By Benjamin W. Mkapa
GENEVA, Aug 16 2016 (IPS)

The EPA issue has once again re-emerged when, in early July, Tanzania informed East African Community( EAC) members and the European Union (EU) that it would not be able to sign the Economic Partnership Agreement (EPA) between European Union (EU)  and the six EAC member states.

The European Commission reportedly proposed signature of the EAC EPA in Nairobi, on the sidelines of the 14th session of the UN Conference on Trade and Development (UNCTAD XIV).

Benjamin William Mkapa

This is a major quadrennial event where all United Nations member states negotiate guidance for UNCTAD. For the European Commission, it would have been a propitious place for a signature ceremony as it would have projected the EPA as a “trade and development” agreement to the benefit of EAC.

Nevertheless, the agreement is antithetical to Tanzania’s as well as the region’s trade and development prospects.

The EPA for Tanzania and the EAC never made sense. The maths just never added up. The costs for the country and the EAC region would have been higher than the benefits.

As a least developed country (LDC), Tanzania already enjoys the Everything but Arms (EBA) preference scheme provided by the European Union.

In other words, we can already export duty-free and quota-free to the EU market without providing the EU with similar market access terms. If we sign the EPA, we would still get the same duty-free access, but in return, we would have to open up our markets for EU exports.

The EPA is a free trade agreement. Under it, Tanzania would have to reduce to zero the tariffs on 90 per cent of all its industrial goods trade with the EU, according duty-free access for almost all the EU’s non-agricultural products into the country.

Such a high level of liberalisation vis-à-vis a very competitive partner is likely to put our existing local industries in jeopardy and discourage the development of new industries.

Research using trade data shows that Tanzania currently produces and exports on 983 tariff lines (at the HS 6 digit level.) The EU produces and exports on over 5,000 tariff lines. If the EPA were implemented, 335 of the 983 products we currently produce would be protected in the EPA’s “sensitive list,” but 648 tariff lines would be made duty-free.

So the existing industries on these 648 tariff lines would have to compete with EU’s imports without the protection of tariffs. Will these sectors survive the competition?

These 648 tariff lines include agricultural products (maize products, cotton seed oil cake); chemical products (urea, fertilisers); vehicle industry parts (tyres); medicaments; intermediate industrial products ( plastic packing material, steel, iron and aluminium articles, wires and cables); parts of machines and final industrial products (weighing machines, metal rolling mills, drilling machines, transformers, generating sets, prefabricated buildings etc); parts of machines (parts of gas turbines, parts of cranes, work-trucks, shovels, and other construction machinery, parts of machines for industrial preparation/ manufacturing of food, aircraft parts etc).

We can already export duty-free and quota-free to the EU market without providing the EU with similar market access terms. If we sign the EPA, we would still get the same duty-free access, but in return, we would have to open up our markets for EU exports
The list does not stop here. Liberalisation (zero tariffs) also applies to the many industrial sectors that Tanzania and the EAC do not yet have existing production/exports ­ about 3,102 tariff lines for Tanzania.

Statistics show that in fact, for the EAC region, the African market is the primary market for its manufactured exports. In contrast, 91% of its current trade with the EU is made up of primary commodity exports (agricultural products such as coffee, tea, spices, fruit and vegetables, fish, tobacco, hides and skins etc).

Only a minuscule 6% or about $200,000 of EAC exports to the EU is composed of manufactured goods.In contrast, of the total EAC exports to Africa, almost 50% is made up of manufactured exports – about $2.5 billion – according to 2013 ­ 2015 data. Of this, $1.5 billion are EAC country exports to other EAC countries.

These figures tell two stories: One; the importance of the African market for EAC’s aspirations to industrialise. In contrast, the EU market plays almost no role in this. Two the EAC internal market makes up 60% of EAC’s manufactured exports to Africa, i.e., the EAC regional market is extremely valuable in supporting EAC’s industrialisation efforts.

The EPA would threaten this regional industrialisation opportunity that is currently blossoming since most EU manufactured products would enter the EAC market dutyfree. Just as our manufactured products are not competitive in the EU market, even though they can be exported dutyfree, might it not be the case that when EU manufactured products can come duty-free into the EAC market, EAC manufactured products may also not sell? The EPA could in fact destroy our economic regional integration efforts.

The pains EAC has taken to build a regional market may instead help serve EU’s commercial interests by offering the EU one EAC market, rather than ensuring that that market can be accessed by our own producers.

The other area where EPA hits the heart of our industrialisation aspirations are its disciplines on export taxes. At the World Trade Organization, export taxes are completely legal.The logic of export taxes is to encourage producers to enter into value-added processing, hence encouraging diversification and the upgradation of production capacities. Developed countries themselves had used these policy tools when they were developing.

The EU has a raw materials initiative aimed at accessing non-agricultural raw materials found in other countries. According to the European Commission, ‘securing reliable and unhindered access to raw materials is important for the EU. In the EU, there are at least 30 million jobs depending on the availability of raw materials.’ In implementing this initiative, the EU has used trade agreements to discipline export taxes.

The EPA prohibits signatories from introducing new export taxes or increase existing ones. For Tanzania and the EAC region with its rich deposits of raw material, including tungsten, cobalt, tantalum etc; such disciplines in the long-run would be incongruent with our objective to industrialise and add value to our resources.

The other area of loss resulting from the EPA is tariff revenue, and the numbers are not small. Conservative estimates (assuming import growth of 0.9% year on year) show that for the EAC as a whole tariff revenue losses would amount to $251 million a year by the end of the EPA’s implementation period Cumulative tariff revenue losses would amount to USD 2.9 billion in the first 25 years of the EPA’s life.

For Tanzania, the losses based on 2013/­2014 import figures are about $71 million a year by year 25. Cumulatively, just for Tanzania, they come up to $700 million over the first 25 years.

Where is the Promised Development Aid?

EU has made many promises that the EPA would be accompanied by development assistance. Hence the EAC EPA incorporates a ‘Development Matrix’ containing a list of economic development projects for the EAC. The price tag of implementing this Development Matrix is $70 billion.

The Matrix and assistance is to be reviewed every 5 years. For the time-being, the EU has pledged to contribute a paltry $3.49 million, which translates into 0.005% of the total required funds!This is also a far cry from the tariff revenue losses the region faces ­the $251 million a year mentioned above.

The only area where the EPA is supposed to serve the interest of the EAC is by providing duty-free access to Kenya. As a non-LDC, Kenya does not have duty-free access via the EU’s EBA. Kenya’s main export item to the EU is flowers ­ just over $500,000 a year.

Without the EPA, Kenyan’s flowers would be charged a 10% customs duty. There are other Kenyan exports also ­vegetables, fruit, fish – that will face tariffs. However, the flower industry has thus far been the most vocal. Nevertheless, all in all, Kenyan exports to the EU market (including the UK) amounts to about $1.5 billion.

If no EPA is signed, the extra duties charged to Kenyan exports amounts to about $100 million a year. Is this worth signing an EPA for? — The avoidance of duties of $100 million? The tariff revenue losses as the EPA is implemented (and more tariff lines are liberalised) would be comparable.

This does not even include the tariff revenue losses of the other EAC LDCs, nor the challenges posed to domestic/ regional industries. In addition, the Brexit development is further reason for the region to pause and reconsider.

The UK is a major export market for Kenya, absorbing 28% of Kenya’s exports to the EU. This reduces the EPA’s supposed ‘benefits’ by a quarter for Kenya. There is a possible solution for Kenya ­ to apply for the EU’s Generalised System of Preferences Plus scheme (GSP+). Under this, almost all of Kenya’s current exports could enter EU duty-free including flowers and fish.

This option could be explored. Alternatively all EAC countries would do well to attempt to diversify production and exports away from primary commodities towards value-added products, and also to diversify our export destinations. Africa is a critical market for EAC’s manufactured goods. Regional integration and trade is the most promising avenue for EAC’s industrial development. The EPA would derail us from that promise.

This article was published firstly in Daily News of Tanzania

Excerpt:

By Peter Richards and - -
ST JOHN'S, Nov 4 2011 (IPS)

The scars on the pilings adjacent to the new Emergency Ferry Docking Facility here are still visible, graphic evidence of the devastation caused by Hurricane Luis when it hit Antigua and Barbuda in 1995.

Soufriere Hills volcano erupting in 1995. Credit: National Science Foundation/public domain

“This facility is one of the fruits of the Comprehensive Disaster Management approach that the Caribbean has adopted as part of its efforts to promote truly region-wide cooperation in disaster management,” said Ivan Ogando, director general of the Caribbean Forum (CARIFORUM), at the formal handover of the facility from the European Union, which financed the project, to Antigua and Barbuda earlier this week.

As the Caribbean experiences more frequent extreme weather-related events possibly resulting from climate change, such infrastructure projects will play a key role in boosting the overall disaster preparedness of the region.

“That regional approach to disaster management has been facilitated by the consistent support of the European Union and this ferry docking facility offers concrete proof of that support,” Ogando added.

The facility will permit emergency evacuation and the movement of relief supplies in the event of further volcanic eruptions or any other disaster, while also facilitating the seaborne movement of persons and goods between Montserrat and Antigua and Barbuda.

The project had been identified as a priority by CARIFORUM – comprising the 15-member Caribbean Community (CARICOM) and the Dominican Republic – and was completed just nine months after the sod-turning ceremony.

It also comes as CARICOM is seeking cheaper modes of transport given the high cost of air travel within the region.

The head of the European Union Delegation to Barbados and the Eastern Caribbean, Ambassador Valeriano Diaz, said the EU has already provided some 283,000 dollars to fund a shipping study within the Organisation of Eastern Caribbean States (OECS) that also includes Antigua and Barbuda and Montserrat.

He said the study contains recommendations relating to the structure, characteristics, routes and appropriate costing of an OECS shipping line.

“We understand that the OECS Secretariat has been exploring the possibility of approaching the EU-ACP’s Centre for the Development of Enterprise for funding for a transport plan so as to present a proposal to leaders,” Diaz said.

Ambassador Dr. Clarence Henry, trade coordinator and head of Economic Partnership Agreement (EPA) implementation for Antigua and Barbuda, told IPS the facility “marks the completion of several years of hard work to justify its importance within the context of emergency evacuation planning as well as placing more focus on trade tourism in the Eastern Caribbean”.

As the national authorising officer who serves as the intermediary between the African, Caribbean and Pacific (ACP) member states and the EU, Henry said the importance of the project was underscored by the presence of Montserrat’s Premier Reuben Meade and the ambassadors from Belgium, Finland, France, Germany and Spain.

A statement from the EU Delegation in Barbados also noted it was the “first occasion such a gathering of member states representatives, based both outside and within the region, were present for such an event in Antigua and Barbuda”.

The CARIFORUM countries had agreed to allocate 1.12 million Euros from the 9th European Development Fund (EDF) resources to fund the design and construction of the facility.

“The project will cement long cooperation arrangements between both Antigua and Barbuda and Montserrat where the dedicated pier will play a critical role in the movement of people and goods thereby contributing to economic sustainability of the British colony,” Henry told IPS.

The Trinidad and Tobago government has already signaled plans to establish a fast ferry service between the oil-rich twin island republic and the OECS, with Prime Minister Kamla Persad Bissessar hoping that it “will bring us closer together as we try to improve upon the integration movement”.

One foreign company, which the Port of Spain government has not named, has indicated an interest and Persad Bissessar said the ferry plan would particularly assist movement of people, goods and trade.

Diaz said that the Trinidad and Tobago initiative “is long overdue, especially given high travel costs throughout the region.

“And in these tough economic times any effort to provide alternative travel which is affordable even to remote places will be more than welcomed by the Caribbean,” he added.

The Antigua and Barbuda prime minister agrees, noting “clearly with our centrality, this pier will be an asset in such a plan” looking further to connecting the French islands of Martinique, Guadeloupe and French Guiana by mid-2012.

“Given the vagaries of the world economic climate and volatility everywhere, it behooves neighbours to cooperate through the sharing of knowledge and expertise,” he added.

Excerpt:

By Servaas van den Bosch
WINDHOEK, Oct 4 2011 (IPS)

Botswana and Namibia are set to lose preferential access to the European Union, which wants African, Caribbean and Pacific countries to sign controversial free trade agreements within two years or face potential loss of market access to the 27-member EU bloc.

Namibia is looking to diversify its beef exports to countries in the global South in order to lessen its dependency on the lucrative EU market. Credit: Servaas van den Bosch/IPS

After almost a decade of negotiations on EPAs between ACP countries and the EU, Brussels has finally set an ultimatum for the talks: a total of 18 out of 36 countries that have not yet concluded or implemented an EPA now have till Jan. 1, 2014 to do so.

While the announcement is not entirely surprising, it is the first time the EU – so far careful not to be seen bullying countries into a grade deal – has put a clear deadline to the talks.

“This move from the EU was anticipated for a long time,” Namibian independent trade expert Wallie Roux told IPS. Namibia has been notably reluctant to sign an EPA, in the process casting the former colonial masters in Africa into an unfavourable light.

“The EU eventually played their last ace in a desperate attempt to conclude their ill-constructed EPA negotiations within a certain timeframe,” said Roux.

The decision comes at a time when upper-middle income countries Botswana and Namibia face the loss of duty free access to the EU under a proposal that sees them removed from the EU’s Generalised System of Preferences (GSP).

“This could be a pincer movement to lock in those ACP countries that are still unsure about their future trade arrangements with the EU, or ringleaders like Namibia that dared to challenge the EU,” added Roux. “It is also interesting to note that the deadlines for both proposals coincide.”

The European Commission (EC) proposal that countries sign the EPAs within two years, to be sanctioned by the EU council, was made on Sep. 30 and quietly put out before the weekend. Officially the commission is limiting the lifespan of Market Access Regulation 1528/2007, which granted the parties an extension to preferential access after a Dec. 31, 2007 deadline saw most EPAs unconcluded.

The proposal means that countries that do not sign up face consequences varying from reverting to the EU’s GSP to losing all duty free and quota free access to the high-yield EU market, depending on the wealth of the ACP member.

The EPAs were necessitated by a World Trade Organization (WTO) decree that preferential trade agreements between countries must be reciprocal. In order to get tariff breaks from the EU, ACP countries would have to open their markets as well, although not to the same extent. The EPAs have been unpopular. African countries in particular feel they expose their markets to unfair competition and limit their economic policy-making space.

“The Regulation was a bridging solution for the countries that had negotiated Economic Partnership Agreements but not yet signed and ratified,” the EC said in a press release on Friday.

“Four years of application has provided enough breathing space for ratification or further negotiation. It is therefore time to bring the process to a close, by amending the Regulation and concluding Economic Partnership Agreement negotiations,” the EU said.

Burundi, the Comoros, Haiti, Lesotho, Mozambique, Rwanda, Tanzania, Uganda and Zambia are Least Developed Countries and will be the only countries around the world that can benefit from duty- and quota-free access to the EU under the Everything But Arms scheme if they do not sign up to an EPA.

“Seven are low-income or lower middle income countries (Cameroon, Fiji, Ghana, Ivory Coast, Kenya, Swaziland, Zimbabwe) that could benefit from the Generalised System of Preferences regime, a less advantageous, but still generous, unilateral scheme in place for all developing countries.”

In a commentary released on Friday, Isabelle Ramdoo and San Bilal of the European Centre for Development Policy Management note that while the deadline might seem reasonable at face value, many countries still seek clarity on contentious provisions in the proposed trade deal. Also many countries are in the midst of regional economic integration processes and are not ready to sign preferential agreements with third parties.

“Like in 2007, expect a bumpy ride in the coming months: some countries might be pressured to sign, ratify and implement the EPA that might not fulfil their ambitions and interests in terms of content, timing and geographical configuration by fear of market disruption, in particular if they risk losing preferential access to the EU,” said Ramdoo and Bilal. “Others might simply walk out. If no common position can be found at the regional level, the EPAs could seriously disrupt any regional integration effort.”

Researcher Paul Kruger from the Trade Law Centre of Southern Africa predicted a particularly “tricky” situation for the (Southern African Development Community) SADC-EPA configuration.

“The EPAs are too substantial to implement entirely before 2014. I expect the Europeans to at least want the EPAs ratified by the parliaments of the ACP countries in order to be WTO compatible, but the SADC-EPA is being completely renegotiated.

“The position of South Africa, that did not sign an interim EPA, is also instrumental in this. What if the South Africans say: ‘We don’t want to negotiate an EPA in 18 months’? This would mean a split in the configuration. Countries like Namibia would have to decide to continue siding with South Africa and lose market access or to join Botswana, Lesotho and Swaziland, which have signed on to the agreement,” Kruger said.

“There is still time to conclude the negotiations. However, this would require real effort, especially from the side of the EU. That is if they are serious about resolving the contentious issues, around development and regional integration, all of which are questionable at this stage,” said Roux.

In doing so the EU could encounter some newfound resolve from the ACP states.

“I see this as a last gasp to restore the EU’s dwindling leverage in the ACP, especially in Africa,” said Roux

On the other hand the alternative to EU markets, through South-South trade, might be overestimated currently, argued Kruger.

“There is potential in the emerging markets, but there are no trade agreements in place. No African country is even negotiating a trade agreement with China.

“Countries like Namibia have realised that breaking into emerging markets with their grapes or beef is not easy because of the competition… The EU is still the major trade partner for countries in Southern Africa and countries have too many vested interests in the Duty Free and Quota Free Access into the EU to just walk out of the negotiations now.”

Excerpt:

By Servaas van den Bosch
WINDHOEK, Sep 15 2011 (IPS)

European Trade Commissioner Karel de Gucht made a pit-stop in Windhoek to appease concerns over a troublesome economic partnership agreement (EPA) ahead of the Africa-European Union summit in South Africa.

European Trade Commissioner Karel de Gucht. Credit: Servaas van den Bosch/IPS

Namibia, with exports to the EU totaling 1.16 billion euros (2.2 billion dollars), is an insignificant player in trade between the European bloc and the rest of the world. However, for years the country has refused to accede to a trade agreement with the Europeans arguing that an EPA would erode its economic policy and would give the EU an unfair advantage in trade.

The EPAs were necessitated by a World Trade Organization (WTO) ruling that decreed preferential trade agreements between the EU and the 78 poor countries in the African, Caribbean and Pacific group should be reciprocal. This means these countries have to open their markets to the EU in return for preferential market access to Europe, though the liberalisation does not have to be equal.

The negotiations have stretched out for almost a decade and have been extremely troublesome as countries like Namibia hold out for a better deal. While a challenge at the WTO for non-compliance is unlikely at this point, Europe is keen to close the deal. The scramble for resources in Africa has intensified with China and India being the EU’s main competitors.

“We have taken stock of the EPA negotiations and cleared up some important misunderstandings that could have been a hindrance to signing,” De Gucht said late on Tuesday after meeting with Pohamba.

He said the concerns that countries in the (Southern African Development Community) SADC-EPA negotiating configuration share will be discussed openly in the negotiations for a full EPA.

