The EU-Africa Summit was held in Lisbon this weekend. Everything from climate change to peace and conflict issues were discussed. But what garnered a good deal of attention was the issue of trade. The EU is currently negotiating a trade deal with African, called Economic Partnership Agreements (EPA) that will replace the existing preferential trade system extended to countries in Africa, the Caribbean and Pacific (CAP).
Many African governments did not embrace the proposal with open arms. A Press Release from Oxfam highlights this point and argues that pushing African countries to sign a new trade deal is not fair. Clearly, African governments will need time to review the current proposal and decide whether it makes good economic sense to sign before the deadline at the end of this month.
Trade is crucial to spur economic growth and eliminate extreme poverty. The classic example often cited is the newly developing countries of Asia which were able to increase their economies mainly through trade. The rapid increase in China’s economy has fueled a massive decline in poverty. This same experience is being repeated in other parts of the world proving that globalization is providing an opportunity to bring many countries out of poverty. The question is not whether trade is important for economic growth; it is what trade deals should look like – in short, how to make trade fair. Do the new agreements proposed by the EU provide a way to bring the benefits of economic globalization to Africa?
A reuters report suggests that the EPAs proposed by the EU does not get the trade formula right for the special needs of Africa.
The disputes between Brussels and some African countries over a string of planned new trade and aid deals have led to accusations that the EU still resorts to old-fashioned bullying in its dealings with the continents.
Some African countries including South Africa and Senegal have indicated that they will not sign EPA, unless its possible negative impacts are widely addressed. African countries concerns are related to the requirements needed to implement this agreement. For instance, EPA will require a number of policy changes related to tariffs, as well as other liberalization measures for goods and services. I think this is a valid concern; most of the industries in Africa have infant industries that will require protection at least at the initial stage before entering international competition. Almost all developed countries used and are still using some kind protection for their major industries. So, African countries have balance the need to protect infant industries against calls to liberalize their markets.
If the agreement on EPA succeeds, it will mean a number of free trade agreements (ETAs) that will enhance the growth of countries and lift millions out of poverty. African countries have refused to sign this deal. And EU was forced to conclude
interim agreements with the most concerned countries [that will protect] the non-LDCs from paying an incredibly high price caused by trade disruption if no interim agreements were to be concluded. Cote d'lvoire, for example, would lose about 700 million euros (1.02 billion U.S. dollars) of trade in goods if it had not signed such an interim agreements”.
The summit is believed to bring a radical change on the relationship between the two continents. However, It is debatable if Africa missed an opportunity by not signing this deal. It remains an open question if these new initiative would have been an effective way of lifting the poor out of poverty.
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