Why Economic Partnership Agreements Undermines Africa's Regional Integration

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Economic Partnership Agreements (EPAs) are legally binding bilateral contracts between the European Union and individual African countries. Once signed, EPAs warrant that within a decade, about 80% of that country’s market should open to European goods and services. To their credit and through commendable negotiation dexterity, negotiators from various African countries have managed to exclude a number of subsidized agricultural products and sensitive industries from the negative elements of EPA stipulated market liberalization. But this is as much a pyrrhic victory as any, since prematurely opening markets translates into African agricultural and non-agricultural production finding it very difficult to compete with the most likely cheaper, perhaps better quality and even larger supply of goods and services from European countries.
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  Stephen McDonald  . Stephen Lande  . Dennis Matanda WHY ECONOMIC PARTNERSHIP AGREEMENTS UNDERMINE AFRICA’S REGIONAL INTEGRATION a Wilson Center   &  Manchester Trade collaboration  Steve McDonaldStephen LandeDennis Matanda Steve is Director of the Africa Program at the Wilson Center   in Washington, DC. A former Foreign Service Officer,* he has traveled extensively to the region and the world, is widely published, has taught at various universities and has also lived in parts of West, Central and Southern Africa.With a 50-year career in trade policy at State Department, at the USTR and in the private sector, Stephen  was pivotal to adding bilateral and plurilateral elements to U.S. trade policy that had almost exclusively been multilateral and based on the GATT. 1  He was key to initiatives such as AGOA, CBI 2  and GSP 3  as well as various US FTAs. 4  He is President of Manchester Trade and also an adjunct professor at the Paul H. Nitze School of  Advanced International Studies , Johns Hopkins University.A proficient government relations specialist, Dennis  is a post graduate scholar of American Politics and Government from Uganda. He serves as editor of Te Habari Network, an online Diaspora paper, and is currently working on his second book,  Master of the Sagging Cheeks , a work of political fiction. * Uganda and South Africa; and as Desk Officer for Angola, Mozambique, Cape Verde, Guinea Bissau, Sao Tome & Principe1. General Agreement on Tariffs and Trade 2. Caribbean Basin Initiative 3. Generalized System of Preferences 4. Israel, Mexico and Canada, in Central America and with the Dominican Republic* Dennis headed Uganda’s Gifed by Nature  campaign and was one of three founding members of the Uganda Media Center Design by Afrolehar  . Washington, DC . www.afrolehar.com AGOA ~ Africa Growth Opportunities ActAU - African Union COMESA ~ Common Market for Eastern and Southern AfricaCCA ~ Corporate Council on AfricaEAC ~ East African CommunityECOWAS ~ Economic Community of West African StatesEPA ~ Economic Partnership AgreementEU ~ European UnionFDI ~ Foreign Direct InvestmentFTA ~ Free Trade Area | Free Trade AgreementICT ~ Information Communication TechnologyMNC ~ Multinational CorporationNGO ~ Non Governmental OrganizationOPIC ~ Overseas Private Investment CorporationRECs ~ Regional Economic CommunitiesSADC ~ Southern Africa Development CommunitySMEs ~ Small Medium EnterprisesSSA ~ Sub - Saharan AfricaUSAID ~ United States Agency for International DevelopmentUSTDA ~ United States Trade and Development AgencyUSTR ~ United States Trade RepresentativeWTO ~ World Trade Organization Abbreviations  Preamble his paper is specifically about providing suggestions for  positions the AU can take vis-a-vis the European Union’s Economic Partnership Agreements (EPAs). Central is an urgent call for member states to give the  AU latitude to ensure that the conclusion of EPAs with the EU is postponed until, at least, the next decade. Simply: If the EU successfully foists EPAs on a critical number of member states through unilateral threats to  prematurely withdraw or limit preferential treatment, the negative consequences will be devastating not only to Africa but to many trading partners. An Introduction Economic Partnership Agreements (EPAs) are legally binding bilateral contracts be-tween the European Union and individual African countries. Once signed, EPAs war-rant that within a decade, about 80% of that country’s market should open to European goods and services. To their credit and through commendable negotiation dexterity, negotiators from vari-ous African countries have managed to ex-clude a number of subsidized agricultural