In July 2009 the EU signed an interim EPA (IEPA) with Botswana, Mozambique, Lesotho and Swaziland, while Namibia and South Africa refused to sign and Angola is mainly an observer in the talks. The IEPA threatened to cause a schism in the Southern African Customs Union (SACU) until the EU agreed to move the talks up to an all-inclusive agreement for the region.

In this spirit, De Gucht reiterated Europe would push back negotiations on new generation issues. “We will not force countries to negotiate on services or competition issues, such as Intellectual Property Rights (IPRs),” he said.

On the touchy subject of geographic indicators, De Gucht announced that these “will be discussed together.” Geographic indicators restrict countries exporting products linked to a certain geographical area in the EU. For instance, the brand name Champagne can only be used for sparkling wine that comes from the Champagne region in France.

The issue is mainly of concern to South Africa, which wants to increase market access for its agricultural products above and beyond the existing preferential Trade and Cooperation Development Agreement (TDCA) it has with the EU.

De Gucht was confident that outstanding issues, such as preferential access for Namibia’s fisheries products that are sourced beyond the internationally accepted 12 nautical mile territorial zone and the ambivalent status of its canning industry, could be solved. The same would apply for other remaining tariff issues.

“We want to conclude these talks. We want to sign,” said Namibia’s Minister of Fisheries Bernhardt Esau. “There is an understanding that we can resolve the remaining issues as soon as possible.”

De Gucht denied that a renegotiation of the EU’s Generalised System of Preferences (GSP) would put pressure on the talks. If Namibia does not sign the EPA it will fall back on the GSP. However, the new GSP, which will come into effect in 2013, would likely exclude middle-income countries like Namibia.

“The GSP does not make much sense for countries like Namibia as it only allows preferential access for 65 percent of products. Under the current Duty Free and Quota Free (DFQF) regime, as well as under the EPA, Namibia would have much broader access,” De Gucht said.

Currently the EU is Namibia’s biggest trade partner outside the region and it is unlikely the large emerging economies will give the region the same favourable terms that Europe does.

However, it is unlikely Namibia will sign the EPA unless its main trade partner, South Africa, accedes to an EPA.

If South Africa signs the EPA it will be under stricter conditions compared to what the EU can offer the smaller peripheral states. But concerns remain. South Africa has little to lose and can opt to continue trading under the TDCA.

If Namibia continues to refuse to sign an EPA and loses market access under the GSP, it would have to trade with the EU under general WTO rules. However, the EU, through the SACU customs area, would have access to Namibian markets under the TDCA, said independent Namibian trade expert Wallie Roux.

“In terms of international trade, this does not make sense at all. It would be the EU versus Namibia. The net result would thus be to succumb to a signature of an un-concluded EPA in order to have some agreement with the EU, while in the meantime being subjected to EU preferential access to our own domestic market,” Roux said.

Excerpt:

By Wambi Michael
KAMPALA, Sep 12 2011 (IPS)

The East African Community (EAC) and European Union head back to negotiations on Monday to resolve the controversy over the delay in signing an economic partnership agreement between the two trading blocs.

Farmers fear that their produce will not be able to compete with those by EU subsidised farmers. Credit: Wambi Michael/IPS

EAC and EU officials will meet from Sep. 12 to 14 in Zanzibar, Tanzania to agree on a roadmap to guide the negotiations.

The EAC and EU hope to negotiate outstanding articles in the interim EPA, which include issues of export taxes, the most favoured nation (MFN) clause, rules of origin and agriculture.

Permanent secretaries from EAC member states and EPA experts met in Arusha, Tanzania in June as the first step towards resuming negotiations with the goal of signing the final agreement before the end of 2011.

One of the unresolved issues in the negotiations is the MFN clause, which obliges the EAC to extend the same preferences to the EU it grants to third parties under future trade agreements.

EAC negotiators and civil society groups say the clause could severely undermine South-South trade as it introduces disincentives for the EAC to negotiate agreements with other developing countries.

Dr. James Ndahiro, Rwanda’s representative to the East African Legislative Assembly, told IPS that the MFN clause should be removed or modified to restrict its application to agreements with more developed economies. “We are concerned that the outstanding issues, if not resolved and included in the EPA framework, will bind the EAC to poor trading terms,” said Ndahiro.

Sam Kasirye, a programme officer at the Southern and Eastern African Trade, Information and Negotiations Institute, told IPS that the EU was trying to insulate itself from competition by insisting on the MFN clause.

“The EU will be the biggest beneficiary of the MFN clause because it wants to insulate itself against emerging economies like India and China,” said Kasirye.

The EAC and EU signed the interim EPA, also known as a Framework EPA (FEPA), in November 2007 in order to avoid any trade disruptions with Kenya’s horticulture and fisheries sectors, the country’s leading export earners. Kenya, which is not a least developed country (LDC), would have lost its free market access to the EU as its preferential trade agreement with the bloc was set to expire in December 2007.

The FEPA was signed to safeguard against job losses in Kenya’s horticulture, fisheries and related sectors, as well as the loss of revenue by the Kenyan government as a result of reduced exports.

The EAC’s civil society, politicians and trade experts say some of the clauses in the FEPA are incompatible with the World Trade Organization’s (WTO) provisions and flexibilities accorded to EAC states as LDCs.

Critics of the EPA have raised a red flag against articles of the agreement, which relate to subsidisation, unfair competition and stringent protectionist policies.

One of the other unresolved issues is the agricultural subsidy offered by the EU to its farmers. The EAC is concerned that highly subsidised agricultural products will flood local markets and affect local farmers in its member states.

Members of the East African Legislative Assembly in a June 2010 resolution asked EAC states to halt signing the EPA until the Framework EPA was reviewed.

The EPA deal would require Burundi, Kenya, Rwanda, Tanzania and Uganda to liberalise tariffs on 82.6 percent of EU goods imports by 2033, while the EU would liberalise all tariffs on EAC goods imports, with transition periods for rice and sugar.

Kasirye told IPS that liberalisation of the EAC markets to EU products is one of the contentious issues under negotiation. “The agreement may not favour East Africa if not well negotiated and implemented. Most of the infant industries in the region will collapse once cheap goods from Europe flood our markets,” he said.

Dr. Nathan Irumba, Uganda’s former ambassador to the WTO, told IPS that the EPAs are likely to have an impact on smallholder farmers in the EAC who will not be able to compete with highly subsidised EU farmers.

He said the EU was exerting pressure on the EAC to have the agreement signed, regardless of the outstanding issues.

Benjamin Mkapa, the former president of Tanzania, warned that signing the EPAs in their current form would compromise the future development of the EAC and jeopardise the potential of regional trade and integration.

Mkapa said the EPAs are being negotiated with the misconception that the EU is the EAC’s main partner.

“Up-to-date trade statistics show that the trend, for quite a long time, has been that EAC exports to the EU as a percentage of overall trade are declining. At the same time, EAC exports to Africa are on the rise. By 2008, EAC exports to Africa surpassed EAC exports to the EU,” he said. The EAC exported four billion dollars worth of products to Africa while only exporting 2.9 billion dollars of products to the EU.

Ridolfi Roberto, head of the EU delegation to Uganda, denied that they were exerting pressure on Uganda to sign the EPAs. “Indeed the EU cannot want the comprehensive EPA more than the region,” said Roberto.

Roberto said the EU has no objection to the EAC’s refusal to open up competition with key products like meat, fish, dairy products, vegetables, fruits and textiles.

Kenya enters the negotiations in a weakened position as it faces pressure to sign the EPAs or risks taxes being imposed on its exports to the EU.

Excerpt:

By Servaas van den Bosch
CAPE TOWN, Sep 9 2011 (IPS)

Southern Africa has moved forward with regional economic integration, but challenges remain, say trade experts.

Few fisheries products reach landlocked countries in the region because of infrastructure development and trade barriers. Credit: Servaas van den Bosch/IPS

These figures were presented on Friday at the annual conference of the Trade Law Centre of Southern Africa (Tralac), a high profile meeting of trade experts from Africa and beyond in Cape Town.

But challenges remain in the political bloc, which from a trade perspective is characterised by lengthy negotiations and complicated trade rules. “There remain a number of countries such as Angola, the Democratic Republic of Congo, Madagascar and the Seychelles that are not participating for a variety of reasons,” said Petros Shayanowako, a researcher at the Trades Centre in Zimbabwe.

“And then there are countries like Malawi, Tanzani and Zimbabwe that have sought derogation of the FTA mainly to protect their agricultural markets,” said Shayanowako. Derogation means that states delay the implementation of a trade agreement until they are ready.

Within SADC the Southern African Customs Union (SACU), consisting of South Africa, Botswana, Lesotho, Namibia and Swaziland, is a relatively developed and prosperous nucleus of mostly upper middle-income countries. But even the oldest customs union in the world struggles with some fundamental problems, say researchers.

“There is a lack of common industrial development, common policies and there is little intra-SACU trade,” said Reginald Selelo, the Foreign Direct Investment specialist at the USAID (United States Agency for International Development) Southern Africa Trade Hub.

The development of regional industrial policies has eluded the customs union. This is at a time when the customs union faces several critical negotiations. It is in negotiations with the European Union (EU) over a set of problematic Economic Partnership Agreements (EPAs) while continuing to develop an existing agreement with the European Free Trade Association (EFTA) comprising Liechtenstein, Iceland, Norway and Switzerland.

At home SACU is supposed to be the driver behind the envisaged SADC customs union and the Tripartite Free Trade Area (TFTA), which connect the FTAs of SADC, the Common Market for East and Southern Africa (COMESA) and the East African Community (EAC). The TFTA, the first phase of which should be launched in three years time, will span 27 countries and close to 600 million consumers.

But little is coming out of SACU these days, with major decision-maker South Africa putting the brakes on the development of regional industrial policies. “Without the active support of member states, the SACU Secretariat in Windhoek, Namibia is powerless. It is no more than a post office box,” said one agricultural trade expert.

“In order to achieve sustainable, equitable and balanced growth, SACU has to fast-track its regional industrial policy, trade facilitation, review of its revenue sharing formula, the establishment of common institutions and building a framework for unified trade negotiations with third party,” Selelo analysed.

But that is just part of the solution to building a stronger SACU that in turn can truly function as the cornerstone of a common market in SADC – however unlikely that prospect is at the moment – or the TFTA.

“SACU must also seriously consider the inclusion of a deeper integration agenda into the work programme it has set itself,” says Selelo.

Furthermore, it should develop a clear guideline on the accession of new members. Because of its relative wealth, a number of peripheral states are keen to join the customs union, not necessarily attributing to its stability. This problem will become more acute as markets between SACU and the rest of SADC and the continent are freed up.

Most important is that SACU starts to develop within itself instead of economic powerhouse South Africa using the other members to legitimate the concept of an external tariff to the rest of the world and propping up their budgets in return.

“SACU now has to identify and build cross-border value chains,” Selelo said. “Secondly, it needs to focus more on new generation issues like services. These are not prioritised at the moment, but trade partners globally want to engage on this.

“Looking at the wider region, SADC will need to make haste with its planned infrastructure development, opening countries up for increased trade,” he said.

“There is also an urgent need for monitoring and compliance mechanisms including those relating to non-tariff barriers,” Selelo said. “And SADC needs to expedite the implementation of its finance and investment protocol to improve investment inflows into and across the region.”

Excerpt:

By Servaas van den Bosch
CAPE TOWN , Sep 8 2011 (IPS)

While globally trade agreements are more and more about linking production chains between countries and continents, Africa remains locked in a struggle to overcome the colonial legacy of fragmentation, trade experts say.

Chief Economist of the World Trade Organization Patrick Low says preferential trade agreements are less about tariffs. Credit: Servaas van den Bosch/IPS

Speaking on Thursday at the two-day Trade Law Centre of Southern Africa’s (Tralac) annual conference in Cape Town, Low said preferential trade agreements (PTAs) are less and less about tariffs and increasingly deal with ‘deep integration’, or linking production networks.

Low referred to the WTO’s World Trade Report 2010 that shows that 87 percent of trade conducted under PTAs enjoys a preferential margin of just two percent. And only 16 percent of world trade is subject to preferences.

“It’s no longer just about opening markets, but about subtle ways to create a competitive environment for your industry. By engaging in such deep PTAs, trade within production networks has gone up by eight percent,” said Low.

However, this does not apply to Africa.

“Africa does not fit into this pattern. Rather than accommodating production networks, it is locked in a struggle to overcome the colonial legacy of fragmentation. PTAs in Africa are therefore rather shallow and do not necessary lead to deeper integration,” observed Low.

An analysis of global trends in PTAs shows they increasingly facilitate the removal of obstacles to cross-border production. They are highly private sector-driven, with a buy-in from government and with domestic regulation supporting regional developments. They also often go further than what the WTO prescribes for free trade.

In Africa, said trade law expert and Tralac associate Gerhard Erasmus, PTAs are motivated by post- colonial politics and characterised by a top-down government-led approach. Africa also pursues a linear model of trying to move from Free Trade Areas (FTAs) to a customs union and ultimately a common market. This is not always realistic and results in ‘messy’ FTAs without the proper monitoring and enforcement of rules.

For instance, the Southern African Development Community (SADC) is in name a FTA, but it continues to suffer from numerable trade barriers.

“A truck driver shipping goods from South Africa to the Democratic Republic of Congo will be, for instance, held up at a border by obstinate officials citing improper documentation and be forced to abandon the truck.

“Upon returning to the border post, after months of unsuccessfully trying to seek redress through the courts, the truck will be gone and so will the merchandise,” Erasmus said of the daily challenges private sector players face.

Development of services, such as a cost-effective transport sector, is largely avoided in the extensive trade talks African countries have engaged in over the past decade. Yet without them, trade suffers.

“For example 40 percent of Rwanda’s export income is gobbled up by transportation costs,” said Erasmus.

“Africa continues to be preoccupied with trade in goods, rather than embracing a deeper regional integration agenda like elsewhere in the developing world. Talks are mostly state-driven with both the private sector and civil society occupying a peripheral place. The private sector should be engaged to boost deeper integration,” said Tralac Director Trudi Hartzenberg.

Services are essential to boost the production sector or networks, even when they deal with goods, said the Organisation for Economic Co-operation and Development’s Hildegunn Nordhas. He said that services were needed to grow industry and businesses. The development of services can open markets or boost productivity.

“The cut-flower trade in Kenya only started flourishing when more tourists flocked to Kenya, thereby establishing regular air connections that could then be used to export flowers.

“Or take the proliferation of the telecom sector in Africa. Where you previously had to drive to a farm in the rural areas to see if they had produce, you can now call the farmer on his cell phone,” Nordhas said.

To continue to ignore the development of the service industry in trade agreements on the continent will do Africa no favours in the long run, Nordhas said.

“The relative gap between developed and developing countries that invest in services and Africa will grow and we will fall behind. So actually the development of services is a priority.”  

Excerpt:

By Servaas van den Bosch
WINDHOEK, Sep 1 2011 (IPS)

It is not certain that an African free trade area will further regional integration or deepen the existing inequality between countries.

A cavalier attitude has seen South African businesses and services spreading across the continent. Credit: Servaas van den Bosch/IPS

The tripartite area, which will connect the Regional Economic Communities (RECs) of the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC), will span 26 African countries with over 578 million consumers and a combined gross domestic product of 853 billion dollars.

Negotiations were launched this year in June in South Africa and leaders want the first phase of the Cape to Cairo free market to be a reality within 36 months. This phase deals with trade in goods and focuses on tariff liberalisation, infrastructure development, non-tariff barriers, movement of business people and rules of origin.

“The timeline is probably a bit unrealistic, seeing that the negotiating mandate is driven by member states of the different RECs,” says Ndiitah Robiati from the Agricultural Trade Forum in Windhoek. She refers to the slow progress made on economic integration in SADC and COMESA, where member states have not implemented agreements on tariff liberalisation.

Officially the tripartite FTA is the panacea for overlapping membership of different RECs and an important step in the implementation of the 1991 Abuja Treaty that calls for an African Monetary Union by 2023. But a single currency bloc, or even a customs union, could be the last thing on the mind of South Africa, which is dead set on making the tripartite FTA a reality.

“South Africa has the industrial base, but they face the problem of getting their goods and people into the continent, especially into the large markets of East Africa, where its footprint is limited,” comments Paul Kruger, researcher at the Trade Law Centre of Southern Africa (TRALAC).

Economists point out that big countries like South Africa and Egypt stand to benefit most from the tripartite FTA. “In the short term the bulk of the countries will not benefit in terms of increased trade between member states, our research has shown. The dominant role players will benefit because they are better positioned,” says TRALAC researcher Taku Fundira.

“In Southern Africa only South Africa and Mozambique will benefit. In the case of South Africa, this is because of the advanced state of its economy and its existing industrial base, which gives it an edge over other countries. Mozambique is still growing and is putting the right policies in place to attract investments. Both countries will benefit from liberalisation in the agricultural sectors as they are large sugar producers.”

But trade experts warn that the cumbersome economic integration process in SADC, with an envisaged customs union being pushed back and countries failing to implement the provisions of a 2008 FTA, raises doubts about the tripartite area.

“No doubt there are challenges,” says Fundira. “The smaller problems manifesting themselves in the RECs could be multiplied in the tripartite FTA. But states have also learned from experience. Rules of origin, for instance, should not be an obstacle but a facilitator of trade.”

Rules of origin are a way to protect products and industry sectors. Countries use them to exclude third parties from preferential trade agreements. An example would be preventing a Chinese product, repackaged in South Africa, finding its way into the European Union (EU) under South Africa and the EU’s Trade and Development Cooperation agreement (TDCA).

Similarly countries listing products as sensitive should not hinder the process, says Fundira. “The definition of ‘sensitive’ currently is quite broad. As most countries in the region produce the same things, listing a few tariff lines as sensitive immediately restricts trade. Then the process becomes meaningless. We can see that this issue is approached more cautiously in the FTA negotiations.”

It is still unclear how the ambitions of the tripartite FTA will be reconciled with those of the RECs. EAC and COMESA are customs unions, while SADC announced two weeks ago it still intends to establish a customs and monetary union.

“It will be interesting to see how a SADC customs union will converge into the tripartite FTA,” notes Kruger. “The current situation in COMESA, which has a customs union without a common external tariff, indicates it will be impossible for SADC to realise its ambition of a customs union.”

This might be fine with South Africa, which already has a headache from its membership of the Southern African Customs Union (SACU). Through the SACU South Africa pays revenue to the union’s four other members. It is money that disappears in the budgets of these countries, instead on being spent on infrastructural development that would enable South Africa to widen its markets.

“South Africa is shifting its efforts from deeper economic integration to liberalising markets. Technically speaking it probably could do without entities like SACU,” notes Robiati.

What some commentators describe as a new South African imperialism, others deem a more realistic alternative to the haughty ideals of economic unity so far pursued.

