EPAs and African Countries: A Totally Bad Deal; What are the Real Issues?

EPAs and African Countries: A Totally Bad Deal; What are the Real Issues? Esther Katende Magezi 1 Abstract A lot of talk has been going around about the Economic Partnership Agreements (EPAs) and how African states stand to lose from the conclusion of the same. There has been outright criticism against some African governments for signing of the same. But the question is, have we really understood the issues around the EPAs? Or are we simply condemning a move that we cannot even make head and tail of? This paper seeks to dissect the issues around EPAs and to give you an opportunity to make an informed decision on whether to really castigate the EPAs or to see how African countries stand to benefit from the partnership agreements. It is the hypothesis of this paper that like anything in the world, there are always two sides to the argument and it is about mitigating the bad or cushioning the negative so as to turn it round into good, for the benefit of all involved. Key Words: EPAs, EBA, African Countries, ACP States, the EU, EAC, SADC, ESA.. 1.0 Introduction and Background We have heard about EPAs. EPAs are bad for African countries. African countries should not sign EPAs. We have come across headlines such as; East African Parliamentarians Express Fear That EPAs will Undermine the Economic and Political Integration Process of the Region! 2 UNCTAD Warns That North-South Bilateral and Regional Trade Agreements may be More Costly than Expected. 3 Chaos on Eve of EPA Deadline! 4 Eastern and Southern Africa Regional Conference Worried on the Trade and Economic Impacts of ESA-EU and SADC-EU Economic Partnership Agreements. 5 ACP Countries Being Pushed into a Tight Corner to Sign far Reaching Interim EPA Agreements. 6 But what is the actual analysis of the situation? Aside from the endless criticism, what are the real issues? Where is it that African countries should widen their eyes and analysis prior to the signature of the interim EPAs and eventually, the full EPAs? Is the existing criticism healthy? Is it accurate? Is there indeed a bone to grind? This paper intends to present the pros and cons of African countries signing EPAs, with an African analytical perspective. It is the hypothesis of this paper that EPAs are not altogether a 1 Esther Katende Magezi is a Lecturer in the Department of Law, Makerere University Business School. She is also an International trade consultant. She holds an LLM in International Trade and Investment Law. 2 SEATINI, <http://www.seatini.org/publications/articles/2007/east%20africa%20expresses%20fear.html> (Accessed on 28 th April 2008). 3 SEATINI, <http://www.seatini.org/publications/articles/2007/unctad%20warns.html> (Accessed on 28 th April, 2008). 4 SEATINI, <http://www.seatini.org/publications/articles/2007/trade%20east%20africa.html> (Accessed on 28 th April, 2008) 5 SEATINI,<http://www.seatini.org/publications/articles/2007/Eastern%20and%20Sourthern%20Africa%20Regional %20conference.html> Accessed on 28 th April, 2008) 6 SEATINI,<http://www.seatini.org/publications/articles/2007/ACP%20countries%20being%20pushed%20into%20a %20tight%20corner.html> Accessed on 28 th April, 2008) 1

bad idea. Like anything, they have their pros and cons and it is our duty as African countries to mitigate the bad and benefit from the good. This paper intends to show the areas that are likely to be disadvantageous to African states and how these can be mitigated, to benefit African countries at the end of the day. 1.1 Economic Partnership Agreements (EPAs) EPAs are regional trade agreements to create a Free Trade Area (FTA) between the EU and different developing countries. 7 A Free Trade Area is an arrangement between countries in the FTA to eliminate trade barriers between themselves though to the exclusion of the rest of the world with each party maintaining its own external tariffs. It is a preferential (usually reciprocal) agreement among countries that reduces barriers to economic and non economic transactions amongst the FTA countries. Examples of FTAs in the world include the North American Free Trade Area, (NAFTA), the Asian Free Trade Area, (AFTA), the Latin American Free Trade Area, (LAFTA) which in 1981 was replaced by the Latin American Integration Association (LAIA) inter alia. An FTA is permitted as a general exception to the WTO MFN principle, 8 where owing to the FTA, countries are allowed to give preferential trade treatment to other countries within the FTA arrangement, which same preferential treatment need not be extended to the rest of the world. So by concluding EPAs, African countries are entering into an FTA with the EU, to grant preferential and reciprocal treatment to EU goods entering the African countries, and vice versa. EPAs are a response to continuing international criticism that the originally preferential and non discriminatory treatment granted to African Caribbean and Pacific (ACP) countries under the Cotonou Agreement was incompatible with WTO rules, in that it was discriminating against other developing countries that did not fall within the ACP region. To address this, the EPAs are therefore open to all developing countries, without the requirement that such countries be part of the ACP group, as was originally required by the Cotonou Agreement. As such, the key feature of the EPAs is the creation of