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by Shannon Field

The European Union is turning away from multilateral agreements, seeking instead to negotiate economic partnership agreements with individual African countries, or small groups of countries.

The following article argues that this amounts to a new form of 'divide and rule', concealing a desire to exploit local markets.

The scramble for Africa has shifted from a race for human and mineral resources to one for markets. The European Union and the United States now find themselves competing for market share in Africa, exploiting open markets on the continent in any way they can.

The commitment to multilateral trade negotiations has largely given way to divide-and-rule tactics in terms of which trade agreements are sought at the bilateral or regional level, thus preventing poorer countries from negotiating as a bloc - often their only source of political strength.

These tactics proved their utility during colonial times, as the colonial powers manipulated relationships and the balance of power in order to ensure that their interests were served.

It seems as if major developed powers are succeeding with the same strategy today, ensuring that countries with weak bargaining power will be forced to make greater concessions in negotiations in which the stronger power (often the donor) makes demands of the weaker (the recipient).

The United States has probably been the most forthright in pronouncing its intentions in pursuit of its trading objectives. After the collapse of the fifth World Trade Organisation (WTO) ministerial in Cancun, the US Trade Representative Robert Zoellick stated: 'The US has an agenda on multiple fronts.

We are going to keep opening markets one way or another.' The US believes it will more easily achieve its objectives bilaterally, rather than via the 'unruly' multilateral system.

While the EU initially confirmed its commitment to the multilateral system, it has similarly pursued a policy to maximise its gains via whichever forum serves its purposes - hence its push to conclude economic partnership agreements (EPAs) with individual nations or regions on the basis of the Cotonou agreement.

This will enable it to gain concessions it could not secure at Cancun. EPAs are reciprocal free trade arrangements between the EU and an Africa-Caribbean-Pacific (ACP) country, or group of countries. They seek to remove barriers to trade between the EU and the ACP, and typically include WTO-compatible free trade arrangements.

Given their inadequate public utilities, poor public infrastructure, and poor productivity, developing countries in Africa are poorly placed for free trade with an economic giant such as the EU.

Should manufacturers in developing countries be exposed to increased competition from EU-based industries, they will find themselves disadvantaged by their lack of economies of scale, and poorer access to the latest technologies.

EPAs would have particularly negative effects on the Southern African Development Community (SADC) economies by increasing job losses, accelerating deindustrialisation, and suffocating the small to medium-scale enterprises that form the backbone of those economies.

Developing countries are aware of the potential impact of EPAs on their economies, and have learnt the lesson of Cancun - that, as a bloc, the developing world had the power to resist the demands of developed countries.

As a result, ACP countries called for a binding agreement with the EU on common principles before regional negotiations could begin. No binding outcome emerged from the first round of ACP-EU negotiations, however, and regional negotiations have started.

The EU will probably insist that regions open up 90% of trade over 12 years. Under Cotonou, however, the ACP should be able to decide to open up more slowly, and to exclude sensitive sectors. Free trade could drive African producers out of national and regional markets as EU goods, made cheaper by Common Agricultural Policy (CAP) subsidies, flood local markets.

The ACP would like tariff reductions to be linked to the attainment of development goals, but the EU has so far refused. SADC in particular has pushed for greater support in respect of human development, debt servicing, poverty, and shifts in commodity dependence.

The EU would like to see services negotiated in all sectors by 2006 at the latest, but many argue that the ACP countries should be allowed to preclude liberalisation in important public sectors such as health, education, and service provision.

While, on the one hand, developing countries are calling for funds to support ACP service sector development, the EU continues to maintain that such assistance is not necessary.

Similarly, ACP countries have recommended that processing, marketing, distribution, and transport programmes should be in place before free trade is phased in, but the EU claims that these things can be done after the EPAs have been set in motion.

A region such as SADC will find it very difficult to implement a free trade agreement (FTA) while its trade policies remain as disjointed, and markets and economies as poorly integrated, as they currently are. SADC cannot negotiate an FTA unless it is a customs union, and it is only expected to become a free trade area in 2008.

SADC countries currently participate in three sub-regional trading arrangements: the Southern Africa Customs Union (SACU), the Community of Eastern and Southern Africa (COMESA), and SADC.

South Africa has already concluded a free trade agreement with the EU, and, given their membership of SACU, Botswana, Lesotho, Namibia and Swaziland are de facto linked to it as well.

However, other SADC member states should form alliances with other regional partners for jointly negotiating an EPA. SADC itself does not have a mandate to negotiate such an agreement, and lacks the capacity to do so effectively.

In any future negotiation of an EPA, southern African countries will need to be wary of EU attempts to force the inclusion of the so-called 'Singapore issues'. The EU's emphasis at Cancun on these issues (investment, competition policy, trade facilitation, and public procurement) contributed to the breakdown of that meeting. In particular, the EU can be expected to press for transparent public procurement.

However, the liberalisation of procurement could undermine the rights of individual countries to determine domestic economic priorities; developing countries may be forced to advertise tenders throughout the EU, and may not be able to prioritise local companies for domestic contracts.

This will allow European companies to squeeze out local firms. Discrimination between foreign and domestic firms is one of the tools of industrial policy in many developing countries.

Developing countries should also be able to limit foreign ownership, require local employment, and insist on joint ventures. Investment liberalisation is a product, not a cause, of development, and should only be sought once a country reaches a certain level of competitiveness. Countries in the North did not liberalise their investment regimes until their economies were fairly advanced.

The question remains, why should this be expected of African countries while they are still dealing with the challenges of reducing poverty, and finding paths to sustainable development?

There seem to be no areas in which the commitments the EU is pressing for in the EPA negotiations are in the best interests of developing countries in Africa. Both policy-makers and civil society need to realise that this is a new battleground, where the capacity to negotiate really counts.

- Third World Network Features

www.ceylincoproperties.com

www.Pathmaconstruction.com

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