African countries stand to gain from EPAs

by Eugene Jernigan*

African Heads of State and trade ministers face the difficult task of deciding whether to sign the controversial Economic Partnerships Agreements (EPAs) or not as the December 31 deadline gets closer.

On the surface, Africa stands to lose in the new trade deals, but on closer examination, the continent will benefit greatly.

African countries fear that the EU will not open its markets. However, it should be remembered that the African, Caribbean and Pacific (ACP) countries already have access to them for up to 97 per cent of their products under the current trade arrangement. But the EU supplies very little to the ACP markets.

The EPAs are poised to integrate Africa into the world economy and increase trade with other world trading blocs. There will certainly be increased efficiency in the public and private sectors as well as the diversification and mass production of goods of quality due to competition.

Currently, trade between African countries and other economic blocs is greater than intra-African trade. African countries hardly trade among themselves due to protectionism and other barriers. According to the 2006 UNCTAD report on investment, sub-Saharan Africa is lagging far behind the rest of the developing world due to barriers to investment, nationalised industrial fiefdoms, fractured regional markets and a huge tariffs trap.

But the African regional blocs are negotiating individually with the EU, and this will make it difficult for the countries to come up with any tangible results conducive to greater economic growth on the continent. For example, Tanzania is negotiating for better terms of trade under the Southern Africa Development Cooperation (SADC) and Kenya under the Economic Commission for Africa.

The EPAs process is facilitated and funded mainly by the EU, making it difficult for African leaders to articulate their desires.

Most industries in Africa are still young and are mainly involved in extraction and are therefore labour-intensive. There is lack of technology for processing, so the finished products are of poor quality and face stiff competition in the world markets. Besides, the EU standards are quite high, and despite 30 years of bilateral trade with Europe, ACP still exports just basic commodities that fetch low prices.

Economic integrations are known to open up countries for better trade and hence greater yields and huge markets for their products. This translates into higher foreign direct investment as well as better opportunities and governance, higher standards of living and informed societies.

African countries are poised to increase their revenue as much as the other economic blocs. There will be more expansion of industries and markets, and this will improve economic growth and create employment.

The EPAs will also encourage African countries to diversify trade to include manufactured exports and services.

*Nairobi resident

The Standard