EU-AU Summit: No Trade Deal (Surprise!)

♠ Posted by Emmanuel in ,, at 12/09/2007 04:57:00 PM
With the Cotonou trade waivers for preferential access of African goods to European markets set to expire at the end of the year, most African Union member countries have decided against entering into Economic Partnership Agreements (EPAs) that would have superseded the existing deal. I have previously noted the history of preferential trade agreements between these parties that now need to be scaled down under WTO rules concerning non-discrimination. That is, you cannot discriminate against other countries exporting similar goods using PTAs. Here is an Associated Press briefing on this latest impasse:

Most African leaders have rejected European Union proposals for a free-trade deal that would replace colonial-era trading systems, Senegal's president said Sunday at a summit marred by disputes over Zimbabwe and Darfur. The two-day meeting in Lisbon had been seen as a chance to push for progress on the deals known as [Economic] Partnership Agreements, or EPAs.

"It was said several times during the plenary session and it was said again this morning: African states reject the EPAs," Senegalese President Abdoulaye Wade said in angry comments at a news conference. Wade said he and South African President Thabo Mbeki had led African opposition to the EU's proposals which, he said, "aren't in Africa's interest."

He did not provide details. His tone of indignation reflected an increasingly tense atmosphere at the end of a summit that was intended to foster a new era of close relations between Europe and Africa...

On trade, the EU wants to meet a Dec. 31 deadline set by the World Trade Organization for replacing its trading system with former European colonies around the world, including in Africa. The WTO has ruled that the EU's 30-year-old preferential trade agreement with Africa was unfair to other trading nations and violated international rules.

The negotiations have lasted five years and officials had hoped the summit would bring a breakthrough. During previous talks, African governments have said the agreements would do little to boost their access to European markets. They also viewed the conditions as an EU attempt to meddle in African affairs.

European Commission President Jose Manuel Barroso acknowledged the difficulty of reaching free-trade deals between wealthy European countries and poor African nations. "It is a challenge for both Africans and Europeans and will require time," Barroso said in a speech to the gathering.

The two sides will press ahead with talks on interim accords with individual African countries to assure they continue to enjoy privileged access to European markets, he said. "We are nearly there and we now need to focus all of our energy to achieve this priority objective," Barroso said.

The EU says a deal will boost trade and help the development of African economies. It has warned that nations with which it does not forge new agreements by January will automatically lose preferential trade privileges and receive only limited access to EU markets under existing world trade rules.

Various non-government organizations (NGOs) have been accused by the EU of distorting African countries' trade views in pushing for the extension of preferential trade deals. NGOs are asking for a lot of things while accusing the EU of all sorts of malice in pushing these deals. See this Oxfam press release, for instance. Better yet, look at this laundry list of grievances highlighted by the Transnational Institute in the context of EPAs. It seems to blame the EU for every ill that has befallen Africa countries (which of course isn't possible):

• the inherently unbalanced nature of the trade flows between economies of very different size and at totally different levels of development, encouraged by so-called reciprocal 'market access';
• the consequent trade deficits in the weaker economies, contributing to balance of payments difficulties, continued external indebtedness and continuing aid dependence;
• the extensive reduction in tariffs eroding the revenues of governments heavily dependent on custom duties for their budgets; with negative implications for essential public spending;
• the intrinsically unfair competition between large and highly competitive producers/exporters from the EU in relation to the much smaller and weaker counterparts in the ACP countries;
• the inevitable decline and even closure of 'uncompetitive' companies in the ACP, contributing to the de-industrialisation already set in motion there by IMF and World Bank liberalisation programmes;
• the accompanying retrenchments and exacerbation of unemployment, now reaching generalised and catastrophic proportions in most of the ACP countries;
• the parallel loss of livelihoods of small farmers, and even bigger agricultural producers, in large measure through the influx of subsidised EU agricultural exports, whether directly or indirectly subsidised;
• the undermining of family and community food security, and food sovereignty/security within such regions, and their increasing dependence on imports even of their staple foods;
• the aggravation and deepening of poverty in both rural and urban areas, and the accompanying social stresses; including health crises, above all HIV/AIDS in Africa;
• the consequent survival struggles of the poor contributing to the environmental pressures already acute due to the extractive operations of transnational corporations in mining and agriculture, and in their fishing and (de)forestation operations.

Oh, the EU is so...EVIL [sniff...hand me a hankie, quick]; it's Satan's emissary on earth. Seriously, though, here are some reasonable questions I'd like to ask these campaigners and the African countries which they offer advice to:

(1) If preferential trade agreements are so desirable, then why have African countries failed to make progress by leaps and bounds over the past three decades while PTAs were in place?
(2) Conversely, if high tariffs in African countries are so desirable, then why have these countries failed to make much progress while these tariffs were in place?
(3) Who's caused more harm--the EU or a succession of despotic African rulers like Robert Mugabe?
(4) With terms of trade moving in favor of commodity exporters as worldwide commodity prices increase at a healthy clip, are African countries incapable of taking advantage of this trend?

Oxfam also makes much of allowing African countries more time for deliberation. As the AP report highlights, the EU has pressed this matter for five years. The EU has given African countries more than ample time to negotiate more favorable terms IMHO. Furthermore, the year-end deadline is there for a reason and it's not because the EU is "forcing" African countries into compliance. Rather, it's there because other WTO member states have given these countries up to the end of 2007 to dismantle current arrangements. Bottom line: European countries have done plenty of rotten things in Africa, especially during the colonial era. That the Common Agricultural Policy is still in place is also a great shame. All the same, the EU has made steps to make up for its sordid history in Africa by, for example, entering into PTAs with the Lome Convention and Cotonou Agreement. However, PTAs are becoming untenable as the WTO prescribes non-discrimination for various trade partners. More importantly, if PTAs have been unable to promote development over an extended period, shouldn't African countries try another tack? Playing the victim can only get you so far.