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Trade agreements: How African states are resisting pressure from the North but not managing to assert their priorities

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Equal Times | 4 June 2024

Trade agreements: How African states are resisting pressure from the North but not managing to assert their priorities

By Julie Chaudier

On 29 February 2024, Members of the European Parliament voted in favour of the EU-Kenya Economic Partnership Agreement (EPA). Presented as a great success by the European Commission, after 20 years of negotiations, it has, by contrast, provoked great anger within the East African Community.

Like Kenya, African countries are regularly offered Free Trade Agreements (FTAs) by the world’s major economic powers. The balance of power is so unequal that they seem forever condemned to be the big losers. Recent history has nonetheless shown us that there is some scope for resisting European and US entryism, at a time when the only place where African countries are still able to defend their trade interests, the WTO, is in the process of disappearing, and the efforts to move forward with the African Continental Free Trade Area (AfCFTA), in which so much hope is placed, are being undermined by US and European FTAs.

Since 2000, the United States, through the African Growth and Opportunity Act (Agoa), has had a Generalised System of Preferences (GSP) specifically dedicated to African states, in accordance with the rules established by the WTO, which allow developed countries to offer zero customs duties to the least developed countries (LDCs), based on the principle of equity. This system has, however, been abused, with conditionality being used by the United States as an instrument of power and pressure – economic and diplomatic – on African countries. Every year, the US unilaterally reassesses which countries are or are no longer entitled to preferential access to its market.

In addition to coups d’état or human rights violations, damaging the interests of the United States leads to removal from the list of Agoa beneficiary states. In July 2018, for example, former US president Donald Trump suspended Rwanda following the East African Community’s decision to ban the entry of second-hand clothing, mainly imported from the United States, which was suffocating the local textile sector. In January 2022, Ethiopia was excluded from Agoa based on human rights violations, in the context of the civil war in the Tigray region. According to Ethiopia’s former chief trade negotiator, Mamo Mihretu, under Agoa, Ethiopia’s exports had risen from US$28 million to US$300 million between 2000 and 2020. The country’s exclusion led to around 100,000 job losses, mostly in textile factories in the south of the country, employing women workers who were in no way connected with the conflict in the north.

Going a step further, the United States has also begun calling on African countries to conclude Trade and Investment Framework Agreements (TIFAs) with it. These agreements, which provide a framework for trade relations and facilitate US investment in Africa, are “seen as a springboard for moving towards the negotiation of FTAs”, explains Paul Ryberg, a lawyer and president of the African Coalition for Trade and an advocate of Africa’s private export sector.

Already signed with eight countries and three sub-regional communities, the TIFAs are viewed with concern by Harrison Mbori, a Kenyan researcher at the Max Plank Institute in Luxembourg, specialising in international law and Africa:

“The history of African relations and investment governance with the North is far more disadvantageous than in the case of trade. The current international investment law regime already strongly protects and promotes the interests of the capital-exporting countries.”

If TIFAs are seen as a threat to African interests, why sign them? As Harisson Mbori explains, “Northern countries generally use subtle threats and incentives to secure concessions. For ACP [African Caribbean Pacific] countries, the sovereign debt burden is one, human rights governance is another, more recent one. So the negotiating table is not at all fair and equitable.”

Like the United States, the European Union has been promoting its trade interests by signing EPAs with ACP countries since 2002, using every argument in its power to secure them. Firstly, it maintained that EPAs were the only way for ACP countries to retain duty-free access to the EU market, while complying with WTO rules. On this basis, the European Union managed to threaten all of Africa’s developing countries with the withdrawal of their preferential access to its market if they did not agree to sign an EPA, instead of trying to negotiate a waiver with the WTO, as it had done with Moldova, on the grounds of its poor competitiveness.

Then, it went on to brandish the promise that African governments would receive assistance to boost the competitiveness of their businesses and improve their tax systems so as to shift the loss of revenue from customs duties to domestic businesses in the form of taxes. Between 2014 and 2019, the EU thus pledged €6.5 billion under the Economic Partnership Agreement Development Programme (EPADP) for developing countries in West Africa, as part of the EPA between the EU and West Africa (ECOWAS and WAEMU). But according to experts, it was just old aid repackaged under a new name.

International aid, even if the African states themselves are keen to receive it, tends to make them lose sight of their basic interests. At the WTO, in the 2000s, Nicolas Imboden, a Swiss consultant in international trade for developing countries, accompanied certain ACP countries in their negotiations on cotton subsidised by developed countries, such as the United States, which were unfairly competing with their own cotton production. “The Africans defended themselves very well in the negotiations until the United States, the Europeans and China started offering financial aid. I said to them: ‘Refuse! These are poisoned gifts dependent on their goodwill, whereas the cotton trade is sustainable and the benefits will go directly to your farmers.’ Unfortunately, many have allowed themselves to be lulled, corrupted by the prospect of aid. Even Burkina Faso abandoned its demands when the United States offered it membership of Agoa,” said the consultant.

Despite its forceful arguments, the European Union has nevertheless taken between five and 20 years to painstakingly sign EPAs with just two regions of the African continent and four states in the other regions. Africa’s Least Developed Countries (LDCs) have all chosen to keep the European GSP, regulated by the WTO and offered by the EU, which they remain eligible for based on their low level of development. It’s quite a poor result for the EU, considering the efforts it has made.