reciprocity and non discrimination between the EU and other developing countries. This paper is however going to focus on the ACP countries, with particular reference to the African countries. With regard to the ACP countries, the ACP have formed six regional groupings in which they are negotiating EPAs with the EU. These regional groupings are: The East African Community (EAC) 9 Eastern and Southern Africa (ESA) 10 The Southern African Development Community (SADC) 11 7 Wikipedia, <http://en.wikipedia.org/wiki/economic_partnership_agreements> (Accessed on 6th March, 2008) 8 The MFN (Most Favored Nation) principle is the cornerstone of the World Trading System. (US Section 211 Appropriations Act). The principle is enshrined in Article 1 of the General Agreement on Tariffs and Trade (GATT) which requires any advantage, favour, privilege or immunity granted by any WTO Member to any product originating in or destined for any other country to be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other WTO Countries. 9 Comprising of Uganda, Kenya, Tanzania, Rwanda and Burundi. (See also <http://www.eac.int/>.accessed on 6 th March 2008) 10 Comprising Sudan, Eritrea, Djibouti, Ethiopia, Zambia, Zimbabwe, Madagascar, DRC, Malawi, Mauritius, Comoros, and Seychelles. 11 Comprising of Botswana, Mozambique, Swaziland, Lesotho and Namibia. South Africa indicated that it will not initial the EPAs and will continue to export to the EC under the TDCA. (See also <http://www.sadc.int/> Accessed on 6 th March 2008). 2

La Communaute Economique et Mone taire de l Afrique Centrale (CEMAC) 12 L'Union Economique et Monetaire Ouest Africaine (UEMOA) 13 The Pacific Region 14 The Caribbean Forum of African, Caribbean and Pacific States (CARIFORUM) 15 1.2 The EU Africa Trade Arrangements that Preceded the EPAs Since 1958, the European countries have been carrying out preferential trading with African countries in what was known as the Association of African and Malagasy States (AAMS) (1958 1962). 16 The AAMS arrangement was replaced by Yaoundé I and II between the period 1963-1974, which involved reciprocal and non discriminatory trade between the EU and African countries. 17 Between 1975 2000, the African European relationship was governed by the Lome Convention. Lome I lasted for the period 1975 1980 and it principally established the EU - Africa relationship as a relationship between equal partners. In Lome II, (1980 1985), the EU - Africa relationship became one between unequal partners at a time when Africa s marginalization within the world economy was growing. 18 Between the period (1985-1990), Lome III grounded the EU- Africa relationship as one of conditionality, especially as Africa s importance to Europe for raw materials dwindled further. During Lome IV, (1990 2000), there was increased dialogue about the need to replace existing non reciprocal trade agreements with reciprocal trade agreements, that are also WTO compatible. It is also during this time that Europe became a single European Market, in 1992. There was increased globalization and open regionalism in world trade and Africa was further marginalized within the world economy. At the same time, there was increased competition between the US and the EU for access to Africa s markets hence arrangements like the US AGOA scheme and the EU SA FTA. There was also increased competition between the EU and Asian countries like China for African Markets. Lome V (2000-2007) simply tried to maintain the Lome acquis until 2007. 19 12 Comprising Cameroon and Gabon. The LDCs Chad, DRC, Central African Republic, Equatorial Guinea, Sap Tome and Principe export under the EBA initiative. (See also <http://www.cemac.net/> Accessed on 6 th March 2008). 13 Comprising Cote d Ivoire and Ghana. Nigeria and Cape Verde export under the standard GSP and Nigeria has applied for the GSP + scheme, instead of exporting under the EPAs. The application has however not yet been decided upon. The remaining LDCs are to export under the EBA initiative. (See <http://www.uemoa.int/index.htm> Accessed on 6 th March 2008). 14 Papua New Guinea and Fiji have initialed an interim EPA with the EU. The remaining non LDCs Cook Islands, Federated States of Micronesia, Nauru, Niue, Palau, Marshall Islands and Tonga are to export under the GSP regime. The LDCs East Timor, Kiribati, Samoa, Solomon Islands, Tuvalu and Vanuatu are to export under the EBA initiative. See ECDPM, EPA Negotiations, Where do we Stand? Update 7 April 2008, <www.acp-eu-trade/epa>, at 9. (Accessed on 27 th March 2008) 15 Comprising of Antigua and Barbuda, Bahamas, Belize, Dominica, the Dominican Republic, Grenada, Guyana, Haiti, Jamaica, Saint Lucia, Saint Vincent and the Grenadines, Saint Christopher and Nevis, Surinam and Trinidad and Tobago. All these countries initialed a full EPA with the EU on the 16 th of December 2007. (<http://www.crnm.org/esp/acp_esp.htm> Accessed on 6 th March 2008). 16 Lee C Margaret, Trade Relations Between Africa and the European Union under the Cotonou Agreement, at 3. 17 Supra at 5. 18 Supra at 8. 19 Supra at 20. 3