“South Africa has not allowed itself to be held back by trade barriers. When you are in Dar es Salaam you can eat in the same Spur restaurant as you would in Johannesburg,” says Robiati. “You can phone with MTN and take your money out of a Standard Bank ATM. South African companies have taken the risks and it has paid off.”

In short, South Africa has an economic vision. “Outside South Africa there are no industrial policies in place. How can countries sign up to trade agreements when they essentially do not know what they want?” Robiati asks.

Excerpt:

By Servaas van den Bosch
WINDHOEK, Aug 31 2011 (IPS)

Weariness surrounds the negotiations on an Economic Partnership Agreement (EPA) regulating trade access between Southern Africa and the European Union (EU).

The status of Namibia's fishing industry and the country's 200 nautical miles Economic Exclusive Zone remains a sticking point with the EU. Credit: Servaas van den Bosch/IPS

“Support from the side of the EU has dissipated. There is markedly less interest from Brussels this year to push the process. The EU is frustrated by the little progress made and currently focuses more on Asian countries,” observed Paul Kruger, a researcher at the Trade Law Centre for Southern Africa in Cape Town, South Africa.

For the past decade the EU has been putting in place EPAs with the 79-member strong African, Caribbean and Pacific (ACP) group of states to meet the World Trade Organization’s (WTO) demand for reciprocity in world trade.

Last year countries decided to leave a divisive interim EPA (IEPA) behind and focus on concluding a full trade deal instead. But in doing so, the parties are renegotiating the IEPA article by article, while also bringing new concerns to the table – a time-consuming exercise.

A final agreement will prescribe reciprocal liberalisation of tariff lines and continued duty and quota free (DFQF) access to Europe’s high-yield markets. Annexes to the EPA text will outline different schedules for various countries, reflecting their wide-ranging stages of development.

South Africa, whose preferential trade is covered by a separate Trade Development and Cooperation Agreement (TDCA), is using the EPA talks to get even better access for their products.

The TDCA, when fully implemented in 2012, will open 86 percent of South Africa’s market to the EU. Conversely, the EU will liberalise 94 percent of its market for products from South Africa.

“In order to get additional advantage from signing up to an EPA, the South Africans are looking at securing better access for agricultural products from the region, but the EU has had difficulty in convincing its member states to agree to this,” Kruger said.

“South Africa sent a list of proposals regarding tariffs lines and market access for agricultural products. The EU took five months to respond and now the parties will have to discuss the offer on the table,” said Ndiitah Robiati, director of the Agricultural Trade Forum in Windhoek, Namibia.

South Africa’s increased dominance in the talks once again puts a break on the negotiating process. Botswana, Mozambique, Lesotho and Swaziland have signed the IEPA and are ready to move forward. Angola is a mere observer in the talks and though Namibia previously refused to sign, the country has indicated that most of its concerns have been met.

“There are a number of ongoing unresolved issues in the EPAs, but Namibia’s particular concerns seem largely addressed,” said Robiati.

The debate now largely focuses on technicalities, such as Namibia’s 200 nautical miles Economic Exclusive Zone (EEZ) – a zone beyond and adjacent to the territorial sea of a coastal state.

“Normally this zone is just 12 nautical miles wide and the EU wants to understand the implication of Namibia’s territorial claim for trade,” said Robiati.

Major policy space concerns, such as the Most Favoured Nation (MFN) clause, that automatically extends preferential trade agreements between SADC and third parties to the EU, seem to have been toned down. “Namibia is now merely committed to consult the EU on this on a case by case basis,” Robiati said.

But while the Europeans can afford to be accommodating to the smaller Southern African Customs Union (SACU) states, in South Africa it finds an industrialised trade partner.

“There is no way Brussels will grant South Africa the same access as the others,” said Namibian independent trade analyst Wallie Roux.

The different approach towards South Africa causes friction in SACU. “Differences between the EU’s stricter approach to South Africa and the other SACU members are a sticking point, exactly because all these states are in one customs union,” said Roux.

So the same incongruence that existed under the TDCA will continue under the EPA.

“The process of integrating the tariff lines of the TDCA in the EPA is almost complete, there are 10 or so tariff lines outstanding,” said Roux. “There are also other trade obstacles flowing from this definition of parties, like cumulation issues.”

“Cumulation relates to BLNS (Botswana, Lesotho, Namibia and Swaziland) countries using South African products as a basis or component for their own exports to the EU. This is currently not allowed. It’s basically a backdoor the EU wants to keep closed to prevent South Africa from channeling their products through the BLNS.

“It raises the question why the EU can act as a homogenous bloc, while countries in the SACU are approached on different levels,” Roux explained.

Another major headache is geographic indicators, which refers to the branding of products by their geographical origin, such as “Champagne”. In the EU Champagne can only be used for sparkling wine that comes from the Champagne region of France.

“South Africa has now said it will abide by WTO rules regarding geographic indicators, arguing that what the EU proposes is not yet law,” explained Roux. The WTO rules regarding geographic indicates are looser that the EU’s.

Other outstanding issues include the position of South Africa on infant industry protection and export taxes which, according to Robiati, are slowly being solved.

All in all 2011 seems a continuation of the ambiguity surrounding the EPA while players rapidly lose interest.

Roux said: “It seems the EU is expanding the negotiation agenda, instead of solving the existing problems.”

“Ultimately Southern African countries risk losing their DFQF access. It’s a concern that even the countries that signed an IEPA are not implementing it. Possibly the EU is delaying the process so they can have more leverage, since in the end it all comes down to WTO compatibility,” said Kruger noting that meanwhile the private sector is holding its breath. “Sectors like the tobacco industry really don’t want their markets cut off.”

“A mini-waiver has been given, which will buy states some more time to conclude the negotiations,” said Robiati. “This gives some breathing room, but all it takes is one non-ACP country, like Panama or Indonesia, to make noise at the WTO.”  

Excerpt:

By IPS Correspondents
BRIDGETOWN, Barbados, Jun 13 2011 (IPS)

The inaugural meeting of the Trade and Development Committee (TDC) of a sweeping trade pact between Caribbean nations and the European Union is being hailed as a success by regional diplomats.

The convening of the TDC had met with earlier delays. It is a key component in implementing the Economic Partnership Agreement (EPA) that the European Union signed in 2008 with the Caribbean Forum (CARIFORUM), comprising the 15-member Caribbean Community plus Cuba and the Dominican Republic.

“Notable strides” were made, “albeit with a mixed record of success,” said Alexis Rosado, the chief executive officer of the Ministry of Foreign Affairs and Foreign Trade of Belize, who chaired the Jun. 9- 10 inaugural meeting.

He spoke of Britain’s Caribbean Aid for Trade and Regional Integration Trust Fund (CARTFund), which has provided the financial and technical impetus for establishing EPA Implementation Units in a number of CARIFORUM states.

“These units are expected to have a direct and positive impact on EPA implementation in these states,” he said.

“These institutional additions to the EPA implementation landscape across the region are very tangible expressions of EU States’ commitment to assisting their EPA partners through Aid for Trade. Since the inaugural meeting of the Joint Council, these institutional advances have emerged as vital components of the machinery of EPA implementation in the region,” he said.

A statement issued at the end of the closed-door meeting said that both Europe and CARIFORUM agreed “to work collaboratively towards an Aid for Trade-styled coordination and resource mobilization event in 2012 for CARIFORUM, in recognition of the magnitude of the financial requirements of the EPA implementation task ahead, at both regional and national levels”.

The EPA provides for a TDC to assist the Joint CARIFORUM-EU Council, which at its inaugural meeting in May approved Rules of Procedure for the Committee, the second highest institution after the Joint Council. The TDC’s functions include supervision of and responsibility for the implementation and proper application of the provisions of the EPA.

“The two sides agreed that the meeting represented a ‘crucial step’ in efforts to move forward on full implementation of the EPA, not least because it provided an opportunity for detailed exchanges on and identification of follow up required in respect of a range of matters” that included legal issues; ratification of the EPA; trade in goods and services; development cooperation; and monitoring the implementation of the EPA, the statement said.

CARIFORUM countries stressed the importance of continued support to Caribbean’s rum industry and the continued erosion of preferential treatment “as it relates to agreements that the EU has concluded and those that are under negotiation affecting rum and other products of interest to CARIFORUM”.

The CARIFORUM countries also raised issues regarding the liberalisation schedule for trade in goods, in particular relating to motor vehicles and their parts, and changes to product rates assigned. The statement said that Europe has “given an undertaking to review these matters, based on a formal submission from CARIFORUM”.

Prior to the start of the meeting, the EU Delegation to Barbados and the Eastern Caribbean noted that among the matters to be raised under the aegis of trade in goods included tariff reductions, application for non-tariff barriers for the French Caribbean islands of Martinique and Guadeloupe, as well as the tariff liberation schedule for motor vehicle, parts and components.

The statement made no mention as to whether there had been progress in those areas.

CARIFORUM delegates also used the two-day meeting to update their European counterparts on the work being done toward trade in services, in particular as relates to the negotiation of mutual recognition agreements.

On Jun. 16, St. Lucia will host a two-day workshop for CARIFORUM trade officials that the organisers – the EPA Implement Unit of the Caribbean Community Secretariat – said “is propitious, in so far as the engagement stands to build on the momentum” coming from coming so soon after the inaugural TDC meeting here.

“It will seek to clarify the provisions of the EPA related to Services and Investment, point to obligations which CARIFORUM States have undertaken, identify activities needed to be undertaken to implement the obligations, draft national work plans and refine the Regional work plan for Services,” said the Implementation Unit’s Trade in Services and Investment Specialist, Allyson Francis.

But the Barbados meeting also agreed that there is more to be done, especially in the area of “innovation”, with both sides underscoring the need to “elaborate specific actions that they could undertake to promote further CARIFORUM participation in existing and future EU innovation programmes and activities, including joint activities with the EU Outermost Regions”.

Excerpt:

By IPS Correspondents
PORT OF SPAIN, Trinidad, May 31 2011 (IPS)

In his first address to the board of governors of the Barbados-based Caribbean Development Bank (CDB), Dr. Warren Smith, the new president of the region’s premier lending financial institution, warned of insecurities engulfing Caribbean economies.

He told the governors meeting here last week that the situation has been worsened by structural weaknesses and extreme vulnerability linked to Caribbean countries’ small size, openness, narrowness of the production base and proneness to potentially devastating natural disasters.

“The economic structure has been further undermined and industry competitiveness challenged by volatile oil prices since the 1970s and the deeper integration of Caribbean economies into the international financial and economic systems through globalisation,” he said.

Into this mix, Smith adds the Economic Partnership Agreement (EPA) that was signed in 2008 between the European Union (EU) and the Caribbean Forum (CARIFORUM) countries, consisting of the 15-member Caribbean Community (CARICOM) grouping and the Dominican Republic.

He said the EPA signaled the end of unreciprocated preferential access by Caribbean exports into the EU market, resulting in new insecurities being created as agriculture production, farm incomes and employment declined. Small farmers, especially in banana and sugar producing countries, have become displaced and poverty levels rose dramatically, more so in rural communities.

“If you look at countries in the Eastern Caribbean like St. Lucia, Dominica, their banana industries have been adversely affected so that there is, if you will, a first round fallout from that (EPA) development,” Smith told IPS.

He believes that the region should not sit idly by, “but what we should do is to recognise that even in the face of those sets backs what the EPA has done is to open up a whole new world of opportunities”.

He wants the region to focus on being much more innovative while recognising that accords, such as the EPA, are an irreversible process in a changing global environment.

“It is Europe tomorrow, it is going to be another region the next day and so on, so that we have to become accustomed to that reality and position ourselves to deal with it,” Smith told IPS, adding that as the 2008 global economic and financial recession unfolded, and the Caribbean experienced its impact, vulnerability increased.

Jamaica’s Finance Minister Audley Shaw said the EPA is “a sort of indication of what trading is likely to be in the future” and “what this must signal to us is that we have to prepare ourselves for significantly higher levels of productivity and higher levels of product differentiation… so that we can benefit from comparative advantage in the arena of trading with Europe and ultimately in the arena of global trade.”

He told IPS that most of the measures contained in the EPA are consistent with the new policies being pursued in Jamaica, where productivity has been in decline and where economic growth levels – “marginal at best” – has been at less than one percent for the last 14 years.

“We just have to go and recognise that for EPA to be successful all of us in terms of our ability to export…must understand that we have to build capacity, build output levels and productivity and efficiency levels,” he said, adding “we have signed the agreement already, the horse kind of gone through the gate already”.

Trinidad and Tobago’s new economic and planning minister, Dr. Bhoendradatt Tewarie, has also endorsed the need for more innovation as a means of enhancing competitiveness leading to improved productivity.

“A major factor in productivity is the skills and competencies of the workforce. Human capital, therefore, is the essence of productivity, competitiveness, innovation, diversification, the migration of industries upward in the value chain, entrepreneurship, new business creation, wealth generation and sustainable development,” he said.

Tewarie said that the EPA would be useless to CARICOM countries “unless we have industries that can take advantage of the EPA to access the markets of Europe”.

“So what it demands of us is industries that have export capability on a competitive enough basis to penetrate the market,” he told IPS.

“If you see the EPA as a challenge or a difficulty it will always be so, but if you see Europe as a market made possible by the EPA then there are requirements that are necessary to be met in order to access that market and a lot of this has to do with how you see things, view the world and how you view your own requirement and responsibilities in the world.”

The CDB has received a 10 million pound (16.5-million-dollar) grant from the British government which it has out into a trust fund that Smith says operates along the line of “aid for trade”.

“We use those funds to help Caribbean institutions and Caribbean companies to position themselves better to be able to access the European market and we are in discussions with CARIFORUM to get another round of similar resources to do a similar type of thing,” he said.

Tewarie notes that it has been two years since the signing of the EPA, and with only eight more years before the region has to allow for duty-free access of European goods into the Caribbean, it is necessary for initiatives such as the CARICOM Single Market and Economy (CSME) to be far advanced.

“What is required of us is really diligent and highly focus preparation and in that regard the pace of achievement of the CSME which is really a single economic space needs to be quicken,” he said, noting “notwithstanding that there is nothing that prevents a particular company or a cluster of companies across the region in cooperation from accessing the European markets”.

CARICOM leaders who met in Guyana for a two-day retreat last weekend noted that the move towards the single economy, first mooted for 2015, would “longer than anticipated” and “it may be best to pause and consolidate the gains of the single market before taking any further action on certain specific elements” of the initiative.

Excerpt:

By Isolda Agazzi
GENEVA, May 24 2011 (IPS)

Some of the decisions taken on trade in the Istanbul Plan of Action are likely to disadvantage poor countries while others are so vague as to be meaningless, says Abdoulaye Sanoko, counsellor at the mission of Mali to the World Trade Organisation (WTO) in Geneva.

TWN's Sanya Reid Smith: The Istanbul LDC conference sent out a message that LDCs should not be pressured or advised to liberalise imports. Credit:

“LDCs negotiated, but they had no choice. There had to be a result, so this is a compromise text which is not necessarily good,” Sanoko told IPS upon his return from Istanbul.

The International Centre for Trade and Sustainable Development (ICTSD), a Geneva-based think tank that also had representatives in Istanbul, concurs that “trade proved to be the most controversial issue at the negotiations” for the plan of action.

Sanoko says, “when I see the chapter on trade, I have a feeling of setback when comparing it to what the WTO has already cast in stone regarding special and differential treatment.

“In the Doha Round, it is clearly said that LDCs will not have to cut any tariffs. They would do so only on a voluntary basis, while they are encouraged to consolidate their applied tariffs.”

ICTSD underlines that the final version of the plan of action only calls for a timely implementation of the duty-free and quota-free market access on a lasting basis for all LDCs, in line with the Hong Kong ministerial declaration of 2005, and the abolition or reduction of arbitrary or unjustified trade barriers.

However, for Sanoko, this language is “full of ambiguities”. “It is a contradiction and a setback from the Hong Kong commitment of duty-free and quota-free access, since it includes the possibility of ‘reduction’ alongside ‘abolition’ of unjustified trade barriers”, he notes.

While he welcomes the call to strengthen regional integration, he regrets the absence of innovative means to do so, particularly concerning the amendment of article XXIV of the General Agreement on Tariffs and Trade (GATT), one of the issues currently discussed in Geneva.

This article stipulates that in regional so-called free trade agreements (FTAs) the parties have to liberalise most of the exchanges, without specifying how much. LDCs and developing countries are asking for it to be amended to include a good dose of special and differential treatment so that poor countries would not be asked to reduce their tariffs too much.

“We understand that such a conference cannot resolve problems related to trade rules, but we would have liked a reference to it,” Sanoko comments. “The UN Conference on LDCs is a common effort by the international community to encourage the development of our countries and one cannot talk about general concepts that are largely accepted without deepening them.”

Concerning trade agreements like the economic partnership agreements (EPAs) between the EU and the Africa, Caribbean and Pacific (ACP) countries, he argues that, “they are supposed to be a partnership, but they are an FTA like any other one.

“How can you imagine a partnership between some hyper-developed countries and others that can barely stand on their feet? This is another missed opportunity to innovate.”

Sanya Reid Smith, legal advisor and senior researcher at Third World Network (TWN) points out that in the high-level debate in Istanbul a strong message was sent that LDCs should not be pressured or advised to liberalise their imports since, when they did that in the past, it had very damaging effects. TWN is an international nongovernmental organisation headquartered in Malaysia.

“Fears were also expressed about the free trade agreements and economic partnership agreements, which can cause similar kinds of damage and can prevent the use of export taxes to industrialise on the basis of natural products,” she told IPS.

“Due to the WTO impasse, there should be an early harvest package for LDCs which includes issues such as duty-free and quota-free market access and the elimination of trade-distorting subsidies for cotton,” Reid Smith concludes.

Another fuzzy point, according to Sanoko, is the request to LDCs to broaden their export bases so as to be able to double their share of international trade within 10 years. “But on what basis? Today they represent only one percent of world trade. You could even take it to three percent but, concretely, how?” he wonders.

He considers it is a “great pressure on LDCs” to ask them to avoid protectionists tendencies and to correct trade-distorting measures while agriculture in Northern countries is being distorted.

“For African LDCs, agriculture is a vital issue,” he stresses. “Take Malawi: it had a chronic food deficit, but within three years only it has become self-sufficient and today it even exports.

“Their solution was to put in place a new agricultural policy that gives some support to small producers, like seeds and fertilizers. At a time when the food crisis may erupt again, supporting small farmers can make a crucial difference and help a population to feed itself.”

“In 30 years, only three LDCs have shed that status. This shows little progress, particularly since the number of African LDCs is going to increase with the partition of Sudan,” Sanoko concluded.

Martin Khor, director of the South Centre, an intergovernmental organisation of developing countries based in Geneva, argues that it is untrue that LDCs are not integrated into the world economy. In fact, many LDCs have higher export ratios than some developed countries.

The way in which the LDCs are integrated disadvantages them as they are too dependent on raw materials export and, with prices of commodities being in long-term decline, they are suffering great revenue losses, he concludes.

