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Strained Trade Relations Between Africa and the EU | Europe | Deutsche Welle | 12.01.2008 Africa |
12.01.2008 Strained Trade Relations Between Africa and the EU

The EU wants to forge a series of new trade agreements with Africa.
But the deals foundered at a summit last month. With anti-pact protests
in Africa and increasing Chinese investment, Europe might have to think
again.

When the Senegalese unions ordered people to take to the streets in
protest against food and energy prices this week, the target of their
ire was, at first glance, their own government alone. But the unions
and the government have a common enemy.

On Monday, Jan. 7, members of the government marched alongside the
unions to express their opposition to signing an Economic Partnership
Agreement (EPA) with the European Union. This, experts believe, could
make the economic situation in the country even more precarious.

That's set to give EU Trade and Industry commissioner Peter Mandelson
a considerable headache. He clearly regards the EPAs as the best way of
placing trade relations with Africa on a new footing.

In December, the favorable trade arrangements that the EU had with
African, Caribbean and Pacific (ACP) countries -- most of them former
European colonies -- ran out. The World Trade Organization found that
the trade preferences broke world trade rules and ordered the EU to
extend them to all poorer countries or roll them back altogether.

EU splitting African states

The EU decided to plump for the latter option. The bloc wants to
forge EPAs with individual African regions. Under the proposals, EU
import barriers upon African goods would be lifted. But in return,
African states would be expected to open their markets to EU countries.

This free trade agreement means that the African states would lose
the relative advantage that they have enjoyed up to now in European
markets. It's hardly surprising that the EU-African summit on this
topic ended without agreement.

The representatives of most African countries refused to put their
signature to the EPA deals -- first and foremost Senegal's President
Abdoulaye Wade, who categorically rejected them. The EU has had to face
more criticism since then.

After failing to pull off their grand plan, the Europeans are now
concentrating on trying to sign pacts with individual states which do
signal willingness. The international aid organization Oxfam has
accused the bloc of exploiting its stronger position to coerce states
into agreeing.

Worse still, the EU is -- the organization says -- playing off
African states against one another. What will happen, for example, to
the customs union between South Africa, an EPA opponent, and
neighboring Botswana, which has signed up?

"This is ironic given that the EU efforts were supposed to promote
the regional integration of African economies," said Oxfam spokeswoman
Amy Barry.

African markets are "not yet ready" for this step

Dirk Kohnert from the GIGA Institute for African studies in Hamburg
said the African's worries are justified.

"The EU is hiding behind the World Trade Organization's ruling," he
said. "In fact, the Europeans are trying to assert their own
interests."

He said European companies were waiting in the wings ready at any
moment to move into the liberalized African markets. But most of the
states are not prepared for this. On the other hand, African products
are also facing barriers that are not dealt with under the EPAs.

"Cotton products from West Africa are competing in the EU with
products from Southern Europe -- where the EU is subsidizing the
sector's development," Kohnert said.

And the EU's chocolate purity regulations is an obstacle to African
cocoa producers who would like to switch from exporting cocoa beans to
producing chocolate.

Another problem of the EPA, according to Barry, is the loss of
important customs income, which could endanger the budgets of African
states.

"It is also threatening jobs and the growth of domestic industry,"
she said.

African states keeping their options open

But the African states are not going quietly. Many have not signed
the EPAs and others, such as Kenya and a number of its neighbors in
East Africa which have said yes to the EU, are not bound by those
agreements, according to Oxfam. Up to now, the states' negotiators have
only signed the pacts and not their heads of state.

"This means they could pull out at any time," Barry said.

Peter Mandelson's opposite number in the African Union, Trade
Commissioner Elisabeth Tankeu, has announced this week that the trade
ministers from across the continent are planning to meet before the end
of February to decide on a common position vis-a-vis the EU.

Transitional arrangements mean that not much has changed for African
states since the end of the EU's preferential trade tariffs. But it is
not clear how long this situation can last. Time is on the Africa's
side. The EU is now facing a number of powerful competitors in the
African market, such as China, India and Brazil.

These transitional economies see the continent as a useful source of
raw materials and have been investing in local industry. China's
Foreign Minister Yang Jiechi has been striking these kind of trade
deals on his four-day trip to Africa this week. According to official
Chinese statistics, trade between China and Africa grew more than 30
percent to 50 billion euros in last year alone.

This pressure is having an effect, according to Kohnert.

"The EU has decided to put back by one year the deadline for the
conclusion of the EPA agreements with the Africans -- this is an option
that the Europeans firmly ruled out at the outset," he said.

He believes that the Chinese competition in Africa could mean that
the EU will be forced to negotiate with their African partners on a
truly equal footing.

Ranty Islam (jg)