28 Nov 2014

Is the EU-Africa Free Trade Agreement Inimical to Africa’s Economy?

By Emmanuel Iruobe

In recent times, there has been some ‘back and forth’ argument over the legality and long term usefulness of the Economic Partnership Agreement (EPA) between the European Union (EU) and several African states, according to the United Nations Economic Commission for Africa (UNECA).

The EPA encourages African countries to open up to 83 percent of their markets to European imports while tariffs and fees are planned to be gradually eliminated. In exchange for this, African states are to receive customs-free access to the European market. While there may be some economic sense here, a number of African countries are not in support of the arrangement, the major concern being that they may lose their competitive trade advantage to European companies.

Kenya was among the countries that refused to sign the deal, and it got significant import tariffs imposed on many of its products for that reason; this reportedly led to numerous layoffs in several African firms. Eventually the East African country caved in to the pressure two weeks ago and signed the trade agreement. This, in the opinion of a growing number of people, might just be called “economic bullying.”

Notable EU officials have criticized this arrangement. One of such is German Chancellor Angela Merkel’s Africa Commissioner, Günter Nooke, who claims the EPA counteracts Europe’s development policy efforts. “Economic negotiations should not destroy what has been built up on the other side in the Development Ministry. Germany and Europe contribute large sums of tax money toward various development programmes in Africa, but the economic agreement with African states cancels out these efforts,” he said.

Andrew Mold, UN Economic Analyst for East Africa, believes the African economy will eventually be threatened by the agreement.

“The African countries cannot compete with an economy like Germany’s. As a result, free trade and EU imports endanger existing industries, and future industries do not even materialize because they are exposed to competition from the EU,” he commented.

On the other side of the divide, there are supporters of the deal. One of such is Michael Gahler, a Member of the European Parliament (MEP), who believes the deal offers African countries the chance to strengthen their own markets while also creating flexible mechanisms, as African governments are not compelled to implement precise requirements until after two decades.

“Kenya should use this time to do its homework by building up its infrastructure, strengthening the rule of law and fighting corruption. We Europeans have experienced, first-hand, how much prosperity is brought on by the free movement of goods. We want to help African regions take similar steps,” he concluded.

Understanding that the World Trade Organization (WTO) had declared this kind of “one-sided market opening” unlawful in 2000, another MEP, Sha Keller declared “We are pointing a gun at their chest!”

“Developing countries have a gun pointed at their chest – either they sign or their market access to the EU is restricted, the EPA is the opposite of development cooperation,” Keller added.

Can African governments continue to hold up under such economic pressure from Europe? What will be the final outcome of this deal if successfully implemented? These are the sort of questions expected to be on the minds of many Africans as the drama unfolds.

Emmanuel Iruobe (@EmmanuelIruobe) is Freelance Writer at Ventures Publishing International

This post first appeared on Ventures Africa 

The views represented here are those of the author and not necessarily those of ECDPM


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