In assessing the performance of the Lome Convention in relation to the ACP states, it is notable that there was a general decrease in ACP exports to the EU. This was principally due to the lack of ACP export diversification, where by only 5 products (petroleum, diamonds, cocoa, fish and wood products) covered 60% of the total ACP exports, and where only 9 countries represented 60% of total ACP exports. 20 There were supply side constraints as well, resulting from tough Rules of Origin, lack of access to telecommunication infrastructure, low labor productivity, sanitary and phytosanitary standards, absence of functioning capital markets, poor transportation, inter alia which hindered actual performance of the Lome Convention. 21 The Lome Convention was succeeded by the Cotonou Agreement (2000 2020), which aimed at reducing poverty through enhanced economic and trade cooperation, enshrining and institutionalizing democratic principles in the ACP States, creating respect for the rule of law and human rights, establishing better conflict prevention and resolution methods and greater peace building through good governance and supporting regional integration. 22 Whether the Cotonou has achieved these goals is yet to be empirically assessed. What is clear however is that it is within this back drop that the issue of EPAs came into play. 1.3 Aims of Establishing EPAs The EPAs are a key element of the Cotonou Agreement, with the following goals: 23 To replace the non reciprocal trade agreements with reciprocal trade agreements. To encourage regional integration (south south cooperation). To also encourage the creation of free trade areas or customs unions in Africa, as a precursor to the EPAs. To contribute to Africa s economic development through the EU development aid component. To enhance Africa s integration into the world economy. There had been an analysis that the Lome and Cotonou system of preferences to the African countries had not worked, owing to the fact that Africa s marginalization in the world trade was growing steadily. The EU thus sought to create EPAs as an instrument for development, that would allow African countries the liberty to shape agreements that would enable them achieve this goal, to enable them build ability to compete in the world markets. The rationale behind this was that liberalization can benefit African countries in the long run, but only if they are able to make their own decisions on the timing of how this can work. To address trade in services. 24 To address the Singapore issues. 25 20 Kiener Christopher, European Commission, 2004. See also Lee C Margaret, Trade Relations Between Africa and the European Union under the Cotonou Agreement at 16. 21 Lee C Margaret, Trade Relations Between Africa and the European Union under the Cotonou Agreement at 16. 22 Lee C Margaret, Trade Relations Between Africa and the European Union under the Cotonou Agreement at 16. 23 Ibid. 24 The Cotonou Agreement was principally dealing with trade in goods. The EPAs therefore sought to expand the area of coverage of the EU ACP arrangement to include further trade in services. 25 Singapore Issues include Investment, Competition, Government Procurement, and Trade Facilitation. These issues are of particular importance when it comes to EPAs because they have not yet been dealt with or included in the WTO Agreements. The 152 Members of the WTO have not yet come to a conclusion or agreement on the actual rules and disciplines that should govern these issues, as well as their inclusion in the WTO trade rules. They have been a subject of great contention on their inclusion in the EPAs on the grounds that they have not yet been agreed 4

To ensure that trade relations between the EU and ACP are in line with the current WTO rules. Since 1976, the agreement between the ACP and the EU (Lome ) has allowed ACP countries to have non reciprocal access to the markets of the EU. While ACP producers were therefore able to export to the EU, they were protected from EU competition in their home countries. However under the WTO rules, developed countries can only give this kind of non reciprocal access to either all developing countries or only to the LDCs. As a result, several developing countries outside the ACP regions were challenging the ACP EU arrangement for failing to comply with the WTO rule. The EU and ACP were given until the end of 2007 to implement new arrangements that would fit with the WTO rules, hence the EPAs. 1.4 State of Play of EPAs as of 1 st January 2008 Progress in the EPA negotiations has been slower than expected. It should be noted that notice of expiration of the Cotonou waiver was in 2001, where it became clear that the EU ACP Cotonou arrangement would come to an end hence the need to conclude EPAs by 31 st December 2007. 26 By October 2007 however, it was apparent that the EPAs would not be concluded by the said date, yet the WTO waiver covering the Cotonou preferential trade regime was expiring anyway. 27 On noticing this, the European Commission issued a communication on 23 October 2007 that facilitated the conclusion of a WTO compatible market access arrangement that covered trade in goods only, in order to achieve the extension of the negotiating time towards complete EPAs while safeguarding the preferential market access for non LDCs on the expiry of the waiver. 