Africa right to hold out for better European deal

May 31, 2009 Features / Columnists, Ronald Sanders

By Sir Ronald Sanders
With the intention of getting a more favourable arrangement, several African countries are holding out on signing an Economic Partnership Agreement (EPA) with the European Union (EU). Both the members of the Southern Africa Development Community (SADC) and the Economic Community of West African States (ECOWAS) are continuing to negotiate with the EU.

SADC was scheduled to sign the EPA on May 7th but the ceremony was cancelled at the last minute, and ECOWAS declared that signing an EPA before a June 20 deadline was ‘‘no longer realistic’’.
One of the issues identified is the ‘‘most favoured nation’’ clause under which all trade benefits agreed with third parties are automatically extended to the EU. The fear is that the EU will access market openings that African countries give to other developing countries in the context of South-South trade. This would give developed EU countries an unfair advantage.
The identical argument was raised in criticism of the EPA signed between the EU and Caribbean countries.
Another objection that has surfaced in the Africa-EU negotiations is the limited capacity of African developing countries to take future trade disputes to arbitration. This was also a concern of critics of the Caribbean EPA with the EU.

In the case of the Caribbean, while the CARIFORUM countries – the members of the Caribbean Community and Common Market (CARICOM) plus the Dominican Republic – negotiated the EPA jointly through the Regional Negotiating Machinery (RNM), each Caribbean country is a separate signatory to the agreement with the 27-nation EU collectively. In the event of a dispute going to arbitration, the affected Caribbean country would have to bear the cost alone while the EU as a whole will meet its expenses. The cost of such arbitration would be beyond the reach of most developing nations.

As they did with the Caribbean, the EU has threatened African countries with the deprivation of market access for existing export products if they do not sign the EPA. In the Caribbean’s case, the threat was the imposition of a Generalised System of Preferences (GSP) regime on Caribbean exports to the EU market.

All 14 Caribbean countries signed up to a full EPA to avoid being penalised. Although, available figures show that GSP treatment on exports to the EU would have affected only one per cent or less of the total exports of goods and services of eight Caribbean countries. The eight countries are: Antigua and Barbuda (0.0%), Bahamas (0.0%), St Kitts-Nevis (0.0%), St Vincent and the Grenadines (0.2%), Trinidad and Tobago (0.3%), Grenada (0.4%), Barbados (0.5%) and St Lucia (1.0%), But, as Professor Norman Girvan has pointed out, though the percentages are small for countries such as St Vincent and St Lucia, the sectors concerned, such as bananas, were politically vulnerable because of the numbers of people employed. The EU knew that and played on it mercilessly.

The countries that would have been worst affected by the GSP tariffs on their goods and services are: Guyana (21.8%), Belize (8.5%) and Jamaica (4.3%). Yet, it was the Guyana government that most strongly held out against signing a full EPA with the EU, and which did so only after succeeding in getting the EU to agree to a review of the EPA within five years of its coming into force.
Had the Caribbean stood together, they could have refused to surrender to the EU threat of GSP treatment for Caribbean exports.
It was a similar threat that led to the initialling of the interim EPA by all southern African states except South Africa. However, unlike the Caribbean, the SADC countries have now committed themselves to sticking together.

Caribbean countries had the option of initialling only an Interim Agreement preserving market access to the EU, and continuing to negotiate into 2008 and even after – as the African countries are doing, but chose not to. A renowned trade lawyer, Dr Lorand Bartels of Cambridge University in England, had identified three legal ways in which the negotiations could have continued into 2008 without having to apply GSP.
The Africans are rightly resisting another red herring that the EU used in their negotiations with the Caribbean. The red herring is the claim that they (the EU) are under pressure to make preferential tariff provisions with African, Caribbean and Pacific regions compliant with WTO regulations or face a challenge from other WTO members.

But, of course the text that the EU presented to the CARIFORUM governments included a range of matters that had nothing to do with WTO compatibility. Among these matters are the so-called ‘Singapore Issues’: trade in services, public procurement, investment, customs issues and competition policies. All that was required for WTO compatibility was an agreement on trade in goods.
The Africans are rightly making the point that “the EU’s push to include services and other ‘‘new issues’’ has nothing to do with WTO compliance and is an attempt to sneak proposals through at bilateral level that were defeated at the WTO”.

In the aftermath of signing the EPA, some Caribbean governments made much of the access to the 400 million-strong market of the 27-nations EU for “services”. This, they said, included the right to set up financial services and to send musicians and chefs to work in the EU. But the devil was in detail as critics pointed out at the time. For while the EU Commission negotiated and signed the EPA, they made it clear that access to the EU markets depended entirely on the rules applied by individual EU member countries.

That reality came home to roost when it was discovered that “rigid visa regimes” constituted barriers to getting goods and services in to the EU. The Jamaican Minister of Information, Culture, Youth and Sports, Olivia Grange, lamented that: “The idea of being able to showcase your products to the 500 million-strong European market is among the most appealing elements of the EPA. However, this seems like an empty promise if people are unable to enter the region, because they either don’t qualify, or can’t afford a visa”.
As with the EPA signed with the Caribbean, the EU shows no inclination to include in the EPAs with African countries an unequivocal commitment to funding a development programme to ameliorate the effects of an EPA. An ECOWAS Ministerial Monitoring Committee has recommended that contributions to the EPA Development Programme should be “adequate and accessible” and beyond the commitment already made in the European Development Fund.

In the CARIFORUM-EU agreement, the Caribbean did not get such a commitment.
By not capitulating to the EU, the African groups may end up getting a better deal than the Caribbean.
Meanwhile, Haiti is also to be admired for refusing to sign the EPA between CARIFORUM and the EU despite reported pressure from the EU and CARICOM to do so. There is nothing in the EPA that benefits Haiti which, as a less developed country, should theoretically be able to export ‘everything but arms’ to the EU. It would be a further grave injustice to the Haitian people for the EU to compel it to sign by withholding much needed assistance.
(The writer is a consultant and former Caribbean Diplomat)
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