Africa: European Union Economic Partnership Agreements

Lord Chidgey Excerpts

Thursday 17th November 2016 Lords Chamber

Asked by

[Lord Chidgey]

To ask Her Majesty’s Government what is their assessment of the impact of Economic Partnership Agreements negotiated between the European Commission and economic regions of Africa on the agricultural economies of the African countries concerned.

[Lord Chidgey (LD)]

My Lords, the events leading to the development of the economic partnership agreements—the EPAs—go back to the 1960s, with the signing of a series of co-operation agreements to give ACP exports preferential access to European markets as part of a broader development strategy. These had to be replaced by a GATT-compatible trading system by the end of 2007, and the Cotonou agreement provided for the EU to open negotiations with six regional groups, four being in Africa, with the objective of agreeing a series of economic partnership agreements before the end of 2007. That may have been the grand plan but, while all the African regional agreements have been made and provisionally applied, as of October 2016 the ratification process for individual countries was still ongoing.

In 2014, the EU Directorate-General for External Policies reported that the EPAs, while supposedly intended to promote trade and development, regional integration, sustainable growth and poverty reduction, remained deeply controversial. He said:

“There are fears they may be actually undermining the sustainable and long-term development of ACP countries and their regional integration processes”.

This was underlined by Dr Carlos Lopes, UN Under-Secretary-General and executive secretary of the Economic Commission for Africa, at meetings in Addis Ababa and London, and by a recent fact-finding delegation to South Africa and Namibia by the Africa APPG, of which I am a co-chair.

The EPA negotiations continued to drag on and the EU allegedly began to bully African countries by deciding to remove unilateral trade preferences by 1 October 2014 for countries that had not signed or ratified the EPAs. This created tremendous pressure and tension in various countries and regions. Meetings at a Finance Ministers’ conference in Addis Ababa, with Ministers from Namibia, Tanzania and Uganda, confirmed that African countries were—and some still are—caught in a dilemma of losing preferential market access for the few products they export to the EU if they did not sign the EPAs versus losing long-term development prospects. Many countries were threatened with significant tariff revenue losses, serious disruption of existing or planned customs unions, disruption of regional trade and regional production capacities, and unemployment.

The directorate-general’s study concluded that major changes would be needed before the EPAs could be a development model suitable for Africa. The EPAs called for sweeping liberation of African markets, and that was seen as reminiscent of the discredited World Bank and IMF neoliberal structural adjustment programmes that were so destructive in the 1980s.

Under the EPAs, to maintain duty-free access to Europe, African countries had to remove tariffs from at least 80% of imports from the EU—in some cases removing trade barriers from as much as 96% of imports. This left local producers and manufacturers with no buffer against cheaper and often subsidised European economies during their industrialisation process.

Despite misgivings from African policymakers, the EU Trade Commissioner resolved to force through as many EPAs as possible before the Africa-EU summit in April 2014. A sustainability impact assessment, however, begun in late 2002 by PricewaterhouseCoopers and completed in 2006, produced a series of conclusions and recommendations to help ensure that EPAs promoted development and supported economic, social and environmental sustainability. In particular, it was recommended that all ACP countries should retain duty-free and quota-free access to the EU market and that access to the EU should be improved for the few products not yet fully liberalised.

In 2015, Sir Ronald Sanders, the ambassador of Antigua and Barbuda to the USA, and formerly to the EU, presented a paper to an EU ECOWAS conference in Abuja assessing EPAs in the context of the African Union. He emphasised that an EPA is not an agreement between the 28 nations of the EU collectively and Africa as a whole but a legally binding bilateral contract between the 28 nations of the EU collective1y and each country in Africa individually. In the event of a dispute arising from the terms of the EPA, individual African countries, most with very scarce resources, would have to contest against the combined capability of the 28 nation states of the EU collectively. The inequality that arises in any dispute is stark, and any mechanism for dispute resolution would have little value.

That brings me to the key question: do EPAs allow Africa to conduct policies for its own development or for the development of Europe? African countries should be able to ensure that the EU provides sufficient aid and trade development assistance to implement these agreements with robust monitoring procedures for their delivery and effectiveness.

It is not surprising that the European Commission has recognised that the moves to set up the series of regional EPAs have faltered. A senior European ambassador to the EU reported as recently as last month that the EPA negotiations started late and were prolonged, controversial and marked by ill feeling. Bitter accusations were made by some ACP negotiators and European development organisations about the objectives and negotiating style of the EU.

They alleged that the EU used the negotiations to pursue its commercial advantages, which in some cases conflicted with the development strategies of the ACP countries. They alleged that the EU put ACP countries under heavy pressure to accept negotiations on a much wider agenda, such as trade in services, public procurement and competition policy—the so-called Singapore issues. They alleged that the EU’s approach did not take sufficiently into consideration the regional integration objective, and in some cases even threatened it. EU negotiators were accused of using divide-and-rule tactics and being more concerned with big company interests than with the needs of their EPA partners. Their style was overaggressive, putting ACP countries under heavy pressure to sign up to EPAs before the 2007 deadline, preventing consultation with their parliaments and stakeholders because of the time constraints.

At present, there is little, if any, consideration of civil society and the role of parliaments in the EU-SADC EPA. That is incomprehensible given the increased political importance of the trade agreements in Europe. That brings me to my final point: Brexit and its implications for the ACP EPAs. The UK is currently a major contributor to the EC trade and development fund. If the UK leaves the EU, the market access provision will no longer apply to the UK. In the absence of any specific action to establish alternative trade regimes, the UK could have no alternative but to impose the most favoured nation—or MFN—duties on imports from ACP countries. This will have the greatest impact on agro-food products, since this is the sphere in which the UK’s inherited EU MFN duties are likely to be highest.

The prospect of establishing new trade agreements with the UK is, of course, hampered by the fact that the UK cannot enter into any new trade deal agreements until it leaves the EU. The ACP countries therefore face the prospect of being at the back of a long queue of countries trying to conclude alternative trade agreements with the UK, while facing crippling most favoured nation duties on exports to the UK, on a daily basis.

Perhaps the challenge is for the UK initially to prioritise its future conduct of bilateral negotiations. Will the Minister agree that that could allow the internalisation of ACP concerns within these policy discussions? Will the Minister also agree that every opportunity must be taken to allow current market access arrangements to continue from day one of the UK’s departure from the EU? Does the Minister accept that part of the plan should be to engage through an alliance of the Commonwealth ACP countries, since within the UK body politic, the ACP as a group tends to be seen as an EU construct? This would suggest that there will be a crucial role for Commonwealth ACP high commissioners to the Court of St James. For example, exploiting opportunities presented in a range of UK parliamentary hearings and inquiries in hand into the impact of Brexit on the UK’s external relations could prove highly effective.