Peter Draper of the European Center for International Political Economy (ECIPE) has an timely paper on the evolving nature of Africa / EU trade. As I have noted earlier, preferential treatment of African agricultural exports is becoming endangered as the WTO rules gain further weight. The ECIPE's prescriptions for improving Africa's trade position, though, are rather boilerplate "neoliberal." That is, these prescriptions would be hard to differentiate from the World Bank or IMF's output. You know the story: improve infrastructure, open up to capital goods imports, cut down on corruption, promote aid for trade, etc. Here is the executive summary:· African, Caribbean, and Pacific States have been negotiating Economic Partnership Agreements (EPAs) with the European Union for five years, in an attempt to replace longstanding preference arrangements with reciprocal agreements. These negotiations are fraught with problems, notably for African states. Much of the received wisdom in "civil society" is negative about EPAs and skeptical of EU intentions in pursuing them, further complicating matters. Of particular concern has been the breadth and depth of the EU's proposed agenda.
· Yet sober analysis of African development challenges points clearly to the need for African states to adopt a broad agenda, backed up with appropriate resources. From an African perspective the policy case hinges on two interconnected challenges: overcoming supply-side constraints, and addressing market access constraints. The former requires investment in infrastructure and market-buttressing supportive regulatory frameworks. The latter requires goods trade liberalization, notably with respect to manufactured goods. Hence the broad EPA agenda favoured by the European Union finds support, particularly the inclusion of core infrastructure services, investment protection, and competition policy. Intellectual property rights, trade and environment, and government procurement do not easily fall within this frame.
· Governance and governance capacities in Africa are central to the adoption of this agenda. These challenges are so severe as to require tailoring the negotiating framework to African capacities both to negotiate and implement negotiated outcomes. Hence it is proposed that the EU should tailor and sequence the negotiating agenda rather than insist on pursuing it all at the same time. Furthermore, the degree of dependency on aid in the continent means that substantial aid for trade, targeted at adoption of regulations and supporting institutions, will be necessary for a long time to come. Efforts to promote greater efficacy of aid disbursements must continue, albeit with the long-term objective of phasing out aid flows altogether.
· Within a tailored and sequence negotiating approach the goods agenda is clearly the most critical owing to the imminent expiration of the ACP waiver. Four scenarios regarding how this problem could be dealt with are suggested, with the conclusion being that the most likely amongst a range of difficult options is a combination of the EU not renewing the waiver for a limited period whilst graduating those countries (non-LDC states) that do not benefit from access to EBA ["everything but arms"] preferences to the EU's GSP-plus scheme and simultaneously reconfiguring the scheme to take account of their market access concerns. However, it is not apparent that sufficient political consensus in the European Union exists to pursue this path, hence the negotiations will remain uncertain for some time to come. Furthermore, this option is still inferior to negotiated reciprocity which should remain the cardinal goal of ACP states, including LDCs, albeit this needs to be carefully designed with fragile tariff-dependent revenue bases in mind.
· Contrary to conventional wisdom the paper is skeptical of EPAs' potential to build regional economic integration, and argues for considerable caution in using them to pursue this objective. Hence the EU's conscious effort to "externalize" its own model of regional integration using EPAs needs to be tempered. This fits with the broader project of reducing the regulatory burden and reinforces the need for a tailored, sequenced approach.
· This broad framework is applied to the SADC EPA, which is found to exhibit unique peculiarities owing to the EU's relations with South Africa. Of particular concern is the EU's proposal to "differentiate" its market access offer on goods for South Africa. This is found to run counter to the EU's stated goal of using EPAs to build regional economic integration as it would require members of the Southern African Customs Union to establish internal border controls in order to police rules of origin.Yet South Africa's approach to the negotiations is also found wanting in that the country is blocking adoption of the regulatory agenda, particularly services, whilst this would affect its customs union partners most negatively. In order to overcome this impasse it is proposed that the EU soften its goods market access stance in return for South Africa agreeing to negotiate regulatory issues. Failing this the EU should urgently consider graduating the non-LDC SADC EPA states (Botswana, Namibia, and Swaziland) to GSP plus in the interim renewing their preferences in the absence of the waiver.