Excerpt:

By IPS Correspondents
PORT OF SPAIN, Trinidad, May 16 2011 (IPS)

When Caribbean journalists met in Antigua in late March to discuss the Economic Partnership Agreement (EPA) that was signed between the European Union and the Caribbean Forum (CARIFORUM) countries in 2008, they were told that the absence of tax treaties, foreign exchange controls and language barriers were among the factors preventing the full implementation of the accord.

Sonia Allyson Francis, a specialist with the EPA Implementation Unit of the Guyana-based Caribbean Community (CARICOM) Secretariat, also listed ignorance of cultural norms, customs and values, and the cost of travel as other challenges to the implementation of the EPA.

“Persons aren’t able to key-in in terms of what are their actual development cooperation needs and that’s why we have a delay in implementing the services and investment aspect of the agreement,” she said.

Now, as the CARICOM Council for Trade and Economic Development (COTED) – one of the principal organs within the 15-member regional grouping and comprising finance, trade and economic ministers – gets ready to meet in Guyana on Thursday, the CARICOM Secretariat has signaled that implementation of the EPA will be the major agenda item.

Issues include the tariff reductions set for this year and the first meeting of the Trade and Development Committee under the EPA on Jun. 9 and 10.

The head of the Implementation Unit at the Secretariat, Branford Isaacs, welcomed Grenada’s announcement that it has established its own EPA Implementation Unit in keeping with the provisions of the agreement. “As respective CARIFORUM states strengthen their EPA implementation capacity, CARIFORUM will be better positioned to advance on EPA implementation,” he said.

In October 2008, CARIFORUM, comprising the CARICOM grouping and the Dominican Republic, signed the EPA with the 27-nation European Union.

The optimism of some Caribbean technocrats regarding the trade deal is, however, not shared by former Jamaican prime minister Edward Seaga, who said his country will not benefit from the accord.

Seaga, 80, who is now chancellor of the University of Technology (UT), said in a public lecture last month that the EPA, just like the CARICOM Single Market and Economy (CSME) which allows for the free flow of goods, labour, services and skills within the regional grouping, was not the way forward, and in fact would be a hindrance to Jamaica’s overall development.

Seaga, who served as prime minister from 1980 to 1989, said that with countries now negotiating EPAs for open markets, Jamaica would not benefit from the CARIFORUM-EU EPA for a number of reasons.

“Poor countries will not be able to develop because it’s a one-way flow of benefits, widening the gap between rich and poor nations. The Jamaican economy is a strong importer but weak exporter. As such, it will not benefit from increased export earnings in the CSME or the EPA schemes. It is a supermarket, not a factory,” Seaga said.

At the launch of the 10th European Development Fund (EDF) Regional Private Sector Development Programme in Barbados in mid-April, the head of the European Union Delegation to Barbados and the Eastern Caribbean, Valeriano Diaz, said the programme is the first initiative to be approved under the 10th EDF EU-CARIFORUM Caribbean Regional Indicative Programme (CRIP), through which the EU is providing 232 million dollars largely to assist the region in the implementation of the EPA.

“EPA implementation remains a priority for the EU and we are pleased that the inaugural meeting of the Trade and Development Committee will take place here in Barbados on the 9th and 10th June,” he said, noting that the EU and CARIFORUM are currently preparing a package of assistance to CARIFORUM and regional governments for, among other things, the overall coordination of the implementation of the EPA- agreement.

He said this would also include enacting and implementing legislation, regulations and procedures in the areas of competition law, public procurement, trade and customs; enhancing the policy framework and system of support measures for improving competitiveness of agriculture and the fisheries sector and improving the regional and national capacity to assist companies to comply with international regulatory requirements.

“There can be no doubt that the EU remains committed to the continued thrust in making the Caribbean a viable and vibrant region for international trade and investment. We have invested a considerable amount of financial and human resources in this regard,” Diaz said.

The two-day meeting in June will allow senior Caribbean and European officials to meet for the first time under the aegis of the CARIFORUM-EU Trade and Development Committee, the second highest institution, after the Joint Council, which met in inaugural session in May 2010.

It is also expected that the meeting will address an EU proposal for a special committee on trade and investment for Haiti.

Meanwhile, a review of the legislation of the Organisation of Eastern Caribbean States (OECS) with regard to implementation of their Trade in Services and Investment obligations under the EPA is nearing completion and a draft report has already been submitted.

Allyson Francis said that the consultant’s findings indicate “there will be a need for legislative changes, as regards allowing EU nationals to enter these (OECS) states to provide services and in the granting of national treatment.”

“There is also a need for policy and legislative development in areas where legislation is not in place, such as professional services and e-commerce,” she said, adding that the next step will be the convening of a meeting for the OECS sub-regional grouping, to further examine the findings of the consultancy.

That meeting is scheduled for next month.

A similar consultancy, launched earlier this year, looked at the situation in Barbados, Belize, Guyana, Jamaica and Trinidad and Tobago.

Excerpt:

By Yazeed Kamaldien
SANA'A, May 11 2011 (IPS)

Yemen’s young anti-government protesters have learnt a vital lesson about the world of politics during their seemingly endless revolution – betrayal is inevitable.

Yemen's young protesters in Sana'a are unhappy with opposition parties too. Credit: Yazeed Kamaldien/IPS

This controversial initiative was proposed in April by the Gulf Cooperation Council (GCC), which comprises six Gulf nations led in the Yemeni talks by Saudi Arabia.

The U.S. – a strong supporter of Saleh – backs the deal and has urged all parties to sign it.

But many young protesters who launched a civil society movement for regime change in mid-January claim allegiance to no political party and strongly reject the GCC exit strategy. Their main contention is that it guarantees immunity to Saleh, some of his allies and relatives who have served during the time that he has been the country’s leader.

In return for immunity, Saleh – the country’s leader since 1978 – would step down a month after signing the deal. This counters the grassroots trend that forced leaders in Tunisia and Egypt to step down with political dishonour.

Hesham Lutf is an unemployed high school graduate who has stayed at Change Square since it was set- up as a tent village in mid-February outside Sana’a University. He said that most youth protesters were disappointed with the JMP.

“We welcomed anyone to the square in the beginning but we saw that the JMP takes everything and does things that we don’t know about,” Lutf told IPS. “They never tell us what they are doing. They just use us to get what they want. Young people have been killed since they joined us.”

He was referring to scores of deaths at Change Square as dissidents have clashed with those who support Saleh. Snipers allegedly supporting Saleh also killed 53 protesters on Mar. 18 – the worst bloodshed at Change Square.

Luft said that protesters wanted to choose new leaders and would not allow the JMP to simply take over from the current leadership.

“We will tell the JMP to go out before the president leaves. We don’t need the president and we don’t need the JMP. The JMP is a copy of the government. We are bored of all these faces. We want new faces and a new modern country,” said Lutf.

Anas Homaid, an English language student at the temporarily closed Sana’a University, said that he was angered by the clause in the GCC deal granting immunity to Saleh.

“Many people said that Saleh will be free but nobody should go free from the law. This should not be,” Homaid told IPS. “Saleh must go to jail. Everyone who is proven guilty of crimes against the people must also go to jail. Such crimes against humanity should be heard at a court.”

Amr al-Khateeb, an electrician, said that the president has done too many bad things to be granted immunity.

“He killed young people,” al-Khateeb told IPS. “There was a lot of blood in the streets. He will never be free after he killed so many people. The families of those who were killed will not allow this.”

Nadia Abdullah, an IT engineer and MBA student, expressed a mistrust of all political parties because they “are part of the same regime”.

“They have taken so much time to negotiate,” she told IPS. “This shows that they are all part of the same regime. From the first days the protesters loved each other. But when the JMP started negotiating with the regime it became an awful situation… It became difficult to talk with them. They started talking about the ignorance of youth. I don’t trust them at all.”

Other clauses of the GCC initiative state that Saleh would hand over power to his deputy who would announce presidential elections, a government of national unity would be formed, and the opposition would take leadership of the country.

This has angered anti-Saleh protesters and pro-Saleh supporters who have taken to the streets across the country to show their dissatisfaction with the plan put forward by the GCC’s foreign ministers. At least a dozen meetings have been held in Riyadh, the Saudi Arabian capital city, to fine-tune the plan but proceedings have stalled.

Delays are apparently due to clarifying certain points of the deal while the opposition’s political ping- pong to save face with anti-Saleh protesters has also side-tracked a swifter closure to the country’s political deadlock. The JMP said at one point that it would not sign the deal, but now is behind it again.

Salah Sharafi, who studies English linguistics at Sana’a University, said that they had lost all hope in the JMP which was “using the youth for their benefit… youth feel very sad about this”. Sharafi told IPS that protesters would ensure chaos if the deal was signed, but for now tolerated the JMP.

“I was disappointed in the JMP from the beginning. They tried to hijack this square but we allowed them to participate because we need them. If they sign then we will see a real crisis in Yemen. We will begin a new revolution against both of them [government and opposition]. They are all part of the same regime,” he said.

Abdullah Sharabi is an engineer who volunteers at Change Square’s media and information centre. He echoed Sharabi’s sentiment and told IPS that the GCC deal was a “dirty game in order to kill this revolution”.

“It does not fulfil the demands of the revolution or its goals. This is a solution only for the president but not for the youth,” Sharabi said. “The opposition has betrayed the youth. We don’t trust the opposition because it’s full of tricks. We want to keep a relationship in harmony with the opposition until we overthrow the regime.”

Yemen is treading on a path of desperate uncertainty. It is still run by a caretaker government – mostly officials who did not defect to the anti-government movement since mid-March.

Saleh heads up the ruling General People’s Congress (GPC) party that has warned that the JMP – which comprises at least six different parties – wants to seize leadership via a gradual coup.

Saleh supports the Gulf deal as a necessary step to end the political crisis which the country’s finance ministry has said has already cost its economy 5 billion dollars in 2011. Investment projects have been postponed, local currency has dropped against foreign exchange and the conflict has led to limited water, power, gas, fuel and diesel supplies countrywide.

Young protesters are saying that they are ready to escalate anti-government action. In the capital, they have mobilised some shop owners to close down on certain days to ensure that their struggle is felt more widely in the streets.

Civil disobedience campaigns have already escalated in other provinces such as Taiz and Aden, where protesters have stormed government buildings. Clashes with security officials as a result have led to more bloodshed which in turn has fuelled further protester reaction.

Basem Moghram, a computer programmer who contributes photos and reports to an anti-government website, told IPS that protests will continue until they have a “civil state that believes in justice, freedom and separation of authorities”. The GCC deal stipulated that all public protests and sit-in demonstrations should cease if the opposing parties accept it. Youth protesters are not included in these talks and have not been asked to sign the deal either as the JMP and Yemeni government are the only players seen as potential peacemakers.

Excerpt:

By Isolda Agazzi
GENEVA, Apr 21 2011 (IPS)

“It would be bad news for poor countries in Africa if the Doha Round of trade talks fails. This round was meant to rebalance the rules of world trade in favour of developing countries. We have put a lot of resources and hopes into this process and a collapse would be a big betrayal for us.”

Mali's Abdoulaye Sanoko: "We don't want to conclude the Doha Round at any cost." Credit: Isolda Agazzi/IPS

“However, we don’t want to conclude the round at any cost, but rather to emphasise its developmental aspects. In contrast, the big stakeholders are stressing market access.”

Nobody knows exactly how least developed countries (LDCs) would be affected by a collapse of the round. A study requested by the African, Caribbean and Pacific (ACP) group has not been started.

But LDCs would be happy with a conclusion on the round on the basis of the current (2008) negotiating texts as “it would be better than losing everything”, Sanoko added.

However, Romain Benicchio, trade policy officer at Oxfam International in Geneva, differed: “We do need a multilateral agreement that responds to the needs of poor countries, but one can doubt that what is on the table now would really benefit them.” Oxfam is

Recently, WTO director general Pascal Lamy acknowledged that the round “could fail”. The U.S.’s demand that large emerging markets slash tariffs in entire industrial sectors have led to seemingly insurmountable differences with Brazil, India and China.

In Geneva, some diplomats are starting to look for a “soft landing” to salvage the progress achieved to date, in case the one-to-one high-level meetings organised by Lamy don’t lead to anything.

Benicchio agrees that a collapse would hamper the expected gains of the round. “However, what is on the table now is far from being a panacea and it is not clear whether these gains would effectively materialise”, he told IPS.

One of the expected outcomes was 100 percent duty-free and quota-free market access for LDCs to developed countries’ markets.

But the current text involves only 97 percent of tariff lines “and there is no clarity on which products would be excluded by the U.S. and other industrial countries. So, de facto, these exclusions could include the main exports of LDCs”, Benicchio noted.

The same goes for cotton where gains could be expected, “but we have not seen any progress since the Hong Kong ministerial conference of 2005”, he said, adding that the U.S. renewed its subsidies in 2008 and has not implemented the recommendations of the Dispute Settlement Body following Brazil’s complaint.

Instead, Washington has committed itself to giving 150 million dollars a year to a research fund on Brazilian cotton and to undertake the necessary reforms only in 2012. “And we still have to see if this will be politically feasible. So, today the U.S. is subsidising Brazilian producers in order to keep subsidising its own,” he commented.

“In many of the areas where LDCs have made proposals, there has barely been any progress due to the resistance by many developed countries,” Sanya Reid Smith, senior researcher at Third World Network (TWN) in Geneva, told IPS. TWN is an international nongovernmental organisation with headquarters in Penang, Malaysia.

“For example, the special safeguard mechanism that allows LDCs to address import surges, including by increasing their tariffs above pre-Doha bound rates if needed, has been made more and more unusable.”

She added that, although LDCs are exempt from cutting tariffs, many LDCs (especially in Africa) that are members of customs unions that include non-LDCs will have to cut tariffs by the amount that the non- LDCs are required to, unless the customs unions are given exceptions.

“So far these exceptions have not been given. Based on the current texts, LDCs in customs unions will have to cut their tariffs, resulting in a permanent loss of government revenue, increased competition from imports and worsening balance of payments,” Reid Smith noted.

For Benicchio, another lost cause in the event of a Doha collapse is the services waiver for LDCs, where industrialised countries would grant facilities to services exporters from LDCs, especially in mode four, the ability of their unskilled workers to work in developed countries.

“But this decision is not guaranteed anymore,” he said. There is only a proposal on the table and it could go one way or another.”

He admits that in some issues there will be no result anyway, like the proposal by African countries to limit the price volatility of agricultural products, or the request to facilitate WTO accession of LDCs without imposing too strict conditions on them.

“But there are alternatives for LDCs if the Doha Round is not concluded,” Reid Smith pointed out. For example, WTO members legally have the option to have an early harvest on certain issues, such as duty- free and quota-free market access and cotton. It is just a question of political will on the side of developed countries.

Sanoko concurred: “We have always asked for an early harvest and many things have been announced. Stopping everything now would be a real pity.”

He explained that a revision of the General Agreement on Tariffs and Trade (GATT, the WTO’s predecessor) article XXIV is essential, but it is not going forward. “This article stipulates that in regional and free trade agreements (FTAs) the parties have to liberalise most of the exchanges but without specifying how much.

“It is most important that it should be amended to include a good dose of special and differential treatment so that, among other things, when poor countries negotiate FTAs with developed ones, they don’t have to reduce so many of their tariffs,” Sanoko stated.

Excerpt:

By IPS Correspondents
PORT OF SPAIN, Trinidad, Apr 11 2011 (IPS)

The first public hint that something was amiss within the Caribbean Forum (CARIFORUM) bloc came last week from Belize’s foreign minister, Wilfred Elrington, when his country hosted the 18th meeting of the Caribbean Community (Caricom) Council of Ministers, the second highest body within the 15-member regional grouping.

Elrington told reporters that the Dominican Republic was not comfortable with the current structure of CARIFORUM, which includes Caricom plus Cuba and the Dominican Republic. In particular, the Dominican Republic, which is not a member of Caricom, appears to feel that the grouping is playing too large a role in decision-making.

“The Dominican Republic doesn’t seem to want the director general to have to report to the Council of Ministers by going through the secretary general of Caricom. Their recommendation is for the director general to have a direct line to the Council of Ministers,” he said.

“It’s a thorny issue because protocol has always been for institutions, certainly the Caricom institutions, to make reports through the secretary general that is the highest post. And from the secretary general it goes to the Council of Ministers or to the heads of government. You just don’t bypass your secretary general,” Elrington said.

In 2008, Caricom and the Dominican Republic signed a wide- ranging Economic Partnership Agreement (EPA) with the 27- nation European Union.

According to the former secretary general of the Association of Caribbean States, Professor Norman Girvan, “The EPA defines the Dominican Republic as part of the region.”

In fact, the Dominican Republic has an economy that is larger than that of any single Caricom member, and the equivalent of 64 percent of the combined size of all of Caricom.

The EPA’s Regional Preference clause obliges CARIFORUM states to extend to each other the same treatment they extend to the EU.

However, regional leaders have not yet given the green light to the Dominican Republic’s application – first presented in 2009 – to join the Caribbean integration movement.

“The Dominican Republic is already an elephant in the Caricom room that cannot be ignored – its participation in CARIFORUM and the terms of the EPA with the EU make it a big player,” former Caribbean diplomat Sir Ron Sanders noted in one of his weekly newspaper commentaries.

“The English-speaking countries of Caricom can no longer inhabit an exclusive neighbourhood. They have to concede they are small players, and acknowledge that only cohesive action will preserve their identity, their culture, their language – and a meaningful place in the Caribbean economic space,” he added.

Antigua and Barbuda’s trade coordinator, Ambassador Dr. Clarence Henry, who attended the Belize meeting where the Dominican Republic issue had been raised, told IPS that the member countries were “overwhelmingly clear” that CARIFORUM, founded in 1992, was no longer an institution which simply managed aid from the European Union, “but one which must take the lead role in the implementation of the EPA”.

“As such it is necessary to increase the capacity of the Directorate and as a consequence make some changes to its structure. The member states wish to see a CARIFORUM which is impactful, effective, proactive and aggressive,” added Henry, who is also head of his country’s EPA Implementation Unit.

Antigua and Barbuda has since put forward a proposal to conduct “an urgent in depth assessment of CARIFORUM Directorate which would result in an institutional overhaul”, he added.

At the Belize meeting, both Barbados and Jamaica supported the creation of a new head of CARIFORUM in the form of a director general, arguing also for additional directors.

Emanating from this proposal was the agreement that the director general should be the EPA coordinator. Both proposals included the need for there to be a genuine EPA implementation Unit for CARIFORUM which is located in the CARIFORUM Directorate.

But there appears to be some disagreement as to whether the Caricom secretary general should continue to be the secretary general of CARIFORUM, with the new director general reporting through the secretary general to the leaders.

Henry believes there needs to be autonomy for CARIFORUM which will require substantial amendment to the Rules of Procedure. A team, chaired by Belize, and comprising Barbados, Jamaica, Suriname, Antigua and Barbuda and the Dominican Republic, has been established to examine the legal and other implications. The team will report within 60 days.

