| EPAs: The wrong development model for Africa | Send to a friend |
| Wednesday, 31 March 2010 10:01 |
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The document critically analyses pros and cons of Tanzania and other African countries/ least developed countries when negotiating – and eventually sign – a trade agreement with the European Union. Read on The Economic Partnership Agreements (EPAs), provide the wrong development model for Africa, and will jeopardise African countries’ development and regional integration prospects, rather than support them. Until now, only ten out of 47 African countries have signed the EPA – most are dragging out the negotiations because they are reluctant or resisting signing, due to their anti developmental content. This analysis thus provides some insights into three key areas. It assesses toxic provisions within the proposed agreements; it looks into the balance sheet of losses and gains for Africa and most important, suggests solutions i.e. alternatives to the EPA. 1.Toxic provisions in the EPA 70 per cent to 80 per cent liberalization of all tariff lines; Standstill clause The EPA model makes the assumption that dismasting of the majority of tariffs by African countries will lead to development gains. In the EPAs, EU is asking that tariffs for 80 percent of African countries’ tariffs lines are reduced to zero. Thus far, the experience of African countries has not proven that liberalisation brings development gains. In fact, despite being relatively more integrated in trade terms with the global economy, the last three decades of structural adjustment policies (by the World Bank and the International Monetary Fund (IMF)) imposing liberalisation have brought stagnation and even de-industrialisation in much of sub Saharan African. For instance, according to Buffie, E., Trade Policy in Developing Countries, Cambridge University Press, 2001, rapid tariff cuts in sub – Saharan Africa since the 1980s resulted in de-industrialisation. In Senegal, one third of manufacturing jobs disappeared, in Cote – d’Ivoire, the chemical, textiles, footwear and automobile sectors were crushed. In Sierra Leone, Sudan, Tanzania, Uganda, Zaire and Zambia, imports displaced local production of consumer goods, causing large – scale unemployment. The industries of Kenya, too have not been spared – beverages, tobacco, textiles, sugar, leather, cement and glass have been negatively affected. The reality is that Africa, relatively speaking, is even more integrated into the global economy than the developed countries. Sub – Saharan African’s share of trade vis–a –vis its gross domestic product is 34.5 per cent. For all Least Developed Countries (LDCs), the figure is 29.5 per cent. In contrast, the rations for the developed countries are much lower – 13.5 per cent for the US and Japan and 14.3 per cent for the EU. The EPA therefore discourages African countries from having an appropriate trade policy to support increasing production capacities both in agriculture and industry. No country has developed as a result of drastically lowering their tariffs during their development process. All developed and advanced developing countries have progressed based on the strategic use of their tariffs, combined with policies that have supported the development of their industrial and also agricultural sectors. The standstill clause in the EPA have committed that they will not increase any of their tariff lines, not even those 20 per cent of lines which are ‘sensitive’ and where tariffs will be retained. That is, should Ghana sign the EPA, it will not be allowed to raise its applied tariffs on poultry, even though the imports of poultry are now destroying the livelihoods of local poultry farmers. Relinquishing the ability to craft appropriate trade policies will lock African countries into their current patterns of production i.e. low levels of manufacturing capacity and ‘mono – exportation’. For many countries in Africa, 50 – 70 per cent of their exports, to the EU are made up of only one product – petroleum accounting for 90 per cent of Nigerian exports, gold and diamonds are 96 per cent of Botswana’s exports; coffee is 67 per cent Burundi’s exports. In large part due to liberalisation and the resultant import surges, Africa’s agricultural sector has also stagnated, with disastrous implications on poverty. According to World Bank reports on poverty related issues, number of poor in Sub Saharan Africa has almost doubled between 1981 and 2005. Percentage wise, poverty levels in sub – Saharan Africa have remained stagnant, comparing 1981 and 2005 figures i.e. before the food and financial crisis. However, the number of poor in Africa has doubled – from 202.1 million in 1981 to 384.2 million by 2005. With the financial and food crisis, the numbers have increased. The food crisis alone added 5.8 million additional poor people in sub – Saharan African between January 2005 and 31 December 2007, as a result of higher food prices. For poverty reduction in Africa, the agricultural sector which still provides a significant amount of jobs must be supported – both by governments, for example through price supports and inputs, as well as through trade policies so that farmers can sell their produce on the domestic and regional markets and receive decent prices. Governments can also support the sector through investing in processing and diversification. Purchasing power for the rural sector must increase, so that demand for industrial products can in turn create local domestic industries. These efforts cannot succeed in the context of an EPA. TOMORROW: Read about the state of Africa’s agriculture and industrial development, and an assessment on losses and gains for the continent Add this page to your favorite Social Bookmarking websites           |
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