policy, investment policy, transparency in government procurement and trade facilitation, issues that are much easier to manage at the WTO level. This is also the reason why the EU is fast-tracking the process, so that the EPA negotiations are concluded before the finalisation of the Doha Development Agenda. As a result, the EU is ready to use all its leverage to put pressure on the four African configurations to come up with EPA outcomes that favour Europe, even though this may not necessarily promote the Africa’s long-term sustainable development through trade.
The EU as a ‘donor’
Europe provides developmental assistance to individual countries and debt relief to the highly indebted poor countries (HIPC) of the continent. Having realised the vulnerability of African economies, Europe then dangled the 'developmental aid purse', which resulted in the split of Africa into four configurations that totally disregard existing regional economic communities. The division of Africa into small, weak and fragmented negotiating structures suits the EU politically, especially since to date no country has received the promised developmental assistance despite the development challenges they face.
The EU also supports many projects across Africa and provides assistance to fiscal financing. In some African countries, this budget support is estimated to be over 60% of the total fiscal budget. At a regional level EU support has gone to implementing developmental projects and bankrolling regional integration efforts on the continent. These regional groupings were able to establish trade protocols that seek to facilitate trade and development within and outside the regions. However, largely through the EPA process, the EU is sacrificing the very regional integration it has long been bankrolling. In the process, it is deligitimising the existing regional integration agenda simply because of its desire to experiment with the new wave of regional negotiating structures that are set to negotiate a new medium- to long-term trade regime with Europe.
Of interest is the EU’s desire to bankroll an EPA with the Eastern and Southern African (ESA) region - the 'high breed configuration' which does not have the legal standing and structures that ought to be required by any donor. But because the donor is an interested party, which expects to gain from the conclusion of the negotiating rounds, it simply overlooks the ESA’s legal and structural deficiencies. Under normal circumstance, no donor could bankroll the activities of a recipient through another 'entity’s structure' the way the EU is supporting ESA-EPA activities through COMESA. This raises a number of questions: Why bend the rules of donor funding? Whose interests are at stake if proper legal structures are established, albeit at a slow pace? What will happen if ESA member-states refuse to honour funds coming from the EU through COMESA? All this points strongly to the EU having considerable interests at stake over EPA negotiations. It therefore appears that forming these new regional configurations is likely to produce desirable results for the EU comparable to those of the 1884 Berlin Conference, which carved Africa into small but controllable states solely for the benefit of Europe.
The EU’s divide and rule policy
EPA negotiations have bundled countries in Africa into new regional political structures a development that separates them from the existing regional integration frameworks and hampers regionalisation efforts. Since countries belong to multiple economic integration blocs, the EPA structures have further split and bundled them into a weak and loose trade negotiating machinery. For instance, this process has split the EAC, ECCAS and SADC regional groupings, a development that raises the question of what will happen to Tanzania, the four original members of SADC (Malawi, Mauritius, Zambia and Zimbabwe) and the three ECCAS member-states (Burundi, Rwanda and the Democratic Republic of Congo) in the event of a good or bad ESA–EPA deal. This is part of divide-and-rule tactics associated with the EU and other bigger powers at the multilateral level. The result is total control over the other partner (Africa) and compliance with the EU’s interests. Africa is aware of well-documented threats the EU has made in the past, including withdrawing development aid, existing trade, aid and investments, contracts and budgetary support; interfering with national and regional security policies; re-imposing trade barriers; and removing ambassadorial representations from WTO and ACP-EU headquarters where key events take place.
Africa as a ‘partner’
EPAs will tie Africa to Europe in an unbalanced framework, and in so doing will undermine the continent’s economies, particularly the producers of goods and services and the regional integration effort. Africa is experiencing serious developmental challenges including supply-side constraints, growing unemployment and declining economic activity. The supply-side constraints include: the unreliable provision of public utilities (electricity and water); a poor public infrastructure (run-down roads and railways); weak institutional and policy frameworks (leading to fluctuating exchange rates and high interest and inflation rates); and low labour productivity (arising from poor education, health and housing provision).
In addition, all the African countries negotiating an EPA are locked into an unhealthy post-colonial dependence on Europe for development aid, fiscal support and markets, which hinders Africa’s competitiveness in the national, regional and international markets. This dependence and these economic weaknesses ensure that the EU is unlikely to face strong opposition to its desire to fast track EPA negotiations. Europe is aware that African configurations not only lack independent preparation, but are also small, weak, poor and too fragmented to mount a strong position in the timeframe that is being determined by Europe. Europe is also aware that African countries do not have the resources to mount any serious resistance to its long-term agenda and that her negotiators at every level lack the experience of their EC counterparts.
This clearly illustrates that Africa is being denied an opportunity by its partner and the referee of this process to revitalise its industrial development so that its products and service can become more competitive. Surely, the EU is set to win this bilateral round of negotiations. It is also certain to score victories at the WTO given its strategy for neutralising the larger organic group in the south.
* Richard Kamidza has just joined the African Centre for Constructive Resolution of Disputes (ACCORD) as a senior researcher. You can reach him on [email protected] or +27315023908.
* Please send comments to [email protected]