28 (Trade in goods was the main area that needed to be covered by an agreement to comply with WTO rules). To this end therefore, several interim agreements were signed during the last weeks of 2007, with clauses that provided for the continuation of negotiations towards full EPAs that covered other aspects of trade other than trade in goods, in 2008. This solution circumvented a loss of trade preferences for non LDC states arising from the expiry of the waiver, while fully respecting the WTO law. Of the original 77 countries that were negotiating EPAs with the EU, 35 had initialed the Interim Agreements by the end of 2007. This left the remaining 42 countries unprotected by either an EPA or the previous Cotonou Agreement which had expired. 29 However the majority of these countries are LDCs and are thus covered under the Everything But Arms (EBA) initiative, which allows duty free access into the EU for products from all LDCs in the world. The remaining non LDCs which did not initial the EPAs can however still benefit under the Generalized System of Preference (GSP) system which provides duty free access on non upon and sufficiently addressed by the multilateral trading system. There should therefore be no reason why the EU should require developing countries to negotiate on them in the bilateral EPA arrangement. 26 Global Europe, Update: Interim Economic Partnership Agreements, at 1, 19 December 2007, <http://ec.europa.eu/trade/> (Accessed on 28 th March 2008) 27 O Sullivan David, All AC Meeting on the Economic Partnership Agreements, <http://ec.europa.eu/commission_barroso/mandelson/speeches> at 3. (Accessed on 28 th March 2008) 28 Ibid. 29 European Commission, External Trade, Bilateral Trade Relations: Africa Caribbean, Pacific. <http://ec.europa.eu/trade/issues/bilateral/regions/acp/pr201207_en.htm>. (Accessed on 27 th March 2008) 5

sensitive items and a 3% point reduction in duty on sensitive items. 30 By January 2008, 6EPAs had either been initiated or signed. These include: 31 In East and Southern Africa, the EAC decided in November 2007 to form a separate EPA region and initialed an interim agreement on 27 November 2007. The rest of the ESA countries opted for a framework agreement with a common text but separate market access schedules. The ESA EC EPA was initialed by Seychelles and Zimbabwe on 28 November 2007, Mauritius on 4 December 2007 and Comoros and Madagascar on 11 December 2007. Zambia initialed the agreement but did not submit a market access schedule hence it would be exporting to the EU under EBA from 1 January 2008. In Central Africa, no regional interim agreement existed by 1 st January 2008. The non LDC Cameroon however initialed the interim agreement on 17 December 2007. The other countries, Gabon and DRC had not yet initialed the agreement by 1 st January 2008. In the SADC region, an interim agreement was initialed by Botswana, Lesotho, Mozambique and Swaziland on 23 November 2007. Namibia initialed on 11 December 2007. South Africa despite its customs union of SACU with Namibia, Lesotho and Swaziland declined to participate in the interim agreement. South Africa however benefits from its exports to the EU SA Free Trade Agreement known as the Trade, Development and Cooperation Agreement (TDCA) which was concluded in 1999 and came into force in 2000. In West Africa: Cote d Ivoire and Ghana initialed interim agreements on 7 December and 13 December respectively. Cape Verde which graduated from LDC status on 1 January 2008 now exports under the EBA initiative for a transitional period of three years. In the Pacific, an interim EPA was signed with Papua New Guinea and Fiji on 29 th November 2007. The Caribbean concluded a full regional EPA which was initialed on 16 December 2007. Of these 6, only the one signed by the Caribbean one is considered a full EPA. This is because it does not only deal with trade in goods which were necessary for compliance with WTO rules, but also trade in services, investment, competition and public procurement, interalia. 32 The remaining 6 interim EPAs all focus on trade in goods only but include clauses to continue negotiations on the other areas by the end of 2008. 33 On its part, the Council of the EU on 20 th December 2007 formally adopted a market access regulation to grant duty and quota free access to the EU market to ACP countries from 1 January 2008, with transition periods for sugar and rice. 34 This applies to 35 ACP countries that have concluded negotiations on either a full EPA or an interim agreement, which are listed in Annex 1 of the Regulation. The regulation provides for the possibility of amending the Annex by countries concluding negotiations at a later point in time. 35 30 European Commission, External Trade, Bilateral Trade Relations: Africa Caribbean, Pacific. <http://ec.europa.eu/trade/issues/bilateral/regions/acp/pr201207_en.htm>. (Accessed on 27 th March 2008). 31 Global Europe, Update: Interim Economic Partnership Agreements, at 2-6, 19 December 2007, <http://ec.europa.eu/trade/> (Accessed on 28 th March 2008) 32 <http://www.dfid.gov.uk/aboutdfid/organisation/economic-partnership-agreements> (Accessed on 27th March 2008) 33 Ibid. 34 ECDPM, EPA Negotiations, Where do we Stand? Update 7 April 2008, <www.acp-eu-trade/epa>, at 9. (Accessed on 27th March 2008) 35 Ibid. 6

