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EPAs at risk

by Theresa Krinninger

In brief

Ghana and Ivory Coast were ready to strike a separate trade deal for the sake of cocoa exports.

Ghana and Ivory Coast were ready to strike a separate trade deal for the sake of cocoa exports.

According to a recent study published by the Heinrich Böll Foundation (HBF), the Transatlantic Trade and Investment Partnership (TTIP) puts at risk Economic Partnership Agreements the EU has reached with countries in Africa, the Caribbean and Pacific (ACP). The author calls for a modification of TTIP.

The Economic Partnership Agreements (EPAs) have been on the agenda for twelve years. Now, they are being concluded. They remain contested, but according to HBF-author Helmut Asche they look reasonable as, in his eyes, countries of the global south have regained policy space.

The EPAs are meant to boost trade between the EU and several regional economic communities that are made up of ACP nations. However, these regional communities are loose and superficial. They often have not achieved more than customs reductions. Making matters more complex, some countries are members of more than one regional community. Asche, nonetheless, rules out that the EPAs will undermine regional integration.

This statement is not trivial. For example, the agreement the EU was negotiating with the ECOWAS (Economic Community of West African States) was close to splitting up ECOWAS itself. When negotiations were stuck in 2014, Ghana and the Ivory Coast signed an interim-EPA to promote cocoa-exports. According to Asche, such risks were evident in different world-regions, but that is no longer the case.

By making various trade-offs, the parties have agreed to a kind of “gradual” liberalisation. Asche argues that the EPA debate has thus become less explosive. He sums up the outcomes of the most contested points:

  • Market access: The EU will allow goods 100 % customs-free access to the EU whereas African partners must open up 85 % of their markets.
  • Safeguard clauses: Developing countries can protect agriculture, but doing so is cumbersome in practice.
  • Export duties: ACP members can levy duties on commodity exports in order to promote local processing.
  • Subsidies: ACP governments are allowed to subsidise national manufacturers.
  • Local content rules: African governments tend to compel foreign companies to source supplies at the national level, but this does not apply to EU-based companies.
  • Most favoured nation treatment (MFN): African states are allowed to favour other developing countries, but not China, over the EU in trade policies.

The author sees putting the EPAs into practice as the next big hurdle. On completion of his study, only 32 of 49 countries in Sub-Saharan Africa had signed, and the perspectives for Central Africa, Angola, the Democratic Republic of the Congo, Malawi and Zambia were still unclear. Three important topics remain untouched moreover: industrial policy, good management of mineral resources and deep regional integration geared to sustainable growth.

The author appreciates that African countries regained policy space for their agro-industrial strategies. They are, moreover, equipped with tools to protect industries. This is an outcome, which the European NGO-association CONCORD should appreciate, writes Asche, especially as the EPAs will not threaten further regional integration.

Transatlantic risks

Whereas the EPAs were narrowed down to the trade in goods, the EU is moving towards “deep” economic integration in talks with the USA (TTIP) and Canada (CETA). “Deep” integration goes beyond customs-reductions and the like. It is geared to shared rules for investments, services and free movement of capital. According to Asche, TTIP and CETA would lead to a deregulation “in an unprecedented scale” in all spheres of daily life.

In his view, TTIP is relevant for ACP countries because it will inspire future EPA talks. The EU Commission has commissioned a series of studies to asses the impacts of TTIP-spurred economic growth between the EU and North America. The projections are generally positive, but the methods used are debatable, to put it mildly. In a similar sense, Asche challenges expert rhetoric that dismisses impacts on third countries as “not dramatic”. In contrast, Asche warns that deep economic integration between the EU and North America will happen at the expense of developing countries.

Asche states that African countries are set to lose the competitive advantage they now have thanks to duty-free access to EU. Moreover, he points out that none of the positive trickle-down effects some EU experts forecast will occur automatically. The weak bond of trust between the EU and African partners is likely to be strained even more, he argues.

Asche admits, however, that it does not make sense to maintain old trade barriers between North America and the EU just for the sake of developing countries. Asche calls for „flat“ TTIP-negotiations that ensure positive effects on third countries. Two German think tanks, Deutsches Institut für Entwicklungspolitik (DIE) and Stiftung Wissenschaft und Politik (SWP), have made similar demands. Asche proposes an institutional platform such as an ACP TTIP Advisory Council. In such a setting, developing countries could bring forward their arguments. The UN Conference on Trade and Development (UNCTAD) could become involved as well.

In order to prevent negative TTIP-effects on developing countries, Asche proposes following two principles:

  • “do good” by assessing the impacts of TTIP on developing countries beforehand and during the negotiations, and
  • “do no harm” by ensuring that EU-US harmonisation of standards is acceptable to third countries.

Theresa Krinninger

Heinrich Böll Foundation: Europe, Africa, and the Transatlantic. The north–south challenge for development friendly trade policy.

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