EU Stands to Increase Market Share in Africa With EPAs

EU Stands to Increase Market Share in Africa With EPAs

Inter Press Service (Johannesburg)
NEWS
26 January 2008
Posted to the web 26 January 2008

By Julio Godoy
Paris
While the real impact of the economic partnership agreements (EPAs) on the economies of African, Caribbean and Pacific (ACP) countries will be “small”, the pace of negotiations and of the liberalisation of their markets is too fast and will damage their economies, according to numerous French economists and development experts.

“The main problem with the EPAs is that the European Union wants to go too fast with the negotiations, too fast with the regional integration in the ACP group, and too fast with the market liberalisation in there,” says Bénédicte Hermelin, research director at GRET, a Paris-based umbrella organisation of international cooperation groups.

The EPAs, supposed to take effect as of January 1, 2008, propose to create a free trade area between Europe and the 79 ACP signatories of the Lomé Convention. The convention goes back to the 1970s.

EPAs are part of the Cotonou agreement — a much wider agreement signed between the European Union (EU) and the ACP countries in June 2000 in the capital of Benin. It covers aid, trade and political cooperation between the two groups of countries.

The Cotonou agreement replaced the Lomé convention, which gave ACP countries special access to sell certain products in European markets.

EU officials defend the EPAs as trade and development tools, as Peter Mandelson, EU commissioner for trade, has put it. In a speech on January 20, 2005, Mandelson described the EPAs as “potentially a crucial, hugely positive contribution that Europe can and must make to trade and development” in Africa.

The EPAs’ “purpose is the successful integration of the ACP economies in the global economy — and by that I mean putting the ACP on a ladder of prosperity that ends the grinding poverty which is the daily experience of so many ACP citizens,” Mandelson said.

But numerous ACP governments and European non-governmental organisations oppose the EPAs, for they consider them an instrument of “European economic neo-colonialism”, which would destroy these low developed economies by forcing ACP countries to open their markets to subsidized agricultural goods from Europe.

However, says Hermelin, at least regarding agriculture, “for Africa, the imports of poultry from Brazil are more dangerous than those from Europe”. Similarly, she says, Africa will need to import milk from Europe “still for a long time, until its milk production can satisfy the local demand”.

Other experts believe that the EPAs will strengthen Europe’s trade position in Africa at the cost of inter-Africa trade.

“If African coastal countries, such as Senegal, completely open their markets to European agricultural products, then the Saharan countries producing livestock will lose their market shares in those neighbouring countries,” Benoit Faivre-Dupaigre, an economics researcher at the French Institute for Research on Development, told IPS.

Like Hermelin, Faivre-Dupaigre denounced the pace of negotiations on the EPAs imposed by the EU. “This fast-track liberalisation contradicts the experience of industrialized countries, which needed decades to build up their domestic markets before they opened them up to international competitors,” he said.

According to a study by the Paris-based Research Centre in International Economics (CEPII, after its French name), the impact of EPAs on ACP economies would be negative, if small.

On the one hand, the liberalisation of trade with the EU would represent a 22 percent growth of imports from Europe. But, if 20 percent of these new imports are blocked by the “sensitive products” clause, that growth would fall to 16 percent, representing some 3.5 billion euros in new imports from Europe.

However, these new imports from Europe would substitute goods the ACP countries presently bring in from the U.S., Brazil, China, Japan and other countries, thus reducing the new trade debit balance for the ACP countries to 1.8 billion euros.

As the CEPII notes, given that the ACP countries imported a total of 102 billion euros in goods and services in 2005, that new deficit is insignificant.

More important is the ACP custom revenues loss due to EPAs, as estimated by the CEPII. These losses could go up 3 billion euros per year for the ACP countries, with individual impacts going on from five to 35 percent of the state budget.

In the cases of the poorest countries, such losses can be of enormous importance for states almost deprived of income, notes the CEPII.

Such data lead Roger Blein, French development advisor for the Economic Community of West African States (ECOWAS, a regional group of fifteen West African countries), to believe that “even if the impact of the EPAs would be modest, it is clear that the EU is trying to expand its market share in the ACP countries.

“When the European Commission says that Europe does not have any economic interest in the EPAs negotiations, it is lying,” Blein added.

In general, French critics of the EPAs recall that while the EU farmers do enjoy of massive subsidies — some 50 billion euros in 2005 — small agricultural producers in the ACP do not.

The French group ATTAC, for instance, argues that these subsidies for European agricultural goods already encourage overproduction and, if added to so-called free trade agreements such as the EPAs, will also promote export dumping.

This will lead to the destruction of livelihoods in developing countries, representing a real and palpable menace for those countries’ “food sovereignty”.

ATTAC stands for Association for the Taxation of Financial Transactions for the Aid of Citizens and opposes neoliberal globalisation in general, from the World Trade Organisation to the policies of the World Bank and the International Monetary Fund.

In a position paper published last December, ATTAC recalls that the production of tomatoes in Ghana was affected by the structural adjustment programmes imposed by the International Monetary Fund in the 1980s and 1990s. “The import of tomatoes skyrocketed, from 3,600 tones to 24,000 tones,” ATTAC says in its paper.

This growth in imports led to “weakening of the Ghanaian farmers, traders and the food processing industry in the country”. EPAs would launch a similar process in the whole of Africa, ATTAC claims.