products and sensitive industries from the negative elements of EPA stipulated market liberalization. But this is as much a pyrrhic victory as any, since prematurely opening markets translates into African agricultural and non-agricultur-al production finding it very difficult to com-pete with the most likely cheaper, perhaps better quality and even larger supply of goods and services from European countries. For the past few months, the EU has pressed African Union Member States to end EPA ne-gotiations or face the withdrawal of LOME type preferences they currently benefit from. And on April 16, 2013, the European Parlia-ment reversed an earlier decision to wait until the beginning of 2016; the deadline has now been brought forward to October 1, 2014. Thus, since the current EU approach, osten-sibly, doesn’t fully consider how EPAs impact issues of global importance such as Africa’s regional integration, these negotiations can be deemed fatally flawed. The arbitrary dead-lines set are, first off, much too premature; and especially expose individual sub Saharan African countries much too susceptible to de-mands from third countries like those in Asia and the Americas for the kind of reciprocity afforded European suppliers. Therefore, if Africa is going to ameliorate the negative impact of EPAs, the AU must respectfully insist that deadlines, such as the October 1, 2014 one, be postponed, allowing for various prerequisites that will enable an equitable negotiated conclusion since the re-gion will be a collective like the EU. This ample time and leeway should also allow AU Members to develop consensus between themselves and all major trading partners on how best to integrate Africa into global sup-ply chains and distribution networks.   i  Micro Issues in EPA Negotiations Without apparent concern for the conse-quences, the EU is keen to conclude  fair and balanced   EPAs between the parties. However, the issues central to the current round nei-ther address how EPAs will affect intra Africa trade specifically nor global trade in general. Instead, they are insular and micro; seeming to only have direct relevance to the trade and investment regimes of the African countries engaged in negotiation. They focus on mar-ket liberalization levels that don’t threaten existing activity or the development of new pursuits and have, to a certain extent, been surprisingly successful in protecting local farmers from imports under preferential rates of subsidized agricultural produce.However, in this instance, African countries must be lauded for efficacy at defending their own interests in the absence of a countervail-ing force to resist European blandishments.Contextually, many African countries may believe that they have no choice but to sign EPAs or lose preferential access to the EU market. Using this as an ace, the EU progres-sively tightens the screws; threatening to not only remove special LDC preferences avail-able under EU-ACP programs, but also with-holding GSP benefits from more advanced African economies. Under the circumstances, those countries still holding out for more mutually beneficial agreements deserve special recognition. Invariably, what both Africa and her trading partners might consider with some saliency are the so-called most favored nation (MFN) obligations, which force EPA signatories to bestow on the EU any concession negotiated with Africa’s other major partners. Basically, African countries will not be able to negotiate agreements with other major trading partners unless they provide conces-sions not included in the EPAs. Yet EPA ben-efits do not provide the requisite structural safeguard measures necessary to protect sub Saharan Africa economies from the negative consequences of trade concessions. Fatal Flaw of the EPAs Irrespective of their current individual na-tional security or economic conditions, AU Member States must not proceed with EPA negotiations in ad hoc  fashion. As it stands today, individual countries and groups enter into agreements with the EU with little or coordination with the rest of the membership. Relatively, this leaves countless issues and contradictions between African countries. For instance, the reciprocity de-manded in EPAs defies the non-reciprocal LDC provisions in the WTO. Seminally, the different rules applied within each EPA as well as to the EU trade regimes governing non-signatories (EBAs, GSP+, reg-ular GSP and GSP graduation) create insur-mountable obstacles to achieving integration - an already arduous task being undertaken by RECs such as the Tripartite group of which COMESA, alongside the EAC and SADC are integral partners. ii
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