Quarterly Bulletin

 In the globalised world that we live in today, interdependence and cooperation would seem the most important social, cultural and economic values. Economically, trade is one of the things that countries of the South have to develop if they are to gain from global resources and exchange. Despite the weak negotiating powers that individual countries have in these trade agreements, African countries still fail to cooperate to have a bigger voice. Muyatwa Sitali, who attended the recent EU-Africa Summit in Portugal, writes on the failure by African countries to cooperate in negotiating one such trade agreement known as the Economic Partnership Agreements (EPAs).

While the 80 leaders of Africa and Europe met on December 8 and 9, 2007 in Lisbon to discuss a joint strategy for the development of the two regions, citizens of these regions waited for practical responses to the challenges facing them. With overwhelming poverty levels of over 50 percent in Africa, continued human rights abuses, criminalisation of migrant communities, the persistent impact of HIV and AIDs, the impasse over the hurried completion of negotiations for a free trade area between Europe and Africa, Caribbean, and Pacific (ACP) called Economic Partnership Agreements (EPAs), peoples’ high expectations are understood.

But did the leaders stand for the human development of everyone, especially the poorest? Were their deliberations circumscribed to the development agenda which the people expected? It is clear that many people in Africa and Europe did not underestimate the unity and divisions which often characterise such meetings of big people, meeting in big places, discussing big issues which they hope would positively affect the majority of people with little influence, scattered in many little places whose participation is always little.

“Interesting Dichotomy”

For the Lisbon Summit, the leaders portrayed an “interesting dichotomy” in their responses to key issues facing them. An “interesting dichotomy” in that firstly, African Leaders unanimously showed solidarity to the Southern Africa Development Community (SADC) in their quest for a solution to the problem of Zimbabwe. Most of them declared their sovereignty and in one way or another agreed that the problem of Zimbabwe was not only delicate but also required careful historic consideration.

Secondly, African Leaders exercised their autonomy in their approach to the challenge of Free Trade Agreements (FTAs) between their countries and Europe. They made country decisions most of which were against the   initial  decisions they had been making in their negotiating groups. Some African nations including Zambia have already nodded the European Commission’s EPA Interim Agreements, which were unilaterally designed by the Commission and unveiled in the last 90 days before the expiry of the 31st December 2007 deadline.

On the other hand, the European Union was divided on Zimbabwe and united on their quest for further opening of African markets through reduction of tariffs on European products. While African states seemed not to care much about their unity on these FTAs which have the potential to reduce the participation of small scale entrepreneurs, service providers and farmers, they cared to unite onZimbabwe.

Divided on EPAs

African states were initially negotiating the EPAs under regional groupings representing countries in Central Africa, West Africa, Eastern and Southern Africa. Admission to each group was not primarily based on geography but also membership to regional economic bodies.

For example, Zambia belongs to both the Southern Africa Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA); it chose to negotiate under the Eastern and Southern Africa (ESA) group whose secretariat is COMESA. Tanzania on the other hand, is a member of COMESA, SADC and East Africa Community (EAC), but it chose to negotiate with SADC and then changed to make an agreement with EAC. African states drafted positions together in these regional groups.

Together, they devised common strategies and strongly defended positions which supported a young, weak and “poorly supported” production base of their countries. They advocated for increased support in order to fully address their development needs such as infrastructure development. These positions were reinforced by the African Union. For example, in January 2007, the African Union expressed their concern “that at this advanced stage of the negotiations Africa’s priorities have not been positively and adequately addressed by the European Commission.”

Even though their economies are small, their strength in the negotiations was always in their unity. For example, the Eastern and Southern Africa   group which comprised 16 countries, most of which are Least Developed Countries including Zambia, managed to come up with their own text for negotiations. Among the many patriotic, pro-poor and development-friendly positions that this group of countries came up with was a list of products which they could not subject to competition with the EU in local markets. 

This list comprised more than 20 percent of imports from the EU. But the EU insisted that according to the WTO regulations, this list should be only 20 percent. 

ESA insisted that removal of import taxes for EU products entering their market can only happen over a long period of time desirably 25 years with a 10 year moratorium. This was based on the fact that such tariff reductions would lead to huge revenue losses and indiscriminately open their (ESA) markets to a flood of cheap EU products which are heavily supported by the EU. This was a huge threat to local producers and infant industries, especially considering that subsidies in Africa were largely discouraged by the World Bank and International Monetary Fund.  

CUNNING TACTICS

Currently, the ESA group of countries can no longer take pride in the unity of their group, which they called a “Happy Family”. This is because a splinter group consisting of five member countries of the EAC signed their own agreement with the European Union.  Further, four countries including Zimbabwe, Mauritius, Seychelles and Zambia (partly agreed) have also gone ahead to agree with the EU’s interim agreement bilaterally.

In West Africa, Ivory Coast and Ghana are the only two countries which have signed the agreement. Nigeria and Senegal have remained devout to ensuring that they do not sign a weak agreement. This is regardless of the cunning tactics of the EC which cut across a range of strategies including threats of less aid as countries which do not sign may not access some 2 billion Euros. Also, there is the sheer sarcasm from EU officials who have gone as far as calling countries like Nigeria “a sitting elephant”.