Some African countries that are classified as DCs and therefore denied GSP by the EU have refused to sign EPAs, despite the threats and the offers of European aid, as they feel they have more to lose than to gain. Nigeria, for instance, rich in oil and gas, has chosen to protect its fledgling industry from European exports.

The negotiations were painstaking for countries that decided to sign an EPA to safeguard their exports to the EU, such as Ghana, Côte d’Ivoire and Cameroon. In his article The Economic Partnership Agreement between the European Union and West Africa. Lessons from a negotiation, Salif Koné, a senior civil servant in Côte d’Ivoire, explains: “The EU considerably modified its position [during the negotiations. (…) These changes can be seen] above all in the numerous special safeguard provisions contained in the final text of the agreement, particularly with regard to agricultural and industrial production in West Africa.” West Africa thus managed to secure special protection for some of its sectors against competition from European products in the text of the EPA.

The European Union deals with the Maghreb separately from the rest of Africa, as part of its neighbourhood policy. Morocco and Tunisia had already signed FTAs with the EU, so in 2013 the EU asked the two countries to sign Deep and Comprehensive Free Trade Agreements (DCFTAs), which are designed to cover many more aspects of economic life and, more specifically, to lead the two countries to adopt the “acquis communautaire”, in other words, the entire body of laws and regulations adopted by the EU since its inception.

In Morocco, in May 2015, Nizar Baraka, then president of the Moroccan Economic, Social and Environmental Council, warned: “Caution will be needed in the choice of directives we might want to transpose, because the acquis communautaire is a way of thinking, a set of values, and we need to make sure that they are in line with the new constitution [of 2011], and with our national values.” At that point, negotiations had been suspended for a year and remain so to this day.

At the same time, Jamal Belharach, chairman of the social committee of the Moroccan employers’ association (CGEM), insisted: “We don’t want European rigidity in Morocco, we don’t want to see our comparative advantage undermined by convergence.” In other words, Moroccan employers do not want more protective standards for employees or public health, for example, which they see as restricting the freedom and profitability of businesses. There is also opposition to the prospect of prescriptive regulatory injunctions that would be totally unsuited to the reality and needs of the Moroccan economy, particularly given that 60 per cent of employment in the country is still informal. In Tunisia, the negotiations have been suspended for the same reasons.

Between the resistance to the EPAs and the suspension of the FTAA negotiations, the ability of African states to define and defend their interests is clear, despite the fact that the balance of power is heavily weighted in favour of the EU. But even when these agreements are relatively well negotiated, their framework is still determined by the United States and the EU: they are the ones taking the initiative, while Africa is limited to taking a defensive stance.

“The EPAs are the EU’s concern, but that’s not what the African states need, and yet it’s becoming a problem for them,” says Marc Maes, a Belgian lawyer responsible for trade policy at 11.11.11, a Flemish coalition for international solidarity.

For Harisson Mbori, “Africa’s problem is not market access, but diversifying its economies and acquiring the industrial capacity to produce high value-added products.”

And, as Marc Maes points out, African states, like many developing countries, “would rather see discussions on issues such as the regulation of large fishing vessels operated by the major maritime powers, which are depleting the oceans and preventing small-scale coastal fishing from ensuring the survival of African fishers. The problem is that this issue has to be settled multilaterally.”

Yet, the weakening of the guarantor of multilateralism – the World Trade Organisation (WTO) – is reducing the capacity of African states to defend their interests. Even though it was founded to promote free trade, and despite the means used by developed countries to exclude developing countries from discussions, the WTO used to be the best place for countries such as African states to defend their economic and commercial interests, because the debates had to involve all the member states and the decisions were taken unanimously. At the WTO, developing countries used to be able to resist pressure from the rich countries, but in 2017, in response to the deadlock, the wealthy countries launched a series of plurilateral negotiations within the WTO itself, between rich countries, and from which African countries are excluded.

So what can they do to assert their priorities when dealing with global powers? The African Union has opted for the creation of the African Continental Free Trade Area (AfCFTA). “The AfCFTA should be used to increase intra-regional trade with a view to building an industrial fabric within a framework of relatively flexible non-tariff barriers,” says Kwami Ossadzifo Wonyra, a lecturer and researcher at the University of Kara in Togo, specialising in international trade law and policy. The AfCFTA, signed in 2018, could lead to the creation of one of the largest free trade areas in the world, with 1.3 billion consumers and a combined GDP of over US$3,400 billion.

Such a market would give Africa as a whole considerable weight in negotiations, that is, if the EU and the United States had not already signed EPAs and TIFAs with a member country in each African sub-region.

“We are in a situation where the AfCFTA is seeking to establish itself as a single market but the EU [and the United States, editor’s note] already has a foothold everywhere,” says Marc Maes. “When Trump was battling to secure the signature of the TTIP, he said he was going to give up and sign an FTA with Germany alone, instead. This made everyone laugh, because with the single market, everything that enters Germany has access to all the other EU countries. But this is precisely what’s happening in Africa.”

 source: Equal Times