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Gender review of the Economic Partnership Agreements

GENTA | 6 December 2006

Gender review of the Economic Partnership Agreements

Liepollo Lebohang Pheko

Introduction

Trade liberalisation produces different results for men and women. The differential
outcomes are associated with the most essential aspects of livelihoods and wellbeing,
including food security, employment, income and access to affordable health
services. Differentiated outcomes across countries and regions are based on the
category of economic area and specific sector, measures, timing and sequencing of
trade policies. They traverse various sectors and sub sectors of trade liberalisation:
agriculture, services, clothing and textiles, and intellectual property.

Policy-makers and any groupings concerned with gender equality, poverty
eradication and development-orientated economic growth must be cognisant of the massive constraints and challenges presented by the liberalisation of these
sectors. [1] In short any cultural, policy and structural constructs that ignore or
exacerbate the oppression of women must be redrafted or replaced. The EPA have
not examined the cost of liberalisation on women in terms of physical resources,
human resources and social capital needed to transfer resources, skills as control to
effectively manage liberalisation. The liberalisation programme of EPA need to be
examined in a broader, gendered context that is mindful of the non neutrality of the
market economy.

Geo-politics of EPA

It is crucial to be mindful of the geo political agenda propelling the Economic
Partnership Agreements. The agreement is being punted at a time when European
markets are shrinking, production costs are making it difficult for companies to make
a significant profit from Northern consumers and three successive WTO ministerial
meetings have gone badly for corporate interests. The African, Caribbean and the
Pacific offer the opportunity for the European Union to find an unfettered market.
Many observers thus argue that the intentions are related more to pro North market
driven interests than pro South Development ones.

This assertion is evidenced by the intensity of protectionism the EU is permitted while
habitually dumping surplus produce on overseas markets. Though 90% of ACP
countries’ tariffs must be removed to access EU markets, there is no mention of
dismantling the Common Agricultural Policy or of stemming the anti competitive practices arising from dumping. The consensus among many progressives, NGOs and
policy analysts in both the South and North is that there is great cause for concern.

EPA and women [2]

In all this women emerge as the double losers. THE EPA focus on primary production
and force countries to de-industrialise. As such:

- Women are locked into the lowest paid work with the least statutory
protection and benefits even though employment may increase ,the quality
of that employment is poor;
- Labour rights are thus violated while factories are given tax holidays at the
expense of providing real livelihoods and permanent employment to women
workers;
- Women are subject to competing with poorly paid contract workers abroad
as the move to ‘outsourcing’ continues as seen in the notorious Export
Processing Zones [EPZs] operating in the South;
- The ability to organise and gather as unions or worker groups is minimised
through threats, bullying and in extreme cases murder of vocal workers;
- Women’s reproductive rights are violated whether through forced abortions,
dismissal when pregnancy is disclosed or miscarriages through strenuous work
and exposure to toxic chemicals;
- Earning an income externally to the household can lead to greater
empowerment for women, both in the home and in the wider community.
However, trade liberalisation can also lead to unemployment and the
restructuring of labour markets - a situation that tends to affect poor and
marginalised groups of women more than men. In fact, occupational and
wage segregation is widening and bad working conditions are rife in many
export industries. The need for flexible workers to respond to market
fluctuations has led to a rise in the numbers of informal sector workers, of
which a high percentage are women.
- Access to education, health care and other basic services is often truncated
through trade liberalisation. As such there is often less to spend at household
level so the role of social reproduction in terms of providing care, gathering
fuel and food etc is brought upon the women and girls. Where choices are
made about whether to send the boy or girl child to school, most communities
and families favour the boy. The ‘care economy’ meanwhile remains
unregulated and unsupported;
- The displacement of indigenous women farmers and artisans in favour of
European tourism interests transforming the South into a huge exotic safari
and often linked with increasing sex trade;
- The diminishing of women’s role as custodians of traditional knowledge and
bio-diversity has been well documented and bears restating in the wake of
the GMO assault and the threat to food sovereignty;
- Cheaper goods come onto national markets from overseas, affecting existing
indigenous producers but also providing cheaper options for consumers many
of whom are women who manage diminishing household budgets.

Value Added Tax and Women

Value Added Tax [VAT] can be extremely unfavourable for women, not only as
consumers but also relative to their reproductive role, since it is normally levied on
goods for the household and labour-saving devices such as domestic appliances. This
is in addition to the taxes paid on food at the point of purchase.

The theory of fiscal austerity has fundamental repercussions for expenditure on
services such as health and education, which are critical particularly for women in
their socially assigned task as ‘carers’. Fiscal austerity may also constrict governments’
capacity to establish social protection measures and safety nets to counteract the
harmful consequences of liberalisation.

