Global Policy Forum

Everybody is Pushing Free Trade on Africa


By John Ochola*

November 12, 2007

I am responding to the opinion piece by Peter Mandelson and Louis Michel "Africa: Nobody is Pushing Free Trade, EU Chiefs Argue" The New Vision, October 23, 2007. There is an old saying: "Give a man a fish and you feed him for a day, teach a man to fish and you feed him for life". Economic Partnership Agreements (EPAs) are the equivalent of Europe telling the African fisherman that if he does not give them his fishing net (tariff flexibility) he will not be able to sell any more fish to them (fish exports). In return for the fishing net, Europe promises a European fish (aid) that the fisherman has to apply for and wait for over two years.

Let me explain further. Michel and Mandelson ask: "How can we use trade to help African, Caribbean and Pacific (ACP) countries"? They would do well to go back to the drawing board with regard to their trade relationship with Africa. They could start by reading the excellent book Bad Samaritans by Ha Joon Chang, which deals exactly with the sort of misguided thinking that drives the European Commission (EC) towards pushing the ACP countries to sign a free trade deal.

The EC believes that free trade will encourage development and reduce poverty in Africa. But a free trade deal will create direct competition between European manufacturers and farmers, and their counterparts in poor countries, thus putting people in poor countries out of work and exacerbating their poverty. The EC article states: "Critics of EPAs claim they will open up ACP markets to EU trade at the expense of local business and local growth - this is not true." But critics of EPAs take figures from official EPA impact assessments that point to a contraction in regional trade, industry, agriculture and government revenue and list many sensitive products that could be hurt. For example, it is estimated that in Kenya, 65% of domestic industrial products could be vulnerable to unfair competition under EPAs and that a 15% contraction in regional trade would occur because more EU manufactured products would come into the region. In Uganda EPAs is estimated to create an annual loss in Government revenue of $9,458,170.

The article states that the EU is not threatening to raise tariffs for countries like Kenya, rather that "it is doing everything it can to avoid it". But the EU has refused to look at any options other than EPAs for Africa, has refused to look into another waiver, and has refused to provide a transition period in spite of such a request made by Kenyan trade minister and head of the regional negotiating group for East and Southern Africa, Dr Mukhisa Kituyi.

The EC and the East African Community should take heed of lessons from our national and global economic history. Liberalisation brings about factory closures not start-ups. Witness what happened during structural adjustment policies in Uganda in the 1990s. Since then, other countries like Kenya have strategically raised import tariffs, along with investment, to revive both the dairy and the tannery industry. Just when African countries are realising the power it has to help agriculture and industry develop using tariffs as economic policy tools, these very tools - this 'fishing rod' for development - will be removed through signing the EPA.

Countries that are successful today did not start out by liberalising. They started out by using tariffs to protect industries and having the state invest in them. Korea and Taiwan both achieved their phenomenal growth rates by using high tariffs strategically to promote specific industries. China and Vietnam also successfully used high tariffs and state intervention for trade-driven development. The EU itself took many years to develop behind protective barriers before opening up its markets to competition.

If the EC were serious about supporting Africa to trade its way out of poverty, it would drastically change non-tariff barriers into the EU that have seriously hindered the ability of Africa to access the EU market. These include such things as domestic subsidises to EU agriculture, complicated Rules of Origin and Sanitary and Phytosanitary measures, as well as support around private sector standards that have the ability to restrict exports from Africa. But none of these issues will be part of any final EPA text that may be hastily cobbled together to meet the December 2007 deadline. A goods-only EPA is a reciprocal free trade deal, not a fair trade deal.

The EC argue that the current trade arrangements under Cotonou must change because they are "not compatible with international trade rules" and that "calling for an end to EPA negotiations when there is no credible alternative is playing poker with the livelihoods of those we are trying to help". But a credible alternative to EPAs exists.

Least developed countries like Uganda already have the option of the Everything But Arms (EBA) scheme. It is as simple as labelling the produce for export differently. Ugandan EPA negotiators should seriously consider making use of the EBA scheme - like other least developed countries in the region are doing -- before rushing headlong into another round of liberalisation through EPA. The policy space still exists for Uganda to make use of tariffs under the EBA regime - if it chooses to do so - and to give its industry and agriculture a head start over Europe.

About the Author: The writer works for EcoNews Africa and represents Civil Society Organisations working on trade at the East and Southern Africa Regional Grouping.

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