New African economic partnership enters into force, critics still unconvinced

The new deal has already been criticised for its predicted weak impact on lifting poorer countries like Lesotho, pictured, out of poverty. [Shutterstock]

An Economic Partnership Agreement between the EU, Namibia, Botswana, Swaziland, South Africa and Lesotho entered into force yesterday (10 October), but its impact on the region’s development remains controversial. EURACTIV France reports.

The long road to an Economic Partnership Agreement (EPA) between the EU and the countries of Africa’s south finally reached its destination yesterday, when the trade agreement that has been in discussions since 2007 finally came into force.

The deal liberalises trade between the five African nations and the EU, superseding the non-reciprocal 16-years-old Cotonou Agreement, which is set to expire in 2020.

Namibia, Botswana, Swaziland and Lesotho will benefit from duty-free access to the lucrative European market, but South Africa, with its more advanced economy, will still have to pay tariffs on some products it chooses to sell.

In return, the countries in question will have to open up their markets to European exports by scrapping tariffs on 86% of products originating in the EU.

An impact study on the effectiveness of trade liberalisation, released in June, forecasted African exports to the EU to increase by 0.91%. Europe’s producers are also set to benefit, with a 0.73% rise predicted for their exports.

Even though the European Commission continues to insist that it has “never accepted such a degree of asymmetry in a trade deal before”, civil society, some European politicians and African representatives continue to denounce the alleged inequity of the deal.

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Least Developed Countries (LDCs) already benefit from duty-free access to the single market, under the “Everything but Arms” initiative of the Commission, so EPAs are not necessarily good news, given that those countries, for example Lesotho, have to then open up their own less developed markets to European imports.

Mozambique, another LDC, is expected to join the other five nations by ratifying the deal by the end of the year, a Commission representative said.

For the executive, EPAs ensure that LDCs will maintain their access to the European market, regardless of their status. “Today, EPAs grant LDCs free access to the European market because of their status, but the agreement allows them to keep access even if they no longer meet LDC criteria,” a Commission official told EURACTIV.

Another benefit is, of course, that “European goods can be imported at a lower cost, due to the elimination of tariffs”. However, the agreement’s critics insist that this loss of customs revenue is a real problem.

The EPA allows the governments of southern Africa to draw up a list of sensitive products, on which custom duties can still be levied, in order to preserve their economies and protect local production.

Safeguard clauses, intended to protect local products from an onslaught of European goods, can also be occasionally activated by the African countries, but they are strictly regulated and can only be used during the first 12 years of the agreement.

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The deal is set to have only a limited impact in reducing poverty, despite it being one of the stated objectives of the Commission. The executive’s trade chief, Commissioner Cecilia Malmström, said that the agreement will “promote sustainable economic growth and regional integration in southern Africa and is designed to help lift people out of poverty in the years to come.”

But the impact study concluded that the share of the population in the region living on less than $1 a day will only drop by 0.02% by 2035 thanks to the EPA. In Namibia, it would decrease by 0.03%.

In terms of the number of people living on $1.25 a day, the benchmark used to define extreme poverty, the improvement is predicted to be even more marginal. In South Africa, the numbers would only decrease by 0.01%, while in Namibia its impact would be non-existent.

The study concluded that the EPA would only have a “modest” effect on reducing poverty in the two countries it analysed.

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German Chancellor Angela Merkel on Monday (10 October) announced a €27 million aid package for Niger, her second stop in a three-nation Africa tour aimed at fighting terrorism and stemming the migrant influx to Europe.

"Jobs and sustainable economic growth, that is what the EPA can help deliver. Private sector development and trade are significant drivers to lift people out of poverty and implement the new global agenda of Sustainable Development Goals. The EPA can contribute to regional economic integration, an enabling business environment and improved competitiveness of the region." Neven Mimica, Croatia's Commissioner for International Cooperation and Development.

The ACP-EU Partnership Agreement, signed in Cotonou on 23 June 2000, was concluded for a 20-year period from 2000 to 2020. It is the most comprehensive partnership agreement between developing countries and the EU. Since 2000, it has been the framework for EU's relations with 79 countries from Africa, the Caribbean and the Pacific (ACP). In 2010, ACP-EU cooperation has been adapted to new challenges such as climate change, food security, regional integration, State fragility and aid effectiveness.

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