Former President of Tanzania Benjamin William Mkapa gives his insight onwhy Regulation 1528will hurt the efforts of developing countries to successfully integrate into the world trade system.Article originally published inThe Zimbabwe Mail, 02/05/2012

IN September 2011, the European Commission proposed to amend the European Union’s (EU) Regulation 1528/2007. Regulation 1528 currently provides preferences to African, Caribbean and Pacific (ACP) countries, so that they have duty-free and quota-free market access to the EU market. It gives cover to ACP exporters as these countries are in the process of negotiating the Economic Partnership Agreements (EPAs) with Europe. The EPAs are effectively free trade agreements. The September proposal calls for the removal of ACP countries from having such preferential access to the EU if the ACP countries not have ratified the EPAs by 1 January 2014.

African countries are feeling the effects of this proposed amendment to Regulation 1528. The EU has been telling them that to retain their preferences in 2014, they have to sign or ratify the EPAs by June this year (2012).

If they do not, the European Commission has said that the proposed amendment entailing the removal of preferences would take effect in 1 January 2014 and the following countries – Kenya in East Africa; Namibia, Botswana and Swaziland in Southern Africa; Ghana and Cote d’Ivoire in West Africa; and Cameroon in Central Africa will see their flowers, beef, sugar, cocoa, bananas, amongst other products face higher tariffs when entering Europe. This could make their products much less competitive vis-à-vis other suppliers.

The problem, as I have reiterated is that the EPAs as they stand, contain many problematic elements that will have an impact on African countries’ ability to develop and industrialise. Our local and regional markets will be opened up even more than is currently the case to EU products. We could end up damaging our local industries, stymieing their growth, and remaining as raw materials and primary commodities exporters.

In the East African Community (EAC), research by the South Centre shows that the following locally produced products may be put at risk – maize; cereal bran; barley; animal feed preparations. In industrial products – local industries producing drugs (vacinnes, antibiotics, vitamins); chemicals (fertilizers, herbicides etc); packaging materials (paper, cartons); iron and steel products; and inputs for industrial products and machinery could be displaced by EU products, as the EU is more competitive in these sectors on the world market than is the EAC. This is only a short list.

Discussions are taking place this week within relevant organs of the European Parliament on this matter regarding the EU’s removal of preferences if EPAs are not signed and votes will be taken in the next weeks.

Thankfully, there are elements within the European Union that are sympathetic to Africa’s concerns. One draft proposal by the Committee on Development (DEVE) of the European Parliament (dated 3 April 2012) is to reject the EU proposal to cut off ACP countries’ preferential access if they have not signed their EPAs by a certain time. They do not endorse the pressure such a deadline imposes on ACP countries, and are also critical of the provisions of the EPAs. The Committee notes that it

‘regrets the fact that in spite of the recent progress achieved in the negotiations, which the regions concerned are pursuing in good faith, the EU had decided unilaterally to impose a deadline. The main concern of the Committee on Development is that the proposed amendment to the regulation risks putting pressure on the governments of the ACP countries concerned to sign and ratify their respective EPAs within the specified timeframe, regardless of whether or not the contentious provisions have been resolved.

‘The Committee on Development insists that the conclusion of the negotiations should be driven by content, which must take into account the interests and address the concerns of both parties and not by timeframes. Therefore the EU should show the necessary flexibility in the negotiation process, respecting the different levels of development of each ACP country…

…In addition to this, putting pressure on countries to sign a trade agreement which includes certain unacceptable provisions not only limits the space for domestic economic policy-making, but could also damage their emerging economic sectors. This also runs counter to the objective of policy coherence for development…

Therefore the EU should maintain EC Regulation 1528’.

The European Parliament’s Committee on International Trade (INTA), which is the more powerful committee on trade matters in the European Parliament also has a draft proposal (dated 13 April 2012) suggesting an extension of the deadline of the EU’s proposed amendment, from 1 January 2014 to 2016. In its justification for this proposal, the INTA notes that

‘It is necessary to give more time for further negotiations to reach an agreement on the comprehensive EPAs, in order to avoid the risk that a number of ACP countries which still have strong development needs and substantial levels of poverty would have significantly reduced market access to the EU’.

The INTA also comments that ‘Bilateral and multilateral trade negotiations are complex in nature and very often cannot be concluded in rigidly set timeframes. WTO is in a very good position to understand this…’.

The Belgian Senate has also passed a resolution on the EPAs (13 March 2012) calling on the

European Commission ‘to live up to its commitments to flexibility, and, for this purpose to ask the European Commission not to submit its proposal to the European Parliament and Council amending Annex I to regulation (EC) No. 1528/2007 to exclude a number of countries’ from being preference recipients whist they are still negotiating their EPAs.

The Belgian Senate also importantly makes two other recommendations:

i) that the European Commission fully supports any request from the ACP countries for alternative solutions to the EPAs and

ii) that the European Commission ‘examines the possibility of revising the mandate for negotiations on EPAs, to clarify the issue of flexibility…’.

As the machinery of the European Union debates this issue this week and in the days ahead, African countries can make the following demands:

i) Reiterate the ACP Council of Ministers’ and ACP Ambassadors’ call that the European Commission should maintain EC Regulation 1528 i.e. preferences should be retained until the EPA negotiations have been concluded. The ACP Group of Ambassadors have made it clear that ‘the conclusion of negotiations should be driven by content which must take into account the interests and address the concerns of both parties, and not by time-frames’ (ACP Ambassador’s Memorandum on proposed amendment to the EC Regulation 1528/2007, 23 February 2012).

Extending Regulation 1528 from the 2014 deadline to 2016, as proposed by INTA is one step in the right direction. However, it does not go far enough as it does not address the fundamental problem that there are critical areas in the EPAs which the European Commission continues to insist upon which are unacceptable for Africa eg. prohibiting African countries to introduce new export taxes; the overly high level of liberalization EU wants of Africa etc. If this is still the situation in two years, the same problems and pressures encountered so far will remain.

ii) In the meantime, African countries must explore the option proposed by the African Union and endorsed by African Heads of States in January 2012, that the EU should provide duty-free and quota-free preferences not only to Least Developed Countries (LDCs), but also to non-LDCs in LDC regions. LDC regions are geographical sub-regions that have a majority of LDCs, and where these countries are forming customs unions.

In sub-Saharan Africa, most non-LDCs are not materially very different from the LDCs. Many could have or can qualify for LDC status if they wish, but prefer not to do so. Kenya fulfilled all the UN LDC criteria in 1991. The UN Committee for Development Policy found it a ‘borderline case’. If it has become an LDC then, it would not yet have fulfilled the criteria to graduate. Ghana has fulfilled the LDC criteria 3 times since 1991 and if it had chosen to be an LDC, it too would not yet have graduated. Zimbabwe has been recommended to join the LDCs by the Committee for Development Policy in 2006 and 2009, but it has chosen not to do so.

This can resolve the issue of regional integration, which the EPAs are destroying. EPAs negatively impact on regional integration as they will displace intra-regional trade. EPAs are also tearing apart customs unions because they lead to different trading arrangements for different countries within a customs union (LDCs enjoy duty-free market access to the EU but non-LDCs have to give EU reciprocal market access).

The European Union will be a key beneficiary when Africa develops and prospers. We trust therefore that the EU will heed ACP countries’ and Africa’s proposals for a mutually beneficial partnership ahead.

(Photo:Former Tanzanian President Benjamin William Mkapa/World Economic Forum)

– Benjamin William Mpaka