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Is Africa for sale?


The Namibian | Windhoek | 20 February 2004

Cons Karamata

This Sunday, trade representatives from member states of the Southern African Customs Union (SACU) will meet their counterparts from the United States in Walvis Bay, to resume negotiations for a bilateral Free Trade Agreement, expected to be concluded by the end of this year.

Elsewhere, the African, Caribbean and Pacific group of countries have entered into the second phase of negotiations for Free Trade Agreements with the European Union (EU), euphemistically dubbed the Economic Partnership Agreements.

These developments follow shortly after the collapse of the trade negotiations at the World Trade Organisation (WTO) last September in Cancun, Mexico.

Since the Cancun debacle, both the US and the EU have vowed to shift their emphasis away from multilateral trade negotiations towards bilateral negotiations through which they can exercise more economic and political leverage over developing countries.

The South African-European Union FTA, which was concluded in 1999, and the SACU-US agreement currently under negotiation are likely to serve as models for future FTAs with other African regions.

Both the US and EU seem to follow a strategy of establishing FTAs wherever possible, using them to gain concessions beyond those covered by the WTO, while at the same time setting precedents that will push WTO policy further in the direction of rapid trade liberalisation.

Lobbied by powerful, profit-driven transnational corporations, the US-EU trade officials will seek to coerce African countries to open up their (African) markets, while holding on to protectionist measures in their domestic economies.

Given the asymmetric power relations in the donor-recipient relationship between industrial and developing countries, and without the unity among the latter that led to the deadlock in Cancun, Africa has little to win but everything to lose in these negotiations.

Among the issues on the US agenda for the upcoming negotiations are market access for US exports, as well as liberalisation of investment rules, trade in services, government procurement and trade-related intellectual property rights.

’Investment’ and ’government procurement’ are two of the ’new issues’ on which developing countries refused to start negotiations at the WTO.

Not only would negotiations on these issues put immense pressure on resource-constrained developing countries but they all hold severe implications for the development processes in poor countries.

African analysts are concerned that under current US-EU proposals FTAs with industrial countries will result in the following:

* The collapse of local manufacturing ventures as a result of competition from cheap subsidised US-EU products, leading to increased unemployment and a regression in industrialisation efforts on the continent.

Dumping of cheap US-EU agricultural surpluses will threaten agriculture and agri-processing industries as well as food security and the livelihoods of poor farmers.

* Significant declines in government revenue as a result of the elimination of import taxes on US-EU products.

This will result in less spending on social services and human development and probably also in higher tax burdens for citizens in order for governments to make up for lost revenues.

* Strong protection for investors that would restrict the ability of governments to regulate investment, giving leeway to transnational corporatios to trample on workers’ rights and environmental regulations.

* Opening up of government tenders to US-EU competition: local companies that derive their income from government contracts will have to compete with transnational corporations for government tenders.

Corporation profits will be repatriated as a result of "investment protection" agreements.

* Intellectual property provisions that block access to affordable medicines and undermine public health, i.e. the ability of governments to combat diseases such as HIV-AIDS.

* Transnationl corporations taking over the provision of basic social services as a result of selling off essential public services to foreign companies under privatisation arrangements: the provision of health, education and other basic social services to low-income groups will be threatened, resulting in increased poverty and social decay.

* Declines in inter-regional trade due to "trade diversion": countries in the region will lose markets among their neighbours.

Instead of regional co-operation, there will be increased competition among countries of the region to attract ’investment’ from the US-EU at ever-increasing costs to the host country.

The above analysis shows that entering into FTAs with advanced industrial nations will not only be detrimental to current development efforts on the continent but will also have a retrogressive effect on socio-economic achievements in post-colonial Africa.

The erosion of domestic production capacity, the destruction of jobs, increased poverty and social decay cannot prepare the continent for a better future.

Indeed, by entering into agreements that will drastically curtail space available for independent policy formulation and hence the capacity of government to intervene in their own economies, Africans will effectively collaborate in perpetuating a process of dispossession set in motion by colonialism and, in fact, retreat towards ’unfreedom’.

The ’voluntary’ surrender of sovereign governance powers, achieved through the long struggle for decolonisation waged with the transnationals will further subjugate the continent to the worldwide dominance of international capital, and is likely to render African governments operationally impotent.

What then can be done? Further trade liberalisation vis-a-vis industrial countries has never been part of any African development agenda.

African thinkers have been putting more emphasis on an internal path of development.

Instead of engaging in contra-developmental processes, African countries need to use their scarce resources to promote and strengthen current regional and continental integration efforts.

Available human and financial resources must be utilised to iron out the structural and organisational impediments to a rapid regional economic integration.

Rather than surrendering sovereignty to international capital, African governments need the political will to relinquish a degree of autonomy to regional integration bodies (e.g. SADC, Comesa and Ecowas).

Moreover, the continent will have to identify and pursue mutually beneficial areas of South-South co-operation (e.g. mutually beneficial trade, investment and communications links) while, together with other developing countries, persistently working towards the long overdue reform of the skewed multilateral trade system.

Greater collaboration among regional institutions of the global South (for example, ASEAN, SADC, Mercosur, Caricom etc.), especially in research, sharing of information and policy co-ordination, will improve the position of developing countries in their efforts to strengthen the UN system, democratise international institutions and work towards fair and mutually beneficial global trade relations.

Cons Karamata is a researcher with the Labour Resource and Research Institute (LaRRI).

P.O. Box 62423
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Windhoek, Namibia
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 source: Is Africa for sale?