2.0 Are EPAs really a bad deal? Now that we are conversant with a slight background to the creation of EPAs and the rationale for their creation, we shall proceed to analyze the issues whether EPAs are really a bad idea. There has been varying views on the same as will be discussed herebelow. For the foregoing arguments, this paper will first present the arguments against the conclusion of EPAs, and subsequently thereafter, a reaction to the said arguments. 2.1 EPAs have Undermined Existing Regional Integration Arrangements It has been argued that EPAs have disrupted regional integration arrangements in the different countries. For example, only Cameroon had initialed the interim Agreement by December 2007 in Central Africa, while the other Countries refused to adhere to its deal. 36 Cameroon on the other hand declined to go back on its agreement despite several requests by the other CEMAC countries that sought to make a consolidated negotiating position to conclude a regional EPA. By February 6-7, the other CEMAC countries had decided to use the conclusions of previous Central Africa EU Ministerial Meetings of 2007, and the texts initialed by other regions as a basis for future negotiations, rather than build on the text of the Agreement initialed by Cameroon. 37 The compromising of regional unification was also seen in the case of South Africa and the other states in the SACU arrangement. According to Business Day; S.A s pursuit of its own interests in demanding the complete renegotiation of Southern Africa s trade agreements with Europe gives its neighbors good reason to doubt the integrity of the country s leadership role in the region and indeed on the continent It is clear S.A s stance is designed to serve its own interests. It also puts the world s oldest customs union at risk, an eventuality that would cost the BLNS [Botswana, Lesotho, Namibia and Swaziland] countries dearly. 38 South African trade negotiators have, at least for now, backed off from their threat to break up the Southern African Customs Union (SACU) in a standoff with other member states over a divisive economic partnership agreement being negotiated with the EU. 39 It is thus on the basis of the aforesaid examples that critics have condemned EPAs as dividing Africa, contrary to the goals and spirit of the multilateral trading system. It should be noted however that one cannot rely only on the above examples to conclude that EPAs are killing regionalism. The EU successfully concluded a full EPA with the Caribbean region as a whole in December 2007. As such, the question that should be addressed I whether the failure of achieving the same in African countries is indeed an EU problem or infact the inherent division of the different regions in Africa and the desire to promote individual country benefits as opposed to regional benefits. If there is a family that is inherently disunited 36 ECDPM, EPA Negotiations, Where do we Stand? Update 7 April 2008, www.acp-eu-trade/epa, at 14. (Accessed on 27 th March 2008) 37 Ibid at 16. 38 Editorial, Clashing Interests, 29/02/08. 39 Mathabo le Roux, Business Day, SA Pulls Back on Threat to Customs Body, 06/03/08. 7

and this disharmony is never seen until an external person provokes competing interests from the different family members; where is the problem? The external intruder or indeed the inherent problems in the family? 2.2 De-industrialization, Increased Unemployment and Increased Poverty It has been mooted that EPAs are fostering increased liberalization of the economies of African countries, thus opening up the said economies to foreign competition, there by killing the local industries of the different African countries. For example, in the interim Agreement signed between the EU and the EAC, EAC is to liberalize its cumulative value of imports from the EU by 64% by 2010, by 80% by 2023, and by 82% by 2033. 40 For the SACU Countries minus SA, (Botswana, Lesotho, Namibia, Swaziland), 86% by 2010. For Cameroon, 50% by 2018, and 80% by 2023, Zimbabwe, 45% by 2012, and 80% by 2022, interalia. 41 It has thus been argued that the ripple effect of this will be increased unemployment and poverty in African states, arising from this liberalization. The above however is an over generalization of the matter. Under the EPA arrangement, countries are free to exclude a wide range of sensitive goods and sectors from any liberalization. For example goods that have been excluded from liberalization include: 42 EAC: Agricultural products, wines and spirits, chemicals, plastics, wood based paper, textiles and clothing, footwear, glassware. SADC: Agricultural goods. W.A and CEMAC (Cameroon): Agricultural and non agricultural processed goods. ESA: Seychelles; Meat, fisheries, beverages, tobacco, leather articles, glass and ceramics and vehicles. Zimbabwe; products of animal origin, cereals, beverages, paper, plastics and rubber, textiles and clothing, footwear, glass, ceramics, consumer electronics and vehicles. Mauritius; live animals, meat, edible products of animal origin, fats, edible preparations and beverages, chemicals, plastics and rubber articles of leather and fur skins, iron & steel, and consumer electronic. Comoros; goods of animal origin, fish, beverages, chemicals and vehicles. Madagascar; meat, fish, products of animal origin, vegetables, cereals, beverages, plastics and rubber, articles of leather and fur skins, paper and metals among others. All this clearly shows that countries are at liberty to negotiate what they want to liberalize in and to exclude from liberalization the sectors they want to protect. It therefore goes that it is unfair to out rightly declare that EPAs are compromising countries, when it is up to the countries themselves to advance their areas of interest. Further, it is pertinent, at this point, to inquire whether liberalization and thus competition is such a bad thing, as EPAs are fostering increased liberalization. 2.3 Diminishing Revenues Arising from Removal of Tariff Barriers EPAs have been condemned on the ground that developing countries are going to loose revenues owing to reduction and or removal of tariffs for imports from the EU as a result of the free trade arrangement, which revenues are the main stay of these Countries. It should be noted however 40 ECDPM, EPA Negotiations, Where do we Stand? Update 7 April 2008, www.acp-eu-trade/epa, at 6. (Accessed on 27 th March 2008) 41 Ibid. 42 Global Europe, Update: Interim Economic Partnership Agreements, at 2-6, 19 December 2007, <http://ec.europa.eu/trade/> (Accessed on 28 th March 2008). 8

