Free trade takes centre stage at EU-Africa talks

What you need to know:

The world’s poorest countries, 33 of which are African, have until October 2014 to sign EPAs with the EU which include provisions for tariff-free trade. Otherwise the EU will begin to impose tariffs on goods from those countries.
Only four African countries have ratified this agreement. African governments are nervous about the consequences of opening up their markets to EU goods and have been delaying any decision for as long as possible.
EU has opened up its markets for development policy reasons, it wants African nations to open up their markets to EU goods. This would give European firms an edge over competitors from elsewhere.

European Union and African leaders from 80 states met in Brussels for a two-day summit as a deadline for tariff-free trade agreements drew near.

There was talk of boycott by some invited African leaders after Robert Mugabe of Zimbabwe and Jacob Zuma of South Africa said they would not attend.

European diplomats, however, maintained that there was more to the fourth EU-Africa summit than just attendance and appearances.

The summit’s official theme ‘Investing in people, prosperity and peace’ offered a broad scope for speeches and discussions on various subjects but the delegates found the going more unpalatable when addressing the signing of Economic Partnership Agreements (EPA) between the EU and African countries.

“Since the Doha round in the year 2000, the EU has had an offer on the table — approved by the World Trade Organisation — which would give the world’s poorest countries, 33 of which are African, tariff-free access to Europe’s markets,” said Francisco Mari, specialist in trade, agriculture and fisheries at the German development aid organisation Bread for the World.

This would include all countries in which per capita income is less than $500 (Sh43,215) a year. In return, those countries are required to open up their markets to goods from the EU.

The deadline for the deal set by the EU is October 2014. The world’s poorest countries have until that date to sign EPAs with the EU which include provisions for tariff-free trade. Otherwise the EU will begin to impose tariffs on goods from those countries.

So far only four African countries have ratified this agreement. African governments are nervous about the consequences of opening up their markets to EU goods and have been delaying any decision for as long as possible.

READ: Fate of EAC trade deal with Europe in ministers’ hands

“Politically they really need to push EPAs centre-stage,” said Jack Mangala, professor of political science and Africa studies at Grand Valley State University in Michigan, US. “The African heads of state need to be aware of the political consequences of not signing these agreements before the October deadline,” he said.

A new market for Europe’s service industries?

Now that the EU has opened up its markets for development policy reasons, it wants African nations to open up their markets to EU goods. This would give European firms an edge over competitors from elsewhere.

“The Europeans obviously want to sell their plant and machinery and spare parts to Africa. And there would be no tariffs, so they would be a better position than the Americans or the Chinese who would face such levies,” said Mari.

The EU does not want just a free trade zone for goods with Africa, but also for service industries as well such as banks, insurance companies or consultancies.

If tenders were to be invited for the building of a hospital, for example, then companies from all over the EU would be able to bid for the contract. African companies would find it difficult to compete with them.

Even though time is running out, a breakthrough is not expected at this summit, says Alex Vines, the head of the Africa Programme at Chatham House, London, UK. “Africa is divided on this issue,” he said.

The agreement will probably be mentioned in the final communique but the tough negotiating won’t start until after the summit.

Mari believes that Africa will adopt a more self-confident posture at this summit, because it is no longer dependent solely on the EU as a partner in development. China, South Korea and the United States are alternatives.

“If one examines the relative strengths of Africa and the EU, then this is clearly not a level playing field and won’t be for some time,” said Mangala. “But that is at least the objective — to transform the relationship between donor and recipient into one of partnership rooted in equality. We haven’t got there yet,” he said.

The EU and its 28 member states are the largest donors of development assistance to Africa, spending over 18.5 billion euros in 2012 alone.