Europe holds out hope of Africa trade deals

September 27 2012 at 05:15pm 
By Reuters

Comment on this story

---

http://sxc.hu/

The European Union is hoping to wrap up free-trade agreements across most of sub-Saharan Africa next year but has yet to assuage African fears that their budding industries will not be able to cope with the new competition.

The European Union launched talks with more than 70 African, Caribbean and Pacific countries 10 years ago on Thursday - on Sept. 27, 2002 - aiming to help them trade their way out of poverty and to give EU businesses access to nascent markets.

But so far only 15 Caribbean nations have agreed accords.

“Clearly we are not yet where we wanted to be when we started the whole process. But there is still a window of opportunity to conclude most negotiations within the next year,” said European Commission trade spokesman John Clancy.

Europeans risk losing influence at a time when the United States has stepped up its involvement in the region and Africa's bilateral trade with China has almost doubled over the past three years, to $166 billion in 2011 from $91 billion in 2009.

The talks present African countries with a dilemma.

If they do not forge deals, all but the poorest - who will get special treatment - will face higher tariffs on exports to Europe, such as bananas and fish. That would reduce their access to the bloc's 500 million relatively wealthy consumers.

If they do agree deals, Africans worry their industries will suffer the fate of the Kenyan shoe and South African textile industries, which have been unable to compete with Chinese imports after they opened up in return for investment over the past decade. Chinese imports have sparked anti-Chinese protests from Senegal to Malawi over the past year.

In addition, African governments benefit from customs revenues that would fall once countries remove import tariffs, likely forcing difficult tax reforms to make up the difference.

“The EU is asking Africa to stop taxing imports and liberalise 80 percent of our goods,” said Obadiah Mailafia, a senior official in Brussels at the African, Caribbean, Pacific Secretariat, which is helping coordinate the trade talks. “But that would be a disaster in terms of lost revenues.”

NEO-COLONIALISM?

Europeans want to maintain influence in a region where they have traditionally been dominant - as colonists from the 19th century and aid-givers since the wave of African independence in the 1960s and 1970s.

After years of stagnation, trade between Europe and Africa grew quickly from 2004 to a peak of 277 billion euros ($359 billion) in 2009, falling slightly after the global financial crisis.

But more Africans are becoming affluent enough to buy European consumer goods, and the continent is developing its mineral and natural gas resources. Africa's per capita economic growth was 13 percent a year between 2000 and 2008, compared to 4 percent in the European Union, according to EU data.

The European Commission, which negotiates trade issues on behalf of the 27 EU members, says trade rules with Africa are different from those with richer economies. For Africa, trade can be a development tool and reduce the amount of aid needed.

“This is not just about the nitty-gritty of trade negotiations, but a fundamental shift in the trade relationship between Europe and Africa,” Clancy said.

But some Africans say the free-trade talks have become overloaded with issues such as intellectual property rights and liberalisation of services - things normally reserved for accords between developed nations. Some countries involved fear cuts in development aid if they conclude accords.

“This is just another form of colonialism because Europe is imposing conditions, not seeking home-grown solutions,” said Rangarirai Machemedze, director of Zimbabwean non-governmental group Seatini, which has been involved in talks.

Until the late 1990s, the European Union granted former European colonies in Africa, the Caribbean and Pacific special market access to help farmers and local exporters. But that put other developing countries at a disadvantage, and needed an exception to WTO rules banning special preferences.

After the special access expired in 2007, Caribbean nations agreed trade accords to avoid higher EU tariffs, while most African nations signed temporary deals to maintain access.

The European Commission now wants those countries to finalise these temporary deals. To pressure larger African economies - including Cameroon and Ivory Coast, the Commission wants to set Jan. 1, 2014 as a deadline for the temporary agreements to expire.

“The EU's interest is Africa's development and we are not here to coerce, but there is still time to establish a lasting partnership,” said Commission trade negotiator Remco Vahl. - Reuters