While on one hand African states are responsible for timidly signing the Interim agreements, the EU on the other hand is responsible for this division. The EU through its Commission exerted undue pressure on some weak African governments. They ensured that their (ECs) propaganda produced the results which they argue are in conformity with WTO regulations regardless of whether such results are beneficial to their counterparts.

The scheming of the Commission does not respect regional integration efforts within Africa, it seeks maximum compliance with the WTO rather than maximum flexibility, and it is only synonymous to duress.

At the summit in Lisbon, the EU chose to evade completely the division that EPAs have caused in Africa. The President of the European Commission, Jose Manuel Durao Barroso seemed to suggest that all African nations are concluding these agreements. He stated that “the economic partnership agreements that we are currently negotiating and in many cases already concluding also here in Lisbon will help to do all these things (referring to a number of requirements for both the EU and Africa to gain from globalisation such as freeing the dynamism of entrepreneurs, attracting new investment, infrastructure development, etc).”

Risks of Division

Interim Agreements are a threat to the unity of Africa and especially to the regional integration efforts. Most African countries have agreed to terms which are less than what they were negotiating for as a group.

What has happened in ESA is sufficient to illustrate this dissection. It is essential to remember that the 16 ESA countries have split into small groups which include the EAC with five countries including Kenya, Tanzania, Uganda, Burundi and Rwanda, and countries which have initialled bilateral agreements including Mauritius, Zimbabwe, Seychelles, Zambia and recently Malawi and Madagascar.

Before the dissection, this large group of countries negotiated for a number of terms including the following 1) A longer transition period of 25 years with a 10 year moratorium, 2) protection of 30% of trade with the EU and 3) and the need for a flexible deadline.

With the new partition, the EAC has now subjected itself to 82% liberalisation of the value of their trade to be progressively reached by liberalising 64% in two years, 80% in 15 years and the remainder in 25 years. EAC also has up to July 2009 to finalise a full EPA which  includes an  inbuilt agenda for negotiations on services, investments and other Singapore issues which most EAC member countries already rejected at the World Trade Organisation (WTO). The agreement even “porously” creates room for negotiations on “any other issues that any partner finds necessary.”

ESA countries including Mauritius, Zimbabwe and Seychelles have agreed to gradually liberalize imports from the EU covering mainly capital, raw material and intermediate products, mostly over 15 years, with an initial 5 year preparatory period. The percentage of trade liberalisation is more than 80%. Some products, mainly final products, will be liberalized over 25 years. ESA have to conclude the full EPAs by December 2008. 

The reduction in the transition period to 15 years and even two years for 64 percent of EAC products is indicative of the loss of bargaining power. Additionally, the moratorium has been drastically reduced by half to 5 years from the desired 10 years. Since there was no rationale for coming up with an extension period, the existing agreements differ in the time they have added to allow for the completion of a full EPA. It is 1½ year for the EAC and 1 year for Zambia, Zimbabwe and Mauritius.  With very short transition periods and liberalisation of over 80%, the impact of these free trade deals will be judged by the extent to which they will benefit small scale producers. 

ENTICEMENTS

The EC have stated that “ACP countries will receive €23 billion in development assistance over the next seven years. ACP countries will also benefit from the Europe’s decision to increase spending on aid for trade to €2 billion a year, with a priority given to measures that help implement EPAs.” This could have been one of the carrots used to entice ACP countries into signing the trade deals.

African nations should remember that, historically, the EU has only disbursed, on average, 34.5% of its development resources in the previous development circles. Clearly, levels of EU development assistance to Africa as a proportion of national income are not increasing at the rate necessary for the EU to meet its promises. EU member countries in 2002 at the Monterrey Conference agreed to spend at least 0.51% of national income on development assistance by 2010, and 0.7% by 2015.

Data from Debt Aids Trade Africa (DATA) indicates that since 2000, the EU’s Development Assistance (ODA) to sub Saharan Africa has been just above 0.10%.

For African states, experiences of liberalisation enforced in the 1990s under the austere conditionalities of the World Bank and IMF should serve as precedence on which to judge current optimism of widespread liberalisation with the economically strong EU. Massive job losses, closure of companies, destruction of the countries’ industrial base such as textile in Zambia, constriction of agriculture and heavy presence of foreign investments which have little regard for internal labour laws still haunt current economies and has already tied posterity to inhumane conditions.

ECONOMIC EMANCIPATION

It is imperative for African leaders to realise that their challenge is not to prove their political independence but to now claim economic emancipation which requires the vigilance, strength and assertive spirit exhibited by the     legends        of political independence. EPAs are a real threat to economic independence as the proponents of liberalisation and free trade are now legally securing ways of accessing resources including natural resources and labour. 

For Zambia, it is even important to know that EPAs are to this decade what the mining development agreements were to the last decade. Such legal agreements unilaterally devised by economically strong institutions require care and jurisprudence before setting pen to paper.

Muyatwa Sitali
JCTR staff
Lusaka