that the elimination of tariffs only relates to imports from the EU and not third countries. Developing countries will still be able to obtain revenues for imports for goods from for example China, USA, Taiwan, Japan, and several other countries that export to Africa. More so, in the EPA negotiations, the EU has pledged to continue providing development assistance under the European Development Fund (EDC) as well as special assistance programs in the area of sensitive products such as bananas, sugar and rice, from the EU budget. 43 Further, the EU committed to increase its support for trade policy and regulation and for trade and development funding to 2 billion euro per year by 2010. 44 Of this, 1 billion euro is to be contributed by the EC and 1billion by the EU Member states. Also, the EU General Affairs and External Relations Council Meeting of October 2007 endorsed the Strategy on Aid for Trade where about 50% of the increase in EU Trade Related Assistance (TRA) would be availed to ACP Countries. 45 This implies that about 300 to 400 million Euro additional funds per year can be expected for TRA in ACP countries. 46 It is therefore upon the regional groupings to negotiate particular figures for assistance, in relation to their studies and analysis of the potential impact of the EPAs in their regions. Moreover African countries have excluded several products from liberalization, and will liberalize over a gradual period of time. This should prevent dramatic changes in revenue, especially because the time frames for liberalization have infact been negotiated by the African countries themselves. 2.4. Benefits to be Derived From EPAs For an African country, an EPA means no export duties or quotas in EU for African products other than the short transition periods for sugar and rice 47 and the long term security for traders and investors with no more waivers, time limits or periodic renewals. More so, under EPAs, African countries can specifically negotiate friendly rules of origin that can support the development of their industries that import materials to make goods for onward export to Europe especially in key sectors like textiles, fisheries, and agriculture. 48 This is in fact why several LDCs signed up for EPAs even when they could still benefit from the EBA initiative. 49 3.0 The Real Issues This part of the paper seeks to throw some light on the real issues that are intrinsic in most African countries that are likely to prevent them from fully harnessing the benefits of the EPAs. 3.1 Recurrent ill Preparation for Negotiations Probably the real issues are not that EPAs are bad, but that African countries have not invested sufficient time into developing their negotiating agenda with the EU. In fact, several regions have begged for more time so as to negotiate sufficiently. For example, according to ECOWAS, 43 ECDPM, EPA Negotiations, Where do we Stand? Update 7 April 2008, www.acp-eu-trade/epa, at 10. (Accessed on 27 th March 2008) 44 Ibid. 45 Ibid. 46 ECDPM, EPA Negotiations, Where do we Stand? Update 7 April 2008, www.acp-eu-trade/epa, at 14. (Accessed on 27 th March 2008) 47 Ibid 48 Global Europe, What Will an Economic Partnership Agreement do? Brussels, 11 January 2008. 49 Ibid. 9

West Africa needed 18 months of additional negotiation time to be able to conclude a full regional EPA. The question that however arises is; who is to blame for this lack of time? It should be noted that the expiry of the waiver permitting the EU ACP arrangement under Cotonou was established by all the Members of the WTO. Not the EU alone. Secondly, knowledge of the expiry of the EPAs did not come to the world in 2007. It has been common knowledge since 2002 that the Cotonou Waiver would expire and that EPAs would be negotiated in its place. 50 So is it rather that African countries did not allocate sufficient time into developing their negotiating position, that they now play victim to attract the attention of the world? Is it not so that in most negotiations in Africa, the individual countries are rarely ready with a negotiating position, up to even the day of negotiation? Lets look at the EAC Common Market Negotiations that are happening at present for example, is it surprising that for example the High Level Task Force of the different EAC countries are scheduled to carry out national consultations on the Common Market between 2-6 June, and regional consultations between 2-3 May, when the actual negotiations commenced on19-21 February? 