“Times have changed and CARIFORUM must change,” Henry told IPS, noting that the Belize meeting provided the first ever opportunity for a “unified spirit and a willingness of CARIFORUM member states to move from their entrenched positions”.

The meeting agreed that the new CARIFORUM structure would provide for both the EPA Implementation Unit and the traditional programming and development cooperation function with its own dedicated staff.

It also noted “the preparedness of the Dominican Republic to forego concessions in its favour to have positions in the CARIFORUM Directorate reserved for its nationals once CARIFORUM is restructured to operate more efficiently and transparently”.

It was also agreed that the current position of assistant secretary general of CARIFORUM should be designated as director general and should assume the position of CARIFORUM EPA aoordinator, in addition to his/her responsibilities for the CARIFORUM Directorate. This position will be filled by a national of the Dominican Republic up Sep. 16, 2012.

The Council meeting also agreed that the status quo would remain regarding the reporting of the new director general of CARIFORUM to the secretary general.

But Henry told IPS that it was a general consensus that the “region is at a juncture where there is a changing of the guard and consequently it could not be business as usual”.

Excerpt:

By Isolda Agazzi
GENEVA, Apr 8 2011 (IPS)

“IBSA what?” is the question you most often get in Geneva when enquiring about the India-Brazil-South Africa (IBSA) dialogue forum, established in 2003 between these three multicultural democracies and emerging markets “to contribute to the construction of a new international architecture”.

El Hadji Diouf: South Africa will try to trump its IBSA partners when it comes to market access in Africa. Credit: Isolda Agazzi/IPS

They also called for an “early conclusion of the Doha Development Round with a balanced outcome which ensures the development needs of the developing countries, especially the least developed countries”.

A trade diplomat from one of the IBSA countries at the World Trade Organisation (WTO), speaking to IPS on condition of anonymity, says, “we don’t coordinate our actions formally as a group. We hold common membership in various coalitions, so we coordinate on an ad hoc basis.”

He explains that Brazil, South Africa, India and China are members of the Group of 20 (G20) in agriculture; of the NAMA-11 group in the non- agricultural market access (NAMA) negotiations; and that they share most positions on intellectual property.

The G20 is a coalition of developing countries but their interests in agriculture may diverge. Brazil, for example, tends to take the offence, while India adopts a defensive position, pushing for a strong special safeguard mechanism that allows developing countries to increase tariffs in the case of import surges or sudden drops in world prices.

The NAMA-11 is a group of emerging market states that asks for flexibilities in the implementation of tariff reductions and for greater market access in industrial goods.

“But, even though the interests of Brazil and India in agriculture may seem divergent, in practice they have been able to find a middle ground with regard to market access, the reduction of trade-distorting domestic support and the elimination of export subsidies,” the trade diplomat points out.

Christophe Bellmann, programmes director at the Geneva-based International Center for Trade and Sustainable Development (ICTSD), explains, “the March Delhi statement is mainly in response to U.S. pressures on sectoral initiatives in the NAMA negotiations.” ICTSD is an independent non-governmental organisation based in Geneva.

Currently, the main divergences in the WTO Doha Round negotiations stem from the U.S. request to large emerging markets to deeply cut or even completely slash tariffs in entire industrial sectors, like chemicals, industrial machinery, electronics and forestry.

Brazil, China and India responded that these initiatives are supposed to be voluntary and must remain so. For Brazil, these sectors represent one third of all its industrial products and, for China, more than 55 percent of all its NAMA imports.

These deep differences have brought Pascal Lamy, WTO director general, to acknowledge last week that the Doha Round “may fail.”

For Bellmann, alliances are “not political or ideological,” but based on commercial interests and therefore very volatile, with the exception of the African group that works more along a regional line.

“Countries don’t think as a group, but in a strategic way, for example, how to increase their weight in negotiations by building alliances, ideally with big countries like China, India and Brazil,” he told IPS.

El Hadji Diouf, executive director of the African Agency for Trade and Development, regards “IBSA as a good initiative of South-South cooperation, but its impact in trade negotiations is limited.” The agency is a Geneva-based non-governmental organisation that specialises in issues regarding trade and Africa.

“The common interest of IBSA is to position itself as an alternative to the hegemony of traditional commercial powers,” he told IPS.

“But these countries must secure access to new markets and are therefore in competition with each other. They can cooperate sincerely on the elimination of agricultural subsidies but cannot make a common offer in market access.”

Neither do they have the same commercial partners. “Brazil has witnessed an incredible growth in recent years and it is globally becoming stronger and stronger. It has a vested interest in the conclusion of the Doha Round, more than the others. South Africa, in contrast, has many relations at the regional level, in addition to its EU relationship,” explains Diouf.

But what can the much smaller South Africa bring to this alliance? “South Africa is a good market for India and Brazil’s exports and, even more so, as an entry point into the African continent because of its membership in different African regional organisations,” Diouf argues.

Concerning the possible effect of IBSA cooperation on African least developed countries (LDCs), Bellmann explains that WTO requirements that apply to South Africa do not apply to LDCs since they don’t have to open their markets in agriculture, NAMA and services.

“We are looking to ways of implementing duty-free and quota-free market access for LDCs,” says the trade diplomat. “India and Brazil are taking steps in this direction.”

The Doha mandate asks developing countries that are in the position to do so to open their markets to LDCs’ products, but without setting a specific target as for developed countries, currently at 97 percent.

“However, because of its geographical position, South Africa could try and get better market access to African LDCs than its IBSA partners,” Diouf reflects.

“IBSA does not exclude competition. Pretoria, for example, does not favour trade liberalisation between its African partners and the EU in sectors like services, to avoid having to share the regional market in which it already has a hand. This is a pre-emptive fight with a commercial rationale that could crop up between IBSA partners.”

Excerpt:

By Isolda Agazzi
GENEVA, Mar 22 2011 (IPS)

Part of the delay in the finalisation of the economic partnership agreements (EPAs) is due to the so-called non-execution clause that gives the EU the power to take steps against its African, Caribbean and Pacific (ACP) trading partners if they violate human rights, democracy and good governance principles.

West African activists demonstrating at the World Social Forum in Dakar, Senegal, earlier this year. Credit: Isolda Agazzi/IPS

“Furthermore, the clause is not reciprocal since West Africa would not be able to take steps against the EU if Senegalese immigrants in France are put in jail in violation of basic human rights principles, for example,” he adds.

The EPAs are the implementation of the trade chapter of the Cotonou agreement between the EU and the ACP, which already contains a strong non- execution clause that has been used several times. The Caribbean EPA – the only complete one to date – does contain a non-execution clause.

“Negotiations need a clear strategy,” adds Jacob Kotchao, the civil society representative of the Central African EPA negotiating team. “Our countries have a long way to go with respect to human rights but we don’t want these values to be used to the detriment of our development.

“We have economic and commercial interests and we don’t want to give our partners arguments to preclude them.”

Marc Maes from 11.11.11, a Brussels-based nongovernmental organisation (NGO) that works extensively on the EPAs, admits that European NGOs have not thought through this issue. “We don’t have a common position,” he told IPS in an interview.

In more general terms, he explains that the first time the issue of introducing human rights clauses into trade agreements came up was with the EU’s trade agreement with Colombia that has still to be ratified.

“There has been a huge outcry about this agreement because of the situation of human and labour rights in Colombia, the most dangerous country in the world for unionists,” he notes.

“The agreement replaces the GSP+ (generalised system of preferences plus) scheme that gives trade preferences to developing countries that commit themselves to actualising human rights and environmental and social standards.

“Since the EU would no longer have an instrument to put pressure on Colombia, European and Colombian NGOs have supported the idea of adding a human rights clause to the bilateral trade agreement.”

David Hachfeld, trade expert at Oxfam Germany, argues that trade agreements and human rights relate to each other.

“The problem is that you cannot heal a negative effect on human rights caused by a trade agreement – for example on the right to food – just with a human rights clause. But, clearly, if these clauses are really enforced, they can play an important role.”

He explains that the EU always tries to include clauses on human rights, environment and labour standards but to different degrees: “In the Korea trade agreement there is such a clause but it is quite weak, even weaker than in the GSP.”

Apart from the issue of the human rights non-execution clause, another problem pointed to by African NGOs is the signing by individual countries of interim EPAs – rather than full EPAs by the designated blocs — that jeopardises regional integration.

“The EPA in its present form is not good and it cannot be signed,” affirms Dieye. “But if we stop there, countries that have signed interim EPAs will have to implement them and we will lose regional integration. The challenge is: how to refuse a bad agreement while preserving our integration?”

He points to three possible scenarios: the first and feasible one sees the EU accepting a 70 percent tariff reduction, renouncing the non execution-clause and dropping the most-favoured nation clause that automatically would extend benefits in future ACP trade agreements to the EU.

In the second scenario, everybody sticks to their current positions: there is no regional agreement, three different commercial schemes are in place and it is the end of the integration – a catastrophe.

“The third possibility sees no need for the EPA,” Dieye explains. “We stop everything, Côte d’Ivoire denounces its interim agreement. But then we would need regional solidarity mechanisms.

“We are trying to evaluate how much Côte d’Ivoire would lose from preference erosion and how the region could help them. Our obligation is then to negotiate a follow-up to the Cotonou agreement, not to sign it.”

Excerpt:

By IPS Correspondents
PORT OF SPAIN, Trinidad, Mar 14 2011 (IPS)

Caribbean officials gathered in Brussels for the region’s annual tourism summit, the first to be held in Europe, are urging their biggest development partner to draft policies supporting the lifeblood sector and ease restrictions such as Britain’s Air Passenger Duty (APD), which they say are holding back its growth.

“We want to encourage a broader awareness that the Caribbean is now the most tourism-dependent region in the world, and that our future development relies to a significant extent on tourism and its myriad economic, social and environmental linkages,” Ricky Skerrit, chair of the Barbados-based Caribbean Tourism Organisation (CTO) and the tourism minister of St. Kitts and Nevis, told European legislators Monday.

The Caribbean now has the 13th largest tourism industry globally in absolute size, and tourism is the biggest employer in the region after the public sector. It is also the largest single contributor to GDP, and in 2010 was worth an estimated 39.4 billion dollars.

Such is the importance of the industry is that while most Caribbean countries experienced a deficit in trade in goods, this was offset by a surplus in trade in services, fuelled mainly by receipts from tourism and travel-related activities.

Official figures show that during 2008-2009, for example, the deficit in trade in goods averaged 3.1 billion Euros (4.1 billion dollars). In that same period, the surplus generated from tourism and travel related activities averaged 2.5 billion Euros (2.7 billion dollars).

Skerrit said that the visit by the Caribbean delegation would also provide an opportunity to discuss how the tourism chapter in the Economic Partnership Agreement (EPA) signed between Europe and the Caribbean Forum (CARIFORUM) countries in 2008 “is to be made operational and support made available for both the public and private sector”.

“We especially want to ensure that tourism becomes deeply embedded in all future EU/Caribbean strategic planning,” he said. “We hope too that today will lead to an ongoing dialogue with multilateral and bilateral funding agencies to support tourism development finance and encourage private investment.”

“And we want to understand the current European approaches to aviation taxation, security, the environment, carbon trading and clean energy in the context of a future Caribbean tourism policy,” he said. “Perhaps this is an ambitious hope, but it is a hope that speaks to the very survival of our Caribbean economies and hope for our Caribbean people.”

It was a theme not lost on the acting secretary general of the 15-member Caribbean Community (CARICOM) bloc, Ambassador Lolita Applewhaite.

The summit provides “a unique opportunity for the Caribbean to exchange views with its most important development partner on policy issues related to Caribbean tourism, including aviation taxation, the impact of crime, the need to increase airlift, training and research, public health, foreign direct investment in the industry and CARIFORUM-EU cooperation in tourism within the context of the CARIFORUM- EU Economic Partnership Agreement,” she said.

Applewhaite noted that the sector is currently beset by a number of challenges. “Among these is aviation taxation, which we view as a tax on our development,” she told EU legislators. “Air travel represents the only realistic way for tourists to reach our region from Europe – an important long-haul market for the Caribbean.”

Europe plays a vital role as a hub in the Caribbean tourism business, she said, with airports in London, Frankfurt, Amsterdam, Madrid and Paris serving as transit points for visitors from emerging markets in Central Europe, China, India and Russia.

She said the aviation tax “has a significant negative impact on our finances, on aviation, maritime transport, on tourism and foreign relations, indeed on our entire development.”

Caribbean countries are worried that Britain, for example, which provides as much as 38 percent of visitors to some regional countries, has now imposed an Air Passenger Duty (APD) on outgoing flights.

“We view the APD as discriminatory against Caribbean destinations and Caribbean people living in the United Kingdom seeking to travel to the region,” Applewhaite said.

A report on the impact of this tax – produced by the CTO and presented to the Treasury and Department for Transport of Britain – shows that arrivals from the UK to the Caribbean are declining while those from other source markets are increasing.

It argues that by simplifying the banding system and adjusting the duty levels slightly, the APD or any successor tax could be made more environmentally apt, while projecting similar levels of revenue.

“It is clear, however, that even if the particular design problems that the Caribbean is seeking to have addressed in relation to the UK APD are resolved, this tax could be only the tip of a global fiscal iceberg that may eventually come to include all aviation and maritime transport,” Applewhaite added, noting that “similar unilateral measures have also been introduced by other countries in Europe”.

Caribbean officials also expressed concerns about the additional burden brought on by the inclusion of aviation in the EU Emissions Trading Scheme (EU ETS) that begins next year.

Recent reports produced by Standard & Poor’s suggest that passengers could face a rise in airfares of up to 40 Euro per ticket once the EU ETS is introduced.

Aviation and sea transport were not included in the Kyoto Protocol on Climate Change due to difficulties in assigning emissions to any specific country.

At the 37th International Civil Aviation Organization Assembly Assembly in Montreal, Canada last year, there was general consensus on the need for a multilateral approach once general principles had been agreed on the implementation of market-based measures for international aviation.

“The Caribbean would prefer to see a multilateral measure that does not discriminate against one mode of transportation, is development-oriented, and which takes into account the vulnerability of the region arising from climate change,” Applewhaite said.

Excerpt:

By Isolda Agazzi
GENEVA, Feb 15 2011 (IPS)

In an unusual move, West and Central African civil society organisations have participated in the negotiations between their countries and the European Union on the economic partnership agreements (EPAs). The organisations stress developmental concerns while assisting under-resourced African governments with trade expertise.

"Africa is not poor, but empoverished by Europe and its good pupils", according to demonstrators at the World Social Forum in Dakar, Senegal. Credit: Isolda Agazzi/IPS

Cameroon’s initialling of an interim EPA in 2009 demanded a change in strategy: “This setback altered the course of the negotiations in the region. After that, we moved from advocacy to providing expertise to governments,” says Jacob Kotchao, CSO representative of the EPA negotiating team for Central Africa.

The EPAs are comprehensive trade liberalisation agreements which have been under negotiation since 2003 between the European Union (EU) and the African, Caribbean and Pacific (ACP) countries to replace the preferential regime of the Cotonou agreement.

The ostensible reason for the renegotiation of the trade regime between the EU and the ACP is its incompatibility with the rules of the World Trade Organisation (WTO). The EPAs came under discussion at a roundtable at the World Social Forum in Dakar, Senegal, which ran from Feb 6-11.

The EPAs should have been concluded by 2007 but only one complete agreement – with the Caribbean — has been signed to date. Controversially, Cameroon signed an interim EPA in Central Africa, with Côte d’Ivoire and Ghana doing the same in West Africa.

For Silke Trommer of the University of Helsinki, who studies what she calls “participative commercial governance”, civil society has been crucial in stressing the developmental aspect of the EPAs and sensitising public opinion to its social component.

“In Aug 2004, when the trade ministers of ECOWAS (Economic Community of West African States) allowed representatives of civil society and the private sector to take part in the negotiations, officials were not very enthusiastic,” she explains.

“But, over time, CSOs have proved to be a source of reliable, flexible and independent expertise while being able to speak on issues officials cannot afford to. Since then, African governments have been happy with them on board.”

Noticeably, this concession is not applied the other way round: CSOs do not assist the European side at the negotiations.

On paper, EPAs should have both a commercial and a developmental component, but the reality is different. CSOs “discovered” that, according to WTO rules, Africa should only be required to cut tariffs by 60 percent and not 80 percent, as insisted upon by the EU.

The EU has stuck to its position, which forced an African compromise offer of 71 percent but, for the EU, the cut is still too slight.

Regarding the developmental component, many sticking points continue to block the negotiations.

One big issue is the compensation for revenue losses resulting from tariff decreases: “For Central African countries, tariffs are not only an instrument of commercial defence but also an important source of revenue,” Kotchao explains. “In some countries, revenue from duties represents 25 to 40 percent of state income.”

Another open question is the strengthening of African states’ productive capacities.

“Even though the EU allows ACP countries to export to the European market under a preferential trade regime – duty-free and quota-free for least developed countries — our exports have not increased and we keep selling unprocessed commodities,” Kotchao points out.

“The EPAs would not bring more opportunities if our countries do not develop real productive capacities.”

Central African countries have identified programmes to strengthen these capacities in agriculture and manufacture, but there is no consensus on how to best support them.

Cheikh Tidiane Dieye, CSO representative of the West African negotiating team, disagrees strongly with European negotiators that “keep saying that ‘the more you liberalise, the more you create growth and development’. Nothing could be further from the truth.

“This point has nothing to do with ideology. West African countries have either almost no industry, or only an embryonic industry; and a very weak agricultural sector. The rhythm and timing of trade liberalisation need to be carefully sequenced.”

Another point of divergence is the most favoured nation clause (MFN) that the EU has wanted to include in the agreement since 2007. If accepted, it would oblige African states to automatically allow the Union the same advantages given to African trading partners such as China, India, Indonesia, Brazil or Saudi Arabia, whether these are developing states or not.

Dieye analyses the European position as follows: “In 1970, trade between Europe and West Africa represented 70 percent of the region’s trade. Today, it amounts to 32 percent, maximum, while trade with the rest of the world has increased at a fast rate – 10 percent per year with Asia.

“In 2007, the president of Senegal stated that the commercial partnership with Europe had failed. In November 2010, Libyan president Muammar al- Gaddafi said the same. Europe tries to get the same privileges Africa gives to other major trading partners, but the system it proposes is unacceptable.

“We will remain a provider of commodities and an importer of manufactured goods. So we do not see how the agreement could be signed,” Dieye argues.

He further explains that the juridical argument to refuse the MFN clause is the enabling WTO clause that allows developing countries to give one another advantages they do not give to industrialised ones. At the WTO, African countries can liberalise markets for Brazil or China without doing the same for the EU.

Kotchao’s conclusion is: “There is a commercial war between the EU and emerging countries about our markets. One can seriously wonder whether we should continue the EPA negotiations”.

Excerpt:

By Isolda Agazzi
DAKAR, Feb 11 2011 (IPS)

Senegalese fishers participating in the 2011 World Social Forum (WSF) warned governments to “wake up to the ethical and transparent regulation of access to fisheries” to halt the overexploitation of this increasingly scarce resource.

