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TRADE: Malawi Stands Firm on Conditions for Signing EPA

Claire Ngozo

BLANTYRE, Malawi, Jul 28 2010 (IPS) - The Malawian government has again stood firm in the face of calls by the European Union (EU) to sign an economic partnership agreement (EPA) — even after top-level EU officials visited the southern Africa to convince it to put pen to paper.

Poor infrastructure, as in this street in Lilongwe, impedes trade in Malawi. Credit:  Claire Ngozo/IPS

Poor infrastructure, as in this street in Lilongwe, impedes trade in Malawi. Credit: Claire Ngozo/IPS

The EU delegation, led by the European Commission’s (EC) director for development and EPAs Peter Thompson and EU Ambassador to Malawi Alexander Baum, engaged Malawi’s top trade officials at a two-day meeting on Jul 26 and 27 in the country’s commercial capital, Blantyre.

But Malawi has refused to budge.

The country’s trade minister, Eunice Kazembe, said at the meeting that Malawi wants to get a clear assurance on how it will benefit from the EPA.

She said Malawi is currently at a disadvantage when it comes to trading in terms of an EPA because it is a land-locked and least developed country (LDC) with poor public infrastructure, low labour productivity, inadequate technological capacity and unreliable public utilities.

“We have interests that need to be sorted out. These challenges should be addressed before full liberalisation,” she told the gathering.

Rural roads, health and education facilities are other issues that the country is demanding before it signs the EPA. Malawi also wants increased investment in research and development.

But the EU is not pleased with how the meeting in Malawi ended. In a statement issued afterwards Thompson indicated the EC’s frustration and impatience with Malawi and the other African, Caribbean and Pacific (ACP) states that have not yet signed the EPA.

“Seven years after their launch, EPA negotiations across ACP regions are not progressing as we would wish. It is now time to take a decision on whether there is a clear way forward together and, if so, under what timelines. I hope Malawians will play an active role in this decision at regional and national level,” stated Thompson.

He identified the consensus between the EU and Malawi on the founding principles of the EPA and a shared trade and development partnership backed up by development support as positive.

This would, he said, contribute to development, growth and job creation through gradual and controlled liberalisation of trade in goods over a reasonable period of time and a set of rules for 21st century sectors such as services and investment.

The meeting, officially tagged as an opportunity to “discuss the role of Malawi in the EPA within the Eastern and Southern Africa (ESA) region”, brought together about 90 people from the government, private sector and civil society.

The meeting was also attended by delegates from the United Nations Economic Commission for Africa (UNECA) and the Common Market for Eastern and Southern Africa (COMESA).

The Malawi Economic Justice Network (MEJN), a grouping of civil society organisations promoting socio-economic rights for the masses, was part of the meeting.

“The interim EPA, in its current form, will have the effect of undermining Malawi’s policy autonomy and causing calamity to the country’s economic development, and therefore, negatively affecting the fulfilment of citizens’ social rights,” said MEJN executive director Andrew Kumbatira at the end of the meeting.

He said the EPA will reinforce Malawi’s position as an exporter of low-value agricultural commodities and will deprive the government of policy space to use tariffs to protect livelihoods and food security and to foster the growth of a manufacturing sector.

“It is likely to have significantly negative effects on Malawi’s trade with other countries in the region and undermine ongoing regional integration processes. An EPA also threatens to lead to the loss of tariff revenue and to cause significant adjustment costs,” said Kumbatira.

MEJN is demanding that the parties in the EPA negotiations “go back to 2002 and start from there. This may not be an easy decision but it is a decision that will give meaning to the cooperation between the ACP and the EU”, said Kumbatira.

He told the media that EPAs have brought more challenges to ESA countries than solutions. Kumbatira said the expectation at the beginning of the negotiations in 2002 was that EPAs would offer an improvement over the Lomé trade preferences, in addition to complying with the World Trade Organisation (WTO) provisions.

“However, interim EPA has conditions which are worse than the Lomé trade preferences. Therefore, the challenge we have at the moment in trying to push the negotiations forward is to make EPAs better than the Lomé trade references. This cannot be done in the spirit and course of the current negotiations,” said Kumbatira.

In contrast, Baum declared in a statement that the EU will drive the negotiation process with enhanced political dialogue and support through the European Development Fund and aid for trade facilities.

Baum said the EU is working with the Malawi government to meet the goals it set for itself within its economic development programme.

“It is clear, for instance, that any customs revenue losses due to the phasing in of EPA provisions are very limited in scope and we can find an arrangement to help Malawi face the challenge,” he promised.

But it is yet to be seen if Malawi will give in. Last year, Malawi’s president Bingu wa Mutharika vowed that the country will not sign the agreement with the EU until all concerns are ironed out. “if EPAs are good, why are we being forced to sign?’’ he queried.

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