Economic Partnership Agreements (EPAs) and new EU-Africa trade relations

EPAs
South Africa – credits photo Ines Caloisi

The European Union is Africa‘s largest trading partner, despite increasing Chinese penetration and an important US presence on this continent. Statistics on investment, foreign trade and development aid reveal that the EU is the main economic and political player in sub-Saharan Africa. And it could not be otherwise, given the colonial past that links many African countries to some EU Member States such as France, Portugal and Belgium.

On 12 September 2018, on the occasion of his State of the Union speech, European Commission President Jean-Claude Juncker said: “Africa does not need charity, but a fair and loyal partnership. And we Europeans also need it. Today we propose a new alliance between Europe and Africa for sustainable investment and employment. The new “Africa – Europe for Sustainable Investment and Employment Alliance” aims in particular to stimulate investment in Africa, boost trade, create new jobs and invest in education. The alliance is expected to deliver concrete results, such as creating up to 10 million jobs in Africa over the next five years. “I am convinced that we should turn the many trade agreements between the EU and Africa into an intercontinental free trade agreement, an economic partnership of equals” said Juncker.

Since the 1960s, Europe has had privileged economic relations with the ACP States, an acronym that refers to a group of countries located in the geographical regions of Africa, the Caribbean and the Pacific, mainly former European colonies. The Yaoundé Convention of 1963 (followed by a second convention in 1969) offered a range of trade benefits and a programme of financial aid for development to 18 former African colonies that had just gained independence. The agreement also provided for technical and cultural cooperation measures. These agreements paved the way for the following

The 1975 Lomé Convention, which extended these benefits to a larger number of African countries, by providing for the granting of non-reciprocal trade preferences for exports of products by ACP countries in derogation of their obligations under GATT, the General Agreement on Tariffs and Trade. A mechanism to compensate for the prices of agricultural products, called Stabex, was also set up. This agreement was renewed several times and was finally replaced by the Cotonou Agreement, signed in June 2000.

This Agreement represents a turning point in relations between the European Union and the ACP countries as it provides for the creation of regional free trade areas between the EU and developing countries for the first time. This agreement is the starting point for negotiations on . This agreement is the starting point for negotiations on Economic Partnership Agreements (EPAs), which introduce a number of new features, including the overcoming of the preferential access regime and the introduction of reciprocal trade conditions between the EU and the ACP countries.

The Cotonou Agreement established the entry into force of the EPAs from the beginning of 2008. Negotiations are still ongoing for many countries, while others – such as Botswana, Swaziland, Lesotho, Mozambique, Cameroon, Ivory Coast – have signed interim agreements. In essence, these are free trade agreements that aim to redefine the trade rules between the EU countries and the ACP countries, guaranteeing goods from the latter access to European markets without customs duties or quotas, and vice versa. The main objective of the EPAs is to promote trade between the EU and the ACP countries, while at the same time promoting their integration into the world economy and reducing poverty.

On the other hand, there has been much criticism of the introduction of these agreements, especially by non-governmental organisations, the no-global movement and those working in the field of development cooperation. It is feared that the establishment of EPAs could damage the already fragile economies of African countries, characterized by phenomena such as high unemployment, lack of infrastructure, low tax revenues, undifferentiated exports and limited access to credit. A non gradual liberalization and not supported by adequate fiscal measures could, for example, determine negative consequences such as the closure of many local businesses and the increase in the unemployment rate.

Among the countries that, on the contrary, could benefit greatly from the introduction of the EPA agreements, South Africa certainly plays an important role. A regional power of the African continent, South Africa is also assuming a leading role on the world stage, so much so that it is included in the G20 and BRICS groups (Brazil, Russia, India, China and South Africa). The Economic Partnership Agreement between the European Union and South Africa, Namibia, Lesotho, Botswana, Swaziland and Mozambique entered into force in November 2016. The Agreement guarantees South Africa greater openness to the EU market than the 1999 Trade Development and Cooperation Agreement (TDCA), which previously governed trade relations between the country and the EU. The main positive effects of the agreement are expected to affect the agricultural sector (in particular exports of wine, fruit, sugar, ethyl alcohol, fishery products). The agreement also provides for more flexibility in relation to tariffs, greater flexibility in the rules of origin and the elimination of EU export subsidies in the agricultural sector.

For more details:

The State of the Union 2018 – Africa

Cotonou Agreement

Economic Partnership Agreements (EPAs)

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(credits photo Ines Caloisi)