The European Union (EU) argues its economic partnership agreements (EPAs) with African countries contribute to development and poverty reduction.
It claims that by giving them duty- and quota-free access to the EU market, the EPAs directly benefit African manufacturers, service providers and farmers, along with their communities. However, the agreements are reciprocal, also requiring the opening of African markets to goods from the EU, which raises fears that African countries will not be able to compete against their European rivals.
Since colonial times, African countries have been structured to supply primary goods or raw materials to European ones, which then exported manufactured products back to the continent. Despite decades of political independence, the structure of trade between the two continents has not changed much.
In 2016, for instance, 94% of EU imports from West African countries were primary goods, while 53% of West African countries’ imports from Europe were manufactures. This is not surprising. European countries are advanced economies.
It is doubtful that African countries would be able to develop a robust industrial base in the face of cheaper and better quality European imports. But could they at least be strong enough over time for their own markets?
Without some trade protection measures, such an aspiration could be in vain. Many of today’s advanced economies employed protectionist measures on the road to development, so why should African countries do differently?
The EU argues these concerns are baseless, citing protection clauses in the EPAs that provide long transition periods for sensitive and infant industries. Participant countries can also ask for a review when problems arise during implementation of the agreements.
This sounds good in theory but may not be so in practice. Resolving these issues tends to take time, and the technological gaps are too wide to be bridged quickly enough, even if the EU were being altruistic.
When pushed, the EU likes to point out the EPAs were the product of intense negotiations. How likely is it, though, that the outcome would be balanced when these countries remain dependent on EU aid? Never mind that their negotiating capacity was similarly enhanced with EU help. Little wonder then that commentators regularly condemn the EPAs as neocolonialist tools, reminiscent of the European scramble for Africa.
Ratification of the EU-West Africa regional EPA is currently being held up by Nigeria and The Gambia. Naturally, the EU argues the delay comes with costs for those yet to sign, such as not benefiting from duty-free access to the EU market, for instance.
The Gambia has recently embarked on a process that could eventually lead to ratification, but Nigeria currently looks unlikely to sign. Its manufacturers are particularly adamant that the EPA would impede what is already slow progress in their industries. There is also the issue of customs and excise revenue that would be lost in the event of assenting to the EPA.
Recognising that revenue loss concerns might be a deal breaker, the EU made provisions for about $9bn to be shared among the 15 West African countries concerned over a five-year period as compensation. However, this is a paltry sum in comparison to what a country like Nigeria could lose in duties alone.
The EU says it is willing to discuss and find solutions to these concerns, provided they are raised in a detailed and clear manner and really relate to the EPA. In any case, West African countries keen on the EPA will not necessarily be affected by the holdup.
For instance, Ghana and Côte d’Ivoire, which are highly reliant on cocoa exports to Europe, have already signed interim bilateral EPAs with the EU, pending the adoption of the region-wide agreement. However, the revenues from these duty-free primary goods exports will probably do little to allay the effect of European manufacturers entering their markets. African countries should be savvier.
from African Business Magazine http://ift.tt/2z4engk