A fish market in Dakar, Senegal. Credit: Isolda Agazzi/IPS

Fishing officially supplies work to 600,000 people in Senegal, or 17 percent of the active working population. 400,000 tons are caught every year, contributing 2,3 percent of gross domestic product (GDP) and 30 percent of exports. But the scarcity of fish is a major problem. During the “soudure” – the rainy season when there is no fish – people fall into debt.

Since 2007, Senegal has not renewed the fishing agreements with the European Union (EU) that gave large European trawlers access to its national waters. The National Federation of Fishers Associations (known by its French acronym FENAGIE) has been key in the opposition to these fishing licences.

The licences meant insufficient financial compensation that did not benefit communities.

“Senegal received between 21 and 23 million dollars per year from these fishing agreements,” Papa Gora Ndiaye, executive secretary of the fishing division of Enda Tiers Monde, known by its French acronym REPAO, told IPS in an interview. Enda Tiers Monde is an international non-governmental organisation based in Dakar, working on development issues.

“But, compared to the export earnings of 165 to 207 million dollars, the financial compensation of the fishing agreements was ridiculous, if not more so considering the potential benefits of equitable trade. If market access to the EU was improved, Senegal could earn much more.”

Even though Senegal, like all other least developed countries, can export duty-free and quota-free to the EU under the Everything but Arms initiative, other technical barriers to trade such as rules of origin and sanitary and phyto-sanitary measures make it hard for local fish to reach the European market.

The fishing agreements with the EU largely contributed to the depletion of resources, though FENAGIE recognises that the bad practices of Senegalese fishers are to blame too.

Even though the licences have been suspended, fishers fear the existence of secret agreements with other foreign ship owners.

“Our main recommendation is to have transparent and ethical governance of fishing resources in West Africa,” urged Ndiaye. “The WSF provides momentum for mobilisation and awareness-raising of stakeholders. It is a window of opportunity for us.”

Bakundakwita added that, “while fishing was a prosperous activity some years ago, small fishers are now getting poorer and poorer. Artisan fishing has deteriorated. There are too many fishers: foreign trawlers, but also local industrial and artisan fishers”.

He explained that artisan fishermen do not only fish for their own consumption anymore but to sell their product on the local market. The best catch goes to foreign, more lucrative markets. The depletion of stocks makes fish more and more expensive and many people cannot afford to buy it any more.

This decrease in the availability of fish hits mainly women, who process and dry the fish. “If there is no more fish, they will be jobless and it will be a catastrophe,” Bakundakwita believes.

The authorities are afraid to regulate, according to him. “Fishing licences bring money in. To limit the access of small fishers to the sea there need to be alternative activities for them, and there is none.”

Ndiaye also expressed concern about the economic partnership agreements (EPAs) currently being negotiated with the EU. The African market will be open to European products, like tuna that will come in at a lower cost than the local tuna.

“But even before the EPAs are adopted, there has been progressive erosion of commercial preferences. Senegalese tuna is hardly competitive on the European market when compared to Asian tuna that is grown in aquaculture with huge government support.”

Excerpt:

By Isolda Agazzi
GENEVA, Feb 1 2011 (IPS)

To allow least developed countries (LDCs) to protect nascent industries, they are not required to cut tariffs for industrial goods and fisheries in the Doha Development Round. However, tariffs cuts will affect them if they are members of customs unions where some of their neighbours are larger developing countries without LDC status.

Mohammad Abdul Hannan: LDCs need more clarity from other WTO members on tariff cuts. Credit: Isolda Agazzi/IPS

Kwa is coordinator of the trade and development programme at the South Centre, an intergovernmental organisation representing developing countries and based in Geneva.

“This is the problem: tariff cuts, whether in agriculture or NAMA (non- agricultural market access), are not going to help poor countries with food security, industrialisation or increasing their domestic production. In most African countries, agriculture has been destroyed by liberalisation, so they need to put up their tariffs instead of reducing them,” Kwa argues.

This point of view is shared by an African diplomat who spoke on condition of anonymity due to the sensitivity of negotiating positions: “Sectorals (deep cuts or elimination of tariffs in certain industrial sectors by some developing countries, supposedly voluntary) will affect LDCs that are in custom unions with large developing countries, particularly those LDCs that depend on tariffs for their revenue.

“It is difficult to bring this subject to the negotiating table. In the economic partnership agreements (EPAs) being negotiated with the European Union there is at least the recognition that the implementation of the EPAs may have adverse effects. In the WTO we do not have that.”

Mohammad Abdul Hannan, Bangladesh’s ambassador and coordinator of the LDCs group at the WTO, admitted in an interview with IPS that the Doha Round would cause preference erosion for LDCs.

“That is an issue. LDCs have duty-free and quota-free market access to most developed countries under various autonomous preference schemes. Reduction of tariffs across the board will make LDCs less competitive in comparison to other developing countries. Therefore, there should be other measures to compensate LDCs for subsequent losses,” says Hannan.

LDCs need more clarity from other WTO members on tariffs cuts and tariff lines where LDCs will be given duty-free and quota-free market access, he adds.

Kwa doubts that the conclusion of the round will benefit LDCs at all. She points to studies showing that, apart from a handful of developing countries like Brazil, China and India that would suffer losses but also enjoy gains, the majority of developing countries are facing mainly losses.

LDCs’ total share of world trade is only one percent and their exports consist mainly of natural resources and some manufacturing and agricultural products.

“The issue is production and until these countries can actually produce, having market access holds no real value for them. The gains for LDCs and other lower income countries from the Doha Round are not apparent,” Kwa argues.

Hannan disagrees on this point: “Richer countries and large developing ones will benefit the most from the conclusion of the round because of their capacity to trade. But through special and differential treatment LDCs can also benefit from the international trading system.

“Developed and developing countries who are able to do so have to support the efforts of the LDCs to build and expand their supply-side (production) capacities.” Special and differential treatment involves exemptions and assistance for developing countries.

Hannan adds that, “as LDCs, we expect the Doha Round to protect and augment our productive capacity and enhance our effective market access. The Doha Round, with development at its core, came about to correct the imbalances of the previous rounds.

“The final outcome of Doha must ensure that development remains the centrepiece of the agreement.”

Hannan is confident that trade liberalisation will bring about growth, employment and development for the poorest countries: “For us, market access, cotton and services are very crucial. These have to be complemented with aid for trade for capacity building and trade facilitation for LDCs to beneficially integrate into the multilateral trading system.

“We are encouraged by the momentum generated recently and would like to believe that we are in the last lap of this decade-long round. Failure to conclude the round would affect LDCs the most.”

It is hoped that the just-concluded World Economic Forum in Davos, Switzerland, will give new impetus to the round. Pascal Lamy, WTO director general, asked the chairs of the negotiating groups to produce new texts by April and the rhythm has intensified.

Kwa regards the high unemployment rates in many countries – due to the global economic recession – as a significant spur for opposition to the conclusion of the round.

Excerpt:

By IPS Correspondents
PORT OF SPAIN, Trinidad, Dec 21 2010 (IPS)

Two years after Europe signed an Economic Partnership Agreement (EPA) with the Caribbean Forum countries, concerns are being raised in the region about the timeline for future negotiations in a number of areas.

“In the cases of both CARIFORUM and the EU, completing the built-in agenda will be a challenging process fraught with many institutional, administrative and logistical hurdles,” said a statement released Monday by the Guyana-based Office of Trade Negotiations (OTN).

The OTN replaced the Barbados-based Caribbean Regional Negotiating Machinery that led the talks for the EPA. It noted that CARIFORUM, which groups the 15-member Caribbean Community bloc and the Dominican Republic, “itself faces many capacity constraints that add a different dimension to their challenges”.

“Limited capacity for extensive and sustained consensus building and coordination of positions amongst governments, and between governments and the private sector is a perennial problem within developing countries, albeit not unknown within the Organisation for Economic Cooperation and Development (OECD) countries,” the OTN noted.

“The early planning and mapping of activities under the built-in agenda would help to identify specific challenges as well as possible solutions to those challenges, which could also be supported through the use of the development assistance which has been earmarked under the Agreement,” the OTN said in a special update.

The EPA built-in agenda addresses the pact’s future commitments with respect to a number of disciplines under the accord that was signed in October 2008, one year after the negotiations were completed.

For example, in the area of services, Article 62 speaks to a commitment to engage in further negotiations on investment and trade in services, no later than five years from the date of entry into force of the EPA, with the aim of enhancing the overall commitments undertaken.

There is also a similar commitment towards progressive liberalisation of investment as specified in Article 74.

OTN noted that the parties have agreed to review the legal framework, the investment environment, and the flow of investment between them consistent with their commitments in international agreements.

“This is to be undertaken no later than three years after the entry into force of the EPA and at regular intervals thereafter,” it said. “Also with respect to services, the EPA speaks to the commencement of negotiations of Mutual Recognition Agreements (MRAs) no later than three years after entry into force.”

The MRAs set out the arrangements through which trade partners recognise each other’s methods of accrediting professionals.

While the EU has regulations which facilitate the mutual recognition of diplomas exclusively for EU nationals, for non-EU nationals, the right of professional service providers to practise in one EU member state does not automatically confer the right to practise in another.

Allyson Francis, a services and investment specialist with the OTN who recently led a workshop on MRAs in the Bahamas, said the European Union is encouraging involvement by Caribbean professionals in various fields in Europe, including engineering, health and tourism, among some 29 professional fields.

The process of the negotiation of MRAs is largely driven by the private sector, emphasising dialogue and consultation between relevant professional bodies in CARIFORUM and the EU.

Delivering his country’s national budget on Monday, Antigua and Barbuda’s Finance Minister Harold Lovell said the government there has already begun to reorganise itself to “more efficiently manage European Development Funds (EDF) provided to Antigua and Barbuda” under the EPA.

He told legislators that the Baldwin Spencer government has agreed to establish an EPA Implementation Unit with a mandate that includes disseminating and articulating the contents of the EPA, ensuring the public and private sectors have the capacity to exploit the agreement and to provide advice to the government on addressing constraints and accelerating the progress of implementation.

Most of the work scheduled under the built-in agenda relates to timeframes that are contingent upon the entry into force of the agreement.

The agreement took provisional effect on Dec. 29, 2008. However, the domestic actions that are necessary for entry into force of the EPA vary across the CARIFORUM states.

In most cases, cabinet approval is sufficient. In others – such as Antigua and Barbuda, Haiti, the Dominican Republic and Suriname – the legislature must ratify the EPA.

According to the OTN, not all the CARIFORUM states have completed the necessary procedures to enable entry into force of the EPA. This means that correlating timelines related to the built-in agenda will be delayed until the process is completed.

The OTN urged that preparatory work be initiated as soon as possible.

“The commitment to engage in further negotiations in services and investment, for example, will provide the region with an opportunity to negotiate improved terms of access to the EU market. Such terms should be consistent with the evolving capacity and development of the region’s sectors,” the OTN said.

“At the same time, those terms should also be developed to ensure that the region captures the benefits and trading opportunities that Europe may accord to its trading partners in the future.”

Excerpt:

By Servaas van den Bosch
WINDHOEK, Nov 5 2010 (IPS)

While a trade deal between the European Union and Southern African countries is close it will not be concluded before the end of this year. In the meantime, South Africa remains in pursuit of an ambitious regional integration agenda.

(l-r) South African trade minister Dr Rob Davies and Namibian trade minister Hage Geingob at a briefing after the bilateral meeting on Nov 4. Credit: Servaas van den Bosch/IPS

“Even for the EU, time is not so much the issue anymore,” added South African trade minister Dr Rob Davies. “They are more interested in investing in a strong relationship.”

The ministers spoke after a bilateral meeting between South Africa and Namibia’s heads of state on Nov 4 in Windhoek. At the meeting, South Africa’s President Jacob Zuma voiced confidence in “a speedy resolution” of all outstanding issues in the cumbersome negotiations.

“Following our recent interaction with the European Union, we are convinced like never before that disagreements with the EU have been narrowed and we are on the verge of finalising an agreement that recognises our developmental challenges while at the same time creating opportunities for mutual benefit,” said Zuma.

Despite pressure from Brussels Namibia refused to sign an interim trade deal, arguing that the forced opening of the Namibian market to more competitive EU companies would severely curtail its future economic growth.

Although Botswana, Lesotho and Swaziland signed an interim EPA, South Africa backed Namibia in holding out for a better deal.

“South Africa stood by Namibia in the EPA negotiations,” Geingob pointed out. “As a result we have turned the negotiations for this interim EPA around and can instead look forward to negotiating a full EPA with the European Union.”

Davies added: “We decided to participate in the EPA process even though South Africa already has the TDCA (Trade, Development and Cooperation Agreement) with the EU. We feel the EPA is very important.

“In our estimation the EPA, as it was originally tabled, would have done enormous damage to the development of the region. The final EPA will include more than the interim agreement but it is important not to overload the agenda now by adding a new set of obligations. It is time to move ahead with this agreement,” said Davies.

Meanwhile South Africa is pursuing the economic integration of African states as “an organic process evolving from regional economic communities that will logically fuse into a single gigantic economy in line with the dictates of the Abuja Treaty”, in Zuma’s words.

The 1991 Abuja Treaty is a “roadmap” to an African economic community.

This is the third time this year that Zuma visited neighbouring Namibia, which holds the chairpersonship of the Southern African Development Community (SADC) and is home to the Southern African Customs Union (SACU) Secretariat.

The visits are aimed at speeding up the process of regional integration. South Africa wants to use SACU as a building block for the mooted tripartite free trade area spanning 26 countries and 578 million people.

“We should spare no effort in increasing the momentum of integration between SADC, COMESA (Common Market for Eastern and Southern Africa) and EAC (East African Community),” Zuma declared.

“This tripartite economic project holds real prospects for contributing to continental efforts aimed at increasing intra-African trade.”

Davies added that, “amidst continued depressed economic conditions, Africa is emerging as the next economic success story. Individually African countries do not have the size to compete in the global arena but as a group we can. This is why we have to promote regional integration,” he added.

A June 2010 report by the McKinsey Global Institute (MGI), “Lions on the move”, stated that Africa’s collective gross domestic product of 1.6 trillion dollars equals that of Brazil and Russia. MGI is the research arm of McKinsey and Company, a management consultancy firm that advises companies.

Increased macro-economic stability and political reforms, combined with the commodities boom and the emergence of a middle class, convinced the report’s writers that the economic momentum is here to stay.

The South Africans see reform of SACU as instrumental to regional integration. Tshwane (formerly Pretoria) wants to change the customs union from a pool of revenue for the BLNS countries (Botswana, Lesotho, Namibia and Swaziland) to a development fund.

Davies reiterated this stance in Windhoek: “We must turn SACU into a tool of development promotion. SACU could be instrumental in creating infrastructural projects and adding beneficiation to the mineral and agricultural sectors.

“We have to ask the question how the smaller economies can benefit from the large South African economy on their borders and vice versa. We need to create a value chain between the countries.

“When the duties were dropped in SACU it did not make a difference to the balance of trade between South Africa and the rest. So, what we really need in SACU is to produce more goods and services,” concluded Davies.

At the bilateral meeting, South Africa announced its intention to be part of the trans-Kalahari railway line that will connect the Mmamabula coalfield in Botswana and South Africa’s Waterberg coalfield with the port of Walvis Bay.

Davies explained: “Transport routes are becoming more significant all over the continent. It is important to progress with the development of a transport corridor programme.”

Namibia and South Africa also strengthened their cooperation on transfrontier conservation areas, industrial standards, air services, green energy projects and development of the Kudu gas field in Namibia.

The countries will also work together on adding value to minerals. Davies singled out titanium: “A ton of titanium dioxide sand, mined in South Africa, will maybe fetch a couple of thousand dollars, but if we can turns this into titanium alloy the revenue jumps to over 100,000 dollars per ton.”

Excerpt:

By Servaas van den Bosch
CAPE TOWN, Sep 21 2010 (IPS)

The beleaguered Southern African Customs Union (SACU) has to face up to serious challenges at its upcoming heads of state meeting in October, including the divergent interests of its member states and the lack of coordinated industrial policies in the union.

Fishing boats in Cape Town harbour, South Africa, with Table Mountain as backdrop. Credit: Servaas van den Bosch/IPS

High-level intervention could assist in pushing through the structural changes that the customs union has embarked on. “One of the key challenges in SACU is lack of leadership on how it can be a platform for deeper regional integration,” stated Trudi Hartzenberg, director of the Trade Law Centre of Southern Africa (Tralac). The non-profit Tralac provides capacity-building support to governments.

The economic partnership agreement (EPA) negotiations with the European Union (EU) brought the underlying dissonances in the sub-regional organisation to the fore.

A key difference among the member states, of which the current discussion on revenue sharing is a symptom, is the divergent views on the roles of the customs union.

“The labour union movement in South Africa takes exception to South Africa making transfers to countries with a higher GDP (gross domestic product) per capita, such as Botswana,” commented economist Colin McCarthy from Stellenbosch University near Cape Town, South Africa.

Pretoria is said to be getting fed up with functioning as “the regional ATM”, or automatic teller machine, especially in the case of Swaziland where revenues flow straight into the coffers of the autocratic royal rulers. Last year South Africa contributed 98 percent of the revenue pool while taking out only 22.5 percent.

“Where the BLNS states need the revenue to complement their narrow tax bases, South Africa sees import tariffs as an instrument of industrial policy,” McCarthy spelled out the fundamental difference.

“Article 38 of the SACU Agreement requires member states to develop such industrial policies geared towards a more equal distribution of economic activity in the region. But this cannot happen through thumb sucking and crystal ball gazing. There is a need for policies and guidelines on which national SACU institutions can base recommendations.”

In South Africa, industrial policy is hotly debated and politically “sensitive”, as evidenced by the mid-September 2010 release of an economic policy paper, putting forward views on industrial development, by the most powerful trade union federation in the country called the Congress of South African Trade Unions (Cosatu).

“The region will certainly not be unaffected by what comes out of this discussion, but how often are the BLNS states consulted? I expect a number approaching zero,” opined McCarthy.

He pointed out that after eight years SACU still does not have a tariff board or other institutions such as a tribunal. “In the BLNS states I do not detect any seriousness around this, while in Pretoria senior government officials are against a tariff board. The question arises whether South Africa really would be willing to sacrifice its policy space to such institutions?”

“The space for cosily muddling through in SACU will become smaller as developments around us take place,” remarked Tralac associate professor Gerhard Erasmus. “The EPA negotiations were a traumatic exercise which taxed the relationship between the members. They served as a sober reminder of what it takes to be part of a new world.”

This seems borne out by SACU’s lack of progress in closing preferential trade agreements (PTAs) — not just with EU but with virtually every major trade partner. A new PTA with Mercosur, the largest trading bloc in South America, was signed in 2008 but analysts argue the agreement is not as beneficial as it could have been, as exhibited by a reluctance in the BLNS to ratify the pact.

