Economic partnerhip agreements (EPAs) increasingly challenged
Momagri Editorial Board
Economic Partnership Agreements (EPAs) are designed to strengthen free trade between the Eu-ropean Union and the African, Caribbean and Pacific (ACP) group of nations by taking over the Lo-mé Convention, but removing the advantages given to these countries in terms of price stabiliza-tion and preferential access to the European market.
Since 2002, the EU has thus engaged into negotiations with 77 Africa-Caribbean-Pacific (ACP) coun-tries divided in six blocs for the purpose of implementing free trade areas (FTAs) by 2020: Western Africa (Benin, Burkina Faso, Cape Verde, Ivory Coast, Gambia, Ghana, Guinea, Guinea-Bissau, Libe-ria, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone and Togo), Central Africa, Eastern and Southern Africa, Southern Africa, Caribbean, Pacific.
Yet, the negotiating process and implementation conditions of such agreements have showed the massive complexity and reluctance by some ACP nations to agree in opening up their markets. Only 35 of the 79 ACP countries have “initialed” interim EPAs with the EU as of December 2014, including 15 Caribbean nations that have signed a comprehensive EPA in 20091. More recently, Nigeria, Gambia and Mauritania2 even announced they would refuse to ratify the agreement be-tween the European Union and the Economic Community of Western African States (ECO-WAS)+Mauritania signed in February 20143, thus jeopardizing the EPA final ratification before the October 1, 2016 deadline.
The motives for such a rebuff? Nothing more and nothing less than endangering these emerging economies. For Nigeria––Africa’s leading economic power––this agreement could shackle its in-dustrialization and structural change efforts, and deprive the country from customs revenues with-out any assurance from Europe, which, by increasing the number of free trade agreements, is wearing down the interest in tariff preferences it was putting forward a short time ago. “This means that not now but starting in 2025-2026, depending on specific items included or excluded, there will be a significant revenue deficit for the government, as well as a loss of jobs and invest-ments” said Olusegun Aganga4, Nigerian Minister for Industry, Trade and Investment, in March 2014.
Presented by Brussels as development tools for Africa, the advantages of such agreements are in fact consistently challenged––unfair competition, breach of regional integration and threat of im-poverishment. For the sole ECOWAS, the losses in customs duties would reach €3.182 billion each year indicates the “No to EPAs” National Coalition5. “For Nigeria––the driver of Western Africa’s economy––the losses in customs duties would reach €1.898 billion” indicates the Secretary General of the coalition. He also adds that the country’s investments would decline by 12 percent, and its GNP by 1.8 percent at the close of the liberalization period6.
In addition to lowered budget resources and the fear of economic development regression in the countries involved, the issue of agriculture is also a major concern.
In the framework of the EU-ECOWAS+Mauritania agreement, Western Africa’s commitments in terms of access to markets provide the liberalization of 75 percent of tariff lines at the close of the transition period, which means that 20 years after the implementation of the EPA, 25 percent of tariff lines will remain identical for all third countries. Western Africa has excluded mainly agricul-tural products that are considered more sensitive and subject to a 35 percent rate under the ECO-WAS’ Common External Tariff (CET)7. About half of mostly agricultural products are also excluded from liberalization, and subject to a 20 percent rate under the ECOWAS’ CET8. Yet, two major products for the food security and long-term future of regional production would not be excluded from the agreement’s planned liberalization: milk powder and grain (except rice).
Customs duties for milk powder and grain excluding rice, which were already low at a five percent ad valorem rate, will fall to zero starting on January 1st of the sixth year, at the opening of the Western Africa’s market to EU exports9.
Africa benefits from a high agricultural potential and is home to 65 percent of the world’s remaining farmland. In addition, African agriculture employs two thirds of the population and creates close to 25 percent of GDP10. Agriculture and agribusinesses would eventually represent a $1,000 billlion market by 203011. This configuration is one of the reasons which prompted African governments to plan for not only the implementation of structural reforms––land reform, attracting private inves-tors and employment promotion in agriculture––but also to regain economic sovereignty in the face of EPAs that are perceived by many as a neocolonialism practice from the European Union.
This explains why in Nigeria––where agriculture accounts for 37 percent of GDP––the Goodluck Jonathan administration has initiated a policy to lower rice imports in 2011. As a result, the country increased to 80 percent from 45 percent its rate of rice self-sufficiency between 2012 and 2015. The Nigerian authorities are even thinking of banning all rice imports by 2017, as announced by Alhaji Abdulaziz Yari, of Chairman of the Nigeria Governors’ Forum (NGF) in October 2015. “We have the potential, the required human resources and farmland areas. We are going to ban rice imports in the next two years.”12
“Without agriculture, there is no development” recently said Akinwumi Adesina, the new President of the African Development Bank. In order to run this equation, that is exactly why safety nets are crucial to protect agriculture from excessive exposure to international markets and their turmoil. Consequently, in the words of Dieter Firsch, Director General for Development at the European Commision between 1982 and 1993, “Historically, there are no reported cases of a country in the early stage of economic development would have developped through international competition. Growth has always been initiated involving some protection measures.”13
In the absence of renewed world agricultural governance to stem the overall drop in international prices that continues to unfold, the African nations are at risk of being ensnared between their commitments regarding customs duties reduction and their determination to place agriculture at the core of their development policies, especially regarding grain. But how can they be blamed it they decide to protect their agricultural activities, a key sector for their development and their eco-nomic and social stability?
1 Source : European Commission
2 Although it left the ECOWAS in 2000, Mauritania is negotiating an association agreement with the Economic Community of Western African States.
3 “EPAs Tumble As Three West African States Refuse To Sign”, News Ghana, March 1, 2016 http://www.newsghana.com.gh/epas-tumble-as-three-west-african-states-refuse-to-sign/
4 “Nigeria clarifies the reasons why it does not become parties to the EU-ECOWAS EPA”, Centre Africain pour le Commerce, l’Intégration et le Développement (CACID), April 23, 2014
5 “ECOWAS would lose €3.182 billion in customs duties because of the EPA”, Conakry Time, November 15, 2015
7 Such as meat (including poultry), yoghurts, eggs, processed meat, cocoa and chocolate powder, tomato paste and concentrate, soap or printed fabrics (Source: European Commission)
8 Such as fish and fish-based products, milk, butter and cheese, vegetables, rice, flour, spirits, cement, paints, fragrances and cosmetics, paper products, textiles, clothing and automobiles (Source: European Commission)
9 “Impact de l'APE Afrique de l'Ouest sur les céréales hors riz”, (Impact of West Africa EPA on Grain excluding Rice), Jacques Berthelot, May 23, 2015
10 African Development Bank (AfDB)
11 “Growing Africa: Unlocking the Potential of Agribusiness”, World Bank report, 2013
12 “2017, New target date for the end of rice imports to Nigeria”, Agence Ecofin, 17 October17, 2015
13 Reported in the publication Dajaloo (SOS FAIM), “EU–Africa: EPA, An economic partnership with full consent?’ July 22, 2015