Production structures and employment

In real terms, the effects and shocks of trade are experienced by individual women,
by individual men, by households, by families and by communities whenever
fluctuations in price (related to availability of goods) and changes in output (the
goods and services people work to produce, how they produce them and under
what conditions) occur. A typical claim made by advocates of EPA policies,
including some gender advocates, is that increased trade and investment
liberalisation can improve economic growth, which in turn can increase women’s
participation in the labour market. However we need to examine the nature and
terms of this participation.

Case Study on Production Structures - Leather sector South Africa [3]

Rapid liberalisation of tariffs in the South African footwear and leather sub-sectors
(from 41.2 per cent in 1995 to 28.9 per cent in 1999) has resulted in retrenchments and
drastic changes in production processes in local factories. Additionally, is a
correlation between company restructuring in the footwear industry and the
expansion of the informal sector. Not only is this the only apparent option for the
increasing number of retrenched workers, but also for factories through
subcontracting to the informal sector in order to cut labour costs. South Africa’s
informal sector has increased from 1,136,000 workers in 1997 to 1,907,000 in 1999 [4].

There are approximately 193,000 African women compared to 28,000 white women
working in the informal sector. What this illustrates is that it is the social groups with the least power and resources who are over represented in the ‘informal’ sector (Statistics
South Africa 1999 cited in ILRIG 2001: 82-83).

Investment measures [5]

There are typically four ways in which a government can protect the national
investment measures environment:

  1. By prescribing and enforcing minimum local content requirements (in terms of value, volume or proportion);
  2. By setting trade balancing requirements (limits on purchase or use of an imported product up to the maximum value or volume related to local production);
  3. By placing restrictions on repatriation of dividends;
  4. Be placing ceilings on the equity holding of foreign investors. Several African ,Caribbean , South American and Asian countries have adjusted their mercantile and investment laws to comply with bilateral investment agreements aimed at encouraging foreign direct investment (FDI). Usually the result has been to remove regulations which govern minimum local content, trade balancing, access to foreign exchange and repatriation of dividends.

Several South American and Asian countries implemented Import substitution policies
in the 1960s and 1970s to encourage local production of consumer goods and to
maintain a balance of payments through barriers on certain imports. Under WTO
agreements these would now be illegal. The gender dimensions of this are that
women tend to work more in industries in which capital flight is common and that are
more susceptible to foreign competition. These industries are profoundly distressed by
economic downturns, which have repercussions on the job protection of the largely
female workforce.

Case Study on the Investment Environment - Tomato Sector, Senegal

Some years ago, the Senegalese government reduced tariffs on food imports to
comply with a trade liberalisation package. This coincided with the launch of tomato
paste business by a group of Senegalese women. They had taken out micro-credit
loans. Having shifted from producing subsistence crops to solely growing tomatoes
tariffs dropped and cheap foreign tomatoes flooded the Senegalese market. In what
seems the typical story of the South when confronted with Northern imports co-op
were unable to compete with the result that they could not honour payment of micro
credit loans. This illustrates the hostility of the market towards women and less
resourced business people. It also shows the importance of Southern government
regulation and protectionism of women and their families. It is critical to prevent families from entering economic situations that are more invidious than before as a
result of placing them in competitive environments without adequate support.

Small and medium enterprises and women entrepreneurs

Enterprise development and market access are commonly promoted as policies that
enable developing countries to engage in international trade. Overall, liberalisation
under the WTO rules has not significantly increased women’s access to credit, nor has
it enhanced opportunities to generate domestic savings for entrepreneurial
activities [6]. Structural gender inequalities linked to property rights and ownership
women have fewer assets that can serve as collateral.

Instead of introducing a framework to enable women’s access to credit and venture
capital, profit-motivated liberalisation policies have propagated the discrimination
against marginalised and dispossessed women by mainstream financial markets by
aiming at urban areas and more lucrative economic sectors. This excludes poor
women who are concentrated in the informal sector and operate mostly in small and
medium enterprises. The Most Favoured Nation principal merely enforces this.

Women largely go to unregulated sources of venture capital. These are composed of
specialised moneylenders, pawnbrokers, savings and credit associations, and
characterised by the lack of regulation and high interest rates.

Currency devaluation

Currency devaluations have particularly insidious effects on people living on the
economic margins especially women. Typically, women and girls absorb the direct
consequence of price increases attributable to classic societal expectations that
prescribe women as custodians of domestic well-being. This encompasses [7]:
- Extra workloads in waged and unwaged work to outpace appreciating
prices;
- Survival mechanisms to source affordable alternatives (replacing home
produced food for shop bought);
- Transferring consumption rations to family members who earn the most.

