Sunday, September 27, 2020

EU/ACP in economic checkmate

About nine months are left before the Continuo Agreement elapses. Before that fateful eventuality occurs, the 77 member states that form the ACP grouping must make a do or die move. The choices, if any, are limited. It is either they agree to the new arrangement of dealing with the powerful EU in pockets of six groupings under the Economic Partnership Agreements (EPAs) or they expose themselves to the shrewd sharks of global trade.
?We are stuck. We don?t know what to do; it is a dilemma,? the Vice President of the ACP/EU permanent committee of Economic Development, Trade and Finance, Boyce Sebetela told The Sunday Standard.

In any case, it is clear that ACP countries are bound to come out losers in attempting to determine the discourse of international trade beyond 2007. The best that can happen to them is to reduce the margin of loss. This past week, the EU?s trade negotiator, Karl Falkenberg ? the Deputy Director General at the European Commission?s Directorate General for Trade, jetted into the country for a two-day behind-closed-doors discussions with the Southern African Development Community (SADC) ? the sixth group that forms the ACP block. His mission was simple: to sway SADC in the EU?s direction. He had already done the same with the five others. An hour and a half before flying back to Brussels, Falkenberg addressed the non-state actors on the progress of trade negotiations between SADC and the EU. During his address, he pleaded for public support of the EU agenda as he denounced the past preferential treatment that had been accorded the developing countries.

?There is need for a relatively substantial overhaul of trade arrangements,? said Falkenberg. ?Forty years of experience of open markets in Europe have proved to be successful and preferential trade between the EU and ACP has yielded little progress. The ACP countries are still producing a handful of goods and basic products. There is little or no diversification in the ACP and figures show that in the last 20 to 25 years, you (ACP member states) have lost a significant share in international trade, by up to 50 percent. This is a dramatic thing and we have to refresh our minds.?

Falkenberg said the EU is worried by the sliding trade portfolio of ACP member states and wondered ?why the ACP is not responding the same way as Asian and Latin American countries to opportunities offered by the EU.?

However, it is this ?refreshing? of minds that the ACP block has consternation with. The EU agenda is viewed with suspicion and the ACP countries are also accusing their ?negotiating partner? of arm-twisting.

On the agenda, the EU is proposing to individual group members of the ACP to, amongst other things, integrate and liberalise regional economies, increase competition, open government procurement to external players and even allow Europe to compete. In return, the EU would advance huge financial support to various units in an effort to assist them modernize, create jobs and wealth, reduce poverty and increase investment. Some of the issues on the agenda, such as increasing competition, reciprocity, rules of origin and agricultural subsidies, which Sebetela terms ?Singapore issues?, are still pending before the World Trade Organisation (WTO) under the Doha Development Round. The rich nations, EU included, had desperately made an attempt through the WTO to open up world trade by removing obstacles to open trade. The developing countries are vehemently opposed to that, arguing that should trade be open, they would be disadvantaged by the technical superiority of the rich nations. Developing countries are saying the playing field is not yet level but the rich nations are saying the time is now ripe for developing countries to advance their economies.

?There is no example in the world where economies have managed to grow behind the protective walls. Protection results in laziness, inefficiency and high prices,? explained Falkenberg.

Sebetela is not amused by the EU cause.
Explaining his discontentment, Sebetela ? who this week is scheduled to fly to Brussels ? said the EU is trying to use the EPAs to advance the failed talks at Doha.

?If the EU can get the six regions of ACP to agree to its concessions, they know that the agreements would completely change the scope of the Doha negotiations. Now they would be having 77 countries rallying behind their agenda,? he said. He wondered why the 15 EU member states are not facing the 90 developing countries at the Doha table to advance their case than cut deals with regional units on the issues that are already on the table. The EU is fully aware that the stakes are even higher for these groupings in view of the fact that the Continuo Agreement is coming to an end.
?Continuo Agreement is a WTO preferential trade waiver and the end of the Continuo Agreement, trade would be reciprocal. There would be no waiver, except for Less Developed Countries (LDCs) and what it means is that trade would be reciprocal for middle and upper middle class countries. Goods such as beef from middle income countries like Botswana would have to trade on an equal basis with others from countries such as Brazil and India. We would now be competing at full strength with the likes of the United States and Asia,? he said.

To avoid the might of the advanced economies, the EU is inviting the ACP to an equally unfavourable deal. The EU promises to protect these infant economies under the new trade arrangement of EPAs, only on condition that these economies would favourably open competition to some of the goods produced in Europe. That is why Sebetela concludes that ?we are stuck with EPAs?.

Despite his discontentment, Sebetela acknowledges failure on the part of the ACP. He agrees with Falkenberg that on the supply side, the block has not responded adequately to preferential trade arrangements.

?There we take the blame,? he agreed. The blame though, comes with an explanation.
?We have failed because we did add value to our raw materials. But now the concept is value addition and that is why we are stressing the issue of rules of origin,?

Sebetela is expected to ascend to the presidency of the ACP/EU Economic Development, Trade and Finance Committee this year.

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Sunday Standard September 27 – 3 October

Digital copy of Sunday Standard issue of September 27 - 3 October, 2020.