3.2 Wrong Mentality: Beggar Attitude Developing countries have been so accustomed to the beggar attitude that it is high time they mature. For example, developing countries have been benefiting from the Special and Differential Treatment provisions of the WTO where these countries are not expected to grant full reciprocal treatment to the preferential treatment granted to them by developed countries in trade. Most of the arguments that have been advanced for this treatment have been the protection of infant industries, and the lack of institutional infrastructure to meet a competitive supply. But the issue is, for how long will the infant industries be infant? At what point in time should the world say that the industries have now become mature? These industries have been protected since 1948 under the GATT. Isn t it high time that African countries realize that this concept does not work? Shouldn t African countries now cease to have this beggar attitude, and practically work on addressing the supply constraints in their countries so as to produce better standard goods that can effectively compete on the world market? Is there a lesson for African countries to learn from the emerging BRICs economies? EPAs will help create viable economies with supply chains that can compete internationally. They will provide a platform to introduce and manage changes over many years while still protecting sensitive or growing sectors, since countries are at liberty to liberalize at their pace and in commodities of their choice. 3.3 Is Trade Liberalization Such a Bad Idea? EPAs should be looked at as any other vie to effect increased trade liberalization, which in itself is not such a bad idea. With increasing globalization and the successive rounds of trade negotiations in the WTO, with the ongoing Doha negotiations, it is clear that the general trend in the multilateral trading system is greater liberalization of markets. If this is the premise, then EPAs are just another way in which African countries can benefit further from trade liberalization. Benefits of globalization and increased liberalization to countries include increased domestic and foreign investment, technology transfer and enhanced economic relations with 50 See ACP Guidelines for the Negotiations of EPAs. ACP/61/056/02, Brussels, 5 July 2002. 10

other countries, economic development arising from removal of supply side constraints to trade, hence reduction in poverty levels, and the development of more competitive African trade regimes which will result in the eventual gradual integration of Africa into the world economy. 4.0 Is There a Viable Alternative to EPAs? Way Forward If there is an argument that EPAs are not good for African countries, the foregoing section shows the existing viable options that can be adopted by the various African countries, as opposed to crying foul. 4.1 Rejection of EPAs African countries have not been forced into signing EPAs. Indeed several African countries have not signed EPAs. For example, Nigeria, Gabon, Congo and South Africa, to mention but a few. The pressure to sign EPAs by 31 st December 2007 came from WTO Members including developed and non ACP developing countries. The countries that signed the interim agreements realized their need to do so as to continue benefiting from the EU trade without being legally prevented by the expiry of the waiver. More so, most African Countries are LDCs, which means even if they do not sign the EPAs, they will still benefit from the EBA initiative. The Non LDC countries will still benefit from the GSP scheme that is available to all developing countries. It is also pertinent to note here that whereas African countries are crying foul over EPAs, they should note that the EPA arrangement should also be a worthwhile venture for the EU. They too need to benefit from the arrangement. Otherwise there is no reason why the EU should get out of their way to benefit African countries, when there is nothing in it for them. They too have a constituency, (the different EU country governments) to report to, as well as so much political pressure from the different sectors back at home. At the end of the day, negotiations are about give and take, and not take, take and take, as African countries would want to make them. 4.2 Wise Negotiation: Embrace the Good, Mitigate the Ugly As already stated, there are always two sides to a coin; the good and the ugly. It is up to African countries to milk the good from the negotiations and negotiate in such a way that they mitigate the ugly. It should be remembered that EPAs are negotiations. That is, it is an opportunity for African countries to negotiate terms that are relatively favorable to them and in accordance to their circumstances, an opportunity that is harder to achieve in the multilateral arena. Wise negotiation arises from sufficient preparation prior to the negotiation dates. African countries still have to complete the negotiations for the full EPAs by the end of 2008. It is not too late to prepare sufficiently. In depth country and regional studies, surveys and analyses could be commenced on wide scale to develop informed negotiating positions. For example, African countries can negotiate provisions that help attract investment such as fair rules of origin, or cooperation to help meet international product standards, favorable agreements in key sectors such as telecommunication and construction that support a growing economy and help reduce supply constraints. African countries can also negotiate provisions that will facilitate reform and change, which are linked to measures needed to build greater capacity to trade, such as business development programs, provisions detailing the specific amount of funding that the different countries in the regions are going to obtain from the European Development Fund, based on viable empirical studies and surveys that would not be unreasonably challenged by the EU. 11

