Out from under EU’s trade yoke

2008-03-15 00:00

The flood of new bricks-and-mortar investments, cash and two-way trade deals from China and India into Africa offers the continent a real opportunity to lift itself out of poverty on the tails of the Chinese dragon and the Indian tiger.

One immediate advantage of the mass entry into Africa of the two Asian giants — and, increasingly, other non-Western powers such as Brazil and Russia — is that African countries now have more options and can negotiate better trade deals with Western competitors. In the past, African countries had to accept outrageously lopsided, trade, aid and economic deals Western countries forced on them.

Following the collapse of the World Trade Organisation’s (WTO) global trade negotiations, which were supposedly a development round, industrial nations are now increasingly attempting to get individual developing or regions into one-sided “partnership” agreements. So far most, if not all, of them have included the very same one-sided deal that the large industrial countries wanted to tie the developing countries to, but failed during the WTO’s failed global trade negotiations.

Worse, developing countries are bullied into accepting these lopsided “partnerships” with not-so-subtle threats of withdrawing aid or in the event of failing to sign, blocking access to products from developing countries to the markets of their industrial nation “partner”.

One of the most debilitating demands from especially the European Union, in its offer to extend “Economic Partnership Agreements” to African and poor developing countries, is to force them to promise not to sign preferential agreements with EU competitors. These EU competitors, although not explicitly stated, are widely meant to be China and India. The countries of the Southern African Customs Union (Sacu), Botswana, Namibia, Lesotho and Swaziland, which share the world’s oldest customs union with South Africa, last year signed an interim economic partnership with the EU that will govern trade between these countries and the EU.

The EU has put tremendous pressure on the southern African nations to sign the deal quickly.

Under article 31 of the Sacu/EU interim “partnership” agreement, it states very clearly that after signing the deal, the signatories cannot enter into new preferential trade agreements with “third parties”. These Sacu countries’ governments must still formally endorse the deals. They should not. Mozambique has already agreed to sign an EPA with the EU. These countries will be committing trade suicide if they agree to the current stipulations of the EPAs. South Africa wisely opted out. Namibia has told the EU they want to renegotiate aspects of the EPAs.

But, astonishingly, EU trade commissioner Peter Mandelson told Namibian and other Sacu negotiators the EU would not renegotiate the draft of the EPA deal. Furthermore, the EU refuses to consider suspending the unfavourable timeline it set for finalising the EPA negotiations, especially the planned next round that will deal with the EU’s demand for the southern African EPA deal signatories to agree to liberalise their services trade. The EU gave the governments of Sacu an ultimatum until this week to sign up to the EPAs or face even tougher entry barriers for their products into the EU markets.

Yet, even under the existing EU EPA terms, products made in southern African countries still face import duties in the EU, while products from the latter can enter and circulate freely in southern African markets. Furthermore, the EPA compels southern African countries to alter their countries’ individual economic regulatory regimes according to the wishes of the EU. The EU’s demand for African countries to open up their markets to the services trade from the EU is particularly contentious, and may undermine the already vulnerable economies of African EPA signatories even more.

In South Africa’s case, for example, the EU demands that the country opens up its energy, transport and communications industries, at the heart of the country’s attempt not only to deliver services to its poor communities, but also crucial to the country’s attempt to achieve a six percent and beyond yearly growth, which would put it on target to halve unemployment and poverty by 2014.

The EU has stepped up the pressure on South Africa, telling the country’s negotiators that if they refuse to sign, they risk losing out on being elevated to a “strategic partnership” level with the EU.

Under President Thabo Mbeki, South Africa has rightly pursued a trade strategy of seeking closer trade relationships with large developing countries, such as Brazil, India and China, rather than depending on the EU or the U.S., attempting to secure the best individual deals on a country and product base, rather than tying its trade exclusively (and on terms dictated by them) to the EU or the U.S.

This has evidently raised the ire of both the EU and the U.S. In the wider southern African region, seven of the Southern African Development Community’s (SADC) 14 members are about to sign to the EU’s economic partnership agreements. The EU has signed such agreements with almost a third of the former 79 African, Caribbean and Pacific colonies of EU members.

The new post-WTO strategy by industrial nations, such as the EU and U.S., to negotiate regional specific trade deals actually undermines regions such as the 15-member SADC trying to establish tighter regional integration in terms of trade, economics and politics to make them more viable economic entities. President Mbeki rightly told the EU’s Mandelson last week that provisions in the EPA will adversely affect regional integration in SADC.

Western conditions tied to African trade and aid, such as prescribing the economic policies they should pursue, must rank as one of the most undermining of African societies. The entry of China, India and other giant developing country economies such as Brazil, has opened much more trade and development opportunities to poor African and developing countries.

Signing the EPAs will be to squander these ready opportunities.

•William M. Gumede is author of Thabo Mbeki and the Battle for the Soul of the ANC.

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