Friday, April 12, 2024

EU reforms to cripple Botswana’s Economy ÔÇô warns ODI

Botswana has been listed among developing countries which stand to lose out from trade reforms that are pushing the European Union towards more protectionist policies, according to a report by the Overseas Development Institute (ODI).

Eighteen developing countries ÔÇô among them Kenya, Ghana, Botswana and Namibia ÔÇô could lose Ôé¼50m each year if they do not sign up to the EU’s Economic Partnership Agreement (EPA) Union’s part of a raft of reforms pushing protectionism, which it is feared will damage developing countries, stated the ODI report.

The ODI’s report ÔÇô a series of essays from trade and development experts ÔÇô warned that the changes contemplated by the EU will lead it towards a more protectionist stance that will hamper the global economy and damage developing countries.

In his essay in the report, Christopher Stevens, senior researcher at ODI, sees the changes in EU trade policy as an important shift from multilateral trade rules that protect all players, including the weakest states, to a set of arrangements between the EU and developing countries in which it is able to set the agenda.

Several SADC states have had close to a decade of negotiations with the EU and, as yet, no final closure. In late 2007 Botswana, Swaziland, Lesotho and Mozambique initialed the interim EPA so as to maintain their market access to EU for their beef, fish, sugar textiles and table grapes. Now the EU has threatened 18 countries, which includes Botswana that if they have not commenced ratification by the end of next year then the EU will withdraw its concessions. This would mean no more duty free, quota free access for Botswana beef.

The new trade policy also has a glaring omission, the EU’s common agricultural policy (CAP), in which European farmers receive Ôé¼50bn in subsidies. Such payments and export subsidies aimed at boosting the production and income of EU farmers tend to reduce world prices and the attractiveness of the European market for developing countries.

“Designing a trade strategy in times of economic and financial crisis always carries a risk, and there will inevitably be winners and losers,” said Dirk Willem te Velde, head of the ODI’s international economic development group. “The clear protectionist trend in the EU’s new strategy will not only damage the developing world, but also European economies and consumers.”

This comes at a time when BMC’s finances are dwindling and government is being called in to bail out the cash strapped parastatal. Exports to the EU, which have been stopped for over a year, will recommence this month but indications are that things may not improve much.


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