5.0 Conclusion This paper set out to dissect the issues around EPAs and to throw more light on the real issues concerning EPAs, to facilitate a more informed analysis of whether EPAs are indeed a good or bad thing for African countries. It is the finding of this paper that EPAs are not all together a bad thing for African countries. African countries should instead address the inherent problems that are looming in their economies that would hinder their ability to effectively negotiate and therefore successfully benefit from the EPAs. References ACP EU Trade website (http://www.acp-eu-trade.org) ACP Guidelines for the Negotiations of Economic Partnership Agreements, 5 July 2002, ACP/61/056/02 Bilaterals.org, EU-ACP EPAs, http://www.bilaterals.org/rubrique.php3?id_rubrique=7 (Accessed on 10 April 2008) Business Day, Editorial, Clashing Interests, 29/02/08 Business Day, Mathabo le Roux, SA Pulls Back on Threat to Customs Body, 06/03/08 DFID, A Rough Guide to Economic Partnership Agreements, <http://ww.dfid.gov.uk/aboutdfid/organisation/economic-partnership-agreements> Economic Partnership Agreements, The Secretariat of the African, Caribbean and Pacific Group of States, <http://www.acpsec.org/en/epa/note_on_epa.htm> (Accessed on 19 th April 2008) ECDPM, April 2007, Negotiating Economic Partnership Agreements, Agriculture, www.ecdpm.org/inbrief13c ECDPM, 7 April 2008, EPA Negotiations: Where do we Stand? www.acp-eu-trade/epa ECDPM, April 2007, Monitoring Economic Partnership Agreements, A Methodological Overview, www.ecdpm.org/inbrief18 ECDPM, June 2006, Negotiating Economic Partnership Agreements, Fisheries, www.ecdpm.org/inbrief13b ECDPM, November 2006, Overview of the regional EPA Negotiations, Central Africa-EU Economic Partnership Agreement, www.ecdpm.org/inbrief14a ECDPM, November 2006, Update on Regional EPA Negotiations, Central Africa-EU Economic Partnership Agreement, www.ecdpm.org/inbrief6i ECDPM, December 2006, Delivering the Goods: Challenges of ACP-EU relations in 2007, www.ecdpm.org/inbrief17 ECDPM, 2002, Cotonou Infokit Maastricht. Retrieved June 8, 2006 from www.ecdpm.org 12

Economic Partnership Agreements briefing from Transnational Institute (http://www.tni.org/detail_pub.phtml?&know_id=176) Everything But Arms, Regulation (http://ec.europa.eu/comm/trade/issues/global/gsp/eba/index_en.htm) EPA 07, Stop Unfair Trade Deals Between Europe and ACP Countries, 1 February 2007, www.epa2007.org Gathi Thuo James, Demerits of the EU Trade Agreements, Wednesday 23, April 2008, Business Daily Africa. GLOBAL EUROPE, Update: Interim Economic Partnership Agreements, 12 December 2007. See http://ec.europa.eu/trade/ GLOBAL EUROPE, December 2007, Update: Interim Economic Partnership Agreements, http://ec.europa.eu/trade/ GLOBAL EUROPE, Six Common Misconceptions About Economic Partnership Agreements, 1 January 2008. See http://ec.europa.eu/trade/ GLOBAL EUROPE, What Will an Economic Partnership Agreement do? 11 January 2008. See http://ec.europa.eu/trade/ Maclean William, Africa Reform Would Open Fund Floodgates, says Expert, Mail & Guardian online, 24/01/01 Lee C. Margaret, Trade Relations Between Africa and the European Union Under the Cotonou Agreement SEATINI, Economic Partnership Update, http://www.seatini.org/> SEATINI, Trade East Africa: Chaos on Eve of EPA Deadline, http://www.seatini.org/publications/articles/2007/trade%20east%20africa.html> (Accessed April 24 th, 2008) SEATINI, EPAs State of Play, <http://www.seatini.org/publications/epas/state%20of%20play%20as%20on%2011%20december%2020 07.html> (Accessed April 24 th, 2008) SEATINI, UNCTAD Warns That North-South Bilateral and Regional Trade Agreements may be More Costly Than Expected, http://www.seatini.org/publications/articles/2007/unctad%20warns.html> (Accessed April 24, 2008) SEATINI, East African Parliamentarians Express Fear That EPAs will Undermine the Economic and Political Integration Process of the Region, http://www.seatini.org/publications/articles/2007/east%20africa%20expresses%20fear.html> (Accessed April 24 th, 2008) SEATINI, Eastern and Southern Africa regional conference worried on the trade and economic impacts of ESA-EU and SADC-EU economic partnership agreements (EPA) http://www.seatini.org/publications/articles/2007/eastern%20and%20sourthern%20africa%20regional %20conference.html> (Accessed April 24 th, 2008) 13

SEAINI, ACP Countries Being Pushed into a Tight Corner to Sign far Reaching Interim EPA Agreements. <http://www.seatini.org/publications/articles/2007/acp%20countries%20being%20pushed%20into%20a %20tight%20corner.html> (Accessed April 24 th, 2008) SEATINI, The 9th ACP-EU Joint Parliamentary Assembly puts the EPA Negotiations Firmly on the Agenda, http://www.seatini.org/bulletins/8.8.php#epas> (Accessed April 24 th, 2008) Stopepa.org, Stop EU-ACP Free Trade Agreements, http://www.stopepa.org/stopepa/campaign_english.php (Accessed on 10 April 2008) Wikipedia, the Free Encyclopedia, <http://en.wikipedia.org/wiki/economic_partnership_agreements> (Accessed March 2o th, 2008) 14