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By: Gitura Mwaura
The alarming concerns about how the EU Economic Partnership Agreements (EPA) could undermine the African Continental Free Trade Area (AfCFTA) ought to be allayed.
The experts should come out and calm the fears. Though the concerns have been there for a while as AfCFTA has been taking shape, they have been more speculative than established fact.
First, only the Southern African Development Community (SADC) has ratified the EPA. Nothing untoward has been reported about this EPA thus far, while the AfCFTA will become fully operational next year.
No judgment can also be drawn from the other regional economic communities where progress to ratify the EU pact has stalled, either because of the perceived economic impact of the EPA or due to a lack of political will.
The East African Community is a case in point. It does not seem likely that the region will ratify the EPA soon.
Since 2014 when the EAC negotiated and concluded a bilateral trade agreement with the EU as a bloc, only Rwanda and Kenya have ratified the pact.
Without discounting Burundi and Uganda, Tanzania appears the linchpin to the whole deal. One may not question its concerns about the EPA undermining its industrial growth, but Tanzania remains the most adamant not to sign the pact.
Some international observers agree with Tanzania’s urging other countries and their regions not to sign what they view as a lopsided deal.
They have argued that the trade gains brought by the EPAs, as negotiated, are likely to be concentrated in a few agricultural products. This is factual, and the EAC offers yet another example for examination.
When the EPA, as negotiated, comes to force, the EU will not export to the EAC product labelled “sensitive,” and largely consisting of farm and dairy products.
The products will comprise 17.4 per cent of the entire bilateral trade and will be progressively liberalised to enter the EAC within 15 years from the date the agreement comes into force.
The EPA, on the other hand, gives EAC products 100 per cent access to the EU market. This is compared to only 82.6 per cent of imports from the EU being allowed into the EAC, aside from the “sensitive” products.
One may argue whether this is a good deal or not, but in so far as the EAC agreed to it as a bloc, we must assume it to have been well considered, though Tanzania would later change its mind.
But, will the EPAs hurt intra-African trade, weakening trade revenues and undermining trade-driven industrialisation in Africa?
The question is posed in irony if one considers that the EU has been one of the major supporters of the AfCFTA.
The EU has been supporting African economic integration politically, technically and financially — setting aside EUR 62,5 million to support the AfCFTA negotiations, advocacy and ratifications, among other areas.
This is not to suggest the EU is a saint. The EU is in it for its own interests, meaning that the support, though welcome, may also be viewed as cultivating the market to better exploit it.
Recall that African countries currently trading with the EU makes the continent its third-largest trading partner after the United States and China.
With the EU already having a substantial economic foot in Africa, the concern becomes apparent how the EPAs may play against the AfCFTA.
In reality, it does not necessarily pit the EPAs against the AfCFTA. To present a likely picture of how it could play out, Togo offers an example that can be extrapolated to mean Africa.
The UN Economic Commission for Africa (UNECA) sought to find out what would be at stake for the West African country.
One of the key findings was that, if the AfCFTA was to be established and implemented before full application of the EPA, any negative effects of the EPA on intra-African trade would be more than offset.
Another of the findings was that, for the AfCFTA to play a major role in support of Togo’s diversification and structural transformation processes, the country would need, in parallel, to adopt ambitious non-tariff measures aimed at easing trade within and across borders.
This finding is an economic truism. If countries across Africa don’t adopt ambitious non-tariff measures aimed at easing trade across open borders, AfCFTA may as well be dead in the water.
The other finding was that the EPA and the AfCFTA can coexist, and that the sequencing in terms of the implementation of the two reforms does matter, to ensure that benefits from both can be maximized.
In other words, says UNECA, getting the AfCFTA right when it goes live next year will put African countries in a better position to take advantage of their trade agreements with external partners such as the EU.