EU arrogance damages trade relations with Africa

Relations between the EU and Africa are worse than in a long time, which is partly due to the EPA negotiations on trade policy. Stefan de Vylder, economist, gives in this article a brief background to the controversies - what are you really arguing about?

Relations between the EU and Africa are worse today than they have been for a long time. A major cause of tensions has been the EU's arrogant way of conducting negotiations on so-called EPAs (Economic Partnership Agreements). These were supposed to be signed as early as 2008, according to the EU's original plans, but negotiations have dragged on. Only in October 2014 could an agreement be concluded with the EAC (East African Community, consisting of Kenya, Uganda, Tanzania, Burundi and Rwanda) and with ECOWAS (Economic Community of West African States) in West Africa. However, some countries, such as the economic power Nigeria, have refused to sign.

The purpose of these comments is to briefly describe the background to the EPA negotiations. What have they been arguing about?

EU tariff preferences

For most low- and middle-income countries, in particular LDCs (Least Developed Countries), it is not the general customs agreements within the framework of the World Trade Organization WTO that are most important in terms of access to the markets of the OECD countries. Since the 1970s, all OECD countries have established special systems for tariff preferences, so-called Generalized System of Preferences (GSP), for less developed countries. The GSP system is based on unilateral agreements, which means that each country, like the EU, can unilaterally decide on changes to their respective preference systems.

The same applies to the EU decision from 2001 to in principle allow duty- and quota-free imports of all goods except arms into the EU market from all LDCs, the so-called EBA initiative where EBA stands for "everything but arms"(That the EU's laudable initiative has been renamed everything but arms is a bit bizarre considering that no LDC exports weapons).

The EU has also concluded a series of free trade agreements with individual countries and regions. For a long time, the most important of the EU's regional preference systems was the one that gave specific trade preferences to the so-called ACP countries, ie the group of countries, mainly old British and French colonies, which was formed in 1975 and currently consists of 78 states in Africa. , The Caribbean and the Pacific. The vast majority, around 95%, of the ACP countries' more than 800 million inhabitants are in Africa.

Between 1975 and 2000, the EU's trade preferences and economic cooperation with the ACP countries were governed by the so-called Lomé Conventions, which in 2000 were replaced by the Cotonou Agreement. In the area of ​​trade policy, the Cotonou Agreement was largely a continuation and further development of the Lomé Convention's system of trade preferences for ACP members. However, the generous preferences on paper were surrounded by numerous restrictions, not least in the field of agriculture and in terms of the EU's cumbersome rules of origin. For these and other reasons - not least the inability of the ACP countries to diversify their commodity-based economies - trade preferences never became the path to rapid export growth to the EU that many had hoped for.

The Lomé and Cotonou agreements were at one point in conflict with GATT's and WTO demands for equal treatment, ie the prohibition of discrimination between Member States. However, there are opportunities in the regulations to give the countries that are classified as developing countries, and especially the LDC group, a positive special treatment in different areas.

The interpretation that was given, however, was that the positive discrimination of the ACP countries in particular, which includes both middle-income countries and LDCs, was contrary to fundamental principles within the GATT / WTO. If the EU were to continue to grant special trade preferences, these would have to be extended to all countries classified by the UN as developing countries. The EU therefore decided to replace the whole old system of unilateral tariff preferences with the ACP countries with what has been renamed Economic Partnership Agreements and which were originally intended to replace the Cotonou Agreement as early as 2008.

Impulses and irritants

The EU chose to divide the ACP group into six different groups - four in Africa, one in the Caribbean and the Pacific each. The grouping was done, to the indignation of the ACP countries, by the EU, and did not correspond at all with the regional trade policy blocs already created by groups of countries in Africa.

Negotiations were slow for a long time. Among the demands that the ACP countries have had difficulty accepting is that the tariff preferences under the Cotonou Agreement should be replaced by reciprocal free trade agreements which entail duty-free treatment for virtually all exports from the EU. The ACP countries are thus losing customs revenue, which in several countries is important for the Treasury, and there is also great concern that the EU will have an even easier time than hitherto to have the right to dump its subsidized agricultural surpluses on poor countries' domestic markets. The EU's response has been to grant countries relatively long transition periods, as well as to grant exemptions from duty-free treatment for certain strategic goods.

Another sensitive issue is the ACP countries 'right to levy export taxes and in other ways regulate the export of raw materials in order to promote the countries' own processing and industrialization. According to the EU, this is contrary to the EU's interest in securing the supply of strategic commodities in accordance with the EU's so - called Commodity Initiative of 2008, which should be a priority part of all regional and bilateral trade negotiations. This issue has not yet been resolved, but the EU's arrogance in this and other issues has caused great irritation.

The ACP countries have on many occasions demanded that new agreements with the EU bring development and not just free trade to the fore. But the development aspects have been almost absent in the negotiations. Among other things, all issues of assistance and debt relief, which were included in the Cotonou Agreement, have been deleted.

"Exclusion" is not a disaster

Countries that had not signed and started implementing the EPAs by 1 October 2014 have lost their tariff preferences to the EU market and have to settle for the general tariff preferences granted to all countries classified as developing countries. This is not a disaster; as tariffs have been reduced slightly throughout the world, and also to the EU, the importance of special tariff preferences has diminished (so-called preference erosion).

The ACP countries' dependence on the EU as a market has also fallen sharply since the termination of the Cotonou Agreement. China is today a more important trading partner than the stagnant EU for most ACP countries, and the old colonies' need for tariff benefits from the old colonial powers is steadily declining.

This is a debate article. The author is responsible for analysis and opinions in the text.

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