Statement to the COMESA Summit on the ESA-EC Economic Partnership Agreements Negotiations

SOUTHERN AND EASTERN AFRICAN TRADE, INFORMATION AND NEGOTIATIONS INSTITUTE

 
Strengthening Africa in World Trade

Statement to the COMESA Summit on the ESA-EC Economic Partnership Agreements Negotiations

Monday 1 June 2009

1. The Common Market for Eastern and Southern Africa (COMESA) is holding its Policy Organs meetings and the 13th Summit of Heads of State and Government in the resort town of Victoria Falls, Zimbabwe from the 28th May to 8th June 2009 under the theme Consolidating Regional Economic Integration through Value Addition, Trade and Food Security.

2. From the 2nd - 4th June 2009 the Council of Ministers will be meeting to deliberate on a number of issues affecting the COMESA region, including the current negotiations with the European Union (officially known as the European Community) on concluding Economic Partnership Agreements (EPAs).

We recall that:

3. The Eastern and Southern Africa Group (ESA) and the European Community (EC) senior officials met in Brussels on 28 April 2009 under the co-chairmanship of H.E Ambassadors S Gunessee and N. Wahab on ESA side as well as P. Thompson, Director, DG Trade on EC side. In their conclusions on the Interim EPAs initialled towards the end of 2007, the officials noted that:

On signature of interim EPA, EC confirmed that provided that an agreement is reached on translation, the interim Economic Partnership Agreement (EPA) could be ready for signature around mid-May 2009. ESA confirmed its decision to host the signature in Mauritius and informed that the issue of the date of signature will be considered at the next ESA Council scheduled for the 4th June 2009 in Victoria Falls back to back with COMESA Summit with a view to agreeing on a mutually convenient date as well as its arrangement for the signing ceremony.

We are concerned that:

4. The ESA countries (as represented by their officials) have confirmed their decision to host the signature of the interim EPAs and that they are already considering discussing the dates of such a ceremony when the outstanding and contentious issues in the interim EPAs have not been addressed and resolved.

5. The contentious issues arising from the interim EPAs include, inter alia, involve far reaching commitments on tariffs reductions the freezing of export taxes that ESA countries have been using, the requirement that ESA countries should not increase duties on products from the EU beyond what they have been applying (standstill clause), liberalising “substantially all trade”, bilateral safeguards (for infant industry protection)-all these issues are still under negotiations. We take the precautionary principle and reiterate that nothing is agreed until everything is agreed.

6. The EC has insisted that the first priority should be the signature of the interim EPA. The EU main interest is in market access which they may achieve in interim EPAs. This limits the scope of focussing on the real issues of interest to ESA countries that need attention before the signature. ESA countries should resist the pressure of rushing to sign the interim EPA when it is clear they will be mortgaging national and public assets to the EC.

We urge ESA countries to recognise that:

7. Africa remains a marginal player in world trade (6% in 1980 and 3% in 2008) since the continent’s trade structure still lacks diversity in terms of production and exports. As such, negotiations to further liberalise (after Structural Adjustment Programmes) their economies will be a futile and possible suicidal exercise until certain pre-requisites are met and instituted within their economies. The emphasis on trade liberalisation alone as a means to stimulating growth and development is misplaced.

8. The pre-requisites (as informed by the United Nations Conference on Trade and Development) centre on addressing the structural constraints in ESA countries including

? increased public investment in research and development, rural infrastructure — including roads — and health and education
? overhauling the basic productive infrastructure to make production more reliable. Power generation, water supply and telecommunications are three key areas that need special attention. In addition, building a competitive manufacturing sector will require the strengthening of the support infrastructure needed for exporting, including roads, railways and port facilities.
? encouraging cross-border trade infrastructure. It is unlikely that the manufacturing sector in Africa will grow to a competitive level if it is limited to small domestic markets. The smallness of individual African markets and the difficulty for most firms to access the markets of industrialized countries suggest that in the short and medium term, the expansion of intra-African trade could offer the opportunity to widen markets outside national boundaries. In so doing, some key infrastructure projects could be executed at the regional level, taking into account regional economic complementarities.
? development of domestic policy regulatory frameworks to regulate the movement of goods and services in and outside ESA countries. This includes adopting policies that ensure Special and Differential Treatment including the Special Safeguard Mechanism in agriculture, use of tariffs, among other things

9. Trade liberalisation has so far discouraged intra-regional trade in Africa as the reduction of tariffs, which reduce the preference margins given to other African countries, reduce the incentives for intraregional trade.

10. The Cotonou Agreement (that forms the legal basis of negotiating EPAs), recognise that reciprocal agreements (EPAs) with the EC had to foster regional integration and to be based on current integration efforts. However, as the interim agreements have shown, this commitment has been negated as the current configuration of the EPA encompasses a major risk of undermining ongoing regional integration processes.

11. Most countries in the region continue to suffer from food shortages and food insecurity. As a result they have been importing more food and energy (including inflation which was at 10.7% in 2008 up from 6.4% in 2007, the continental average excluding Zimbabwe) into the region. Trade liberalisation will exacerbate the problems of food insecurity.

12. The ESA political leadership have an obligation towards their people and should ensure that whatever decisions they take should not put the lives of people in danger. This means all those targets of reducing poverty, reducing child and maternal mortality and increasing access to education for the people should be used as tools for making informed decisions especially with regards to trade negotiations.

13. Given the above, liberalising ESA economies under the EPAs as already indicated by the interim EPAs will further weaken the countries’ ability to develop and respond to the challenges posed by liberalisation and Limit Africa to the production and export of low value goods (the so-called “poor-country” goods) based on the so-called comparative advantage argument. This is tantamount to condemning the continent and locking it into poverty.

We therefore recommend that:

14. A moratorium be put in place on EPAs negotiations until the ESA countries have put in place adequate institutional mechanisms to deal with trade liberalisation as recommended by the African Union, UNCTAD, the United Nations Economic Commission for Africa among others.

15. ESA countries focus on developing its regional market, steps that have already been taken by consolidating the gains of the COMESA FTA, the Customs Union and the move to form a single FTA with the East African Community (EAC) and the Southern African Development Community (SADC)

16. In light of the high food and energy prices, the climate crisis and the current global recession triggered by the financial crisis, ESA countries MUST reverse most of the commitments they have agreed under the IMF/World Bank SAP policies, the World Trade Organisation and the so-called interim Economic Partnership Agreements. This will allow the countries to implement favourable home grown policies that are in tandem with their development priorities

For Further Information please contact:

Rangarirai Machemedze
SEATINI
20 Victoria Drive
Newlands
Harare
Zimbabwe
rmachemedze@seatini.org
+263-4-788078
+263-4-776418

Or

Jane Nalunga
SEATINI
Plot 101 Kira Road , Kamwokya
Kampala
Uganda
Jnalunga09@gmail.com
+256-414-540856