EUROPE-AFRICA TRADE: UNEQUAL RELATIONS AGGRAVATE DEFICIT

By Aileen Kwa Reprint | | Print |

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GENEVA, Oct 27 2008 (IPS) - The Economic Partnership Agreements (EPAs) being negotiated between the European Union and African countries are likely to exacerbate the food import surges from Europe.

Unlike the World Trade Organisation (WTO) negotiations, where countries are talking about reducing tariff rates from bound tariff levels, in the EPAs negotiations, tariffs for EU products entering Africa will mostly be brought down to zero, writes Aileen Kwa, coordinator of the Trade for Development Programme, South Centre, Geneva.

Mismanaging the agricultural sector can impact very negatively on countries’ development and can also increase levels of poverty.

The latter has in fact been the result of the last twenty years of structural adjustment policies in many African countries. From being net food exporters in the 1970s, the liberalisation policies of the 1980s and 1990s led to only small increases in the growth of exports, but exponential growth in terms of Africa’s imports of food products.

Whilst 72 percent of the population in Sub-Saharan Africa, or 286 million were living under two dollars a day in 1981, the figure is 72.2 percent in 2007, or 551 million.

Lower tariffs essentially led to a deluge of food imports ­subsidised tomato paste from Italy destroying Ghana and Senegal tomato producers; subsidised Dutch poultry making it financially unviable for small chicken farmers in Ghana and Senegal; European Union supported dairy products particularly milk powder displacing small producers throughout many African countries including Tanzania and Kenya; EU exports of subsidised wheat and other cereals to Africa.

Conversely, mismanaging the agricultural sector can impact very negatively on countries’ development and can also increase levels of poverty.

Not only are the imports increasing unemployment, the poor developing countries’ food import bills are also escalating. The deficit in 2001 of 11 billion dollars is predicted to rise to 50 billion dollars by 2030. If food prices remain high, this figure could easily be doubled.

The Economic Partnership Agreements (EPAs) being negotiated between the European Union and African countries are likely to exacerbate the food import surges from Europe. Unlike the World Trade Organisation (WTO) negotiations, where countries are talking about reducing tariff rates from bound tariff levels, in the EPAs negotiations, tariffs for EU products entering Africa will mostly be brought down to zero.

Tariffs are a very important trade and development policy tool for Africa. This is particularly so as Europe continues to subsidise its agricultural production so that opening up of borders leads to a situation of unequal competition and in fact, an invitation for Europe to dump agricultural products in Africa.

Agricultural safeguards have been included in the various interim EPAs which several African countries have initialed at the end of 2007. Unfortunately, only a few countries -and in a few cases- have the conditions to use those safeguards, while it is the opposite for the European countries.

As the EU continues to heavily subsidise the agricultural sector, the playing field is not level between the EU and African countries. This is because subsidies are a form of ‘natural’ safeguards that the EU uses. By providing these supports, the EU is lowering prices domestically, and this has the same effect as raising tariff levels.

According to agricultural expert Jacques Berthelot, reducing domestic agricultural prices by 50 percent has the same impact as an increased duty of 40-50 percent.

EU provides agricultural subsidies to the tune of between 50 to over 70 billion a year. Studies have already shown that by their sheer volume, these supports do distort trade. The World Bank has also noted that the decoupling of farm payments ­which is what the last Common Agricultural Policy reforms did- is only effective if these payments are one-time buyout programmes to compensate farmers for the transition. If there are no time limits, decoupled payments will have the same detrimental and distorting effects as other subsidy programmes.

These subsidies provide the EU with a natural buffer or ‘safeguard’. However, EU subsidies are not being dealt with, either in the context of the EPAs, or in the WTO. At the same time, the EU tells African countries that the subsidies issue will not be negotiated in the EPA since it is already being handled at the WTO.

A couple of points need to be made with regards to tariffs and safeguards. Firstly, safeguards are a safety net. African countries should in the first place ensure that their tariff levels allow producers to have access to the domestic market, so that the conditions are conducive for agricultural production to be increased. That is, the domestic markets are not deluged by imports.

Secondly, we have not thought through fully the implications of safeguards on countries’ common external tariff. Will regional blocks be required to invoke the safeguard? If not, and if only a country within a regional block invokes the safeguards, will these be effective for the country needing protection? How will regions manage their common external tariffs?

Again, we go back to the necessity to have high enough common external tariffs (CETs) particularly in the area of agriculture, so that African countries do not have to repeatedly contravene the CET that we have set for our regions, and so that our agricultural production capacities can increase even in the face of asymmetrical agricultural trade in favour of the EU.

In as far as the EPAs constrain our ability to put a stop to unwanted and subsidized import surges, by forcing tariffs down or by only affording a weak safeguard, they will remain a major challenge for the development of African countries. (END/COPYRIGHT IPS)