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DAKAR, Sep 24 2007 (IPS) - The European Commission is pursuing a hidden agenda in its negotiations of Economic Partnership Agreements (EPAs) with African countries, writes Demba Moussa Dembele, Director of the African Forum on Alternatives. In this analysis, Dembele writes that the EC, claiming it wants to promote trade and investment in Africa, included the so-called \’\’Singapore issues\’\’ dropped from 2003 WTO discussions following the strong opposition of African and other developing countries, which do not want to lock themselves into binding agreements on elements that are key policy instruments in their development process, particularly for industrialization. Such binding investment agreements would straightjacket African countries for the foreseeable future. This is why African and other ACP countries have emphatically reiterated their opposition to including these policies in the EPA negotiations. The best way to promote trade and investment in Africa is to address the fundamental issues of development raised by African countries, by assisting them in capacity- and infrastructure- building, in strengthening the process of regional integration, in developing the capacity to transform their raw materials domestically, and in building strong regional markets.

The majority of African countries are former European colonies. After most gained their independence in the 1960s, their relationships with Europe were institutionalized in a series of conventions that provided preferential access of African exports to European markets, without reciprocity. But the Cotonou Agreement between the European Union (EU) and African, Caribbean and Pacific (ACP) countries, signed in June 2000, maintained the preferences only until December 2007 and should be replaced by Economic Partnership Agreements (EPAs).

EPAs are in essence ”free trade” agreements: they envisage the end of trade preferences and the establishment of full reciprocity in market access in compliance with World Trade Organization (WTO) rules. It is in this context that one should understand the European Commission’s intention to ”promote trade and investment” in Africa.

While the economies of the European Union and Africa are obviously not comparable, the extreme degree of asymmetry can be easily seen in the two areas’ gross national income (GNI) figures : USD 13.3 trillion for the EU and USD 526 billion for the whole of Africa, including North Africa, in 2005. Given this huge disparity, is hard to believe that trade between the two groups of countries can be really ”free”.

The Cotonou Agreement stipulates that its principal objectives are to ”reduce poverty”, ”promote sustainable development”, and ”insert African economies into the world economy”. The EC is putting more emphasis on the third objective than the first two. This explains why, in spite of the huge differences between African and European economies, the EC believes that ”free trade” is the more effective way to achieve the above objectives. This belief stems from the simplistic and false assumption that the persistence of underdevelopment and poverty in Africa is in large part due to the region’s lack of integration into world trade.

On the contrary, it is this openness that makes African economies extremely vulnerable to exogenous shocks largely resulting from the volatility of commodity prices. The collapse of domestic industries hurt by competition from heavily-subsidised imports combined with export revenue losses due to the same subsidies. The scandal of cotton subsidies is just one of the most publicized. In 2002, world cotton prices fell by 25 percent because of US subsidies, which, at between USD 3-4 billion per year, exceed American yearly “assistance” to the whole of Africa. This support for some 25,000 American farmers translated into a loss of USD 300 million for 10 million African cotton growers.

This pattern will likely continue with the EPAs if the EU’s costly Common Agricultural Policy (CAP) is not dismantled or profoundly reformed.

To make matters worse, market access to developed countries for African countries’ products has been elusive, despite the lifting of nominal tariffs. Tariff peaks on processed goods, complex rules of origin, and sanitary and phytosanitary measures are among the protectionist policies used by the EU to keep away African exports, mostly products in which African countries have a comparative advantage.

In claiming that it wants to promote trade and investment in Africa, the EC is pursuing a hidden agenda: in the negotiations on the EPAs, the Commission has included the so-called ”Singapore issues”, which involve investment policy, government procurement, and competition policy. These issues were dropped from the 2003 WTO discussions in Cancun, Mexico, following the strong opposition of African and other developing countries, which do not want to lock themselves into binding agreements on elements that are key policy instruments in their development process, particularly for industrialization.

Thus when the Commission trumpets about ”promoting investment” in Africa, it is obvious that it is trying to justify the reintroduction of the Singapore issues into discussions with African countries. Likewise, the EU is putting pressure on African countries to make offers on services beyond what they have presented in the WTO. And all this will be promoted as being ”in the interest” of Africa because it needs to liberalise in order attract private investments, which would improve productivity and enhance the competitiveness of its economy.

In the opinion of the EC, liberalisation in trade and investment as well as services must be part of the negotiation package if African countries are to attract more foreign direct investment (FDI). The EC insists that ”there will be no EPA without investment rules and full reciprocity”. Furthermore, the EC is insisting on ”non-discrimination”, which means that African countries will be forced to treat giant European multinationals in the same way they treat their own national companies.

How can such policies promote ”sustainable development” in Africa, which the EC claims is its objective? On the contrary, such binding investment agreements would straightjacket African countries for the foreseeable future. This is why African and other ACP countries have emphatically reiterated their opposition to these policies in the EPA negotiations.

Clearly, ”free trade” cannot be a basis for mutually-beneficial relationships between Africa and Europe. With the stalled Doha Development Round of world trade negotiations, the EU should team up with Africa and other ACP countries to request a new transition period for the completion of the EPAs discussions. Since their primary justification was compliance with WTO rules, there is no hurry to sign them before the conclusion of the Doha Round.

The best way to promote trade and investment in Africa is to address the fundamental issues of development raised by African countries, by assisting them in capacity- and infrastructure- building, in strengthening the process of regional integration, in developing the capacity to transform their raw materials domestically, and in building strong regional markets. It is when these conditions are met that Africa will be able to take up the challenge of ”free trade” relationships with Europe. (END/COPYRIGHT IPS)