EU-African trade conundrum

December 9, 2007

It’s all so terribly fraught, that for a non-specialist like me venturing into EU-African trade relations is a very risky matter.

But here an attempt at a few comments on the EU-African Summit held in Lisbon this week-end. Here an overview. The EU and African nations agreed to engage in a “strategic partnership”which has, among others, the aim to “move away from a traditional relationship and forge a real partnership characterised by equality and the pursuit of common objectives.” Those objectives are: “(a) peace and security, (b) governance and human rights, (c) trade and regional integration and (d) key development issues.”

Now to area (c), trade. [UPDATE: on why Africa is marginalised in world trade, some explanations over at Telos]. The EU and Africa were due to sign new Economic Partnerhsip Agreements (EPAs) by the end of this year to replace the preferential, or non-reciprocal market access agreements (so-called Cotonou Agreements of 2001, which replaced the 1975 Lome Agreements) to the EU. These were not compatible with WTO-requirements. This means that African countries need to open their markets to the EU. These EPAs further contain a flurry of other topics ranging from regional integration to aid. EPAs are in a total impasse now. Issues revolve around conditions for aid, what markets the EU will open, and especially the fact that African countries would be required to open their services markets to European companies. The EU has been accused of arms-twisting. For more details and background on what is at stake, please see this dense paper by a South African scholar Peter Draper.  Where do we stand now? Here for a state of play.

  • EPAs seem dead, or at least in a coma, to use Doha Round language. Senegalese president Abdulaye Wade seems to have buried them altogether: “We are not talking about the EPAs any more. We have made it clear that we reject them”.
  • An interim agreement on trade in goods is circulating but has not been signed up to by many African nations.
  • Some African countries could face a steep rise on tariffs in their access to EU markets from January 1. Among them Senegal.

Some intermediary deal will have to be reached. Long term, the EU will probably need to revise its cumbersome FTA strategy. African nations will need to get good economic advice and agree to liberalize their services, and try to seriously get out of aid dependency. The previous agreements are a real dependency trap that hasn’t helped Africa out of its economic desolation. A new type of economic relations will need to be set up. The irony of this services issue is that the EU pushes for opening up African services markets while at home it  watered down a serious attempt to liberalize services markets (the infamous EU Services Directive). In the meantime China is doing a controversial but effective job at providing aid, infrastructure, business and loans to Africa, giving African nations a better clout in their dealings with Europe. Another not very clean player is South Africa: leading the way in opposing EPAs while itself having a quasi-free trade agreement with the EU in place that secures its markets anyway….

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