The October deadline for African countries to conclude their Economic Partnership Agreements (EPAs) with the EU took centre stage at a meeting of African Union (AU) trade ministers last week in Addis Ababa, Ethiopia, with countries remaining divided over the path forward. Officials also discussed Africa’s role in the WTO’s post-Bali process, while reviewing the hoped-for renewal of the US’ African Growth and Opportunity Act and preparations for a future Continental Free Trade Area.
Several African trade ministers openly sided with Nigeria against the planned EPAs, despite recent progress made by some regional blocs towards finalising these trade pacts.
“We must not sign an agreement without first of all carrying out a robust economic analysis of the overall impact the agreement will have on the region, our children and future generations,” reiterated Nigerian trade minister Olesugun Aganga. Ministers from Zambia and Niger agreed, urging fellow African countries to deepen their intra-regional trade through value addition of raw materials.
AU Trade Commissioner Fatima Haram Acyl agreed noting the potential challenges they pose for Africa’s structural transformation. “As far as Europe continues to insist on the present model of EPA… Africa should not agree,” she declared. “Should the negotiations continue along the same vein, Africa should consider EPA alternatives – such as deepening intra-African trade ties and pushing for alternative arrangements with Brussels, such as the EU Generalised System of Preferences (GSP).”
Some experts say that the EU GSP is not a genuine alternative to EPAs as it only addresses market access issues, without other development components. The reciprocity required under EPAs, meanwhile, is likely to pose challenges for African countries.
The AU Commission and UN Economic Commission for Africa are both analysing the impact that the 1 October withdrawal of preferential access to the European market would have on Africa. They will also consider alternative solutions to avoid trade disruptions, should the deadline not be extended.
Nigeria argues that the current market access structure – market opening of 75% over the next 20 years, with 90% of products to be liberalised during the first 15 years – would significantly hamper its economy. It has instead requested a reclassification of 181 tariff lines in other categories of the offer, which some warn could dismantle the current ECOWAS compromise.
The WTO Trade Facilitation deal will be open for ratification by WTO members from 31 July 2014 to the same date next year. Ministers have mandated the AU Commission to send a new request to WTO Director-General Roberto Azevêdo to help mobilise financial resources for implementing the WTO Trade Facilitation Deal’s new requirements, once these enter into force.
WTO members are in the process of developing a work programme aimed at resolving the remaining issues of the Doha Round and have been given until the end of 2014 to establish such a plan.
Ministers also discussed the need for extending the US’ African Growth and Opportunity Act (AGOA) for the next 15 years, while continuing to consolidate regional integration. The US legislation is set to expire in September 2015, and currently provides about 6500 African products with preferential quota and duty-free access to its markets.
The Obama Administration has already committed to pursuing a “seamless” AGOA renewal, while stressing that it wants to review the scheme. Washington has indicated that it will drill down into the thousands of duty-free tariff lines to determine if some sectors or countries should gradually be eased out of the programme as they become more competitive.
Continental Free Trade Area
Trade ministers also highlighted the importance of improving regional integration in order to ensure the continent’s structural transformation and development.
Efforts towards establishing the CFTA by 2017 have already shown some progress. The proposed CFTA is a key component of the AU’s strategy to boost trade within the region by at least 25-30 percent in the next decade.
Intra-African trade currently represents 12% of Africa’s trade with the rest of the world, compared to 60% for Europe, 40% for North America, and 30% for the Association of Southeast Asian Nations (ASEAN), according to WTO data.
Some African countries have cited the uncertainties involved in the current multilateral and bilateral trade negotiations as an additional incentive to maintain the momentum towards establishing a CFTA. For example, the end of the EU’s quotas on African sugar exports in 2017 and falling world prices will likely force African producers to focus on maximising regional trade.
This piece is a shortened version of an article that appeared in Bridges Weekly on 8th May 2014 – read the original here
The October deadline for African countries to conclude their Economic Partnership Agreements (EPAs) with the EU took centre stage at a meeting of African Union trade ministers last week in Addis Ababa, Ethiopia, with countries remaining divided over the path forward. Officials also discussed Africa’s role in the WTO’s post-Bali process, while reviewing the hoped-for renewal of the US’ African Growth and Opportunity Act and preparations for a future Continental Free Trade Area.