A PTA with China is equally problematic. “The Chinese feel that South Africa backtracked on an agreement, not appreciating that it is, domestically speaking, politically impossible right now,” noted South African Institute of International Affairs (SAIIA) research associate Catherine Grant. The non- governmental SAIIA conducts international relations research.

“SACU countries also have different levels of engagement with China, such as Swaziland that does not recognize the one-China policy (due to trade relations with Taiwan). China also elicits a lot of concern from the labour and manufacturing sectors.”

A PTA with the U.S. proved a bridge too far even though the U.S. and SACU signed a trade, investment and development cooperation agreement (TIDCA) in 2008. However, during meetings at the U.S. embassy in Pretoria it is apparently often bemoaned that SACU won’t engage on the TIDCA.

A trade deal with India has been under negotiation for years but is met by a lack of enthusiasm from the private sector.

“The trade agreement with India illustrates the difficulties of SACU operating as a coherent bloc,” commented trade expert Mike Humphrey.

“South Africa uses the high common external tariff to protect its markets. It makes it hard for a country like Swaziland to import primary industry manufacturing goods, such as fertilizer from India. This has led to very fraught negotiations where the Indians were thrown out of the room and we spent hours and hours fighting among ourselves.”

It indicates all is still not well within SACU, with South Africa not engaging the other members in its industrial development plans and the BLNS not putting forward any industrial policy vision.

Even internal border controls, as several experts pointed out, are more arduous than 10 years back, indicating increased use of non-tariff barriers among the member states. “There is a danger that South Africa is retreating in a laager, protecting borders and keeping up competition,” argued Humphrey. Too often, he said, the debate in South Africa “is about SACU, rather than with SACU”.

Excerpt:

By Servaas van den Bosch
CAPE TOWN, Sep 20 2010 (IPS)

With African countries’ trade remaining inordinately dependent on natural resources exports, their economies could benefit from liberalisation of trade in services but only as long as proper domestic regulatory frameworks are put in place, some trade experts argue.

Horse mackerel being prepared for export in the Southern African country Namibia's port of Walvis Bay. Credit: Servaas van den Bosch/IPS

The continent’s dependency on these markets became apparent when demand plummeted in the wake of the financial crisis, putting an end to the 2003-2008 commodities boom, explained Sean Woolfrey, researcher at the Trade Law Centre of Southern Africa (Tralac), at Tralac’s annual meeting on Sep 16-17 in Cape Town, South Africa.

The non-profit Tralac provides capacity-building support to governments and other entities.

Angola’s oil fields, Zambia’s copper belt and Botswana’s diamond mines, among others, have created dangerously one-sided development paths, trade experts noted at the conference.

“Significant policy space is available when it comes to natural resources,” remarked Woolfrey. “But increasingly this space is being constrained by preferential trade agreements.”

As example he mentioned the economic partnership agreements (EPAs) that the EU is currently negotiating with the Africa, Caribbean and Pacific (ACP) states.

Namibia, experiencing a uranium rush, vehemently opposes limitations on export taxes in the EPA. The EU uses tariff escalations to prevent local processing, particularly in mining and forestry, hindering African countries when it comes to value addition. Woolfrey warned that, “this can lead to tit- for-tat trade policies that in the end are not always conducive”.

He pointed out that the rise of economic giants like China and India, hungry for natural resources, could benefit exporters “not because they are somehow more benevolent trade partners, but because the emergence of South-South trade in natural resources means more competition, which is good for suppliers”.

Competitiveness can be enhanced by the liberalisation of trade in services but this would also present a good opportunity to improve domestic regulatory frameworks, opined Tralac executive director Trudi Hartzenberg.

Her position contradicts that of African governments and civil society organisations that have strongly resisted the EU’s insistence in the troublesome EPA negotiations that African countries liberalise their markets for services companies from Europe.

It would be unfair, opponents have argued with some success, to expect companies from developing economies in the region to compete on an equal level with European services companies.

“It would for instance give German operators access to the Namibian market, but on the other hand it is very unlikely that Telecom Namibia Ltd will go to Germany to take over Deutsche Telekom,” said Namibia’s deputy finance minister Calle Schlettwein last year.

Most Southern Africa countries, apart from Botswana, favour postponement of services negotiations in the EPA talks. The EU is grudgingly giving in to this position.

But Hartzenberg’s opinion is that, in the absence of a services development agenda, consumers pay the price for expensive service delivery by South African companies and “inefficient” state-owned companies.

“The risks of liberalisation are overstated,” she told IPS. “South African firms in the services sector have established commercial presence in telecommunications, financial and other services in most Southern African countries already without any liberalisation having taken place.

“Such services are hard to keep out because they often involve foreign direct investment and most countries will bend over backwards to get that.”

Therefore it is timely to open the discussion on services, Hartzenberg argued.

“Even in least developed countries, services contribute an increasing share of economic activity in terms of employment. Services are also very important for the manufacturing sector. It is not possible to be competitive in manufacturing if we do not have competitive services inputs.

“We need only to take a look at bank and telecommunications charges in our part of the world to see that these high costs and, in some cases, poor quality of services are not only hampering business development but have very negative effects on consumers and households.”

Trade expert Mike Humphrey added that, “liberalisation does not mean that there is no control. There can be clear restrictions; it is not a blank cheque”.

Hartzenberg conceded that whether countries should open their services sectors to the EU specifically is a valid question. “If the EU is being given a first mover’s advantage, it may be an idea to look at which European services providers are competitive and opening up only for those that are most efficient.”

Discussing liberalisation in the context of the EPA, according to the Tralac chief, can also give impetus to much needed domestic regulatory reform to promote efficient, more competitive services providers.

The battle over services has only just begun as the powers that be have a vested interest in maintaining the status quo.

“When looking at the banking sector in South Africa there are really four firms that dominate the market and they do not necessarily want new competition,” said Hartzenberg.

“The same goes for telecommunications. In many countries in the region, fixed-line service providers are still owned by governments. They do not want competition to erode their income.”

Governments should be asking themselves whether these services companies are of benefit to the economy, said Hartzenberg. They should also ask: “Would the entry of Deutsche Telekom into Namibia improve service and lower prices? Would it be an efficient services provider?

“Whether a Namibian is working for a Namibian company or for a German- owned company should not make a difference, provided that the domestic regulatory framework is robust enough.”

Excerpt:

By Servaas van den Bosch
CAPE TOWN, Sep 17 2010 (IPS)

African governments’ ambitious plan for a tripartite free trade area (FTA), stretching from South Africa to Egypt, could be more realistic than getting existing ineffective regional customs unions on the continent to work.

Tralac Executive Director Trudi Hartzenberg shows the centre's yearbook on regional integration. Tralac is conducting a study on the tripartite FTA. Credit: Servaas van den Bosch/IPS

The three parties would be the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC).

The bloc would include 26 countries, 578 million consumers and a gross domestic product (GDP) of 853 billion dollars.

It would only be rivalled by China and India in terms of market size and be ranked 15th in the International Monetary Fund’s list of world economies by nominal GDP, somewhere between Mexico and South Korea.

“It would be very big and size matters in economic terms,” says Sean Woolfrey, a Tralac researcher. “Economies of scale would make it easier to diversify, boost industrial development and offer a multitude of trade partners for intra-regional trade.”

Currently the countries that would form part of the bloc survive mainly on exports of a very narrow range of raw commodities to the EU and China while being heavily reliant on the import of capital goods. Intra-regional trade, especially in Africa’s southern regional economic communities (RECs), is low.

“Intra-regional trade is still only 10 percent, the same as 2001,” comments Woolfrey. “The RECs are not promoting this as much as we would want them to.” A look at economic powerhouse South Africa’s regional imports, representing just six percent of its overall imports, seems to confirm this.

COMESA’s customs union, launched last year, is largely seen as a misnomer; SADC is experiencing serious delays moving from its FTA to a customs union.

“There are very important issues around the implementation of the SADC trade protocol and other protocols and there are no mechanisms to monitor these processes, nor sanctions for states that do not comply,” Tralac executive director Trudi Hartzenberg argues.

At the summit of SADC heads of state in August 2010 the customs union, to have been launched this year, was put on the backburner. This was a positive move, finds Hartzenberg.

“Establishing a customs union at this stage would be premature. A lot of work remains to be done on non-tariff barriers, a draft services protocol and services liberalisation. This can be done in the SADC FTA. We do not need a customs union for that.”

The growing aversion against SADC trade integration, especially from Pretoria, has seen the tripartite FTA emerge as a more realistic and attainable alternative for Africa, Hartzenberg points out.

That is not to say it will be easy. “The tripartite FTA has undoubtedly a lot to offer but it will not magically materialise,” comments Woolfrey.

Stumbling blocks include existing non-tariff barriers, harmonisation of tariffs and standards, a lack of coherent strategies, little diversification and the position of the Southern African Customs Union.

A main obstacle is South Africa itself, with its complicated rules of origin. With the disappearance of tariff barriers, rules of origin are a way to protect products and industry sectors.

Countries use them to exclude third parties from preferential trade agreements. An example would be preventing a Chinese product, repackaged in South Africa, finding its way into the EU under South Africa and the EU’s Trade and Development Cooperation agreement (TDCA).

The more complex the rules, the easier it is to shield industries like clothing and textiles from competition. But some analysts argue that this would put an impediment on intra-regional trade, as envisaged in the tripartite FTA.

“Most countries in the tripartite area have a shallow industrial base and would benefit from simple rules,” said trade advisor Mike Humphrey. “But because of South Africa’s diversified economy the rules of origin for the SADC FTA are very complicated, with different rules for each subcategory.

“This has resulted in the SADC trade protocol never actually resulting in more trade.”

The sub-regionally hegemonic powers South Africa and Egypt, at opposite ends of the proposed tripartite area, are expected to cling on to the policy space that complicated rules of origin award them, with possibly paralysing effects on intra-regional trade.

“The rules of origin will be the hardest to agree on in the tripartite FTA,” notes Humphrey.

Hartzenberg agrees: “Both Egypt and South Africa see rules of origin as a means of protecting their domestic markets. The tension South Africa and Egypt bring into this process is perhaps the most important complicating factor in the negotiations.”

A trade-off where the remaining 24 countries open their markets to South Africa, for instance for government procurement, could be a way out of the predicament.

“One of the other ways to diffuse this tension is to get the private sector more involved,” Hartzenberg informs IPS. “The private sector will have a very different perspective, not only in the sensitive sectors like clothing and textiles but also in other sectors which may see the benefit of more liberal rules of origin.”

The tripartite FTA, scheduled for June 2011, will probably take longer to realise because countries are still embroiled in negotiating economic partnership agreements with the EU.

Excerpt:

By Nastasya Tay
JOHANNESBURG, Sep 16 2010 (IPS)

The mooted restructuring of the revenue-sharing agreement of the world’s oldest customs union could lead to at least two of its Southern African members collapsing into “failed states” status as well as macroeconomic crises in two of their neighbours in the sub-region.

SACU's smaller members states depend on import revenue transfers for their survival. Credit: Nastasya Tay/IPS

Pressure from the EPA negotiations and decreasing customs revenues as a result of the global financial and economic crisis have pushed the grouping to reconsider some of its founding policies.

Matters have been elevated to presidential level. Heads of state from the five SACU member countries – South Africa, Botswana, Lesotho, Namibia and Swaziland – are meeting on a semi-regular basis for the first time to try and resolve these issues. They are due to reconvene in October.

The ensuing tensions have caused experts to question the future of the union, and its possible disintegration.

Peter Draper, head of the development through trade programme at the South African Institute of International Affairs (SAIIA), argues that, “the EU leans on the door of SACU and it almost falls in. It shows how weak it was to begin with”. SAIIA is an international affairs research institution.

But Matthew Stern, managing director of a consultancy called Development Network Africa, believes SACU will endure.

“SACU has been through so many squabbles, yet it always continues. When it gets down to the hard realities of the region, most member states cannot survive economically without this arrangement, so they have to make it work,” Stern believes.

But that is part of the problem. SACU’s smaller member states are so dependent on revenue transfers from the customs union that a re-evaluation of this arrangement could prove disastrous. And that is what is on the table.

The formula behind the revenue-sharing agreement — the economic calculation that determines how large a slice of the import tariff pie each country gets — is under review.

As the economic hub of the sub-region, South Africa accounts for over 90 percent of total revenue raised from import tariffs. This revenue is divided among all SACU members. Therefore, with the current arrangement South Africa contributes large sums of money to its significantly poorer neighbours.

Amid signs of political instability in South Africa, with citizens engaged in violent protests about lack of government service delivery and Africans from the rest of the continent increasingly being targeted for xenophobic attacks over the past decade, the government feels under pressure to explain why it hands money to its neighbours.

Draper describes the revenue-sharing arrangement as a ‘‘budget transfer system’’ and regards it as providing budgetary support with no accountability.

Stern, who helped write the current formula, believes the global economic crisis has provided the impetus for the countries to sort out revenue-sharing issues.

“While the countries were benefiting from the customs boom, it would have been difficult to get any of them around a table but Botswana, Lesotho, Namibia and Swaziland are experiencing severe fiscal problems now,” explains Stern.

Between 2003-2008, payments via the revenue-sharing agreement to Botswana, Lesotho, Namibia and Swaziland tripled. In the last two years, they have halved.

Botswana has applied for a one billion dollars loan from the African Development Bank, and both Swaziland and Lesotho are applying to the Washington-based financial institution the International Monetary Fund for assistance.

By Stern’s estimation, in 2008-2009 SACU payments made up 70 percent of Swaziland’s national budget and 55 percent of Lesotho’s. This has now dropped to approximately 30 percent for Swaziland.

“That is 40 percent of total government revenue in a year, gone,” Stern points out. “No country can deal with that scale of revenue volatility.”

There are also broader implications for regional cooperation.

Roman Grynberg, senior research fellow at the non-governmental Botswana Institute for Development Policy Analysis, (BIDPA), describes the revenue- sharing arrangement as the “elephant in the room of regional integration in Southern Africa”.

He believes that, without reform, not only SACU but also the Southern African Development Community cannot progress: “Finding a working formula is a precondition for regional integration.”

But, if fundamental restructuring is not done with prudence and consideration and with a long period of transition, the region will have two more failed states and major macroeconomic crises in Namibia and Botswana, warns Grynberg.

Zodwa Mabuza, CEO of the Federation of Swaziland Employers and Chamber of Commerce, agrees. From her perspective, a shift in the SACU revenue- sharing agreement would have disastrous implications.

“If the plug is pulled without any safety net, it would basically be creating a failed state,” Mabuza asserts.

The customs union also has a profound effect on the way the five countries conduct business among themselves, facilitating key determinants of trade, such as border access, and the stability that comes with being part of a common monetary area.

“Whatever happens to SACU, the ease of doing business should be ensured,” insists Mabuza. “We do not want to create another Beitbridge where trucks wait for days (on the border between South Africa and Zimbabwe). Trade facilitation is paramount.”

Mabuza describes the economic situation in the tiny Swazi monarchy as desperate. “If this continues, the government will not be able to provide services like health and education,” she says.

Grynberg concurs. He says it is time for careful reflection. “When you’ve got a 100 year-old foundation, no matter how antiquated it may be, and you pull out the bottom brick you cannot expect everything to be fine.”

Excerpt:

By IPS Correspondents
PORT OF SPAIN, Trinidad, Sep 13 2010 (IPS)

Almost two years after the controversial and sweeping trade pact known as an Economic Partnership Agreement (EPA) was signed between the European Union and the Caribbean Forum (CARIFORUM) countries, a new study says the impact of the EPA has proved to be, as its proponents claimed, relatively mild.

“None of the critics set out to test the propositions made by the EPA’s negotiators that the fiscal impacts might not be so grave and that revenues lost to new imports would be offset by access to new markets,” the study says.

Conducted by the Jamaica-based Caribbean Policy Research Institute (CaPRI) and the Centre for International Governance Innovation (CIGI), the study found that, contrary to claims that the agreement would prove disastrous for Caribbean economies, the economic effects on the four countries studied – Jamaica, Guyana, Trinidad and Tobago, and St. Lucia – would likely be minimal.

The researchers found that Jamaica, for instance, stands to improve its trade balance with Europe, if only marginally.

“Overall exports are estimated to increase by one percent or roughly 22.8 million dollars. Overall imports, meanwhile, are expected to increase by 0.6 per cent, or roughly 16 million dollars, leaving a positive balance of around 6.8 million dollars. In the context of a trade deficit that is over 200 times that figure, however, this is obviously a negligible change,” they wrote.

In the case of St. Lucia, the study found that the island’s manufacturing sector is expected to suffer from a possible doubling in manufactured imports from the EU.

However, the EU imports represent a small share of St. Lucia’s market for manufactured goods and because the manufacturing sector represents less than a tenth of the country’s economy, the overall impact on the economy will be modest.

“On the positive side, tourism is expected to grow by as much as four per cent,” the study noted, adding overall, the St. Lucian economy appears set to benefit more from the EPA than Jamaica’s, the principal reason being the larger share of services in its economy.

“We are not surprised by the findings of the CaPRI study as the EU had always maintained that the Caribbean had more to gain than to lose in an EPA which was designed to provide better market access and better rules of origin than any other EU trade regime, allow time and space for domestic firms and industries to adjust gradually, and strongly support the existing Caribbean ambition for regional economic integration,” Chargé d’Affaires of the EU Delegation Bob Baldwin told IPS.

“It is now important not to lose too much time in making progress on the implementation of the agreement, which has been slow,” he said, adding that 165 million euro in grant funds is available under the European Development Fund to support such efforts.

In the case of Guyana, whose head of state Bharrat Jagdeo has stoutly defended his decision to sign the EPA at the last minute, the CaPRI researchers found that the country’s agricultural economy was always likely to be the least vulnerable to competitive imports from the EU.

Agricultural activity constitutes almost a third of GDP, nearly five times the share for any other country in the region, and is where more than 20 percent of the employed labour force finds work.

The average tariff reduction on imports from the EU entering Guyana under the EPA is 7.1 percent, the highest of the four Caribbean countries studied.

“The share of total Guyanese imports that originates in Europe is currently only 10 percent, so the increase would represent only 3.7 percent of total imports. Of that, the overwhelming majority, more than nine-tenths, would be imports diverted from elsewhere, leaving a mere 0.3 percent net increase in total imports.”

The study suggests that the EPA signals the end not only of a trading era, but of a school of thought that undergirded decades of Caribbean public policy making.

When the CARIFORUM countries signed in October 2008, it brought about a new era of trade relations between the EU and the Caribbean, after decades of agreements guaranteeing markets and preferential prices for Caribbean exports.

Moreover, the new accord is reciprocal, and as a result CARICOM countries must now open their markets to EU exports, while being compliant with the rules of the World Trade Organisation (WTO).

“The EPA’s guidelines on rules of origin create new opportunities for CARIFORUM countries to extract more value added through further processing within the region before the final product is exported to the EU,” the study indicated.

