Thursday, 6 September 2007

There is an alternative to the EU deal.

A lot has been said about the proposed Economic Partnership Agreements between the European Union and countries from Africa and the Caribbean and Pacific regions (ACP).

One of the recent topics has been that Tanzania must choose whether to negotiate with the SADC bloc or the East African Community.

However, the discussion left out a more important question: Should countries sign EPAs at all?

It is argued EPAs will create free-trade zones between each of the ACP countries and the EU. In this deal, the EU will not levy taxes on imports from the ACP countries, and vice versa.

But the deal is not without opposition. For example, the EU, with an economy about 366 times bigger than that of the EAC and with huge subsidies for its agricultural sector, can easily flood the latter’s markets with cheaper products.

The deal would also see significant losses of revenue from import duties for Africa. For example, Kenya would lose upto 12 per cent of total revenues.

The EU maintains that if the EPAs are not signed by the end of this year, ACP countries will lose the privileged market access to European countries that they enjoy now (ACP countries receive zero tariffs on unprocessed goods when exporting to Europe).

THE EU adds that the ACP countries have to choose between signing an EPA agreement come 2008 or falling back on a worse trade regime whereby countries like Kenya could face a rise in tariffs of upto 60 per cent of their exports into the EU.

Despite the EU claims, the choice does not have to be between signing these EPAs or losing privileged access to the EU market.

There is a better alternative: GSP+ or the “Special incentive arrangement for sustainable development and good governance.”

If the current zero-tariff rating into the EU ends by the end of this year, the introduction of the GSP+ regime would give the ACP countries continued favourable access to the EU market.

Currently, 15 developing countries, mainly in Latin-America enjoy the preferential access that GSP+ gives with the EU.

On a technical level, it would require ACP countries to sign certain international conventions to be eligible for the GSP+ regime. Kenya has signed 24 out of the 27.

Therefore, rather than push for rushed and unfavourable EPAs, EU should instead allow developing countries in Africa to gain access to the GSP+ option.

IT IS really up to the EU to demonstrate the political will to go this way. Equally, the African negotiators must open up to this option — something they have not explored.

With the outcomes of the EPA negotiations looking bleak, it is not too late for negotiators to try this route.

Since the trade arrangement between the ACP states and the EU is key to the future of African development, alternatives must be explored. The negotiators should therefore not feel pushed to sign a bad deal before the December 31 deadline.

John Ocholla is an economist and policy analyst with EcoNews Africa

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