The
African Women Leaders in Agriculture and Environment (AWLAE) have
published a case study of the devaluation of the CFA franc in Mali. [8] The
findings assert that since the devaluation, “women are participating in greater
numbers in agricultural production as the number of households threatened
by food insecurity increases.” Women invest more labour into crop cultivation
as an incoming generating venture. This resulted in decreased child care at
domestic level. In addition AWLAE’s research also exposed the irony that
women’s status improved due to their ‘indispensable’ financial contributions
to the household. In contrast men tended to abandon their social, community
and household responsibilities as financial pressures mounted as an inverse
coping strategy.

Capital controls on direct investment

Capital controls (owning physical property) or portfolio investment (investing in the
stock and bond market) are pivotal in preventing speculative investment and
encourage enhanced financial stability. [9] Speculative investment often results in
major economic disturbance swift, substantial changes in money moving into or out
of a country for rapid profit. Investment controls restrict external money flows
enabling countries to pursue social investment priorities such as employment creation
and technology transfer. Free markets proponents argue that liberal capital
movement is more efficient while restrictions discourage investment. The primary
concern of the free market investment environment is that investors may opt to go to
countries with fewer controls.

Case study on capital controls - Asia Crisis

A major catalyst of the Asian financial crisis was the swift capital flight from Thailand,
Indonesia, and Korea, following a drastic increase in speculation. (FDI doubled in
South Korea, Indonesia, Malaysia, Thailand and the Philippines between 1994-1996. [10])

Most of these had inadequate [if any] capital controls having liberalised financial
markets without sufficient regulations. This inadequately protected environment
enabled investors and well-off individuals to effortlessly remove money from banks,
the stock market and certain businesses to more lucrative off shore markets.

Inexorably financial volatility resulting from capital flight plummeted foreign
exchange rates, triggered scores of bankruptcies and momentarily shattered Asian
economies.

This period was characterised by escalating joblessness and prices for essential
commodities. The numbers of people in extreme poverty soared in tandem with the
increasingly desperate economic conditions. For example from 1997-1998,
unemployment in Indonesia tripled, according to the International Labour
Organisation estimates. One immediate coping mechanism was to despatch women
and girls to augment household incomes. Indonesian government figures state that
there was an increase of 2.4million self-employed people and 1.3 million in unpaid
workers (including family businesses like farms). It is not clear how many of new
workers were female. What is well documented is that females are disproportionately over represented in the informal sector and among unpaid family workers. Statistical
data is not yet able quantify the spectacular rise in migrant labour and prostitution
among Indonesian women.

Conclusion

The EPA will undeniably affect individuals, families and communities through their
impact on prices, employment, capital flows, investment conditions and production
structures. Most critics of the EPA agree that these structural changes will have
differentiated consequences on women and men, the wealthiest and the least
wealthy due to their incongruent locations in the economic system. These diverse
positions arise partly from various national contexts and are strengthened by
nuanced social and cultural factors such as gender, ethnicity, class or race.
Furthermore, the New Issues so far resisted at WTO level could make a pernicious
come back through the EPA.

In all this the power and social relations between the South and the North, between
women and men, between girls and boys, between differently abled citizens,
between the economically dispossessed and the wealthy, between people with
different educational attainments and a plethora of other societal textures will be
exacerbated. The experiences of Economic Structural Adjustment Programmes and
the current struggles against the World Trade Organisation provide ample evidence
of this.

The Economic Partnership Agreements have implications for job security, livelihoods,
well-being and human rights. The dangers of liberalisation for women are well
crystallised by the construct of social inclusion. This inherently respects and
acknowledges a sense of human community in which all community interests must be
considered in order for the whole to progress. These bring human rights to life and
remind us that any policy, practise or law that further removes the displaced, further
excludes the marginalised and further impoverishes the most vulnerable- most of
whom are women- must be redrafted, rethought and realigned to promote gender
equity and authentic social transformation.

Footnotes:

[1Fontana, Joekes and Masika, 1998.

[2Pheko, L. , 2005. “Friend or Foe”.

[3Deedat, H. and van der Westhuizen C., 2004. “The socio-economic impact of trade liberalisation and employment loss on women in the South African clothing industry: A Cape Town case study

[4Smith, G., 2001. “Cutting threads: retrenchments and women workers in the Western Cape clothing industry”.

[5Sexton et al. 2004; Williams, 2003a.

[6Randriamaro, Z. 2001s

[7Sparr,P., Gender Primer Of Trade & Investment Policies

[8

[9ibid

[10ibid


 source: IGTN