It noted also that the agreement has sufficient breadth to encompass non-trade issues as well, including efforts at deepening the Caribbean regional integration given that problems have long bedevilled CARICOM’s attempts at integration from its inception in 1965, and have not abated despite the establishment of the Caribbean Single Market and Economy (CSME) in 2005.

“The full implementation of the CSME is essential to the successful implementation and operationalisation of the EPA,” says the study led by John Rapley, founder and president of CaPRI, and CaPRI Senior Research Fellow Damien King, who heads the Economics Department at the Mona Campus of the University of the West Indies (UWI).

“The track record of Caribbean governments in this respect, however, does not inspire confidence. Should progress towards a CSME be inhibited, the failure of the region to take advantage of the EPA will be properly laid not at the feet of a trade arrangement, but on the doorsteps of Caribbean governments.”

Excerpt:

By Servaas van den Bosch
WINDHOEK, Aug 18 2010 (IPS)

Southern African leaders used the 30th Southern African Development Community (SADC) summit of government leaders to rally around Zimbabwean president Robert Mugabe’s land seizures, in a move that undermines regionalism, while lamenting their own failure to implement their decisions on regional economic integration.

(l-r): Zimbabwe's Robert Mugabe and South Africa's Jacob Zuma. The SADC summit called for the lifting of international sanctions against Zimbabwe. Credit: Servaas van den Bosch/IPS

At the heads of state summit that preceded the bash, Mugabe was not chastised for ignoring the 2008 finding of the regional SADC tribunal that land be returned to 78 white farmers. Rather, the summit resolved to review the “role, functions and terms of reference” of the regional court.

During his address, Mugabe wondered about the continent’s inability to add value to its exports: “How can we fail even to manufacture one chocolate ourselves today?”

Mugabe also complained about the “divisive” nature of the economic partnership agreements (EPAs): “We need better and more effective coordination between the various regional communities to avoid any further fragmentation and ensure that we negotiate from a position of strength.”

Zimbabwe, however, was one of the first countries in the region to bilaterally sign an interim EPA with the Europeans.

Former Zambian president Kenneth Kaunda re-told the story of SADC: the regional bloc’s very existence stemmed from the impetus to lessen economic dependence on then apartheid South Africa. He also called for local value addition and integration of regional trade configurations.

“Our destiny is to realise our long-held goal for a continental economic community in which there will be free movement of people, goods and services across the existing artificial borders,” said Kaunda in a speech at the birthday celebration that evoked emotion among delegates.

However, if anything became clear in Windhoek it was that the process of regional economic integration has stagnated. “It remains a challenge to achieve the set targets, given the many outstanding issues,” acknowledged incoming SADC chairperson, Namibian president Hifikepunye Pohamba, with regards to the envisaged regional customs union that was supposed to be launched in 2010.

“Failing to implement our decisions has the real potential of calling into question our commitments and may breed cynicism and frustration among the people of our region,” Pohamba commented further.

It means SADC will go back to the drawing board to devise a more realistic agenda for establishing a monetary union and a common currency. “The recommendation of the macroeconomic convergence committee to the heads of state on the customs union is to have a clear programme by December 2011,” Namibian finance minister Saara Kuugongelwa-Amadhila told IPS on the sidelines of the summit.

“We need to properly identify the parameters for a SADC customs union. Then we need to look at negotiating common policies for the region. Economic integration will happen, because going back is not an option. We have to share the benefits of international trade, or we will be marginalised forever as a region.”

According to Kuugongelwa-Amadhila, the Southern African Customs Union (SACU) that comprises South Africa, Namibia, Lesotho, Swaziland and Botswana could serve as a blueprint for the larger SADC customs union. “The lessons learned from SACU can be used in setting up a SADC structure but there are still aspects of the current SACU structure that deserve attention.”

SACU Executive Secretary Tswelopele Moremi also reiterated that SACU could function as a building block for a wider regional customs union. Although SACU is already struggling to accommodate a possible inclusion of Mozambique under the EPA regime, Moremi was confident there is room to enlarge the union. “This can happen as long as proper accession criteria are laid out,” she told IPS.

While civil society trade experts warn against optimism in the EPA negotiations, Moremi was confident the regional bloc would not fall apart over the controversial trade agreements. “The issue of the EPAs has been overplayed. The worst seems to be behind us,” she argued.

The commemoration of the 30-year existence of the regional organisation was replete with anti-colonial struggle rhetoric and self-congratulatory messages. But a common vision on how to shift SADC’s historically strong focus on peace and security towards realising the project of economic integration remained elusive.

Although Pohamba in his address urged member states to make haste with the tariff phase-down, as prescribed by the introduction of the SADC free trade area (FTA) in 2008, no ultimatums around this were set in the heads of state communiqué, read out late on Aug 17.

Nor was Pohamba’s call to expedite liberalisation of services in six priority sectors, as agreed in the SADC 2009 protocol on trade services, followed up.

The leaders did, however, decide to establish a special task force to look at the technical complications of establishing a customs union; to hold a special summit on economic development; and to move towards a tripartite FTA including SADC, the Common Market for Eastern and Southern Africa and the East Africa Community.

In Kampala in 2008, heads of state decided on the tripartite agreement to cater for overlapping membership of countries of regional trade blocs. But observers have raised questions around the agreement as many countries in the region have not yet succeeded in making the necessary adjustments after the establishment of the SADC FTA in 2008.

Trade blocs also encountered difficulty in formulating a common position on the problematic EPA trade negotiations with the EU.

Excerpt:

By Servaas van den Bosch
WINDHOEK, Aug 17 2010 (IPS)

Regional economic integration plans in southern Africa are not rooted in reality, according to civil society organisations holding a parallel meeting alongside the Southern African Development Community (SADC) summit in Namibia’s capital of Windhoek.

Activists at the People's Summit, which is running parallel with the SADC heads of state summit in Windhoek, Namibia. Credit: Servaas van den Bosch/IPS

“A borderless southern Africa is a pie in the sky at the moment,” says trade analyst Dot Keet from the Alternative Information and Development Centre (AIDC), based in South Africa. “The 2008 SADC Free Trade Agreement wasn’t signed by all member states. More importantly, it is not being implemented.”

The customs union due to be launched in 2010 has been put on the backburner because the region is not ready.

Part of the failure to move ahead with a regional economic integration agenda, which foresees a monetary union in 2015 and a common currency in 2018, is due to the widely varying priorities of SADC member states, according to Keet and other civil society analysts.

“Botswana wants to be this hub for business and financial services, banking on its strong legal system and market access to South Africa,” explains Keet. “Countries like Lesotho and Swaziland desperately want to hold on to the aid they receive.

“Some countries are going ahead with liberalisation at a faster rate than others, which has dramatic effects on the region.”

According to Keet, “trade is extremely imbalanced currently. For instance, for every 20 products that South Africa exports to Zambia, only one comes back. A functioning free trade area (FTA) will exacerbate this situation. The countries with stronger economies take advantage of the weaker countries that have little to offer.”

In additions, the economic partnership agreements (EPAs) with the European Union (EU), spelling out liberalisation of 85 percent of tariff lines, will make it easier for European goods to enter the FTA. “This will multiply the existing trade imbalances,” states Keet.

Cross-border traders in the region, who recently obtained a tax waiver on consignments under 500 dollars, could be severely affected by different tariff regimes in the SADC area, she argues.

“Mozambique is liberalising tariffs at a fast pace, which can cause problems for traders trying to import goods into South Africa that has a different tariff regime. Border officials will interrogate the traders more intensely and examine the origin of the products closely.”

United Nations (UN) Millennium Campaign coordinator Thomas Deve says, “not one single country in the region is happy with the pace of development. Instead of resource mobilisation through trade, liberalisation has led to deindustrialisation and massive job losses, with the number of poor people in the region increasing”.

The UN Millennium Campaign is aimed at mobilising popular support for the actualisation of the UN millennium development goals.

The civil society representatives argue that the process of economic integration needs to be stripped from political rhetoric and built up from the ground.

Rumbidzai Masango of the Economic Justice Network (EJN), a project of the Fellowship of Christian Councils of Southern Africa (FOCCISA), says that: “SADC is not ready for the ambitious milestones that are currently set out.

“Introducing one currency in the near future would throw countries like South Africa and Namibia 10 years back.” FOCCISA is an ecumenical organisation working with 11 national church councils in southern Africa.

She adds: “The region should set minimum standards with regards to inflation targets, budget deficits and monetary policies. It’s important to ensure countries are stable before marrying the different economies.”

Keet agrees: “The region needs to move rapidly to put in place common strategies where it can. The transport and communications sector is one area where progress can be made quickly. But we also really need strategies on water management, food security and energy provision.

“Even a common industrial policy like South Africa is pushing at the moment is not out of reach,” Keet believes.

The immediate economic survival of the region depends on harmonisation of policies and a common negotiating position with the EU and other trade blocs, argue the trade experts.

The perceived dominance of South Africa in SADC does not have to be an impediment, says Keet. “You can’t wish South Africa away. Instead the other countries can stick together to offer a counter-weight.

“They have to negotiate a charter on cross border investment, regulating the profits South Africa companies can repatriate. Pretoria will welcome this as it will alleviate some of the political pressure.

“This heads of state summit will deliver the usual rhetoric. What I really would like to see is the SADC states coming together in the EPA discussions and negotiating as one bloc,” says Keet.

“As long as we haven’t determined our own position in the region on some vital issues such as export taxes, infant industry protection, rules of origin and so on, there cannot be final EPAs,” she adds.

“Economic integration will be gradual, incremental and based on variable geometry in different sectors,” argues Keet, who is of the opinion that the system of preferences in the EU – currently the focus of heated negotiations – will gradually disappear.

“And then our products will have to compete with those of the rest of the world.”

Masango calls it a “catch-22 situation”: “Countries are coerced into signing for future development, yet the regional economic integration that the EPAs supposedly offer is clearly not taking place.”

For example, some provisions, such as those on fisheries, are contradictory to countries’ development goals, Masango argues. “The Europeans want to come and fish in waters all along Africa’s shores and sell the fish at huge profit in Europe.

“But, on the other hand, it is often impossible for African countries to export fish themselves because of the high phyto-sanitary requirements. How can that be fair trade?” she asks.

Excerpt:

By Julio Godoy
PARIS, Aug 6 2010 (IPS)

Subsidies for agriculture in the industrialised countries of the world grew again in 2009, benefiting the largest companies and land owners, such as Prince Albert of Monaco and Queen Elizabeth of Britain.

The OECD's Carmel Cahill: "European subsidies for agriculture continue to benefit the largest land owners." Credit: OECD

According to a new study by the Organisation for Economic Cooperation and Development (OECD), subsidies for agriculture in industrialised countries rose to around 252.5 billion dollars, or 22 percent of total farmers’ receipts in 2009 — up from 21 percent in 2008.

The study, “Agricultural Policies in OECD Countries at a Glance 2010”, found that the European Union’s subsidies for farmers rose from 22 to 24 percent. In the period between 2007 and 2009, EU farmers received an average of 23 percent of their gross receipts in form of direct financial support from the state.

The OECD represents the 30 most industrialised countries of the world, including the U.S. and most members of the EU.

The subsidies for farmers in OECD countries have been at the centre of a heated dispute for years, both at the level of the EU and U.S. and within the larger framework of the World Trade Organisation and its deadlocked Doha Development Round.

The EU spends about 75 billion dollars on subsidies for agriculture, even though the sector represents only about two percent of the total gross domestic product of the union. This subsidies regime will only change in 2014.

The new OECD data inflamed these complaints, the more so since it has been shown that the largest agro-businesses and even some royal houses in European monarchies benefit the most from the subsidies.

“EU subsidies for agriculture are a shame,” Marita Wiggerthale from the German office of the humanitarian organisation Oxfam told IPS. She cited the example of subsidies for milk, which form part of the EU agricultural policy.

Due mostly to over-production, the European milk prices for farmers were in early 2009 extremely low at less than 0.20 euro per litre. Instead of reducing the production to stabilise prices, the EU reintroduced subsidies for milk in 2009 to support producers.

“As consequence, the EU is again exporting milk to the whole developing world, especially towards Africa, at ‘dumping’ prices,” Wiggerthale said. “By so doing, the EU is destroying the livelihoods of farmers in the poorest countries of the world while artificially maintaining a too high level of production.”

To add insult to injury, the EU is simultaneously forcing developing countries in Africa, the Caribbean and the Pacific to further open their markets through the trade deals called economic partnership agreements.

Rainer Falk, a leading German critic of neoliberal globalisation and publisher of “World Economy and Development”, a specialised newsletter on international cooperation and trade, told IPS that the OECD subsidies for agriculture only benefit the largest companies in the sector.

“The data for 2008 illustrates this point,” Falk said. “The main beneficiary of the EU subsidies in Germany was Suedzucker, a large sugar producer, which that year received more than 50 million U.S. dollars in subsidies,” Falk pointed out.

Data from other countries confirms Falk’s complaints.

In France, one of the main beneficiaries of the EU subsidies for agriculture in the recent past has been Prince Albert of Monaco. Queen Elizabeth of Britain has also received large subsidies from the EU.

Carmel Cahill, head of the policies, trade and adjustment division of the OECD’s directorate for agriculture, food and fisheries, subscribed to this criticism. “European subsidies for agriculture continue to benefit the largest land owners,” Cahill told IPS.

According to the most recent data, 11 percent of farms get 75 percent of the payments. “Take care though,” Cahill warned, “it is the share of the payments, not of the entire budget, some of which goes to programmes and purposes that are not payments.”

Cahill also called attention to positive changes in the agricultural subsidy policies, especially in the EU.

“Despite still spending a large chunk of its budget on supporting a relatively small sector of its economy, the EU has reformed its subsidies criteria to move away from supporting exports and towards supporting producers, thus decoupling aid from production,” Cahill said.

“Such subsidies,” Cahill argued, “are far less distorting in terms of trade than the aid directly linked to production volumes.”

However, Cahill lamented that the EU and the member countries do not link the subsidies to specific targets. “The EU could connect its aid to better environmental protection measures of agriculture, or to an increased concern for biodiversity,” Cahill told IPS.

She explained that the increase in agricultural subsidies was mainly provoked by fluctuations in international commodity prices during the last four years. “Higher commodity prices in 2007 and 2008 were behind drops in the measured support in those years and the return to 2007 level prices reversed this trend for 2009”, automatically leading to relatively higher subsidies.

The OECD report also says that lower or negative economic growth in OECD countries, caused by the recent global recession, moderated demand pressures in particularly higher value-added products, such as dairy and meats. A positive supply response to higher prices in 2008 came at the same time as growth for food demand was easing.

These factors all contributed to the rise in subsidies.

Excerpt:

By Servaas van den Bosch
WINDHOEK, Jul 29 2010 (IPS)

European Union (EU) Trade Commissioner Karel de Gucht has appeased leading European civil society organisations about the negotiations for a Southern African economic partnership agreement (EPA), promising “not to put undue pressure” on countries.

Containers being offloaded in Walvis Bay, Namibia, for further transport into Southern Africa. Credit: Servaas van den Bosch/IPS

“The EU has no intention to put undue pressure on Namibia to sign and implement the interim EPA,” de Gucht wrote in a response to a Jun 18 letter by 30 influential European civil society organisations (CSOs).

Negotiations for an EPA have dragged on since 2002 when the Cotonou agreement redefined trade relations between the EU and African, Caribbean and Pacific (ACP) countries according to World Trade Organisation (WTO) directives.

In their letter the CSOs argued that Namibia is put under severe pressure by the Europeans to move forward with the negotiations, to the detriment of their development goals.

“The signing of the interim EPA would have serious impacts on agricultural and industrial development in Namibia. Among other consequences the country would have to forfeit the policy option of using export taxes on raw materials and an important incentive for value addition of raw materials and as a potentially important new source of income,” noted the CSOs.

In his reply de Gucht tried to allay their concerns, stating: “The EU will continue to engage with Namibia, as well as with the whole SADC EPA group in a constructive spirit as in the past. The objective is to negotiate an agreement that serves the region’s best interest.” SADC stands for the Southern African Development Community.

The commissioner also emphasised the benefits of duty-and-tariff free access for the countries of the region.

But, according to Maes, the realisation has dawned in Europe that the negotiations need to be concluded before the Third Africa-EU summit in November 2010 in Libya.

“There is an EPA-fatigue manifesting itself in Europe after eight years of intense negotiations. The European Commission has take on extra responsibilities, such as developing a comprehensive investment policy. It is eager to close this chapter and will be keen to make the Libya summit a show of harmony not marred by tense negotiations on trade,” Maes told IPS from Brussels.

He predicts the EU will bow to the realities on the ground in Southern Africa, putting some of the more contentious demands on the backburner until the region is ready to negotiate clauses on liberalisation of services and investment.

“From the outset the obstacles in the talks were caused by the EU’s assumption that the EPAs are the best option for development of the ACP countries,” says Maes. “But these negotiations are not at all about what is best for the countries and rather about to what extent they are willing to sign up to the European recipe.”

According to Maes, the negotiating mandate the EU uses is far beyond what the Cotonou agreement requires. “These very poor countries simply don’t have the infrastructure, institutions and regional economic integration to support such a far-reaching trade agreement.”

Some of the provisions, like the contentious most favoured nation (MFN) clause — that requires SADC EPA countries to extend the same preferences to the EU it grants to third parties under future trade agreements — have little to do with sustainable development, argues Maes.

“It’s a purely offensive strategy to protect European interests and to prevent that, for instance, Africa turns around and offers the U.S. a better deal.”

The decision by the SADC EPA configuration’s trade ministers gathered in Gaborone in June 2010 to postpone the liberalisation of services till 2014 will certainly be revisited by the EC, expects Maes. “This is not a done deal, the EC will try to move the services issue forward.”

Still he expects the EC is eager to quietly find a way out of the predicament before November, with talks set to resume in August. “I hope this means that after eight years of negotiations the EU finally accepts it has to make a deal based on what is politically, economically and institutionally possible in the countries.”

Namibian trade analyst Wallie Roux also expects that the region will use the Libya summit to increase pressure on the EC to close a deal. “The negotiating strategy of Namibia and the other countries will be to try to corner the EU in the short term and to engage the Commission as soon as possible,” he predicts.

As for the contentious issues, Roux foresees a problem with the definition of parties, which practically requires the insertion of Mozambique and Angola into the Southern African Customs Union (SACU), as well as with the MFN clause.

“Currently the clause applies to all countries that constitute 1.5 percent of world trade. If the EU is willing to move this up to five percent, at least South- South trade will be somewhat excluded.”

Similarly, the EC-backed tripartite agreement among the East Africa Community (EAC), SADC and the Common Market for Eastern and Southern Africa (COMESA), which comprises three different EPA negotiating blocs, is still a long way off, says Roux.

“The EU will have to resign to the fact that such a free trade area can only be discussed when the regions are ready.”

Excerpt:

By IPS Correspondents
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

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.

Excerpt: